Business model of the 'FED' company

There is a postulate in economy: any joint stock company performs better than any state-owned. Since 1990, the 'FED' state corporation has become the 'FED' joint stock company. This offered a number of advantages:

  • the company has free access to external markets;
  • JSC is more flexible in decisions taking which valued, in the first turn, by the Western partners;
  • JSC has an easier access to cheap long-term credits ('FED' is a vivid example of being trusted by the Western banks);
  • capital stocks are used more extensively which results in increase in the products output by 2-2.5 times when the number personnel is less compared with a similar state-owned enterprise.

The 'FED' company business model shows the ability of working effectively in complex economic conditions.

the company has free access to external markets
 
flexibility of decisions taking
 
access to cheap long-term credits
 
the volume of output is 2-2.5 times higher with a smaller number of personnel.

The 'FED' company gross output per one worker is virtually comparable with European performance. The company has reached the European and North American average level of gross output. In the company this factor – 50 thou. euro per one employee. By way of comparison, average level for Ukrainian enterprises – a little more than 2,000 euro.

50
thou. euro per year
 
Average volume of gross output per one 'FED' employee
2
thou. euro per year
 
Average volume of gross output per one working person in Ukraine

The cost of main machines in the 'FED' company – 500-600 thou. euro. These are heavy investments, plus instrumentation equipment, outfit – this doubles the cost of equipment.

The company operates 24/7, which requires minimum 4 operators for each machine. The system of training highly qualified personnel is continuous one. Therefore, the process of technological renovation has been underway for 7 years already. Each year the company buys up to 10 units of equipment. The total investments volume for the last 5-7 years totaled 50 million euro.

working mode
24/7
1 machine —
4 operators
machines cost 500-600 thou, euro

Within recent years about 1,000 people are employed in the company. The ratio of white and blue collars – 1:1 This ratio considers not only machine operators but cleaners and top management. This is a very competitive ratio. For example, at a state-owned enterprises this ratio – 1:4. That is, one machine operator per three-four 'bystanders'. This is, undoubtedly, inefficient and uncompetitive ratio.

1,000 employees
White collar
1:1
Blue collars
STATE-OWNED COMPANY
White collar
4:1
Blue collars

The company develops at huge rates, virtually doubling the output. Each 3-4 years we create up to 100 high-tech jobs. The cost of one job – 50 thou. euro net of cost of purchased capital equipment .


Within the recent 4 years, the 'FED' invests 35% in the development: 10% - in the new equipment and technologies, and 25% - in the innovations. This solution starts to pay off: labor productivity has increased, and consequently, commercial product output, and all this is reflected in the prospective development, since it allows the company to plan activities for the years ahead. The present growth rates which are the result of technical upgrading, well-thought of marketing policy, dealing with customers – all these make the company confident in the future growth prospects.

10%
35%
25%
in the new equipment and technologies
Each year, the 'FED' invests 35% in the development:
in Research and Development