Organizational Components That Explain Profitability as a Key Factor of Competitiveness: Colombian SMEs' Case

Organizational Components That Explain Profitability as a Key Factor of Competitiveness: Colombian SMEs' Case

Maria Teresa Ramirez-Garzon (La Salle University, Colombia), Rafael Ignacio Perez-Uribe (EAN University, Colombia) and Rafael Espinosa-Mosqueda (University of Guanajuato, Mexico)
Copyright: © 2020 |Pages: 28
DOI: 10.4018/978-1-5225-9425-3.ch002

Abstract

This chapter explains one of the hypotheses of the results of a basic research of the Ramírez-Garzón doctoral thesis entitled, “Organizational components that explain the profitability of Colombian SMEs,” which focused on the application of the Model of Modernization for organizational Management (MMOM) and the Return on Assets (ROA) in 144 Colombian SMEs. The chapter affirms there are organizational components that explain profitability in Colombian SMEs as a key factor for business competitiveness. The multiple regression analysis was used as a statistical method to correlate the organizational components of the MOMM and the ROA of those SMEs. It was found that the components that explain preferentially between 20% and 23% the profitability of the companies analyzed in light of the ROA are: strategic direction, production management, human management, logistics, and innovation and knowledge.
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Modernization Model For Organizations Management (Mmom)

The MMOM (Modernization Model for Organizations Management) is a management tool that allows to systematically carry out a situational analysis on how SMEs are with respect to the enforcement of modern management practices and on how close or far they are of being innovative and world-class companies (Pérez-Uribe, et al., 2013). It was designed by modules in accordance with the stages a typical company must surmount to cross the path that leads the organization to be modern and competitive, with the best management practices that helps it to achieve its entrepreneurial results.

Key Terms in this Chapter

Material Requirement Planning (MRP): The calculation of the net needs of the subsets, components and raw materials by periods, starting from the net needs by period of the finished products, that is, from the Production Master Plan (PMP). ( Velasco and Campins, 2013 , p. 123).

MMOM: For its abbreviation, it means Modernization Model for Organizations Management and it was created by the G3SMEs group of EAN. This model allows to know the situational analysis of SMEs regarding management and financial profile.

Pymes: Small and médium enterprises.

Analytical CRM: The software tools that help in the generation of analysis of data that come from the Operational CRM and/or other sources that supplement the information available on CRM ( Fernández and Navarro, 2014 , p. 26).

Customer Relationship Management (CRM): CRM can be understood as the implementation or improvement of the processes, organization and technology involved in maximizing the value of customers by means of the interaction of the company with the customer through any communication channel ( Fernández and Navarro, 2014 , p. 14).

Efficient Consumer Response (ECR): It is directed towards the improvement in meeting the real demand by customers, through an automatic stock replacement system at the sales points ( Pires and Carretero, 2007 , p. 126).

Entrepreneurial Resource Planning Systems (ERP): ERP is based on the premise that the production plans of the company should derive from the decisions of almost all the other parts of the company. This means that no functional area of a company must or should operate in an isolated manner. These systems generally use a common data base; therefore, the key information used to take decisions will be available to all key functions. The characteristics of ERP systems are that they must be integral -allowing all departments of the company to relate between them-, modular -roles divided by module: sales, materials, finance, production, etc.- and adaptable depending on the idiosyncrasy of each company ( Velasco and Campins, 2013 , p. 155).

Operational CRM: A software that supports entering information by different departments, that is, the creation of a new interaction, opportunity, customer, case, marketing campaign, etc. Overall, it is the software that supports the entrepreneurial interaction with customers.

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