Development of directions of management technology of a network partnership using methods and tools of stakeholder management

Qualitative changes in the economy of business entities occurring under the influence of globalization determine the necessity of further improvement of methods and tools to manage their competitiveness and development. Theory and practice of modern management demonstrate that today such business structures are profitable, which are dynamic and consistently performing innovative transformations in various activity areas, allowing them to develop successfully and to compete in the sectoral market. That is why, under the present conditions the research for new methods and tools of business development management become actual ones for business entities. Global trends of recent years confirm it and indicate that in today’s market leaders are organizations which actively introduce management systems based on the introduction of innovations in all aspects of business activity.

In today’s market, a perspective direction in the development of business entities is development and management of various network associations concentrating on achieving of common goals and providing competitive advantages through the synergistic effect. Therefore, an important role in the interaction of business structures acquire correctly lined up partnerships which allow to strengthen the long-term character of their interaction and to reduce relationships formalizing expenses. It should be noted that the objective condition for the emergence of such structures in the “new economy” has been the expansion of market boundaries. As a result, the business processes of companies go international, and the companies themselves become an integral part of strategic networks with dynamic membership from different branches.

The new concept of strategic development of companies focuses on the satisfaction of many interested parties (stakeholders), whose interests are often in a non-linear, and sometimes inverse relationship. One of the main tasks of the topmanagement of new types of organizations is to build an optimal model of interaction with the stakeholders of the company, the number of which can be quite significant.

It should be noted that networks appear both on the base of classic collapsing inefficient integrated structures and by self-organization of classic market entities in a group with the goal of improving the long-term performance and reducing risks. Establishing priorities for the various stakeholder groups will allow to assess correctly their impact and that share of the attention which should be given to them in the creating of plans and development strategies, intentions implementation. Prioritization of stakeholders generates the idea of choosing the appropriate type of partnership strategies with each of them or all at once. At the same time, we should not forget that the greatest political and economic impact on the efficiency and effectiveness of the company have high priority stakeholders.

As practice shows, the key issue in the management system of modern organizations is the lack of adequate tools to manage the new, in fact, virtual network companies which actively become large enterprises as well as small and medium businesses. Note that the building of the optimal type of partnerships with all stakeholders is a quite complex and problematic process because it is very difficult to describe quantitatively given connection (relationship) due to their non-linear nature. In addition, stakeholders of organization can concurrently be in networking with other agents of the network. But the pursuit of finding the optimal balance of interests in network partnerships can allow organizations to build effective behavioral strategies in a competitive business environment, to negate the adverse effects of individual stakeholders, not only to avoid negative impacts, but also to improve the business environment joining efforts of all network agents.

Despite the obvious relevance of the issue, the process of networking management and assess tools of the effectiveness of this management have not received a proper development yet, either in theory or practice of business management.

Although their presence will:

• -    Clearly identify the role and contribution of each partner;

• -    Competently create effective communications;

• -    Set definite goals and monitor their accomplishment, linking this process with the motivation and stimulation system of innovative development of companies.

In our view, in this approach the struggle for influence within the businessentities, for controlling financial flows successfully transform can in the overall objectives into mutually beneficial cooperation of all interested stakeholder groups. That is why an important role in the interaction of business structures acquire partnerships to strengthen long-term cooperation and reduce the costs of formalizing relations.

The object of the author's research is the networking of legally independent economic agents, built on partnerships (hereinafter - the Partnership).

This partnership combines legal entities of various types, size and character of ownership, of organizational structure and sector, entrepreneurs and individuals acting on its behalf, successfully leading its activities on narrow segments of industrial markets.

The satisfying need of industrial consumers in these segments is very complex and requires a combination of several diverse and specific resources, which are fully absent in each individual participant of the partnership.

The activity meaning of the observing network partnership is a continuous process of creating new values with the involvement of resources of the Partnership members with the direct participation of the individual user, followed by the receipt and distribution of benefits from this activity between interaction participants. Particularly important for activity are approval procedures for production of new values and interests of the partners, and this coordination is the essence of the relationship between the various participants of network partnership.

Selection of tools, methods and technology of network partners’ relationship management in the implementation of the common strategic objectives as a research subject due to the fact that today, in our opinion, one of the problems of network partnerships development is the lack of advanced management technology . Technology that would not only take into account the peculiarities of their construction, but would be suitable for practical use, what is objectively necessary and claimed.

Considering the special importance of interaction between participants for the effective operation and development of network partners communicative approaches must be selected for their managing. One of such approaches is based on the provisions of stakeholder management formed on the stakeholder theory of the firm proposed by E. Freeman that attaches a great importance to the management of the stakeholders’ interaction to ensure their sustainable development [7].

Researchers’ interest to the phenomenon of network forms of business systems organization is rapidly growing since the 80s of the twentieth century. This is due, firstly, to the need to study of rapidly developing various forms of cooperation between economic agents, and secondly, the relevance of searching for alternative forms of organization and business development under significant changes in the world socio-economic structure.

