Theoretical Aspects of Modern Qualitative Methods for Crisis Management

Abstract

Scientists agree on necessity to predict and timely detect a company crisis that is an integral part of business nowadays. The early identification of a company financial failure due to rapidly changing social, economic and environmental conditions is a topic of growing importance. The sooner a potential financial failure can be identified, the more effective and efficient the anti-crisis measures could be implemented. If a company financial failure could be predicted accurately, it might be possible for the business to be restructured, thus avoiding the failure. This would benefit the owners, shareholders, employees, creditors, and others interested alike.

The modern economic literature provides varied crisis diagnosis methods, mostly based on an analysis of key financial ratios. Less attention is paid to qualitative methods. Therefore, the present research aims to examine modern qualitative methods for company crisis diagnosis (prediction) in crisis management theory.

The research used the theoretical findings of foreign scientists and Internet resources. The research employed the following methods: analysis and synthesis, induction and deduction, the monographic method, document analysis and the graphic method.

The paper provides definitions of main terms related to company failure prediction and a description of general qualitative models of company financial failure (bankruptcy) prediction.