An Introduction into Business Administration and Organization of Publishing Companies

1. An Introduction into Business Administration and Organization of Publishing Companies Cairo, December 3rd- 5th 2008.

2. How You Will Lead your Publishing Company Organizationally and Economically into A successful Future!! By the „End of the Day (Workshop)“ you should have an impression on:

3. I What you have learned so far and what is still to come II Economical Basics 1. What is Business Administration about 2. Components of Decision Making 3. The Relevance of Organization for Acting economically 4. Tasks to be coordinated 5. Business Organization as a Means of Optimizing Business Performance III Basics of Organizational Theory 1. Basics of Organizational Theory 2. What is structural organization 2.1 Organization as a structured entity 2.2 Structural Organization versus Process Organization 2.3 Line Organization 2.4 Divisional Organization 2.5 Matrix Organization 2.6 Organization of a Publisher 2.7 Excercises I & II Table of Contents (1)

4. 3. Organization Described as a Process 3.1 Questions to be asked while optimizing processes 3.2 Visualization of a Business Process 3.3 Possible way of Optimizing Processes 3.4 Phases of Optimizing your Process 3.5 How the Process of an Order reaching you Process Organization is visualized 4. Process Organization of a Publisher 4.1 Excercise III & IV: IV Integrated Publishing Information System (IPIS): Connecting Information and Organization 1. Often seeked information in daily work 2. Often met situations in publishing companies 3. Goals of an IPIS 4. Summary of Goals 5. Additional uses of IPIS 6. Possible structure of a System 7. Components of IPIS 8. A publishers production process 9. Strategic Programm-Planning 10. Steps of realiziation Table of Contents (2)

5. V Organizational Management Principles 1. Centralization vs. Decentralization 2. Management by delegation 3. Management by exception 4. Management by objectives 5. Excercise V VI. Financial Reporting for Corporate Governance Purposes 1. Examples 1.1 Balance Sheet, Profit and Loss Account 1.2 Precalculation sheet for an Author´s Right to be Purchased 1.3 Comparing your Fiscal Year with the Previous Year and your Business Plan 2. What is accountancy 3. Purposes of Accountancy 3.1 External Recipients of Information 3.2 Internal Recipients of Information 4. Focus of Information 4.1 Usually externally focused information 4.2 Usually internally focused information 5. Balance Sheets 5.1 Purpose of a Balance sheet 5.2 How to understand a balance sheet Table of Contents (3)

6. 5.3 Comparisson of assets and liablitlities 5.4 Balance Sheet Positions 5.5 The Reliance of Balance Sheet Information 5.6 The Connection between a Balance sheet and a Profit and Loss account 5.7 Balance Sheet of a Big company 5.8 Excercise VI: Set up a balance sheet for a newly founded company 5.9 Depreciation 5.10 The Profit and Loss Account 5.11 The Profit and Loss account of a Publishing Group 6. Excercise VI: Find out about the influence of the Balance sheet to the P&L Account and vice versa VII Financials and the Balance Sheet 1. Financial Rules 1.1 Vertical Structural Rule 1.2 Golden Rule of Financing 1.3 Golden Balance Sheet Rule 2. Types of Financing 2.1 Internal and External Financing 2.2 Owner´s equity and Loans 2.3 Interdependencies between the 2 3. Planning your monthly liquidity 4. Exercise VII Table of Contents (4)

7. VIII Figures and Ratios of Profitability 1. Examples 2. The Purpose of figures of probitability 3. Productitvity 4. Economic efficiency 5. Profitability 6. Return on Investement 8. What may they really tell us 9. The Balanced Score Card: Multiple Goals 10. Exercise VIII IX Internal Accounting is Cost Accounting 1. The purpose of Cost-Accounting 2. Three perspectives of Cost-Accounting 3. Cost types 4. Payments, Expenses, Costs 5. The differences between direct (variable) and overhead (fix) costs 6. Distinguishing direct costs and overhead costs 7. Direct cost: the principle of causation 8. Overhead costs 9. Cost Centre Accounting Table of Contents (5)

8. 10. Contribution Margin Accounting 11. The Break-even Analysis 12. Contribution Margins: a permanent ex post calculation, example of a publisher 13. How to keep your stock under control (it ties up your capital) 14. Visualizing the different importance of your book segments: revenues, contribution absolutely and % 15. Exercises IX 16. Scenarios of Precalculation X Planning 1. What needs to be planned 2. Reasons for planning XI Excercises Table of Contents (6)

9. Marketing for Publishers Sales for Publishers Programmplanning:A Strategic Approach Production of Books Organization of a Publishing Company The Business Administration Tool Set Projectmanagement I. What you have learned so far and what is still to come

