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Overview
A wide gap still exists between Western concepts and their application in the ex-socialist countries during transition. Most Western models in financial management make assumptions about the efficiency and stability of markets and the signals that can be obtained and also assume that traditional accounting information is available and can be used for management purposes. A new paradigm is needed to manage the finance function in a transition economy experiencing hyperinflation since stamdard assumptions are not valid in most ex-socialist countries. This book describes the adaptations of financial techniques as it reviews standard financial concepts and tools, adjusts them when necessary to the unique conditions in the ex-socialist enterprises, and then presents the restructuring context and some strategies that are based on the application of these tools.
Synopsis
This book has a twofold objective. First, it adjusts traditional financial management tools to the needs of ex-socialist enterprises undergoing restructuring. Second, it presents a management approach to restructuring based on the strategic concepts of Porter combined with the restructuring experience accumulated in Central Europe and the former Soviet Union by individuals and institutions, including local and foreign consultants working with the World Bank. The dual focus is intended to make the book useful for persons engaged in restructuring and managing enterprises. The book reviews standard financial concepts and tools, adjusts them when necessary to the unique conditions in the ex-socialist enterprises, and then presents the restructuring context and some strategies that are based on the application of these tools. The legacy of central planning affects not only the financial accounting systems of the enterprise but also the decision-making and business strategy formulation processes. This includes an overly centralized management style with no delegation of authority. Many of the unique features of ex-socialist enterprises are caused by the simultaneous interaction of this legacy and macroeconomic instability (particularly, high, variable, and unpredictable inflation).