engleski

Early Warning Systems- An International Comparison

Objectives: The role of early warning systems consists in revealing weak signals, transferring important information about environmental changes, preventing business crisis, and constructing a creative base for timely and appropriate response. The aim of this paper is to explore the role and importance of early warning systems in companies from an international perspective. We investigate what level companies of selected EU-countries have achieved concerning the implementation of early warning systems, by whom early warning systems are used and for what reason companies abstain from implementing early warning systems. Furthermore, we follow the question whether early warning systems are predominantly operative and short-term oriented instead of strategic and long-term-oriented in business practice. Data and methods: For this purpose an empirical research was conducted in companies in Austria, Croatia, and Greece. The survey was conducted during the year 2010. A total of 126 duly completed questionnaires, i.e. 16 from Austria (94% rate of return), 31 from Greece (89% rate of return) and 79 from Croatia (8.78% rate of return) were returned. The results obtained were processed in SPSS. Results: According to the results of our survey, the most frequently implemented early warning systems include liquidity indicators, operative planning and deviation control, and financial and development analysis. Altman’s Z- score and PESTLE analysis are less prominent. According to our results, 60% of the companies have implemented some kind of early warning system ; one to four employees usually work on the early warning system tasks. The main reasons for not implementing early warning systems are the shortage of employees for following and analyzing indicators, too complicated procedures of implementation and integration of strategic early warning systems into existing systems, the lack of management initiatives and skepticism towards the use of financial report indicators for disclosure of negative/positive trends in the company as well as in the environment. The main users of an early warning system are board members and the top management (83%), followed by department managers and the middle management (70%). Conclusions: On the basis of our results we conclude that companies are predominately oriented towards the operative business. However, they are also aware of the need and the importance to extend the perspectives by integrating the strategic and normative dimension. Recommendations arising from these results in particular relate to challenges in education and know-how as well as an increase in the awareness for the need of an integrative business management that balances between operative, strategic and normative business orientation.

Early Warning Systems ; Operative and Strategic Indicators ; Management ; Austrian ; Greek ; Croatian companies

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