Finances in the leather industry

Finances in the leather industry

The industrial sector in Iran is one of the main sectors of the economy and has a major share of GDP. Therefore, studying the effects of different economic variables on growth and investment in this sector can be important. Over the past decades, the role of financial markets in the process of economic growth has been widely considered. One of the most important challenges currently facing the leather industry is to provide the financial resources needed to perform legal duties and missions or the needs and demands of their customers.

The purpose of this study is to determine the components of infrastructure development of leather industry and to develop a suitable model for the development of infrastructure of Tabriz leather industry. The research questions are what are the components of the development model of the optimal infrastructure of the leather industry and based on the mentioned components, what model can be offered for the development of the optimal infrastructure of the leather industry? The research method is descriptive-survey. The research sampling method is systematic random sampling.

In this research, 120 questionnaires were used for analysis. The research method is library and field. Internet research data collection tool is all databases of international articles, interviews and finally the questionnaire. The results of reviewing a series of articles, related theories and interviewing the relevant components and indicators, components and variables of the research have been compiled.

Introduction

Financial resource management is the most important and sensitive function of an economic enterprise. Financial management is the management of resources and expenses. The purpose of management is to increase the value of the company and since the value of the company is crystallized in the stock price, it can be said that the purpose of financial management is to increase the wealth of shareholders. Successful implementation of this function requires a wide variety of information that is collected through close links with other functions of the firm. Data and information processed in the field of financial resources, on the one hand is the basis of management decisions for planning, implementation and evaluation of performance of all areas in the firm and on the other hand is the basis for monitoring and measuring firm performance by stakeholders (shareholders, auditors) is located.

In any business, capital is one of the most important factors of production and producers need to provide the necessary capital or financing to produce their product or service. In this regard, obtaining capital and financing to start a business and develop it has always been a serious problem for entrepreneurs and owners of manufacturing enterprises. Therefore, the ability of the firm to determine the potential financial resources to provide capital for investment and also to prepare appropriate financial plans is the main factors for the growth and development of a business. The development of a country’s industry requires a diverse set of strategies. But these strategies can be divided into a general category of firm management strategies and strategies surrounding the firm environment.

In the first category, strategies that are directly related to the performance of the firm are considered, such as strategies related to technology upgrades, labor laws, effective taxes on production, and the like. But in the second category, a set of strategies that oversee the firm’s marginal services are considered, such as transportation services, financing, raw material supply, and the like. One of the important services in this category is related to financing services that can play an important role in the activities of enterprises. Before entering into the financing problems of firms, it is necessary to point out that many of the problems of firms, which seem to be the cause of financing, are rooted in other cases and areas. This means that the existence of problems in other areas of the firm’s activity causes the firm to need more financial resources and to meet these excess needs to turn to banking resources and..

Naturally, the financing system is not able to meet this surplus need. For example, non-timely receipt of firm sales revenue due to inadequate market structure or high cost of production in the firm leads to an excess need for banking resources. The leather and leather industry has a long history before the arrival of the Aryans in Iran, and the industries that once had a global reputation in the field of leather production, in the current conditions of recession and alienation are experiencing. Dozens of lasting names left over from the leather industry are each the story of men who stacked their industrial units brick by brick to be a flag of pride and a symbol of empowerment, but these units, one by one, instead of witnessing increasing development. They become stagnant and industrial cemeteries.

The role of financial resources in the development of leather industry infrastructure

Financing of projects and projects and its forecasting is one of the most important issues that are less addressed and in some cases it is observed that without the necessary legal steps and project financing, the implementation of approved projects is started and preliminary operations are started to start executive actions. And consequently, they think about the required financial resources and seek approval because of the financial need. In general, for any useful activity, there should be a well-written plan. A plan in the form of operating budgets, cash budgets and capital budgets for a period of the company’s activity in all areas should be prepared by management accounting and then during the implementation of the mentioned programs based on obtaining reports of actual performance, necessary information to compare operations and program to guide And provide management guidance.

The provision of financial resources and its consumption or use in the firm requires comprehensive management, which is important in financial accounting. Cash flow control, calculation and payment of salaries and benefits of employees as the most continuous, complex and diverse type of payment are the main functions of financial accounting. Registration and maintenance of accrual accounts along with cash accounts in order to summarize the nature and amount of capital used in the firm as well as measuring capital changes due to performance for a period is one of the other main functions of financial accounting.

