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

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Lecture

Lecture

Introduction to Business Economics

University of Innsbruck — Wirtschaftsinformatik

Winter term 2013/14

LV-Nr.: 437231

Lecturer:

o.Univ.-Prof. Dr. Richard Hammer


Literature relevant for examination

Literature Relevant for Examination

Führungsorientierte Betriebswirtschaftslehre

2., überarbeitete und aktualisierte Auflage

Manz Verlag Wien

ISBN 978-3-214-00452-1


Examination mode

Examination Mode

4 to 6 questions

No multiple choice


Lecture

Core Competencies of Management -

The Management Cycle


The basic model by mackenzie

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)


The management cycle

Organisation

target

actual

Planning

Implementation/Leadership

Including hiring procedure

x

Controlling

Adjustments + Steering

The Management Cycle

(Fig. Hammer 2012, p. 99)


The functional and the institutional management approach

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)


Selected key aspects of management

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)


Lecture

Corporate Planning


Basics definition and characteristics

Basics, Definition and Characteristics

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Content

Content

  • …………………………………………………………………

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Functions

Functions

  • …………………………………………………………………

  • …………………………………………………………………

  • …………………………………………………………………

  • …………………………………………………………………

  • …………………………………………………………………

  • …………………………………………………………………

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The time dimension of planning

The Time Dimension of Planning

  • …………………………………………………………………

  • …………………………………………………………………

  • …………………………………………………………………

  • …………………………………………………………………

  • …………………………………………………………………

  • …………………………………………………………………

  • …………………………………………………………………


Rolling wave planning

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)


Planning processes phases

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.


External and internal units responsible for planning tasks

External and Internal Units Responsible for Planning Tasks

(Fig. Hammer 2012, p. 113)


Planning t ypes

Planning Types

Normative planning

­—

Strategic planning

­—

Operative planning

­—


Further types of planning

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.


Lecture

Strategic Corporate Planning


Basics definition and characteristics1

Basics, Definition and Characteristics

  • …………………………………………………………………

  • …………………………………………………………………

  • …………………………………………………………………

  • …………………………………………………………………

  • …………………………………………………………………

  • …………………………………………………………………

  • …………………………………………………………………


Product lifecycle

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)


Product market lifecycle cash flow profile

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)


Boston consulting group growth share matrix

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)


G e mckinsey multi factoral analysis

G. E./McKinsey Multi Factoral Analysis

Value creation

67 High100

Industry attractiveness

Funds commitment

Consumption of resources

33 Medium

Funds decommitment

0 Low

0 Low

33 Medium

67 High100

Relative business strength

Manage

selectively

Invest

Harvest or divest

(Fig. based on Hörschgen et al. 1993, p. 140)


Business plan content

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


Lecture

Company Organisation


Basics definition and characteristics2

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.


The ideal degree of organisation

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)


Objectives of the company organisation

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


Sub objectives 1

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


Sub objectives 2

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!“


Structure of the company

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


Single line system

Single-Line System

Corporate Management

Procurement

Production

Sales

Administration

(Fig. based on Hammer 2012, p. 192)


Multiple line system

Multiple-Line System

(Fig. based on Hammer 2012, p. 193)


Line and staff organisation

Line-and-Staff Organisation

Corporate Management

Staffposition

Procurement

Production

Sales

Administration

Staffposition

(Fig. based on Hammer 2012, p. 194)


Functional structure

Functional Structure

Corporate Management

R&D

Production

Sales

Finance &

accounting

Procurement

(Fig. based on Hammer 2012, p. 195)


Divisional structure

Divisional Structure

Corporate Management

Division trucks

Division automobile

Division motorcycle

Production

Sales

Administration

Procurement

(Fig. based on Hammer 2012, p. 197)


Matrix structure

Matrix Structure

Corporate Management

Sales

Marketing

Administration

Procurement

Production

Region A

Region B

(Fig. based on Hammer 2012, p. 199)


Lean organisation intention and characteristics

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


Lecture

Implementation and Leadership


Definition and characteristics

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


Aspects of authority

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)


Traditional styles of leadership

Traditional Styles of Leadership

  • Paternalistic

  • Charismatic

  • Authoritative

  • Bureaucratic

  • Participative

  • Democratic


Situational leadership theory

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


Management techniques

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)


Lecture

Control and Controlling


Definition and characteristics1

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


Lecture

Controlling (=Managerial Accounting) and Leadership


Controlling definition

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.