Currently, a number of paradigms of network forms of modern markets functioning has been formed. The interest in research has been expressed by scientists from different disciplines including sociology, social psychology, economics, biology that confirms the urgent need for the world community to study networking of economic agents.

Increasing spread of inter-firm network forms of organization allows to consider this phenomenon as one of the urgent management problems. Modern management as applied socio-humanitarian science should include the interaction between stably associated legally independent of the venturers in the analysis of business systems. The need to study the typology of network forms of inter-firm interaction based on modern technological solutions is an urgent management task. Moreover, among researchers and practicians there is no single view on inter-firm network and its place in the current socio-economic system and no understanding the differences in the widely used concepts “intercompany network”, “inter-organizational network”, “network company”, “network partnership”, “ virtual enterprise network”, ”value creation network” etc.

In Russia, the complexity of the answers to these questions is aggravated by the use of old approaches to the analysis of local socio-economic systems. The lack of modern comprehensive analysis of network business interaction prevents the development of advanced forms of business organization, which can be an alternative to inefficient large corporations, a structural unifying to scattered small businesses and serve as an additional source of international competitiveness of the domestic economy.

It is logically to adopt the O. Williamson’s model transforming the current dichotomy “firm – market” into “market – hybrid – hierarchy” as the starting point for the analysis of inter-firm networks as a phenomenon and to include into the analysis “the diversity of market, hierarchical and mixed forms”[25].

Dialectical principle of “hybridization” is shown in Figure 1.

In the O. Williamson’s typology of contracting are laid such criteria as the duration of execution and variants of resources consolidation: from short-term transactions at the market to long-term ones at the firm. In carrying out various kinds of transactions coordination of resources is required: only their own or borrowed exclusively. This leads to the conclusion of contracts of different types: market, hybrid and hierarchy. The entrepreneur makes a choice analyzing transaction costs for each type of contracting. He picks up the way of organizing the contract, the managing structure and the order of resource distribution. The same choice can make the owners of certain assets by concluding long-term contracts and consolidating different resources to varying degrees.

The results of study O.Williamson’s lead to the question: Is it possible to distinguish between the set of agents associated by a long-term contract and the company as the owner of its own consolidated assets? This question can be a cause for a long scientific debate. However, despite the fact that the company and the union are significantly different in terms of law and public policy, the study's author believes that business differences are not so great.

And in some cases, the question of the form of business organization has a tertiary importance such as for activities in narrow niches in the production of unique products for industrial customers.

Moreover, if the size of the hybrid structure is small (small number of association members), the business obtains more adaptive capacity varying the integration degree of participants to create a hybrid form for each situation.

Of course, only highly qualified managers are able to realize these opportunities because they have a significant impact on association participants, but upon condition of understanding the sense of constantly changing direction and degree of integration by all association participants.

MAR             HYBRI           HIERAR

Figure 1 - The emergence of hybrid organization[25]

However, not all networks are hybrid structures. To answer the question, which of the hybrid structures can be defined as a network, it is proposed to use a combination of a number of characteristics (Chart 1) [21].

As can be seen from Chart 1, not all forms of hybrid contractions can be called the network forms of business organization.

Chart 1 - Characteristics of inter-firm networks as a form quasi-integration

	Market exchange	Hybrid form of contracting	Private firm
Mechanism of coordination	Price	Hybrid mechanism	Power
Degree of	Disintegration                    Integration

integration			Quasi-integration		«Classical» integration
			Intercompany network
Contractual precautions	-	Х	Х	Х	Х
Social network	-	Available	Х	Х	Х
Duration of relationship	Short-term /		Medium-term	/ long-	Long-term
Transfer of information	med E i x u p m lic - i t t erm information		Explicit and imp	licit info	rmation
Type of contracting	Classical contracts	Classical / neoclassica l			Relational contracts
Autonomy of parties	Lack of autonomy of the parties outside the transaction		Interdepen under fo	dence rmal	Separate legal entity
De jure transfer of property rights	^^™			Intangi ble assets	Tangible and intangible assets
Transfer of management rights	-	Possible	Х	Х	Х
Private administrative support	-	-	At the intercompany level	Х	Х
Delegation of powers Interdependen                         Dependence Ability to rapid adaptation high                                  low

The mgodern typology of network forms of businoewss organization, meets the requirements of most empirical researchers, according to the author's work, has been composed by M. Sheresheva [21]. However, the proposed typology of interfirm networks doesn’t contain such a common type as network partnership. Furthermore, in our opinion, the list of criteria for the classification is incomplete and requires the addition of a few more criteria. Author considers that it is necessary to use a few more criteria in the study of network entities (Chart 2):

• a)    Effect of persons (key figures of the business) for the operation of networks. Impact can be very significant when the network parameters are defined and controlled by an individual (e.g. in strategic alliances), or too slight (as in virtual networks).

