Business Management

MBA Essentials

Harald Meier, IfTQ-CERT Institute

• Publisher: Books on Demand
• Year: 2020
• Print ISBN: 9783751980449
• eBook ISBN: 9783752651157
• Edition: 1
• Topic: Business
• Subtopic: Management
• Index: Business

Any organization, private or public, profit or non-profit, requires effective management. Being a manager is nowadays a mass-profession - however, managers have often have not received systematic training.In this book, the essential basics of modern management are presented systematically and with practical examples. The focus is on the scope of action as a manager responsible on any hierarchical and process level. Step-by-step, from corporate policy and environmental dynamis through strategic planning, controlling and leadership up to organization, career models and self-managementtechniques.Target group are graduates and specialists who are systematically preparing for a new management position, e.g. in a General Management or an MBA program.

1. Corporate Policy and Management

• 1.1 Corporate Policy
  • 1.1.1 Economic Principles and Corporate Objectives
  • 1.1.2 Corporate Policy and Management
  • 1.1.3 Corporate Governance Process and Management
  • 1.1.4 Current and future Megatrends
• 1.2 Instruments of Corporate Policy
  • 1.2.1 Corporate Governance and Corporate Guidelines
  • 1.2.2 Stakeholder Survey
  • 1.2.3 Corporate Identity and Design
  • 1.2.4 Annual Report, General Meeting, Investor Relations

1.1 Corporate Policy

1.1.1 Economic Principles and Corporate Objectives

The Principle of Profitability (so-called economic principle) requires the best possible effort (e.g. costs) in relation to the benefit (e.g. yield). Traditionally it is differentiated:

• Maximum principle: achieve the highest possible return with a given effort (e.g. for private companies), or
• Minimum principle: achieve a certain return with the least possible effort (e.g. public sector, NGOs).
• The Optimum principle: social criticism today leads to the combination of these both approaches as a possibly favourable relation between Input (e.g. costs, resources) and Output (e.g. earnings, goods, services, sustainability).

Example Criticising the Principle of Profitability

Even the most successful entrepreneurs repeatedly question the sole maximisation of profits.

Henry Ford, already over hundred years ago, realized that doing business on the basis of making money is a highly uncertain thing (...) the job of business is to produce for consumption, but not for profit or speculation. Production for consumption requires that the quality of the production article is good and that the price is low – that the article in question serves the people and not only the producer.¹

In our times almost 200 of the leading US-entrepreneurs (e.g. from Apple to Pepsi and Walmart) are moving away from maximizing profits in a public statement. They distanced themselves from a pure shareholder-value approach by defining new principles of corporate management: … we know that many Americans have problems. Too often hard work is not rewarded and enough is not done to allow workers to adapt to the rapid pace of economic change. In the future, the focus will be more on investing in employees, in environmental protection and in fair and ethical dealings with suppliers.²

Even seemingly rational economic action is often based on incomplete information. It is not certain whether the goals or advantages later prove to be correct or sufficient, whether alternative approaches would have been more efficient, or whether the socio-political framework remains unchanged until the assessment. The Maximization of the individual performance as a guiding principle must also be viewed critically today, as it often leads to social problems (e.g. unemployment) or environmental damage.

Typical corporate objectives often relate to dimensions as performance (sales, market share, product quality), successes and finance (costs, profits, profitability, liquidity, investments) as well as individual (small businesses: e.g. subsistence economy, shareholders: e.g. power), and if applicable ethical goals (NGOs: non-profit).

In fig. 1.1 typical corporate policy objectives (e.g. profit and rentability) are operationalised step by step (example: production) from the general corporate to the individual workplace objectives.

Corporate Policy	Increase Profit and Rentability
Divisional Strategy	Production reducing production costs	Finance optimal liquidity	Sales ...
Department Objectives	Work Preparation reduce set-up times	Production cost reduction per unit	Maintenance extend maintenance phases
Team Objectives	...	3-shift 24/7 production performance bonus reduce drop-out	...
Workplace objectives	...	willing to do shift-work and overtime individual quality control reduce absent-time	...

Fig. 1.1: Operationalisation of Corporate Objectives

NGOs and Social Business

Non-Governmental Organisations (NGOs) primarily non-profit oriented (e.g. working in sectors like social welfare, human rights, nature and environmental protection, international development cooperation or cultural support and education). They must also be managed efficient in order to fulfil their mission in the interests of their sponsors. Accordingly, NGO-Management can be compared to traditional management in many areas: Differences are usually the criteria for success (quality, benefits, etc. instead of profit) and in some in functions as well, for example fundraising in marketing or in HR Management employment of volunteers.

Big NGOs often have profit-oriented subsidiaries (service, consulting, trade and retail) and transfer the profit into the parent NGO.

Example German Caritas

(see example chap. 5.2.3)

Cooperative and non-/limited-profit oriented businesses have a long tradition e.g. in Europe since the 1860s – e.g. as concept of production, trade or banks in form of a cooperative, in health care by public law or churches – and has been somewhat forgotten in the recent past or was a niche sector.

Social Business, structured like a traditional business organisation, is understood with the main inter-dependent features solving important social problems and the investors forego speculative profits following a double bottom line principle (economic thinking plus social impact).

Example FLOCERT GmbH

... est. 2003, based in Bonn/Germany, is a 100% subsidiary of the Fairtrade Labelling Organisation FLO e.V. as an independent audit and certification company for Fairtrade standards. In more than 120 countries FLOCERT works for more than 5,000 customers – from small producers in developing countries up to global resellers (as of 2019).

Because CSR programs in companies often are not really sustainable, there are more and more new approaches to social business are coming up in all industries, they differ from country to country due to national corporate and tax laws (for examples and differentiations see chap. 2.1.5 Ethics, CSR and S...

Table of contents

• Preface
• Notes
• Epigraph
• Table of Contents
• Figures
• Abbreviations
• 1. Corporate Policy and Management
• 2. Innovation and Corporate Trends
• 3. Strategic Management
• 4. Controlling and Leadership
• 5. Corporate Organisation and Constitution
• 6. Management Development
• Bibliography
• Index
• Copyright