Lecture

1. Lecture Introduction to Business Economics University of Innsbruck — Wirtschaftsinformatik Winter term 2013/14 LV-Nr.: 437231 Lecturer: o.Univ.-Prof. Dr. Richard Hammer

2. Literature Relevant for Examination Führungsorientierte Betriebswirtschaftslehre 2., überarbeitete und aktualisierte Auflage Manz Verlag Wien ISBN 978-3-214-00452-1

3. Examination Mode 4 to 6 questions No multiple choice

4. Core Competencies of Management - The Management Cycle

5. The Basic Model by Mackenzie Hire qualified staff Creating a targeted framework HR allocation Organisation Management Focussing actions towards the target Defining Things Communicating target-performance comparison Humans Designing a target-system Ideas Analysing Elements Planning Basic functions Monitoring Functions Activities (Fig. based on Mackenzie 1969, p. 81)

6. Organisation target actual Planning Implementation/Leadership Including hiring procedure x Controlling Adjustments + Steering The Management Cycle (Fig. Hammer 2012, p. 99)

7. The Functional and the Institutional Management Approach Management Functional Management-functions Institutional Management-people Management includes all functions and acts of planning, regulating and controlling in order to create a target-oriented organisation and to control a system. All People and groups empowered to give directives and delegate. (Fig. based on Dillerup/Stoi 2006, p. 7)

8. Strategic decisions Top Management Middle Management Dispositionaldecisions Organising Lower Management Executing functions Selected Key Aspects of Management (Fig. based on Schierenbeck/Wöhle 2008, p. 113)

9. Corporate Planning

10. Basics, Definition and Characteristics • ………………………………………………………………… • ………………………………………………………………… • ………………………………………………………………… • ………………………………………………………………… • ………………………………………………………………… • ………………………………………………………………… • …………………………………………………………………

11. Content • ………………………………………………………………… • ………………………………………………………………… • ………………………………………………………………… • ………………………………………………………………… • ………………………………………………………………… • ………………………………………………………………… • …………………………………………………………………

12. Functions • ………………………………………………………………… • ………………………………………………………………… • ………………………………………………………………… • ………………………………………………………………… • ………………………………………………………………… • ………………………………………………………………… • …………………………………………………………………

13. The Time Dimension of Planning • ………………………………………………………………… • ………………………………………………………………… • ………………………………………………………………… • ………………………………………………………………… • ………………………………………………………………… • ………………………………………………………………… • …………………………………………………………………

14. Rolling Wave Planning Planning horizon Planningcycle 1 2 3 4 5 6 7 8 S L 1 S L 2 S L 3 S L 4 S L 5 S: Short-term Plan L: Long-term Plan (Fig. Hammer 2012, p. 109)

15. Planning Processes/Phases • Top-down The top management defines strategy, policy and vision. Subordinate levels break down the plan and execute it. • Bottom-up Planning is done by the lowest organisational units. They transfer the sub-plans to superior and coordinating levels – a master plan is created out of these sub-plans by the top management. • Mixed planning Combines top-down and bottom-up planning - the top management drafts conceptual plans which are given to the subordinate levels, where the plan is adapted and stated more precisely. In order to consolidate and integrate the plans they are sent back to the upper levels.

16. External and Internal Units Responsible for Planning Tasks (Fig. Hammer 2012, p. 113)

17. Planning Types Normative planning ­— — — Strategic planning ­— — — Operative planning ­— — —

18. Further Types of Planning • Long-term and short-term planning • Overall plans und area plans • Budgets, project plans, investment plans, financial plans, HR planning, etc. • Business plans, master plans • Etc.

19. Strategic Corporate Planning

20. Basics, Definition and Characteristics • ………………………………………………………………… • ………………………………………………………………… • ………………………………………………………………… • ………………………………………………………………… • ………………………………………………………………… • ………………………………………………………………… • …………………………………………………………………

21. Product Lifecycle Introduction Growth Decline Maturity 2 Legend Time of introduction Maximisation of revenue Possible recovery of the revenue due to e.g. product improvement Initial loss (development costs) Break-even point Maximisation of profits Re-entry in the loss area 3 Revenue 6 Profit 1 5 7 Year increasing profit decreasing profit 4 (Fig. Hammer 2011, P. 126)

22. Product / Market Lifecycle – Cash Flow Profile Cash inflowCash outflow Cash-inflow Cash-flow Development of theproduct Product / Market life cycle Introduction (Fig. Hammer 2011, p. 128)

23. Stars Question-marks 22 % 20 % 18 % 16 % 14 % Market growth 12 % 10 % Cash Cows Poor Dogs 8 % 6 % 4 % 2 % 0 1.5x 10x 4x 2x 1x 0.5x 0.4x 0.3x 0.2x 0.1x Relative market share Boston Consulting Group Growth-Share Matrix (Fig. based on Hedley 1997, p. 348)

24. G. E./McKinsey Multi Factoral Analysis Value creation 67 High 100 Industry attractiveness Funds commitment Consumption of resources 33 Medium Funds decommitment 0 Low 0 Low 33 Medium 67 High 100 Relative business strength Manage selectively Invest Harvest or divest (Fig. based on Hörschgen et al. 1993, p. 140)

25. Business Plan - Content • Executive Summary • Initial strategic position • Mission statement of the corporation • Analysis of the corporate culture • Strategic target portfolio • Cash-flow development • Risk analysis • Synergetic effect • Checking the validity of the strategy for each strategic business unit (SBU) • Corporate strategy / Timing • Organisational analysis • Development and allocation of resources • If-Then plans • Financial evaluation of the strategic plan • Budget und three- or five-year plan • Strategic controlling • Action schedule

26. Company Organisation

27. Basics, Definition and Characteristics • Organisation is an instrument for carrying out plans • Organising is objective-oriented and rational • Organisation regulates the cooperation between people and tangible means • An Organisation is an artificial structure • Organising is a task of the management The company • is an organisation, • has an organisation and • is organised.