• b)    The value of the trust for the participants.

• c)    The manifestation of self-organizing start.

The above mentioned criteria are distributed into network types depending on the manifestation of power in one or another type. Added criteria allow not only to give a full assessment of the network type of business system studied by the author, but also to disclose more fully the nature of other types of network entities. Furthermore, another type networks is added in the chart – network partnership – to determine the characteristics of this type of network.

In order to determine the network type of studied business system the author made an attempt of evaluation according to the criteria proposed in Chart 2.

All intercompany network characteristics shown in Chart 2 inherent to the network partnership. This is indicated by characteristics of a network partnership such as establishment of long-term objectives, optimal use of complementary resources and used type of contracting, autonomy degree of the parties, features of knowledge exchange.

Network partnership is a medium (with the transition to long-term trend), but not a short form of coordination based on the neoclassical contract limited in time, but concluded for a long period. Partners have enough action freedom to perform a specific contract. Each signed agreement makes a significant contribution to improving the networking, but does not guarantee the absence of conflicts among members of the network, which in the case of neoclassical contracting are solved by authoritative party of the network – key figures in the business.

An essential feature of the network partnership is the execution of the longterm relational contract having the implicit form. This contract is the most important one for participants of the interaction. Network members are ready to forgive partners in most cases of non-fulfillment of many conditions of neoclassical explicit contracts.

The observing network partnership is the result of “quasiinternationalization”, i.e. the introduction of a hierarchy in market exchanges. The resulting hybrid structure emerged by intensifying of cooperation between economic agents with the establishment of longer contractual relations preserving the autonomy of the parties and accepted by all parties of informal rules, interdicting the opportunistic behavior of participants and providing adaptation to changing circumstances under uncertainty. Development of sustainable long-term relationships among participants of partnerships is performed in the absence of legally registered transfer of ownership rights with the delegation of authority for management of joint activities to individuals who have the appropriate competence – key players in the business (hereinafter – KPB).

Chart 2 - Main types of inter-firm networks (extended classification)

Classification criteria	Strategic alliance	Chain (network) of the value creation	Focal delivery network	Dynamic focal network	Virtual organizatio n	Network partnership
1 Type of quasiintegration	horizontal (sometime	vertical (maybe	vertical	vertical, horizontal	vertical, horizontal	vertical, horizontal

	s with elements of vertical)	with elements of horizontal )
2 Ratio of influence degrees	focal (less polycentric)	polycentri c	focal	focal	polycentric	polycentric
3 Group stability	stable	stable	stable	dynamic	dynamic	dynamic
4 Intern competition	As a rule, the lack of competitio n	Competiti on is possible	Towards the leader is absent, possible competitio n between suppliers	Competitio n for participatin g in the execution of the order	Competitio n for participatio n in the project	Competitio n is managed by coordinatio n of actions and intentions of the participant s
5 Entering into the network	closed	closed	closed	open	open or closed	relative open
6 Size of companies	As a rule, large, but maybe SME	As large, as SME	One major player and SME	Often a major player and SME	SME (small and middle enterprises )	SME (small and middle enterprises ), sole proprietors , individuals

7 Objectives of cooperation	Improving cooperatio n, innovation , risksharing	Improving business skills	Improving business skills	Growth, choice of the best services	Growth (achieving «virtual size»), training	Growth, training, optimal use of resources
8 Influence of persons (KPB) on activity (+negligible,++ minor, +++ essential)	++	+	+	++	++	+++

9 The trust value for participants (+negligible, ++ minor, +++ prevails over economic motives)	+	++	+	++	++	+++
10 Manifestation of selforganizing basis (+negligible,++ minor, +++ essential)	+	++	+	++	++	+++

Thus, it is possible to define the business system in this research. Network partnership is self-organizing, mixed integrated, dynamic, polycentric association of legally independent economic agents (networking members, partners) created for the common mission and strategic goals based on the prevailing long-term implicit contracts.

The main provision of stakeholder theory of the firm is: goals and objectives include (and have to include) care about the welfare of a wide range of agents, not only to increase the welfare of its owners.

Stakeholder approach to the management of business systems results in consideration of the interests (and other characteristics) of business stakeholders. These are the basic postulates of modern stakeholder management which the scientific research had been going to for more than a hundred years.

Current research in stakeholder management is running in three directions closely intertwined in the works of various authors. Descriptive direction analyzes the actual behavior of business systems, management of which is going to implement a wide range of goals, but not only to maximize the welfare of the firms’ owners. This direction is realized in practice through using various approaches considering the interests of stakeholders as well as through identification and analytical description of best practices. Instrumental direction indicates and analyzes what tools and methods of management facilitate to implement these broader goals. In this direction management techniques are theoretically identified and interpreted as well as proposed and justified which let interact effectively with the social environment. Studies in the third, regulatory , direction concentrate on research of business ethics, which perceive sources of appropriate management behavior. The specified direction justifies why the management should carry out the interests of stakeholders in practice.

