Diagnosis management aims to identify critical situations and positive aspects of corporate management. An effective diagnosis made by a team with the status of independence from the organization’s management is for managers a useful feedback necessary to improve performance. The work presented focuses on the methodology to achieve effective diagnosis, considering multitude criteria and variables to be analyzed.diagnosis criteria and variables, levels of diagnostic, qualitative and quantitative analysis

Mihaela Ciopi OPREA

English

Research Papers in Economics

The Annals of “Dunarea de Jos” University of Galati  
Fascicle I – 2009. Economics and Applied Informatics. Years XV – n
o 2 - ISSN 1584-0409 
 
 
  155
 
Consideration Regarding Diagnosis Analyze of 
Corporate Management 
 
Mihaela Ciopi OPREA 
mciopi@yahoo.com 
“Petrol Gaze” University of Ploieşti 
 
Abstract  
Diagnosis management aims to identify critical situations and positive aspects 
of corporate management. An effective diagnosis made by a team with the 
status of independence from the organization’s management is for managers a 
useful feedback necessary to improve performance. The work presented focuses 
on the methodology to achieve effective diagnosis, considering multitude 
criteria and variables to be analyzed. 
 
Key words: diagnosis criteria and variables, levels of diagnostic, qualitative 
and quantitative analysis. 
 
JEL Code: M10 
 
1. Introduction 
 
The role of diagnostic analysis is to provide a qualitative overview of the overall performance 
of  corporate management and to identify actions for improvement. These actions are aimed at 
removing the causes that have generated negative aspects. Efficient diagnosis made by a 
competent team with the status of independence from management activities of the 
organization, is for managers a useful feedback necessary to improve performance.  
 
The literature review diagnosis was addressed different aspects such as general diagnostic of 
the organization, business diagnosis, diagnosis of human resources, financial and economic 
diagnosis, and diagnosis of technical and scientific potential. A diagnosis of managerial work 
was done by George Bailesteanu in his Diagnosis and assessment firm. Also, Ovidiu Nicolescu 
and Ion Verboncu in his management of the organization and redesigning the organization, 
address the diagnosis management system, as the steps in professionalism of Corporate 
Management. 
 
The purpose of this paper is to present a methodology allowing a fair and objective evaluation 
of business management within the organization. In this regard, the content of the paper will 
focus on qualitative and quantitative analysis of diagnostic criteria identified. 
 
2. Objectives and diagnosis criteria  
 
Purposes of the diagnosis performance management are: assessment strategies and company 
policies, organizational structure, decision-information system, methodology and system 
efficiency achieved in the organization. 
In order to conduct a review as objective diagnostic criteria to determine the following: 
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  Capacity management team to develop competitive strategies and policies; 
  Efficiency of the organization activities;  
  Quality substantiation decisions; 
  Quality information system;  
  Using the systems, methods and managerial techniques appropriate profile of activity;  
  Social responsibility and business ethics;  
  Competence and managerial skills; 
  Leadership and management style;  
  Efficiency and effectiveness of management. 
 
Each criterion is individualized by specific diagnostic variables or indicators. 
Figure 1 shows synthetic scheme of management diagnosis. 
 
 
Fig.1. Diagnostic scheme management 
 
To effectively analyze the proposed criteria, the diagnostic team to collect process appropriate 
information in the following documents: 
  Regulation of organization and functioning  
  Organizational  
  Contract Management  
  Strategies, goals and company policies  
Plans and 
programs 
Contract 
management 
Strategies, 
objectives 
policies
Financial 
Results 
Documents to gather information 
Competitive 
strategies and 
policies 
Efficiency of the 
organization 
activities 
Quality 
substantiation 
decisions
Information 
system 
Methods and 
managerial 
techniques 
Diagnostic criteria 
Top 
Management 
Tactical 
Management 
Operational 
Management 
Diagnostic Levels 
Strategies and guidelines 
Social 
responsibility 
Competence and 
managerial skills 
Leadership 
Organizational 
R.O.F 
 
Management 
style 
Efficiency and 
effectiveness The Annals of “Dunarea de Jos” University of Galati  
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  Production Programs  
  Investment programs (feasibility studies, business plan) 
  Plan expenditure 
  The expenditure reduction 
  Company’s financial results 
 
Also, and effective diagnostics should take into account the existence of three levels of 
management with specific targets: the top management, tactical management and operational 
management. 
 