What does controlling mean

What does Controlling mean?

Set objectives

Controlling as circular flow and steady process of learning

Action planning

Take

countermeasures

Variance

analysis

Target/Actual

comparison


Basic functions of controlling

Basic Functions of Controlling

  • Controlling and monitoring function

  • Planning function

  • Coordination function

  • Information function

  • Communication function

Functions of a Controller

  • Planning function

  • Supervising function

  • Reporting function

  • Accounting and tax function


Controlling in t erms of control

Controlling in Terms of Control

  • The Controller is a supportive and advisory part of the management.

  • He provides the management with data and information relevant for planning and making decisions

  • and is focusing his work on contributing to the planning process.


Controlling a functional view

Economical conscience of the corporation

Controlling – A Functional View

Controlling

Documentation and acquisition of data

Planning function

Control and steering function

Monitoring function

1.Documenting the efficiency of accounting

2.Creating an accounting framework that fits the purpose of the company (e.g.: Profit-Centers)

3.Installing informative accounting procedures within the firm

4.

Acquisition of date for special cases (intercompany comparison, investment analysis, … )

1.Monitoring plans, their practicability and feasibility

2.Target monitoring

3.Target/Actual

comparison

4.Analysing results

5.General activities(such as creating bench marks).

1.Developing target-oriented master plans

2.Advising function during the definition of targets

3.Coordinating various sub-plans

4.Monitoring external trends and effects

5.Mind bottlenecks, think forward-looking

1.Monitoring planning targets

2.Variance analysis and taking necessary countermeasures

3.Stimulus for innovation

4.Continuous reporting

5.Analysing figures in order to support the decision making process

All together it means creating a variety of instruments that are concerned with acquiring and processing data

in order to ensure the realisation of the company-goals.

(Fig. based on Horváth 2001, p. 105)


Controller job description example

Controller – Job Description (Example)

  • Preparing periodic financial statements, including budgets, cash flows, variance analysis and commentaries.

  • Providing a support service by working with all departments and the management team to help make financial decisions.

  • Informing about key strategic decisions and formulating business strategies.

  • Advising on the consequences of business decisions.

  • Interpreting and communicating financial data.

  • Monitoring and evaluating financial information systems and suggesting improvements where needed.


Controlling tools

Controlling Tools

  • Different kinds of budgeting

  • Indicators and indicator systems

  • Break-Even-Analysis


Business indicators

Business Indicators

Business indicators

Indicators

Indicator systems

Basic indicators

Financial ratio

Traditional indicator

systems

Value drivers

(Fig. Hammer 2012, p. 246)


A selection of controlling indicators 1

A Selection of Controlling Indicators (1)

=

=

x 100

=

x 100

=

=

x 100

=

=

x 100


A selection of controlling indicators 2

A Selection of Controlling Indicators (2)

=

x 100

=

=

x 100

=

x 100

=

x 100


Break even analysis

Break-Even-Analysis

Sales/Costs

Sales

Profit

Total costs

Loss

Variable costs

BEP

s

Fixed costs

Volume

v

(Fig. Hammer 2012, p. 253)


The cash flow and its corporate importance

The Cash Flow and its Corporate Importance

  • The cash flow is a tool to measure the difference between liquid assets at the beginning and at the end of an accounting period.

  • Contrary to the income statement only transaction directly impacting liquid assets are included in the cash flow calculation.

  • Hence the cash flow is used to determine:

    • The internal financing within the company,

    • The profit situation of the company.

  • Which revenues and expenses are excluded from the calculation depends on the parameter analysed.


Cash flow calculation 1

Cash Flow Calculation (1)

How the cash flow is calculated:

Net profit

+ Non-cash expenses

- Non-cash revenue

Cash flow I

The cash flow I shows the added value during the last base period.


Cash flow calculation 2

Cash Flow Calculation (2)

If the cash flow is used as an indicator for internal financing , it has to be adapted in order to show the correct amount of liquid assets.