All these directions of stakeholder theory concentrate on matters of managers’ actions. “Stakeholder theory is a managerial one in the broad sense of the word. It does not simply describe the existing situation or predict causal relationships; it also recommends adjustments, structures and practices which, taken together, define the stakeholder management. Stakeholder management requires as its key feature simultaneous attention to the legitimate interests of all relevant stakeholders in establishing organizational structures and in general policies, and in concrete made decisions. These requirements apply to all individuals who control the corporation or influence its policy, including not only professional managers but owners, the government and other” (Thomas Donaldson and Lee Preston).

Currently, level, quantity and quality of researches of management stakeholders allow to standardize this process in the form of International Standard stakeholder engagement AA 1000 SES developed by the Institute of Social and Political Statements (UK). In the standard the current definition of stakeholders is given: “Stakeholders are understood to be natural and legal persons or groups of persons that affect the organization and its activities, and / or are influenced by the organization.” In addition, the standard contains requirements for quality of stakeholder engagement, as well as manual for the implementation of these requirements and criteria for evaluating the quality of interaction with stakeholders. Despite the advisory nature of the standard, it can be successfully used as a basis for policy of unified system of communication with stakeholders in almost any organization [1].

Information of the Partnership is provided by the key figures of the Partnership business as well as research’ author has collected independently from different sources. In order to evaluate the control mechanism of network interaction author received source data mainly from the conclusions and evaluations of key figures of the Partnership’ business (KSB). The key figures are some individuals who has taken the decision to do business in the form of a network based on partnership relations, who has determined the mission of the Partnership and who is engaged in strategic and operational management of the Partnership. Other methods of research such as rapid surveys, questionnaires of stakeholder groups’ representatives were used to clarify, correct, and eliminate inconsistencies in the evaluation of source data.

Partnership participants (partners) are legal entities of different type, size, ownership nature, organizational structure and sector as well as entrepreneurs and individuals acting on their own behalf. Partners are united around a common mission: to meet the needs of industrial customers in unique high-tech products using its main (basic) resource – the competence of specialists and managers and entrepreneurial skills of key figures of business. For the execution of each shortterm contract with customers partners provide the optimum set of resources for the most cost-effective execution of the contract. However, short-term economic efficiency is not a priority objective of the Partnership. Priority is long-term cooperation. Consumers also share the mission of the Partnership and are partners themselves considering such an organization to meet the needs of complex high- tech products in this segment of the industrial market for the most responsive one to modern business conditions.

The strategic objectives of the Partnership are:

• a)    Sustainable development of the Partnership on the basis of long-term cooperation;

• b)    Improving the resource base: training of specialists and managers, searching and attracting new highly qualified employees;

• c)    Creation, development, modernization of high-tech products in accordance with the detailed study of the needs of industrial customers;

• g)    Cost-effectiveness of cooperation;

• d)    Employment and decent living standard of highly qualified professionals in the activity fields of the Partnership;

• e)    Expanding the partnerships network, improving of methods and tools of networking.

In accordance with the given characteristics of construction of network forms of business systems’ organization and with the research of modern methods and tools of stakeholder management as well as with taking into account the opinion of the network partnership practicing managers the study's author has developed the main directions of improving the network management technology of partnership.

Direction 1. Development of system for scoring the efficiency of interaction management of business stakeholders.

Due to the fact that the Partnership is an informal, legally segregated enterprise which is not subject to state registration, does not have reporting obligations to any person, including partners, the Partnership has no quantitative data for processing and analysis. Therefore, the study's author searched and collected indirect data for analysis of participants of partnership, consumers and key figures in business. All input data for processing and analysis contained in this research were modified with author’s formulas .

Data conversion was carried out in such way that let, firstly, hide reliable quantitative information of Partnership activities from third parties, and secondly, make the results of research suitable for decision-making by key business figures in whose interests this research is running as well as for further author’s research. Modification of the input data does not detract from the scientific value of the research, as it does not affect the methods, approaches, the author's ideas in the current study.

The author offered to in add to the system of quantitative indicators:

• a)    The rate of critical events of the Partnership demonstrating the number of critical events during a time interval. Critical events are events that had, have or will have a significant impact on relationship management of Partnership’s stakeholders. To such events may be related conflicts between stakeholders, nonexecution (improperly execution) of contracts with consumers, uncoordinated actions of partners, unexplained behavior or sudden requirements of stakeholders.

Critical events indicate on the one hand the imperfection of business management system and encourage taking measures to strengthen coordination. On the other hand they stimulate the business-system to development which direction has to be possible to anticipate and correct.

• b)    Indicators of the internal environment of the Partnership. These indicators describe the condition and character of networking within the business system; they are shown in Chart 3.

