Enterprise in a Market Environment: A Double Tetrad Model

Abstract

System-based economic theory is a natural platform for the duality concept application in modeling and studying of economic systems. Aside from revealing the nature of economic events and showing regular connections between them, the analysis of duality also allows to develop methods to efficiently manage economic processes. This paper reexamines modeling methods of economic system performance. New approach uses double description method, via dual tetrads, one illustrative of intrasystem processes and the other exhibiting external interactions of the system. It is suggested that interactions between business and market are representable as production and implementation cycles. During the former, the initial batch of raw and producing materials are sequenced through object, environment, process and project subsystems of the enterprise. Then finished product enters implementation cycle and passes through object, environment, process and project subsystems of the enterprise’s external environment. Within this cycle the object subsystem represent the enterprise as a manufacturer; environment subsystem represents market environment for sales; process subsystem represents sales process; project subsystem represents delivery of products to the customer and transfer of revenue to the manufacturer. Production flow therefore loops through the stages of these cycles as a going concern, ensuring continuous operation of the enterprise conditioned upon coordination with market. The dual tetrad model allows to determine the roles of administration (with internal content being a controlled object) and marketing (where external environment is a controlled object) in the structure of enterprise management. This paper also analyses general patterns for identification of duality phenomena in system-based economic theory and mathematical economic models of business administration.

This article is an expanded report presented at the plenary session of the XX “Corporate Planning and business Development” Anniversary Symposium (April 9–10, 2019, Moscow).