EQUILIBRIUM MODEL OF BUSINESS ARCHITECTURE USING PREMISES OF AGENT-BASED MODELING

Ioana Florina Coita ()
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Ioana Florina Coita: Universitatea din Oradea, Fac. de Științe Economice

Annals of Faculty of Economics, 2017, vol. 1, issue 2, 166-176

Abstract: Business strategy correlated with marketing and management actions are tested on the market. Their efficiency can be measured by looking at financial indicators. In order to be competitive on the market firms are striving to ensure values of financial results greater than the minimum threshold level of profitability. One way to achieve this goal is by correlating organizational structure of the business with its financial architecture. The need to find new ways of enterprise management that best fit the current economic context needs to create a link between financial structure of the business and its developmental goals. In this sense, the paper analyses the use of implementing project management as a solution to ensure company’s performance by adapting financial architecture to business strategic goals. Businesses are seen as a “fractal structure” made up of projects developed according to objectives planned. Firm’s have their own propensity to consume or to invest. Each propensity has its own specific implementation structure. Dynamic equilibrium of the firm is ensured between its investment projects and repetitive tasks that ensure continuity and survival of the business. Any risk appearing at micro level during project implementation is channeled into the business environment through agents’ constraint. According to agent-based modeling an organizational environment is made up of various agents playing different roles. Their decisions affect equilibrium of the firm, acting in according to various criteria and restrictions. Agents’ decisions are correlated to their objectives and degree of “risk tolerance”. Elements of fractal theory, game theory, econophysics, behavioral finance and agent-based modeling are powerful tools to measure and estimate the optimal business strategy to getting sound financial results. The paper develops a mathematical equilibrium model of a business that connects strategic and operational level to financial architecture taking into account the agents’ attitude to risk.

Keywords: strategic management; risk; agent-based modeling; fractals; propensity to consume/ invest; budget constraint (search for similar items in EconPapers)
JEL-codes: D92 L14 M21 (search for similar items in EconPapers)
Date: 2017
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