10. What Business Administration is about Components of Good Decision Making The Relevance of Business Organization for Acting Economically Tasks to be coordinated Business Organization as a Means of Optimizing Business Performance II. Economical Basics

11. Money- and Capitalmarkets Equity (Eigenkapital) Dept capital (Femdkapital) Capital contribution (Einlagen) Withdrawal (Entnahm.)profits credits Pay backs interest Accountancy Finanancials Financial Purchase market Sales market Money, cash Manage- ment stockunfini-shed products Employess Personal „Produc-tion“ Sales of products Other companies Machines Inventory Combina-tion of factors Stock of finishedproducts House holds, privats Material Current assets Taxes Fees Etc. Contributions subentions Government Flow of goods Flow of finances

12. Resources are Scarce! You need to d e c i d e on best possible allocation of rare resources! (Economic principle: Reach maximum output with given resources or reach a given goal with minimum input.) Decision Making always is a choice among alternatives! Evaluation of alternatives depends on correct and good information! Business Administration is the art of providing adaquate information and taking good decisions! The ultimate goal is to act economically: to maximize profits or minimize losses (non profit organizations)! 1. What is Business Administration about?

13. There is internal and external information necessary to take good decisions Sources of internal information are: up-to-date information -flows between departments. Historical financial data including fiscal resources Decision Makers´ evaluation of future market development Sources of external information are: Knowledge on marketconditions, both: sales and purchase Fiscal matters (taxes, fees, ...) Financial Information (Owners Capital, Banks, Insurances, Investors) Market data as to development of Consumption, Competition, income available Relevant themes for publication of books Development of New Media 2. The Components of Good Decision Making

14. To act economically you at least need to provide the following basic resources: MONEY provided by revenues, bank, owners, supplier-credits PERSONAL to fulfill all tasks and to carry the know how of transforming „material“ into goods (books): lecturers, sales personal, logistics, bookkeeping, … 3. The Relevance of Business Organization for Acting Economically (1)

15. INVENTORY: machinery, computers, offices, … STOCK finished products and „raw material“: Rights, Books, … These resources need to be transferred into an efficient internal and external process, This is the task of BUSINESS ORGANIZATION. 3. The Relevance of Business Organization for Acting Economically (2)

16. The following tasks need to be coordinated for the Business participants to interact economically: Managing including Planning, Organization, Controlling, Supervision Financing getting the money for operations (back) Investing getting the tools/ rights necessary to operate Purchasing getting the current assets to operate Warehousing getting material (digital data) and products (books) stored Producing getting the rights into a sellable book,e-books, licences Selling finding and stimulating your customers and sell to them advertising and marketing Transporting getting your books to the customer 4. Tasks to be coordinated

17. In order to make the „economical priciple“ reality it is necessary to use the information listed above. Business Administration is to collect, organize and communicate this information to all decision makers, respectively, in order to achieve your strategic goals at the best possible. The quality of your achievements, however, highly depends on how strategic goals are postulated and communicated into your publishing company. 5. Business Administration as a Means of Optimizing Business Performance

18. III. Basics of Organizational Theory • 1. Basics of Organizational Theory • 2. What is structural organization • 2.1 Organization as a structured entity • 2.2 Structural Organization versus Process organization • 2.3 Line Organization • 2.4 Divisional Organization • 2.5 Matrix Organization • 2.6 Organization of a Publisher • 2.7 Excercises I & II • 3. Organization Described as a Process • 3.1 Questions to be asked while optimizing processes • 3.2 Visualization of a Business Process • 3.3 Possible way of Optimizing Processes • 3.4 Phases of Optimizing your Process • 3.5 How the Process of an Order reaching you Process Organization is visualized • 4. Process Organization of a Publisher • 4.1 Excercise III & IV

19. 2. What is structural Organization There is no enterprise possible without organization. Organization ist the total of all rules, the management fixes in order to run a publishing company. These rules have to be followed while realizing plans. These rules determine what happens in a company in formal processes, giving concrete instruction to the members of the company. Al-Qahira, Dec. 2 –Dec. 5 2008

20. Giving a structure to a company is to fix responsibilities. A hierarchie is determined by Setting up hierarchies/ departments/ Positions fixing rules of cooperation and competencies Explaining who reports to who thus organizing information and product flows. 2.1 Organization as a structured Entity