The activities of other areas of the firm around the axis of commodity circulation, including supply and supply, maintenance, consumption, production and sales after registration in the relevant functions are first controlled and evaluated in industrial accounting and then their results are reflected in financial accounting for registration. This research is a kind of basic as well as applied research and since the purpose of this research is to collect description, analysis and model presentation, it is a descriptive-survey research method. In any statistical study, the set of required elements is called society. In other words, society is a set of all possible observations that can be obtained by repeating an experiment (Amidi, 2011).

The statistical population of this research is all factories and leather production units of East Azerbaijan province and the respondents are the top managers of factories and leather production units of East Azerbaijan province. Collecting information from a part of the society is called sampling. (Amidi, 2011) The research sampling method is systematic random sampling. This method has been used because the list of all production units in the leather industry was available. The Cochran’s formula was used to determine the sample size. A statistical sample size of 169 people was obtained, and questionnaires were sent to 170 factories for convenience, of which 140 factories answered the questionnaire questions and 20 questionnaires answered were unusable because they were not fully filled.

In this study, 120 questionnaires were used. In this research, a qualitative and quantitative method has been used. In the first step, a qualitative method has been used to find variables and effective and key factors in the development of the industry and in the second step, a quantitative method has been used to prove that the selected factors and variables They have validity and reliability and have been selected and used correctly. Also, in the second step, the impact of each of the variables on the development of the leather industry (their impact coefficients) was identified. The method of studying the research is library and field. Internet research data collection tool is all databases of international articles, interviews and in the last stage of the questionnaire. In the library method, all dissertations, internal management articles, specialized articles in the leather industry, as well as database articles such as Emerald and Science Direct are used.

Research Findings

The present study seeks to develop the infrastructure of Tabriz leather industry and provide solutions for development. In this study, in order to collect information related to the development of leather industry infrastructure, a questionnaire consisting of two parts has been designed. The first part contains questions about the personal characteristics of respondents and the second part after reviewing the literature in previous articles and research. Using the interviews, 179 items were considered as effective factors in the development and improvement of the leather industry, which were divided into seven groups and evaluated on a 7-point Likert scale, which are: Human resources within Organizational, extra-organizational human resources, support, laws, technology, business relationships and innovation. Descriptive statistics of data in this chapter, we first examine the demographic variables of research (age, education, etc.).

The second part includes descriptive statistics of research questionnaire questions and in the third part, analytical statistics of research are presented. In the present study, in order to check the normality of the variables and determine the appropriate type of tests for data analysis, the Klomogorov-Sperenov test, which shows the normality of all research variables. Multivariate regression was used to test the proposed model and find a suitable model for the research. Mean comparison and analysis of variance tests have been used to influence demographic variables in response to questions related to research hypotheses. In order to accurately determine the gender of the sample, one of the questions of the questionnaire is related to this component.

As can be seen in Table 1, 118 people (98.34%) of the statistical sample of the study are men and 2 people (1.66%) are women, indicating that in the Iranian leather industry a very small number of female employees in this The industry is working, it also shows the fact that in this industry, unfortunately, female employees are not used. This can be due to the culture or the reasons for not educating women in this industry. Compared to the leading countries in the leather industry, which are often used in the final parts of the production process in the leather production of female employees (dyeing) , Sorting and packaging) which have a great impact on improving the quality of leather. Unfortunately, in the leather industry, women are at least used.

Table 1: Gender frequency of the statistical sample of the research
Relative frequency frequency Gender
98.34 118 Male
1.66 2 Female

In terms of education, statistical sample people are classified into 5 categories, the table below shows their status in terms of education level. As shown in Table 2, about 20.84 percent of people (25 people) have undergraduate education, 37.5 percent (45 people) have a diploma, 16.67 percent (20 people) have a postgraduate degree, 84 15% (19 people) have a bachelor’s degree, 6.66 percent (8 people) have a master’s degree and 2.5 percent (3 people) have a doctorate. Most of the statistical sample of this study had diploma education.

Table 2: Education rate of statistical research sample
Relative frequency Frequency education
20.84 25 High school
37.5 45 Diploma
16.67 20 Associate Degree
15.84 19 Bachelor’s Degree
6.66 8 Master’s Degree
2.5 3 Doctorate’s Degree

In terms of work experience, statistical sample people are classified into 6 categories, Table 3 shows their status in terms of work experience level. As can be seen in Table 3, out of 120 people in the statistical sample, 25% (30 people) have a history of service under 1-3 years, 25% (30 people) have a history of 4-7 years, 12.5% (15 N) had a history of 10-8 years, 14.16% (17 people) had a history of 11-15 years, 15% (18 people) had a history of 20-16 years and 8.33% (10 people) had a history of more than 20 years.