Analysis of diagnostic criteria was made taking into account the different approaches to 
management organization current social and economic conditions. 
 
3. Capacity management team to develop competitive strategies and policies 
 
A proper foundation of strategies and policies makes long-term survival of the organization in 
terms of a very dynamic environment. In a globalize market, competitive, sometimes affected 
by strong instability, such as a financial crisis, managers must be able to find viable solutions 
based on strategic alternatives to reduce costs or restrict activities. With a stable environment, 
with a trend of increasing strategic alternatives should be focused on developing products, 
markets and implementation of investment projects. 
 
In this respect, managers should know the principle of navigational change that requires 
updating the continuous adjustment of the initial plan, depending on changes in environmental 
conditions. 
 
In term of diagnosis management, analysis of this criterion focuses on practical issues: 
  Existence of coherent strategy based on a through SWOT analysis and forecasts economic, 
technological, commercial; 
  Existence of company policies in key areas of activity: commercial, research, investment, 
production, personnel, financial; 
  There is a specialized compartment of planning-programming models using prospective 
research 
 
4. Efficiency of the organization activities  
 
The organization aims to identify, classify and group activities imposed by achieving mission 
and goals of the organization, to determine the quantity and quality of resources to be used. 
However, the organization provides the authority and responsibility to perform the tasks 
incumbent on the organization’s human resources, establish and maintain relationships 
between them. 
 
Variables analyzed in this criterion are: 
  Suitability to the specific business organization chart and the correlation between its 
content and the actual situation; 
  Interaction between compartments; 
  Share hierarchical; 
  Degree of structuring the tasks, duties, responsibilities and powers stations, offices and 
departments; The Annals of “Dunarea de Jos” University of Galati  
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  Updating the rules for organizing and running, the descriptions of functions and positions; 
  The degree of organizational flexibility; 
  Specific focus on organizational change people’s behavior. 
 
5. Quality substantiation decisions 
 
Taking into account the requirements necessary decision in the context of many changes in 
contemporary economics, may be considered appropriate analysis of this criterion in terms of 
the following variables: 
  Degree of decentralization of decision-making authority which examines in close 
correlation with firm size and degree of diversification of activities: 
  Using modern methods for optimizing decision-making  in conditions of certainty, risk and 
uncertainty, such as simulation methods, linear programming technique, utility theory, 
game theory; 
  Ability foundation of the major decisions concerning the market, investment decisions 
(feasibility studies) relations with financial and banking organizations. 
 
6. Quality information system 
 
From the perspective of its criteria, the diagnostic team should consider the following: 
  Use of information technology within the firm and creating specialized IT department; 
  Ensure functionality for management information system; 
  The implementation and use of decision support system, consisting of: database company, 
a user database and all data processing computer applications; 
  The database company; 
  Knowledge of the company on national and international developments; 
  The ability to communicate information flows with other firms. 
 
7. Using the systems, methods and management techniques  
 
Management methods and techniques used within the organization to ensure efficient work. 
For large and medium organizations it examines the application of modern management 
systems such as management of projects, management by exception. Diagnostic team also will 
examine to what extent they used a series of management techniques currently applied by 
performing companies, such as: business plan, SWOT analysis, business games and 
management simulation. 
 
8. Social responsibility 
 
Areas of social responsibility have a very wide area of coverage, aimed at environmental 
issues, consumers, employees, society as a whole. Managers need to take social responsibility 
activities as required by law and a series of voluntary actions that could have long term 
positive effect. It is necessary to strike a balance between the objectives of productivity and 
profitability on the one hand, and needs, the whishes of employees on the other hand. Clearly, 
managers need to assume social obligation to all business partners (Table 1). The partners are 
all those persons or groups who are directly or indirectly affected by decisions taken within an 
organization.  
 