28. The Ideal Degree of Organisation Success of organising Optimum Smax Too little organising Too much organising Ropt Organisational degree of rationalisation (Fig. based on Kieser 1981, p. 72)

29. Objectives of the Company Organisation • Metal-level Objective: • Contribute to fulfilling the object of the company • Sub-objectives: • Increasing productivity • Increasing flexibility and adaptability • Increasing the security of the people associated with the organisation • Increasing the maturity level of the people associated with the organisation

30. Sub-objectives (1) • Increasing productivity • Avoiding duplication of work • Avoiding idle capacities and bottlenecks • Distinct different areas of competencies and tasks clearly • Routinisation of work procedures and information procedures • Prevention and reduction of tensions and conflicts between the employees • Defining behavioural expectations demanded from the employees • Increasing flexibility and adaptability • Increasing innovation capacities • Supporting creative work with certain tools and work techniques • Data acquisition concerning possible product alterations (e.g. Product development, product improvement) • Gathering of information and information distribution

31. Sub-objectives (2) • Increasing the security of the people associated with the organisation: by shielding the job situation from uncertainty • Distinctive way of dividing tasks • Clear determination of means of monitoring • Build up mutual trust • Transparency concerning the performance assessment • Increasing the level of maturity of the people associated with the organisation: by creating organisational conditions that support the self-development of the employee concerning the job • Implementing the management by delegation concept step by step • Gathering information in terms of education and training possibilities for employees • Creating a leeway (in decision-making) • „Monitoring results instead of checking the progress!“

32. Structure of the Company • Vertical structuring • Single-line system • Multiple-line system • Line-and-staff organisation • Horizontal structuring • Functional structure • Divisional structure • Matrix structure • Project structure

33. Single-Line System Corporate Management Procurement Production Sales Administration (Fig. based on Hammer 2012, p. 192)

34. Multiple-Line System (Fig. based on Hammer 2012, p. 193)

35. Line-and-Staff Organisation Corporate Management Staffposition Procurement Production Sales Administration Staffposition (Fig. based on Hammer 2012, p. 194)

36. Functional Structure Corporate Management R&D Production Sales Finance & accounting Procurement (Fig. based on Hammer 2012, p. 195)

37. Divisional Structure Corporate Management Division trucks Division automobile Division motorcycle Production Sales Administration Procurement (Fig. based on Hammer 2012, p. 197)

38. Matrix Structure Corporate Management Sales Marketing Administration Procurement Production Region A Region B (Fig. based on Hammer 2012, p. 199)

39. Lean Organisation – Intention and Characteristics A lean organisation is committed to its customers and tries to minimize the traditional organisational structure in order to create a slim and neat organisation, which is fast in adaption and adjustment and easier to manage. To create a lean organisation, certain measures have to be implemented: • Reduction of hierarchical levels • Only as much positions as necessary • Optimal filling of vacancies • Competitive costs of the organisation

40. Implementation and Leadership

41. Definition and Characteristics The employee is concerned with and affected by the implementation. Distinction between: • Employee-focused leadership • Task-focused leadership Tasks of Leadership: • Information • Communication • Delegation

42. Aspects of Authority Legal basis Institutional and formal authority Organisation of the company Social rules Professional knowledge Sources of authority Professional authority Leadership capability Taking care of employees Personal authority Integrity Assertiveness (Fig. based on Thommen 2009, p. 969)

43. Traditional Styles of Leadership • Paternalistic • Charismatic • Authoritative • Bureaucratic • Participative • Democratic

44. Effective style of leadership (F1 to F4) Situational Leadership Theory High F 3 F 2 Style of leadership of the manager Participating Selling Supportive behaviour Delegating Telling Low F 4 F 1 Directive behaviour Low High Individual development level High Medium Low (Abb. in Anlehnung an Hersey/Blanchard 1992, S. 92) D 4 D 3 D 2 D 1

45. Management Techniques Management byapproaches Principles for solving the delegation problem Target-oriented and result-oriented principles Management by Exception Management by Objectives Management by Decision Rules Management by Results Management by Delegation (Fig. based on Hammer 2012, p. 222)

46. Control and Controlling

47. Definition and Characteristics • The last task in the circular flow of management. • Planning without monitoring and control is useless. • It is necessary to assess the effectiveness of action steps taken by the management in order to reach the objectives of the corporate goal. Following tasks: • Target/Actual comparison • Performance evaluation • Variance analysis • Reporting Are requirements for: • Adjustments • Steering Kinds of control • Operational control • Strategic control + Controlling

48. Controlling (=Managerial Accounting) and Leadership

49. Controlling – Definition • Controlling does not only mean control and monitoring, • it is concerned with providing information in order to meet and reach the objectives - mainly the profit objective - of the corporation by guiding and regulating the in-company procedures.

50. What does Controlling mean? Set objectives Controlling as circular flow and steady process of learning Action planning Take countermeasures Variance analysis Target/Actual comparison