ABSTRACT
Larger enterprises, however, required a major broad-brush as well as a technical restructuring because, having been created and developed under a centralized planning system, their structures and systems were fundamentally inappropriate for surviving in a competitive economic environment. The constant threat to production targets from shortages of inputs also predisposed enterprise management towards large, self-sufficient, vertically integrated units. The centrally planned economic system and its chronic shortages stifled the incentive for enterprises to develop new products, conduct systematic market research or invest in advertising, promotion and building brands. In command economies, financial management was underdeveloped. Management of an enterprise’s financial resources was essentially a record-keeping exercise in order to account to the central authorities for the way capital and credit had been used to meet plan targets. In the typical state-owned enterprise, the cadre of top management was appointed by the state bureaucracy, usually with little attention paid to the appropriateness of the professional skills of the manager concerned.