 
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Table1. Social obligations of managers towards business partners 
Partners  Social obligations to Partners 
Shareholders/Owners of the 
company 
Increase business value 
Suppliers of raw materials  He development of fair business 
Banks and other lenders  Credit refund under commitment 
State Institutions 
 
The rule of law state institutions 
Employees and unions 
 
Providing safe working conditions and fair negotiations with 
union representatives 
Consumers  Providing safe products, approved and certified 
Competitors  Fair competition and compliance with trade restrictions 
Local communities and society 
as a whole 
Avoiding business practices that harm the environment 
 
9. Management style 
 
Management style is a key factor influencing the organizational communication and employee 
motivation. In this regard, the literature emphasizes that the following management styles:  
  Authoritarian style I, characterized by the top decision- making organization with no any 
communication with employees; 
  Authoritarian style II, the manager requests information from subordinates but takes he 
decision alone, subordinates may or may not be informed about the situation; 
  Advisory style I, characterized by consulting members of the decision-making in solving 
problems, but ultimately, decisions are taken by managers without considering the views of 
subordinates. 
  Advisory style II, the manager and subordinates meet in groups to analyze problems but the 
decision is taken by the manager. 
  Participatory style in which managers and subordinates as a group problem-solving 
approach, with evaluating alternatives and establishing decisions by consensus.  
 
Obviously such an approach remains purely theoretical, practical experience demonstrating the 
need to address contextual style of management (and management process), taking into 
account the characteristics of subordinates. For example, if a decision must be taken within a 
very short time, the most effective style is authoritarian. 
 
Modern management theory and practice have proven efficiency of a participatory 
management style mainly because employees become more productive if participants are 
considered not only the objectives but also to establish their determination.  
 
Analysis of management in terms of this criterion can be a highly subjective and is vulnerable 
to environmental changes. Testing employees on the basis of a questionnaire and statistical 
processing of responses could provide a solution for assessing the degree to which 
management style applied to different levels of the organization’s leadership is strength or a 
weakness for analysis. 
 
10. Competence and managerial skills 
 
It is increasingly evident that, under current conditions, a good manager must not only have 
adequate professional knowledge but also the ability to take risks, capacity for analysis and 
synthesis, intuition, imagination, ability to communicate and establish relationships business 
partners, the ability to listen and guide. The Annals of “Dunarea de Jos” University of Galati  
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Also, each level of management requires specific skills. At top management level prevailing 
conceptual skills that requires the ability to perceive the organization as a whole to understand 
how different business functions interact and complement each other, how the environment 
result in changes in the organization. 
 
At the tactical management, human skills prevail, focusing on attitudes, communications, and 
development of relations between people. Operational management needs mainly technical 
skills, the ability to apply expertise in enforcement techniques and procedures work. 
 
11. Efficiency and effectiveness of management 
 
Management efficiency is resulting from how the organization's total resources are used to 
obtain as high productivity. Managerial efficiency is measured by a series of financial 
indicators such as: economic profitability of sales, cost, and return on assets.    
Analysis of these indicators can be both dynamic, monitoring changes over a longer period of 
time and also compared with competitors, to indicate the position in relation to them and guide 
development strategy. 
Also, contract management may determine the annual values of managerial performance 
criteria expressed by the following indicators: 
  Rate of profit; 
  Profitability measures; 
  Recovery time; 
  Period short-term debt repayment;  
  Stock rotation;  
  Labor-productivity; 
  Share of wages in production costs;  
  Potential growth / development company 
Managerial effectiveness refers to using its resources to achieve objectives. From this 
perspective, assess the following indicators: the degree of realization of investment program, 
the degree of achievement of planned production, employment costs to the amount planned the 
implementation of cost reduction program. 
 
12. Evaluation of diagnostic criteria 
 
Evaluation of diagnostic criteria may be both qualitatively and quantitatively.  
Qualitative assessment is done by classification criteria / diagnostic variables under the 
positive or negative, resulting matrix strengths-weaknesses of Corporate Management. 
 