Cash-Flow I

-Personal drawings

+Private investments

Cash Flow II


Cash flow example

Cash Flow Example


Cash flow solution

Cash Flow Solution

Net profit

+ Non-cash expenses

- Non-cash revenue

= Cash Flow

48.000,-

125.000,-

33.000,-

144.000,-


Lecture

Core Areas of Business Economics - Operational Areas


Core areas of business economics

Core Areas of Business Economics

Corporate Management

Operational areas of the companyin the narrower sense

Marketing and

distributive trade

Production management

Materials management

Financial management

incl. investment budgeting

Human resource

management

Accounting

(Fig. based on Hammer 2012, p. 255)


Operational areas of the company

Operational areas of the company

Materials management

Production management

Marketing and distributive trade


Functions and tasks of the materials management

Functions and Tasks of the Materials Management

Materials management

Procurement

Management

Distribution

Material- disposition

Procurement-Marketing

Material inspection

Purchase

Regional warehouses

Execution

External transport

Material 1

Material 2

…….

Storage

Inventory Management

Internal transport

(Fig. Hammer 2012, p. 257)


Methods and models of the materials management

Methods and Models of the Materials Management

  • Models of material requirement:

    • Deterministic

  • Stochastic

  • Methods of material categorisation:

    • ABC analysis

    • XYZ analysis

  • Optimisation models for order size and point-in-time,

  • Models for selecting suppliers,

  • Indicator systems.


Abc analysis

100

90

80

70

C-goods

60

50

B-goods

Percentage of total value

40

30

A-goods

20

10

0

10

20

30

40

50

60

70

80

90

100

Percentage of total items

ABC Analysis

(Fig. Hammer 2012, p. 260)


Economic order quantity

Economic order quantity

Costs

Tolerance range

CTotal

CS

CO

Xopt

Order quantity

(Fig. Hammer 2012, p. 261)


Strategic approaches of the materials management

Strategic Approaches of the Materials Management

(Fig. Hammer 2012, p. 264 et seq.)


Functions an tasks of the production management

Functions an Tasks of the Production Management

- Product development/design- Long and short production planning

Planning

- Managerial structure- process design, quality management

Organising

- Staff employment- Production control

Implementation/Execution

- Controlling

Controlling

(Fig. Hammer 2012, p. 266)


Short medium and long term production planning

Short-, Medium-, and Long-Term Production Planning

Problem and decision areas

Take in account:

Long-term production planning

  • Product / market strategy

  • Strategic goals

  • Degree of diversification

  • Financing needs

  • Risks

- Width - Depth- Quantity

Medium-term production planning

  • Production capacities / bottle necks

  • Labour requirements

  • Production costs

  • Stage of industrial application

  • Width - Depth- Quantity- Make or buy decision

Short-term production planning

  • Sales budget

  • Production budget

  • Customer requirements

  • Production batch- Production schedule- Capacity plan- Production control

(Fig. Hammer 2012, p. 268)


Production techniques

Production Techniques

Production Techniques

Correlating the amount of the single products

Correlating the products in terms of quantity and type

Assignment of workplaces

Degree of division of labour and assignment of tasks

Technical facilities

Equipping the organisation with appropriate facilities

(Fig. based on Luger/Geisbüsch/Neumann 1999, p. 121)


Functions and tasks of the marketing and distributive trade

Functions and Tasks of the Marketing and Distributive Trade

  • Information procurement concerning marketing

  • Sales planning

  • Market segmentation

  • Determination of the marketing mix.


Information needs concerning marketing and distributive trade

Information Needs Concerning Marketing and Distributive Trade

Information needs concerning sales planning

External Information

Internal Information

Other circumstances

and trends

Marketing

Market

Competition

Materials

management

Production

management

General corporate

planning

(Fig. Hammer 2012, p. 273)


Market segmentation an example

65 +

50 - 64

Age of the head of the household

35 - 49

19 - 34

1

2 - 3

Family members

4 +

Less than 25 000

25 000 – 50 000

More than 50 000

Earnings

Market Segmentation – An Example

(Fig. Hammer 2012, p. 276)


The marketing mix

The Marketing Mix

Market - Competition

PRODUCTSTRATEGY

PRICINGSTRATEGY

DISTRIBUTIONSTRATEGY

COMMUNICATIONSTRATEGY

Customer

(Fig. Hammer 2012, p. 277)