21. 2.2 Structural Organization vs. Process organization • The structural organization contains all rules which are relevant for the production process. They are „independent“ of time, they reflect to the structure of the company. • Structural organization fixes all positions within a company, i.e. determining tasks of each employee in respective departments. • Structural Organization is visualized via Task plans for employees, job discriptions, functional diagrammes Al-Qahira, Dec. 2 –Dec. 5 2008

22. 2.2 Structural Organization vs. Process Organization • Process Organization fixes, what has to be done and in what order. It is to optimize the workflow • It is visualized via processdiagrammes working rules. Prior view is laid upon the business process of optimally, (as to the economic principal) putting out the products • A business process is dependently showing the interaction of tasks to be fulfilled in order to reach the company´s output. The business process therefore is determined by the need to reach the anticipated customers´ requirements, i.e. to publish books, which well can be sold. Al-Qahira, Dec. 2 –Dec. 5 2008

23. 2.3 Prototype: Line-Organization

24. Executive officers Chief publishing officer Chief Financial Officer Chief Sales and Marketing Officer Lecturing fiction Lecturing Non fiction Chief Accountancy Chief Controlling Chief Sales Chief Marketing 3 1 2 3 4 1 2 4 1 2 3 4 Lecturers bookkeepers Sales Advertising 2.3 The Line-System Al-Qahira, Dec. 2 –Dec. 5 2008

25. Organization Management Secretaray , Press Development Publ. Director Financial Director Law and Business Administration ChiefFiction Chief Non Fiction Accountancy Sales Market exporation etc. 2. 3 Line and Staff Organization Al-Qahira, Dec. 2 –Dec. 5 2008

26. 2.4 Prototype Divisional Organization

27. Management Staff Management Fiction Management NonFiction Management Audio PurchaseRigths Editorial Productions Personal Sales Marketing Financial 2.5 Matrix-Organisation Publishing Lines (objectorientiation) Al-Qahira, Dec. 2 –Dec. 5 2008

28. 2.6 Typical Structure of a Book Publisher

29. Fix four groups. Each group put down an organizational model (the structure), the group-members are working in, using either one of the organizational model presented before. Put your draft down on a flipchart. Explain how your company, as to your impression, is organized. Time: 30 minutes 2.7 Exercise I: Structuring entities

30. Please discuss in 4 groups the Pro´s and the Con´s of the before presented organizational forms. Present your results. Time 15 minutes 2.7 Exercise II: Pros and Contras of Organizational forms

31. You may also describe „organization“ in means of a workflow, a process, putting down which tasks need to be fulfilled in their temporay and local order. Designing processes you need to optimize speed and distances thus making the economical principle subject to the work flow. 3. Organization described as defined Process of „How to“

32. How do we proceed today? May we Are are Is Do we May we save responsibilities systems workflow Keep Data save Time? Clear? Clear? Efficient? Twice? Money? 3.1 Questions to be asked while optimizing processes

33. --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- --- 3.2 Visualization of a Business process Product Development Presales Sales Execute After Sales Customer Customer Process view Service / Support F u n c t i o n a l V i e w

34. 3.3 Possible ways of optimizing processes Integrated processes Department- and company-wise Clearify your Business processes Make processes easier Methods for Optimizing processes Short Indepent workflows Parallelizeof dependent processes Optimize Segmentation Integrate tasks into One if possible optimize(de-)centralization Clear definition Of responsibilities

35. Fix Strategy and Business Goals 01 develop your 05 Plan results Non fiction strategy And forecast for next years Realize your Goals and Strategy 04 Invest into new segments 02 Purchase rights of 07 organize sales Book segments to be covered Organize printig Market Market 03 Buy licenses customers 08 customers Organize stock and logistics 09 Build up organization Control Strategy and Goal achievements 06 Establish a current Reporting on goal achievements feed back 3.4 Phases of Optimizing your Process

36. 3.5 How the Process of an Order reaching you Process Organization is visualized Dataview Product (1,n) ist assigned Belongs to (o,n) (o,n) (1,n) Offer to order Productionplan customer customer Functional view order Fiscal ist Technically feasible Fiscal check. o.K. Come in Technical check Company Financials IT Sales Organizational View Resources Al-Qahira, Dec. 2 –Dec. 5 2008

37. 3.6 Processual Organization of a Publisher

38. What steps in terms of general (not detailed) activities does it take you, to publish a book, including the final decision, to take it out of your programme. Consider the life cycle of the right, (not only the book), and different distribution channels. Join to groups of 4. Please list at least 20 steps. Please put down, who is responsible for the steps, respectively and maybe also, who she/he/they is (are) interacting with. Take 30 minutes to put it down and be prepared to present (10 min.) 4 Exercise III: Please design the workflow of your Company in total while exploiting a publishing right

39. 3.5 Exercise IV: Please design the detail workflow for a task you choose, for example • Purchasing • paper, • a right, • Printing-services • Delivering a book to a Retailer • Preparing your presence to a fair • Collecting money from your customers • Please list at least 10 steps for the activity you chose. • Remember to put down, who you interact with • Take 15 minutes to put it down and be prepared to present (5 min.)