• c)    Indicators of financial activity of the Partnership (Chart 4). Financial indicators characterize how networking can be used to reflect the opportunities and threats of the external environment of the Partnership.

Some figures in Charts 3 and 4 are expressed in monetary units (hereinafter monetary units) – quantitative indicators of rubles modified by author’s formula.

TDP indicator – total distributed profits of the Partnership, which is an analogue of the gross income of the traditional forms of business organization. TDP is the total cash inflow from the sale of the Partnership’s products and other (non-sales) activities distributed among the participants.

Financing of networking improvement – the amount of money aimed at supporting and developing the internal environment of the Partnership.

Cost of product sales – money received from production contracts with consumers, income from financial investments – non-operating income from available resources.

Chart 3 - Quantitative indicators of the internal environment of the Partnership with the calculation of the average absolute increase

Indicator	2009	2010	2011	2012	2013	Average absolute growth
1 Number of participants in the network partnership, units	5	9	14	19	19	3,50
2 Number of members of the network partnership, participating in the production contracts, units	5	7	10	13	13	2,00
3 Number of members in the network partnership, participating in R & D, units	1	1	2	3	3	0,50
4 Number of executed contracts with consumers, units	7	15	24	32	35	7,00
5 Total revenue (cash) (total distributed profits), ODS, monetary units	25,20	120,80	201,30	373,50	398,32	93,28

Indicator	2009	2010	2011	2012	2013	Average absolute growth
6 Networking financing, monetary units	0,00	9,63	14,53	30,77	40,12	10,04
7 Average IA per partner, monetary units	5,04	17,26	20,13	28,73	30,64	6,40
8 Average networking financing per partner, monetary units	0,00	1,07	1,04	1,62	2,11	0,53
9 Coefficient of industrial participation	1,00	0,78	0,71	0,68	0,68	-0,08
10 The participation rate for innovation	0,20	0,11	0,14	0,16	0,16	-0,01
11 The participation rate in the contracts	1,40	2,14	2,40	2,46	2,69	0,32

Chart 4 - Financial performance of the Partnership.

Indicator	2012	2013	Forecast for 2014
1 Sales cost of the Partnership products, monetary units	363,00	387,00	416,07
2 Income from investments, monetary units	10,50	11,32	12,20
3 Total revenue (cash) (total distributed profits), IA, monetary units (1+2)	373,50	398,32	428,27
4 Reimbursement of the Partnership for the provision of resources, monetary units	259,00	265,00	265,00
5 Development reserve, DR, monetary units (3 "-" 4)	114,50	133,32	163,27
6 including Sales of traditional products, monetary units	76,33	74,50	72,71
7 Share of DR, % (6 "/" 5)	66,66	55,88	44,54
8 including Sales of new and converted products, monetary units	20,62	30,48	45,05
9 Share of DR, % (8 "/" 5)	18,01	22,86	27,59
10 including sales in new market segments, monetary units	17,65	28,34	45,50
11 Share of DR, % (10 "/" 5)	15,41	21,26	27,87
12 Development reserve, DR – share in IA, % (5 "/" 3)	31,54	34,45	39,24

Indicator	2012	2013	Forecast for 2014
13 Research and development of new products, modernization and modification of the used products, units	13,07	17,32	22,95
14 Share of DR, % (14 "/" 5)	11,41	12,99	14,06
15 Study and search for new customers and new market segments, monetary units	5,86	6,54	7,30
16 Share of DR, % (16 "/" 5)	5,12	4,91	4,47
17 Networking improvement financing, monetary units	30,77	40,12	52,31
18 Expenditure on the network broker, monetary units
19 Investments, monetary units	64,80	69,34	74,20
20 The effectiveness of research and development of new products, modernization and modification of the products used, monetary units (8 "/" 14)	1,58	1,76	1,96
21 The effectiveness of "intelligence" (study and search new customers and new market segments), monetary units. (10 "/" 16)	3,01	4,33	6,23
22 The effectiveness of investments in networking improvement, monetary units (6 "/" 18)	2,48	1,86	1,39
23 Efficiency of investments, monetary units (2 "/" 19)	0,16	0,16	0,16

Chart 4 shows the sources of development reserve in the context of the type of sold products as well as uses of development reserve in the context of alternative strategies. As can be seen, by all indicators is on the rise, which confirms quantitatively the growth strategy of the business system.

Direction 2 . Monitoring of networking includes:

• a)    Study of stakeholders conditions. Identification and classification of goals, motives, interests, influence, prioritization of stakeholder groups by any known methods and tools of stakeholder management. The research must be carried out every three months;

• b)    Study of dynamics of the internal conditions of the environment by, for example, the average absolute growth (Chart 3), the dynamics of financial indicators, such as predictive values obtained by extrapolation of the trend (Chart 4), the dynamics of the coefficient of critical events. Studying the dynamics must be carried out every three months;

• c)    The annual holding of strategic analysis to confirm or correct strategic choice.