Methods and models of the marketing and distributive trade

Methods and Models of the Marketing and Distributive Trade

  • Methods of market research and information procurement

  • Methods of sales planning

  • Methods of the market segmentation

  • The marketing policy


Lecture

Financial Management


Basics

Basics

  • Investment:

    • Allocation of funds

  • Financing:

    • Sources of funds

    • Needed for the creation of capital

  • Financial management includes:

    • Capital procurement

    • Usage of the capital and the capital commitment for certain tasks

    • Reflux of capital


Correlation between capital assets financing und investments

Correlation between Capital, Assets, Financing und Investments

Static figures

Financing

Investment

Capital

Assets

Definancing

Disinvestment

Procedures

(Fig. based on Thommen 2009, p. 570)


Problems related to investments

Problems Related to Investments

Importance and significance of investments:

  • Investments do have a strategic nature:

    • Preservation and development of the competitive situation

  • Investments trigger long term effects:

    • E.g. capital commitment, interest on borrowed capital

  • Investments are associated with a variety of risks:

    • Market risks, financing risks, technical risks

  • Wrong decisions cause opportunity costs.

  • Investment projects affect all kinds of different units within the company.


  • Structure of different kinds of investments

    Financial investment

    Structure of Different Kinds of Investments

    Investments

    Real investment

    Immaterial investment

    Fixed assets

    Know How

    Shares

    Brand

    Current assets

    Financing

    Rights

    (Fig. Hammer 2012, p. 286)


    Problems related to financing

    Problems Related to Financing

    Importance and significance of Financing:

    • Main goal of financing:

      • Creating a financial equilibrium

    • Short term aspect – liquidity

    • Long term aspect – profitability

    • Strategic significance:

      • Financing affects the company‘s capital structure, hence its creditworthiness and its stability


    Types of financing

    Types of Financing

    Types of Financing

    External financing

    Internal financing

    Out of the working capital- Retained earnings- Provision - Amorisation

    Equity financing(e.g. issue of shares)

    Debt financing(e.g. Loans)

    Capital restructuring - e.g. selling fixed or current assets

    Subsidy

    (Fig. based on Lechner/Egger/Schauer 2008, p. 227 f)


    Methods and models of the investment budgeting

    Methods and Models of the Investment Budgeting

    Investment budgeting

    Dynamic investmentbudgeting

    Static investment

    budgeting

    Net present value

    Cost comparison method

    Internal rate of return

    Profit comparison method

    Equivalent annual cost

    Average return analysis

    Amortisation

    MAPI - Method

    (Fig. Hammer 2012, p. 293)


    Methods and models of the financial management

    Methods and Models of the Financial Management

    Application of funds statement

    Performance analysis

    Financial analysis

    Mind the financing rules!


    Human resource management hrm

    Human Resource Management (HRM)


    Functions and tasks of the human resource management

    Functions and Tasks of the Human Resource Management

    • General human resource management

    • Human resource planning

    • Recruitment

    • Staff employment

    • Human resource compensation

    • Human resource development

    • Human resource administration

    • Human resource controlling


    Functions and tasks in detail 1

    Functions and Tasks in Detail (1)

    General human resource management

    • The corporate management has to develop guidelines on employment.

    • Defining tasks, competences, responsibilities and subordinate and superordinate levels in order to establish a distinct framework.

    • The style of leadership and the leadership behaviour are crucial for the effectiveness of the personnel management.

      Human resource planning

    • Stating the goals of the HRM more precisely by developing strategic and operative goals, strategies and actions.

    • Determining the staff requirements in terms of quality and quantity.

    • Planning:

      • Recruitment, Training and development

      • Labour costs

      • personnel layoff / staff reduction


    Functions and tasks in detail 2

    Functions and Tasks in Detail (2)

    Recruitment

    • Internal Recruitment:

      +cost savings, less problems due to integration in the new firm, opportunity for career advancement

      -No additional professional qualifications or ideas

    • External Recruitment:

      +Additional professional qualifications or ideas, no preference of an individual within the company

      -Increased procurement costs, internal employees possibly get demotivated

    • Focusing the following:

      • job advertisement fits the vacancy

      • Acquiring applications, searching applicants

      • Choosing the appropriate applicant

        Staff employment:

    • Introduction and adjustment to a new job

    • Assignment of workforces to specific workplaces

    • Adapting the work and the working conditions


    Functions and tasks in detail 3

    Functions and Tasks in Detail (3)

