Thes “value†and “efficiency†terms in process management

I. G. Fedorov ()

Russian Journal of Industrial Economics, 2015, issue 3

Abstract: The concepts of value, utility, cost and efficiency in economic theory presenting both the backbone and discussion matter, still do not have a single interpretations, experts continue to argue about the relationships that exist between them. The process management widely uses the terms «valuable proposition», «the process created value», «value chain», «value creating flow». Often it remains unclear what kind of values the authors mean and how to evaluate it. The purpose of the transition to process management is interpreted as elevated efficiency, however, the focus on the quantitative assessment of the efficiency does not guarantee commercial success of the enterprise. The «effectiveness» term has many meanings. There arise a problem how to attach to the terms «value» and «efficiency» a consistent explanation where the applied meaning would not be contrary to the fundamental one , otherwise their use in process management would lead to confusion. The solution of this problem has great practical importance for the business analysts when the company plans to shift to process management. Without it will remain unclear what is the value for the consumer , how it is formed, how to analyze the process, how to discriminate work creating value and cost. Not understanding the nature of business performance, the analyst does not know how it can be controlled. The article shows that the classic process management rather freely uses the terms value and effectiveness, so that in each case one has to understand whichthe ultimate meaning lays in those concepts. It is proposed to separate the phase of business process modeling, where the technological process of production is prepared and which appears to be a key for overall economic impact, since it is exactly this stage where the standard cost-effectiveness of the business is created.

Date: 2015
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Persistent link: https://EconPapers.repec.org/RePEc:ach:journl:y:2015:id:452

DOI: 10.17073/2072-1633-2015-3-95-102

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