Direction 3 . Monitoring methodology of quantitative indicators.

The objectives of any business system are the set of goals of its elements. Strategic objectives of the observed network partnership are objectives of its stakeholders. Therefore, the monitoring methodology of quantitative indicators should take into account the accordance of stakeholders’ objectives to strategic objectives of network partnership.

To analyze and evaluate existing technologies and management practices of network interaction eight stakeholder groups of Partnership’s business were identified; a general description of them is given below.

Group 1. Key business persons involved in the control of the Partnership, (KBP), “missionaries” who originally had defined the mission and strategic objectives of the Partnership.

Group 3. Customers and buyers (hereinafter CB) – industrial consumers of the Partnership’ products, different organizations in different industries.

Group 5. Production staff of partners (hereinafter PS) – the direct executors of production and product development of partnerships. These persons are dispersed in different organizations; their role is to carry out production of products either on behalf of their organization, or in temporary teams on behalf of another organization.

Group 6. Business Support of Partnership (hereinafter BS) – legal entities and individuals of various profile providing small services and supporting the business (financial institutions – cash management service, placement of temporary free funds, bank guarantees, logistics companies – delivery of parts for production, finished products and correspondence; packaging; others).

Group 7. Scientific community (hereinafter SC) – research organizations, researchers and developers indirectly involved in research and development and management of the Partnership.

Group 8. Society and some public institutions. Government (hereinafter SG). The role of this stakeholder is in the legislative, technical, fiscal and moral and ethical standardization of Partnership activities as well as in meeting their requirements to prevent industrial disasters which the products of the Partnership are used for.

The objectives of each stakeholder group are shown in Chart 5.

After identifying the goals of each stakeholder ranking of purposes to identify common goals prevailing in Chart 6 is made.

As it can be seen from Chart 6, stakeholder groups have either identical or different from the others goals. The greatest importance for the Partnership have sustainable development (16%) and long-term cooperation (14%) which indicate that the understanding and active support of long-term activity of the Partnership by stakeholders.

Purposes specified in lines 3 – 7, with a share of 7%, indicate production and product focus of the Partnership. Goals with a share of 5% (lines 8 – 11) show the importance of the resource base for the Partnership – specialists’ competence.

Chart 5 - Grouping of stakeholders of partnership’s business

Name of group	Characteristics of group (description of the goals / interests / motives)
KPB	1.    Sustainable development of Partnership. Long-term cooperation. 2.    Extension of Partnership network, improvement of methods and tools of networking. 3.    Searching for free market niches and new customers on the B2B market. 4.    Improving basic resource: specialists and managers training, search and attraction of highly qualified specialists. 5.    Creation, development, modernization of high-tech products in accordance with the detailed study of the needs of industrial customers. 6.    Providing employment and decent living standards for highly qualified professionals in the fields of activity of the Partnership.
CFS	1.    Sustainable Development Partnership. Long-term cooperation. 2.    Creating, development, modernization of high-tech products in accordance with the detailed study of the needs of industrial customers. 3.    Opportunities for career and professional growth 4.    Decent and safe working conditions 5.    Improving basic resource: specialists and managers training, search and attracting new highly skilled. 6.    Extension of Partnership network, improving networking.
CB	1.    Sustainable Development Partnership. Long-term cooperation. 2.    Economic efficiency of cooperation. 3.    Guarantee of product delivery, adherence to contractual obligations. 4.    Product quality and safety, standards compliance.
MP	1.    Economic efficiency of cooperation. 2.    Guarantee of product delivery, adherence to contractual obligations. 3.    Product quality and safety, standards compliance. 4.    Sustainable development of Partnership. Long-term cooperation.
PP	1.    Decent and safe working conditions. 2.    Fair wages. 3.    Tempo of wage growth. 4.    Opportunities for career and professional growth 5.    Sustainable Development of Partnership. Long-term cooperation.
BS	1.    Economic effectiveness of cooperation. 2.    Guarantee of products purchase, compliance with contractual obligations. 3.    Long-term cooperation.

Name of group	Characteristics of group (description of the goals / interests / motives)
SC	1. Using modern scientific achievements in the design and manufacture of products. 2.Improving basic resource: specialists and managers training, search and attracting new highly skilled professionals 3. Creating, development, modernization of high-tech products in accordance with the detailed study of the needs of industrial customers. 4. Long-term cooperation.
SG	1.    Social stability, responsibility, employment. 2. Safety (economic, social, legal, financial) 3.    Payment of taxes and payments to state and local budgets. 4.    Law observance. 5.    Product quality and safety, standards compliance.

Stakeholders have no conflicting objectives, possible contradictions are eliminated by understanding of priority objectives - long-term cooperation, sustainable development.