    Human resource compensation

    • includes:

      • Creating monetary incentives

      • Creating non-monetary incentives

      • Type of payment

      • Considering motivational approaches

    • Goal of the human resource compensation:

      • performance-linked payments

      • Contribute to the employee satisfaction

      • Improving motivation


    Functions and tasks in detail 4

    Functions and Tasks in Detail (4)

    Human resource development

    • includes all actions taken in order to evolve each employees individual development level:

      • Training and development

      • Career management

    • Goals of the human resource development:

      • Company-related: implementing employee development strategy which is suitable for a dynamic market and competition

      • Individual-related: exercise managerial responsibility

        Human resource administration

    • includes:

      • Keeping record of the head count

      • Salary and wages accounting and payment

      • Administrating all actions taken in the field of HRM


    Functions and tasks in detail 5

    Functions and Tasks in Detail (5)

    Human resource controlling

    • Ongoing evaluation concerning efficiency and effectiveness in terms of strategy and actions taken by the HRM.

    • Generating and implementing necessary control information.

      General importance of HRM

    • Increasing strategic importance:

      • Mainly in economic sectors with a high amount of labour costs

      • The increasing economic globalisation also affects the labour market

      • Employees as competitive factor – hence the satisfaction of employee wants becomes part of the HRM


    Methods and models of the human resource management 1

    Methods and Models of the Human Resource Management (1)

    Determining the staff requirements:

    • Gross / net

      • Quantitative/ qualitative

        Selection of personnel:

      • Evaluating and sorting the applications

      • job interviews, tests, Assessment centers

      • Final job interviews

      • Hiring / negative answer

        Making the job more attractive and demanding through:

      • Job enlargement

      • Job enrichment

      • Job rotation


    Methods and models of the human resource management 2

    Methods and Models of the Human Resource Management (2)

    Performance-enhancing measures:

    • Monetary incentives:

      • Time wage, performance-linked payment

      • Profit sharing, optional employee benefits

    • Non-monetary incentives:

      • training and development, career advancement , working time regulation, vacation policy

      • Maslow's hierarchy of needs, Herzberg‘s two-factor theory

        Human resource controlling:

    • HR accounting and budgeting (input models)

    • HR effectiveness analysis (output models)

    • Cost-benefit analysis (input / output models)


    Accounting

    Accounting


    Problems and tasks related to accounting

    Problems and Tasks related to Accounting

    Accounting means

    • gathering,

    • processing,

    • documenting,

    • recording and

    • passing on

      information related to the corporate procedures and operations – mainly flows of money, goods and services.


    Areas of accounting

    Areas of Accounting

    Accounting

    Internal accounting

    External accounting

    Financial

    accounting

    Corporate

    accounting

    Accounting for

    planning and control

    Balance sheet

    Production planning

    Cost accounting

    Results accounting

    Profit and loss statement

    Sales planning

    Investment planning

    Annual financial statement

    Financing planning

    • Balance sheet

    • Profit and loss statement

    • Annual management report

    Business statistics

    (Fig. Hammer 2012, p. 314)


    External accounting

    External Accounting

    External accounting includes mainly three parts:

    • The financial accounting consistently documents all transactions made.Its figures provide a basis for the internal accounting.

    • The balance sheet is usually made annually as a result of the financial accounting. It provides information concerning the sources and applications of funds.

    • The profit and loss statement provides information concerning the revenues and expenses during a certain period of time.

    (Cf. Wöhe 2002, S. 825)


    Internal accounting

    Internal Accounting

    Internal accounting includes mainly:

    • Cost and results accounting, which is based on the financial accounting

    • Budgetary accounting

    • Business statistics


    Types of balance sheets

    Types of Balance Sheets

    Balance Sheets

    Internal balance sheets

    External balance sheets

    Special purpose

    balance sheet

    Annual

    Balance sheet

    Balance sheet

    e.g. in case of

    Mergers and

    Acquisitions

    Tax balance sheet

    (Fig. Hammer 2012, p. 316)


    Structure of a balance sheet

    Structure of a Balance Sheet

    Structure of a balance sheet

    Asset side

    Liability side(Liability and equity)

    Equity

    Fixed assets

    Provision

    Current assets

    Liability

    Accruals

    Deferrals

    (Abb. Hammer 2012, S. 316)


    Costs and results accounting

    Costs and Results Accounting

    Includes:

    • Cost-type accounting

    • Cost-centre accounting

    • Cost-unit accounting

    • Short-term income statement


    Cost type accounting

    Cost-Type Accounting

    The cost-type accounting is the starting point of the costs and results Accounting.