Table 2. Example of matrix strengths-weaknesses of Corporate Management 
Strengths  Weaknesses 
1. Rates of profit recorded a growth trend 
2. The major decisions on market simulation 
techniques used in business and games  
3. In the company there is a department with 
responsibilities in developing strategies. 
 
1.Relations between compartments are 
"broken”.  
2. There is no test of managerial skills on the 
three levels of management. 
3. The investment program has achieved 80%. 
4. There are tensions in relations with unions 
5. Implementation of tactical and operational 
decisions is "cumbersome”. The Annals of “Dunarea de Jos” University of Galati  
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Qualitative assessment can be extended by analyzing the cause-effect. Each strength or 
weakness is the result of the action of a sum of factors coming from internal or external 
environment of the organization 
 
Such analysis is useful in so far as the factors that have generated strong points can be 
extrapolated into the future and the causes for the weaknesses can be removed. For example, 
an increase in the rate of profit can result from implementing a cost reduction program.  
 
Quantitative assessment is done by awarding scores on a scale of 1 to 5 according to the degree 
of fulfillment of criteria (table 3). 
 
Table 3. Assign scores to the degree of fulfillment of criteria 
The degree of fulfillment of 
criteria 
Score 
Pi 
Very poor  1 
Weak 2 
Average 3   
Well 4 
Very well  5 
 
Each variable or diagnostic indicator to rank with a weighted Ki, which determined by 
comparing successive two diagnostic criteria, associating the matrix ║A║ = ║anm║. The 
values of this matrix are 0, 1, 2 and 4 in corresponding with the situation presented: 
– 1, if the criterion is as important as other; 
– 2, if the criterion is more important than the other; 
– 4, if the criterion is more important than the other; 
– 0  in all other cases. 
 In according with these values weighting coefficient Ki is calculated with relation 1. 
 
    Ki = 
∑∑
∑
nm
nm
n
nm
a
a
      ( 1 )  
 
Scores awarded for each criterion is weighted by the coefficient Ki, by summing up resulting 
in an overall point Pg (relation2). 
Pg =  ∑ Ki ·Pi              (2) 
Overall score obtained can be interpreted as follows: 
•  Pg ≤ 2 reflects a critical situation management 
•  2<Pg≤ 3,5 reflects a critical situation with the prospect of recovery by taking corrective 
actions 
•  3,5<Pg≤ 4,5  -good situation 
•  Pg > 4,5 -situation very well (performance management) 
 
13. Conclusion 
 
Increased profitability and sustainability of organizations, regardless of the profile of activity, 
are determined by the ability of managers to adapt to national and international realities in the The Annals of “Dunarea de Jos” University of Galati  
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contemporary world. Establishment of competitive strategies and policies, quality of decision 
making, access to information, social responsibility and work style are the defining elements 
for the practice of management, under frequent changes in the external environment of 
organizations. 
 
This paper aimed to establish a methodology to allow the fullest development of a diagnostic 
management. In addition, the methodology we presented practical methods of analysis for 
each diagnostic criterion. It is clear that changes in management theory and practice will 
determine the future reconsideration of diagnostic criteria and variables. 
 
Furthermore, quantitative analysis provides managers the opportunity to self-assess their own 
work in relation to a reference level and to determine distances to be covered up to the level of 
performance management. 
 
References 
1. Băileşteanu , Gh., - Diagnosticul şi evaluarea firmei, Ed. Mirton,1994 
2. Certo , S., - Managementul modern, Ed. Teora, 2002 
3. Coroian Stoicescu, C., - Bazele fundamentale ale managementului, Ed. Universităţii din Ploieşti, 2004 
4. Nicolescu , O., Verboncu, I., - Managementul organizaţiei, Ed. Economică, 2007 
  

Bazele fundamentale ale managementului, Ed. Universităţii din Ploieşti,

Diagnosticul şi evaluarea firmei,

Consideration Regarding Diagnosis Analyze of Corporate Management

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Consideration Regarding Diagnosis Analyze of Corporate Management

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