Chart 6 - Ranking of common goals of Partnership’ stakeholders

Objectives of stakeholders	Number of stakeholders interested in the objectives	Contributio n share of objectives in objectives complex of Partnership stakeholders, %
1 Long-term cooperation	6	16
2 Sustainable development of the Partnership	5	14
3 Improving the basic resource: specialists and managers training, search and attracting new highly skilled professionals	3	7
4 Creation, development, modernization of high-tech products in accordance with the detailed study of the needs of industrial consumers	3	7
5 Economic efficiency of cooperation	3	7
6 Guaranteed product delivery, adherence to contractual obligations	3	7
7 Product quality and safety, standards compliance	3	7
8 Expansion of the Partnership, improving methods and tools of networking	2	5
9 Employment and decent living standard of highly qualified professionals in the fields of the Partnership activity	2	5
10 Opportunities for career and professional growth	2	5

Objectives of stakeholders	Number of stakeholders interested in the objectives	Contributio n share of objectives in objectives complex of Partnership stakeholders, %
11 Decent and safe working conditions	2	5
12 Searching for free market niches in the B2B market	1	3
13 Fair wages	1	3
14 The growth rate of wages	1	3
15 Using modern scientific achievements in the development and production	1	3
16 Social stability, responsibility and employment. Safety (economic, social, legal, financial). Payment of taxes and payments to state and local budgets. Law Compliance.	1	3
Total	39	100

Further, the author has aligned strategic objectives of network partnerships and directions of cooperation between the stakeholders. To assess the management of network interaction the author offers related indicators and their quantitative measurement. The data are summarized in Chart 7.

Chart 7 – Evaluating the effectiveness of the interaction of stakeholders in

implementing the strategic objectives of the Partnership
Strategic objective	Effectiveness criteria	Quantitative measurement of the effectiveness
Sustainable development of the Partnership on the base of long-term cooperation	Networking financing, monetary units	Saving the average absolute growth at 10.04
	Participation rate in the contracts	Saving the average absolute growth at 0.32
	Average funding networking per partner, monetary units	Saving the average absolute growth at 0.53
Extension of Partnership’s network, improvement of methods and tools of networking.	Number of participants in the network partnership, units.	Saving the average absolute growth at 3.50

"Экономика и социум" №3(12) 2014 544

	The number of executed contracts with consumers, units.	Saving the average absolute growth at 7.00
	Coefficient of critical events	Reduced from 1.8 to 1.5
Economic efficiency of cooperation	Share of development reserve in IA	Increase in 2014 from expected 39.24 to 45.12 during the amplification of development strategy
	Effectiveness of investments in networking improving, monetary units	Achieving forecast 1.39
	Average IA per partner, monetary units	Saving the average absolute growth at 6.40
Basic resource improvement: training specialists and managers, search and attracting new highly skilled professionals.	Networking financing, monetary units	Saving the average absolute growth at 10.04
	Effectiveness of investments in networking improving, monetary units	Achieving forecast 1.39
	Participation rate in innovation	Saving the average absolute growth at -0.01
Creation, development, modernization of high-tech products in accordance with the detailed study of the needs of industrial customers.	Effectiveness of research and development of new products, modernization and modification of the used products, monetary units	Achieving forecast 1.96
	Effectiveness of “intelligence” (study and search for new customers and new market segments), monetary units	Achieving forecast 6.23
	Participation rate in innovation	Saving the average absolute growth at -0.01
Employment and decent living standard of highly qualified professionals in the	Networking financing, monetary units	Saving the average absolute growth at 10.04

fields of the Partnership activity.	Average networking financing per partner, monetary units	Saving the average absolute growth at 0.53
	Reimbursements to the Partnership members for the provision of resources, monetary units	Achieving forecast 265,00

Graph 1 of Chart 7 lists the strategic objectives of network partnership, graphs 2 and 3, respectively, - the evaluation criteria and quantitative measurement criteria. The author has chosen the most important, in his opinion, at the time of the study criteria. Criteria for assessing the effectiveness and efficiency of networking are chosen from a set of indicators of the internal environment of the Partnership and financial activity criteria. In the future, the decision of choosing criteria will be taken by the network broker. The author allows the use all indicators, but he believes that in such case the system will be overloaded with information.

Direction 4 . Creating a network broker. The author proposes to delegate operational management of partners’ cooperation to a network broker - an independent business cost unit specially created for this purpose, the future member of the Partnership, under the leadership of one of the KPB. Funds for the maintenance of the network broker must be allocated from financing networking improvement. That network broker will manage the interaction of business stakeholders.

Direction 5 . Strengthening market development strategy by focusing of key players of business on marketing research and promotion of partnership products in new markets. This let fully realize such goals of a KPB-stakeholder as sustainable development of partnership and long-term cooperation which comply with the mission and strategic objectives of the Partnership. The author proposes to double the 2014 financing forecast from reserve for research and development of new customers and the search for new market segments by reducing investments.

Evaluating the proposals effectiveness of the author of the study.