    Tasks

    The overall costs transferred from the financial accounting are divided into overhead costs and individual costs. These costs are classified in order to allocate them to the different cost-centres in the next step.


    Cost centre accounting 1

    Cost-Centre Accounting (1)

    Based on the results of the cost-type accounting the costs are allocated to the cost centres.

    Cost-centre: Area of the company where costs accrue.

    There are different kinds of how to define and classify cost-centres:

    • Spatially divided areas, e.g. assembling shop, warehouse

    • Operational areas , e.g. procurement, production, sales

    • Areas of responsibility, e.g. administration, general management

    • Accounting aspects – indirect and direct cost-centres

      Tasks

    • Source specific apportion of the overhead costs to the cost-centres

    • Describing the internal performance allocation

    • Calculation of the required rate of interest

    • Profitability accounting for each department


    Cost centre accounting 2

    Cost-Centre Accounting (2)

    Direct cost-centre

    • Direct cost-centres are directly connected to the goods and services produced for the market. Their output is part of the production process.

    • In a machine factory direct cost-centres could be e.g.: sales and distribution, welding shop, grinding shop.

      Indirect cost-centre

    • The services and products provided by indirect cost-centres are only for the internal use.

    • E.g.: energy supply, service station, IT services, internal transport.


    Cost unit accounting

    Cost-Unit Accounting

    The costs are distributed to the according cost-units – either directly as individual costs or indirectly as overhead costs as a result of the cost-centre accounting.

    Cost-unit: A cost-unit (= a service or product) has to bear the costs it caused.

    Goal: Calculating the cost of production of the cost-units.


    The correlation between cost type accounting cost centre accounting and cost unit accounting

    The Correlation between Cost-Type Accounting, Cost-Centre Accounting and Cost-Unit Accounting

    Overall costs divided into

    overhead costs and individual costs

    Cost-type accounting

    Overhead costs

    Individual costs

    Cost-centre accounting

    Indirect cost centre

    Direct cost centre

    Overall costs structured by cost-types.

    Cost-unit accounting

    (Fig. Hammer 2012, p. 320)


    Planned cost accounting

    Planned Cost Accounting

    Planned cost accounting

    Inflexible planned cost

    accounting

    Flexible planned cost

    accounting

    Distinction between

    fixed and variable

    Business overhead costs

    No distinction between

    fixed and variable

    Business overhead costs

    Full cost accounting or direct

    cost accounting

    (Abb. Hammer 2012, S. 322)


    The internal information and control system

    The Internal Information and Control System

    Information and control system

    Verbal information

    Charts and figures

    Statistics

    Bookkeeping

    Reports

    asset accounts,profit and loss accounts,

    Involving all areas of the company

    Annual financialstatement

    Accounting

    Individual verbal information

    Further information

    Short-term income statement

    Cost-centre accounting

    Cost-unit accounting

    Cost-type accounting

    Annual

    management report

    • Profit and loss

    • statement

    Balance sheet

    Development of numbers

    FiguresTarget / Actual comparison

    efficiency analysis:

    Variance analysisDevelopment of absolute deviations/numbers

    Figures showing the profit situation:

    LiquidityPattern of financeAssets and liabilities structure

    Discussions

    (Fig. based on Luger 1998, p. 248)


    Classic accounting and activity based accounting approach

    Classic Accounting and Activity-Based AccountingApproach

    Classic accounting approach

    Activity-based accounting

    Cost-types

    Cost-types

    Cost-centres

    Cost-centres

    Sub-processes

    Main-processes

    Cost-units (products)

    Cost-units (products)

    (Fig. Hammer 2012, p. 324)


    Target costing

    Immediate need of cost reduction

    Further need of cost reduction

    Target Costs

    Target Costing

    Target profit

    AllowableCosts

    Target price

    DriftingCosts

    (Fig. based on Hammer 2012, p. 325)


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