40. 1. Often seeked information in daily work 2. Often met situations in publishing companies 3. Goals of an IPIS 4. Summary of Goals 5. Additional uses of IPIS 6. Possible structure of a System 7. Components of IPIS 8. A publisher´s production process 9. Strategic Programme-Planning 10. Steps of realiziation IV Integrated Publishing Information System (IPIS): Connecting Information and Organization

41. VI. The integrated Publishing Information System iPIS Concept to Economize information flows and raising efficiency in Publishing Companies Concept for a systematical analysis of profit contributions of titles, rights, customers and employees by using such information in the every-day´s publishing-work.

42. What profit contribution comes from a certain title, author, genre or lable within a certain period? Did our expectations in revenues, sales or profit fulfill in a certain period of planning/ of our precalculation? How much may you offer as a guarantee for a certain author´s right? How did certain segment of publishing develop over the time in respect of revenues and profits? How is the today state of our next season´s programmes, are there gaps to be filled in your next book programme? 1. Often seeked information in daily work (1)

43. What profit contributions stem from certain regions, customers, Chains, Sales people, Lectureres How „risky“ are certain authors, single titles, programme segments in respect of stock and guarantees paid? How may I systematically incorporate market know-how or know-how from market exploration into determining future programme? Is there a systematic influence of certain factors like cover design, colour, prizing to be recognized concerning sales? How is work in progress for certain titles? 1. Often seeked information in daily work (2)

44. 2. Often met situations in Publishing companies • Difficult or impossible aggregation of data, belonging together, low flexibility, differred keeping of data. • Heterogene IT-systems. • Software-programming is too expensive. • Information flow between departments isn´t satisfying. Redundances in raising and keeping data, not up-to-date, many mistakes possible. • Decision making via tummy and seldomly based onreliable statistical data. • No transparency on Profit-Contributions of certain market-, programme- or sales-segments, of marketing -acitivities. • Planning of seasonal programmes often not systematically enough. Not enough inclusion of market factors, which determine succes of publishing-work.

45. While getting a Publishing Information System into existence, up-to-date Information , which is important for decision-making and production purposes should be available at any time. Double work will be reduced, quality of decisions will become better, Programme-planning will gain more transparency earlier and processes will be speeded up. Before set into action, processes and responsibilities need to be fixed. It therefore ist necessary to analyze processes and interfaces in process-organization. Helpfull may be an instrument, showing operations and consequencies of changes. This means, too, that optimizing processes and integration of strategic programme-planning becomes to be a permanent task. In order to always be able to decide, you need a direct grip on contents of production and editing, which ideally also should be usable in Internet (CMS: Content Management System): bookcovers, flap copy (Klappentext), information on the author should also be usable for sales folders. Audio- and Video-data should as well be available as the manuscript (totally or in parts): E-books. 3. Goals of an IPIS

46. The Goal of implenting a Integrated Publishing Information System is to integrated processes and data realize transparency on work in progress integrate information flow between the departments Gain transparency on profit contributions of products, customers and employees, Assist and speed up the decission making process. include employees into profit sharing Assist all business processes and thus reach Higher Economical Success System users are all the employess who need to take decisions in their daily work! 4. Summary of Goals

47. Data-keeping is free of redundancies and up-to –date. Optronically archived contracts as well as editorial data (Cover, flap copies (Klappentexte), Bookreviews, informationen on the author). Negotiation: always be able to look at data of historical pre-calculation. Always be able to look at authors´/ genres success in the past Higher quality in decision making helps save guarantees. 5. Additional Possibiltes of Using an iPIS (1)

48. Up-to-date transparancy on work in progress of different product forms (HC, AudioBool, PB, Licences) in departments: Editorial, Production, Coverdesign, Marketing und Sales. Always available: news on economical development of a Right and early possibility to intervene, if not satisfactory Periodical Plan/ Actual/ Previous Year comparisson on any level of aggregation: Right, Title, Author, Customer, … Aid in strategic programme planning (see below) Systematically using advances to an author so far not paid in. First Priority: Adaquacy to the User and Easy to Handle 5. Additional possibilities of Using an iPIS (2)

49. 6. The possible structure of the System

50. 7. Components of the total system