To assess the effectiveness of the implementation of proposals to improve the management of network interaction, according to the author, the following indicators are to be used:

• a)    The coefficient of critical events . Its value should decrease annually which would indicate a lack of critical events in the Partnership over the past year (Chart 8), at the same time the main indicators of the internal environment and financial performance should not decrease. This would mean the effectiveness of the network broker activities to improve networking;

• b)    Author’s proposal to double the investment in searching for new markets as the most effective direction of development will lead to a change in financial index.

Proposed changes and results by the end of 2014 are shown in Chart 9. To assess the effectiveness of implementation of proposals the forecast for 2014 was made by extrapolating the trend. Forecast data were obtained with the rate of growth indicators. The recommended changes are highlighted in the last graph of the chart.

Chart 8 – Indicators of the effectiveness of implementation of proposals for improving network management technology partnership

Indicator	2014	2015	2016
Coefficient of critical events	1,8	1,5	1,3
Number of participants in the network partnership, participating in the production contracts, the average absolute growth	2,00	2,00	2,00
Number of participants in the network partnership, participating in R & D, the average absolute growth	0,50	0,50	0,50
Networking financing, the average absolute growth	10,04	10,04	10,04
Average funding of networking per one partner, the average absolute growth	0,53	0,53	0,53

It is proposed to divert funds from the least efficient investments (financial – 1 unit brought revenue of 0.16 units in 2013 - line 23) in searching for new markets (1 unit of investment gave effect to 4.33 units in 2013 – line 21). Thereby was made the attempt to adjust market development strategy towards strengthening. The last graph of Chart 9 shows the expected results based on the introduction of strategy adjustments.

Doubling of investments in new markets and consumers can lead to the following effects. IA is expected to increase (from 416.07 to 462.78), the structure of which will increase the share of revenues from sales of products, and the share of revenues from inefficient investments will decrease. Another positive consequence will be increasing of development reserve and of its sales share in new market segments.

However, for the development of the double new markets financing it is necessary to concentrate KPB efforts on a relevant strategic objective. This is possible if the network broker successfully implements other strategic objectives of the Partnership.

To assess the effectiveness of the implementation of proposals for managing network interaction in 2014 must use the values of certain financial indicators.

Sales cost of the Partnership products will increase at 46.7 monetary units with the introduction of proposals. Increase of development reserve will be 45.52 monetary units, increase will only achieved from sales in new market segments. Share of development reserve in general distribution benefits will increase at 15.73 monetary units.

Chart 9 – Financial indicators of implementation effectiveness of proposals for networking improving

Indicator	Forecast for 2014	Forecast for 2014 (with proposals )	Efficienc y of proposals
1 Sales costs of the Partnership products, monetary units	416,07	462,78	46,7
2 Income from investments, monetary units	12,20	11,00
3 Total revenue (cash) (total distributed profit), IA, monetary units (1+2)	428,27	473,79
4 Reimbursement of the Partnership for the provision of resources, monetary units	265,00	265,00
5 Development reserve, DR, monetary units (3 "-" 4)	163,27	208,79	45,52
6 including sales of traditional products, monetary units	72,71	72,71
7 Share of DR, % (6 "/" 5)	44,54	34,83
8 including Sales of new and converted products, monetary units	45,05	45,05
9 Share of DR, % (8 "/" 5)	27,59	21,58
10 including sales in new market segments, monetary units	45,50	91,02	45,52
11 Share of DR, % (10 "/" 5)	27,87	43,60	15,73
12 Development reserve, DR – share in IA, % (5 "/" 3)	39,24	45,12	5,88
13 Research and development of new products, modernization and modification of the used products, units	22,95	22,95
14 Share of DR, % (14 "/" 5)	14,06	10,99
15 Study and search for new customers and new market segments, monetary units	7,30	14,60
16 Share of DR, % (16 "/" 5)	4,47	6,99
17 Networking improvement financing, monetary units.	52,31	47,31
18 Expenditure on the network broker, monetary units		5,00
19 Investments, monetary units	74,20	66,90
20 The effectiveness of research and development of new products, modernization and modification of the used products, monetary units (8 "/" 14)	1,96	1,96

Indicator	Forecast for 2014	Forecast for 2014 (with proposals )	Efficienc y of proposals
21 The effectiveness of "intelligence" (study and search for new customers and new market segments), monetary units (10 "/" 16)	6,23	6,23
22 The effectiveness of investments in improving networking, monetary units (6 "/" 18)	1,39	1,39
23 Effectiveness of investments, monetary units (2 "/" 19)	0,16	0,16

Despite the fact that the author's research was conducted on a particular business network, its results can be used for any business associations built on the principle of network and partnerships. The key point in the control technology of such associations is the use of stakeholder methods and tools. In addition, according to the author, the study will promote stakeholder management as a political approach to the management of business systems aimed at solving the problems of coordination improving and control, unifying efforts, government determination and responsibility effective management development.