Fundamentals in Business Part 2 PDF

Fundamentals in Business Part 2 1. Definition of Business a. Basic elements of business administration − Business is organized effort to produce and sell, for a profit, the goods and services that satisfy society’s needs. − To be successful: be organized, satisfy needs a...

Fundamentals in Business Part 2 1. Definition of Business a. Basic elements of business administration − Business is organized effort to produce and sell, for a profit, the goods and services that satisfy society’s needs. − To be successful: be organized, satisfy needs and earn profit. b. Business activity: Combination of factors of production - Factors of Production: Goods used in production of goods and services - Different understandings: o Classis / macroeconomic perspective: labor, land, capital o Classic operational production factors/ business perspective (operational) factors of production (Gutenberg: betriebliche Produktionsfaktoren) 1. Elementary factors 2. Dispositive work performance (mental work) − Material Original dispositive work Derivative dispositive − (equipment) / performance work performance assets − Business management − Planning − (manpower) / − Operational − Organizing labor management − monitoring o Mixed approaches, explaining + tracing resource integration process (ex. Including knowledge) Material resources > < Financial resources Human resources > BUSINESS < Informational resources Service / manufacturing / market / E-business /... c. Business activity: Satisfaction of needs – Maslow’s hierarchy of needs ▪ Most needs: deficit needs – esteem, love, safety and physiological ▪ Most basic needs must be met: individual desire focus on next level ▪ Different needs: processed at same time, but one level dominates human d. Business activity: Business Profit Profit Sales revenues – expenses - Profit, dividends Loss - Not being paid - Losing investment 2. What is and does Management? a. Definition I - Management: process of coordinating people / resources --> goals - Material + human + financial + informational => organizational goals b. Definition II - Management: process with feedback loopholes. - Basic functions: planning, organizing, leading and motivating, controlling. 3. Goals (& Stakeholders) a. What is the definition of goals and their justification? “Goal” result expected to achieve over long period of time communication within coordinating of single entities the organization Functions motivation of make performance of employees and employees entities measurable “Objective” result expected to achieve over short period of time will oriented, activity-oriented, future-oriented Character --> “Something should be accomplished by action in the future.” Types By hierarchy Vision > mission > goal > objective By content SMARTness Specific – Measurable – Attractive – Realistic - Terminated Inderdepen Complementary – Competing – Mutual excluding - Neutral dencies Whose goals does a company pursue? Different stakeholders --> different goals Origin - Investors / Capital provider (equity / dept capital provider) - Employees, Customer, Suppliers, State, Society Assets Liabilities / (active) Balance sheet shareholder’s German equity (passive) GAAP Use Non-current Shareholder's equity Source funds funds assets (net assets)  Provisions Dept / payables Total assets Total equity and liabilities b. What is the effect of the shareholder structure on the company goals? Sole proprietorship / family-owned companies Shareholder Capita market-oriented corporates structure Institutional-funded companies - Capital preservation - Increase in value - Dividend / profit distribution - Information rights Interests of equity - Co-Determination rights investors - Ethical requirements o Product range o Business conduct o Treatment of employees o Ecology Shareholder (value) Corporate strategy: increase the value of the company in approach terms of the market value of its equity c. How to define Stakeholder Management? Enterprises as socio-economic system Tasks of management: balancing conflicting interests Each group: contribution + must be considered Groups of Necessary to...: Otherwise...: interest in - Consider everyone - Low interest rates company - Grant management - Low wages participation - Poor delivery conditions - Take social concerns of weaker serious - Capital preservation Interest of - Appropriate interest rate (=cost for borrowing funds) debt - Repayment of capital capital - Information rights investors - Control rights - --> Equity / debt rate influences goals Owners / investors: Customers: Interest of − “Shareholder mana.” − Important stakeholder Customer − Most important (source final success) stakeholder  − Key interest: high − Key interest: good value for revenues with low money production costs − Ethical behavior − Being good community member - Payment: reasonable prices (material, energy, inputs) Interest of - Reliable payment and delivery practices suppliers - Steady and long business relationship - Flexible work - Reasonable wages and salaries Interest of - Good leadership employee - Good team spirit and willingness to help - --> majority no emotional bond with work - Taxes fees and duties Interest of - Conduct compliance with the law State - Participation: development of legal framework conditions - Create secure jobs (digital transformation!) - Social commitment Interest of - Environmentally friendly production and products society - Create: safe workplaces, secure jobs d. What kind of conflicting goals does stakeholder management have? Necessarily SH: same interest + - Shareholders compatible engage - Top managements - Partners Occasionally SH: occasionally share + - Public compatible engage, not dependent - Companies (trade associ.) Necessarily SH: different interest + - Trade unions incompatible engage - Low-income-employees - Government - Customers - Creditors - Suppliers - NGOs Occasionally SH: not always share + - NGOs incompatible not mandatory to engage - Criminal member of society Example: Management view Employee view (Risk): Incompatible (Opportunity): view on - Positive economic - Negative impact: work digitalization - Competitive content, load, vacancies advantage - Digital surveillance Fields of improvement for digitalization projects:  - Efficiency - Connectivity - Transparency - Quality - Organizational structure - Safety and health of employees - Compliance with legal regulations instrumental Should respect --> maximize long- term returns to ShH classic Be respected --> max. ShH value beneficial Improving SH well being structural Protect SH interest -> formal power in corporate governance