Table 3: Work experience of statistical research sample
Work experience Relative frequency
1-3 years 30 25
4-7 years 30 25
8-10 years 15 12.5
11-15 years 17 14.16
16-20 years 18 15
20 years and up 10 8.33

In terms of age, the statistical sample is classified into 6 categories, Table (4) shows their status in terms of age and Table (5) shows their status in terms of the number of employees in each production unit. According to the information in Table 4, 12.5% (15 people) in the age group of 20-30 years, 16.67% (20 people) in the age group of 30-40 years, 22.5% (27 people) in the age group of 40-50 years 31.67% (38 people) in the age group of 50-60 years, 12.5% (15 people) in the age group of 60-70 years and the rest were unanswered.

Table 4: Age of the statistical sample of the research
Age Frequency Relative Frequency
20-30 years 15 12.5
30-40 years 20 16.67
40-50 years 27 22.5
50-60 years 38 31.67
60-70 years 15 12.5
Unanswered 5 4.17

Table 5: Number of employees in each production unit of the statistical sample of the research
Number of personnel working in production units Frequency Relative Frequency
1-5 people 38 31.67
6-10 people 45 37.5
10-15 people 25 20.84
16-20 people 10 8.34
21-25 people 2 1.66
26 people and up 0

Most companies operating in the leather industry have less than 20 employees, which indicate the small size of production units. According to previous studies conducted in leading countries in the industry, the average number of employees is over 50 (World Trade Organization, 2010). After reviewing, interviewing and reviewing the research background, the researcher’s proposed model for this research is as follows:

According to the information collected through library study and interviews with leather industry experts, indicators were identified as influential factors in the leather industry, and considering that after collecting information through the initial test, the components were at the desired level. Factor analysis was performed. After changes in the research questions, the desired results were obtained. Table 6 shows that the proposed model is valid to explain the development of the leather industry.

Table 6: Degree of model validity
Model Summary
Model R R Square Adjusted R Square Std. Error of the Estimate
1 .994a .989 .987 .07637
a. Predictors: (Constant), TECH1, support and empowerment, human, buy and sell, rule, innovation, external

Result

In fact, one of the major problems posed by leather manufacturers is the problem of financing. This problem arises while considering the volume of investments and the amount of trade in Charmshahr, the question that arises is why the lack of financial resources in leather producers is at the top of their problems? The answer to the relevant question can be said that the problem is not the lack of liquidity resources; The answer to this question can be clearly found in the financial management and finance of leather manufacturers. An organization in which the upward growth of losses and accumulation of annual losses, loss of financial credit with banks and financial institutions, inability to collect a large part of the organization’s receivables due to annuality and lack of positive evidence to be followed, account inactivity The banking hub of the organization, which causes the inability of financial and facility maneuvers, cash purchase of required raw materials and sale of loans with repayment of several months, existence of accumulated obligations and accounts payable and stagnant from previous years to legal and natural persons, existence of many discrepancies in accounts The organization’s financial hub and failure to review profits and losses from book accounts, failure to calculate depreciation of buildings and devices from the establishment of units will not be considered and will not be better than the current situation and will move towards destruction day by day and obviously In the first step, production units must be organized in such a way as to provide a performance-efficient performance in the performance of their inherent duties in accordance with the above. In this regard, the first condition is to establish a balance of cash sales in financing.

Proposal

Proper financing is one of the most difficult and complex elements in the process of leather production units, which plays a very important role in setting up and developing leather production units. The various methods and approaches that exist in the field of financing, provide managers with numerous choices and decisions that can further complicate the process. Solving the essential problems of managers in the field of finance, requires knowledge and application of methods Financial engineering based on engineering assumptions, which is the practical application of mathematics or scientific principles in problem solving, uses tools that have a set of characteristics of risk and return and is widely referred to as technology. Provides finance to solve financial problems and take advantage of financial opportunities. The basis of financial engineering knowledge, financial economics or application of economics principles in stock market dynamics is specific to the design, pricing and risk management of financial contracts. With the development, complexity and diversity of business, the function of financial engineering has become very diverse. Financial sub-processes in business have become more complex and diverse. Business excellence and organizational excellence are the main goals of businesses in the field of business competition. Therefore, solving complex problems and predicting the future that will lead to organizational excellence, and this is in the group of solving complex financial problems, has been considered a necessity of the third millennium. Therefore, knowledge of financial engineering tools and the use of methods to evaluate the goods in question are considered business necessities and the globalization of the economy and markets.

Dr. Mohammad Dabaghi ​​Sadr

PhD in Strategic Management, Tabriz, Iran

Chairman of the Board of Sadra Leather Manufacturing

E-mail: mdsadr@yahoo.com

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