Work

Characteristics of the Prerequisites and Socio-economic Necessity for Diversifying Enterprises' Activity

Year: 2025

Type: article

Abstract: The relevance of this study stems from the complex financial and economic challenges businesses face during wartime. The research aims to identify the factors and reasons that necessitate the diversification of enterprise activities and to elucidate its significance for society. The advantages of diversification were evaluated during the study, and potential reservations regarding its implementation were examined. The key findings included identifying factors necessitating diversification during wartime, such as the migration of regular consumers abroad, disruptions in established supply chains for resources and product sales, changing consumer needs, and damage or destruction of property.Additionally, the study highlighted diversification's main benefits to enterprises, including risk reduction, enhanced competitiveness, and improved financial health. It is emphasized that diversification plays a crucial role in stabilizing the socio-economic situation in the region by expanding job opportunities, reducing unemployment, providing essential goods and services to the population, and increasing tax revenues. The study argues that enterprises with a closed production cycle can achieve less loss-making and risky operations. Additionally, an analysis of the performance indicators of retail enterprises revealed a 25.7% decrease in sales volumes in 2022 compared to 2018. The types of activities of a retail enterprise specializing in the production and sale of cosmetic and pharmaceutical products were analyzed, and it was proposed to supplement these activities with new initiatives to enhance production self-sufficiency. An assessment of the effectiveness of each proposed new activity was conducted, leading to the formulation of an optimal diversification plan that combines two new types of activities with the lowest implementation risk.

Source: Financial and credit activity problems of theory and practice

DOI: 10.55643/fcaptp.3.62.2025.4728

Authors: Oleg Hlushko, Yuliia Drozdova, Serhii Bai

Institution: State University of Trade and Economics

Language: English

Topic: Economic Issues in Ukraine

Subfield: General Economics, Econometrics and Finance

Field: Economics, Econometrics and Finance

Domain: Social Sciences

SDG: Decent work and economic growth

Open Access status: gold

Estimated APC paid: $500