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Fund busadm 2014 lecture14 final
- 1. Fundamentals of BusinessAdministration Winter 2014/15 Module: Fundamentals of Business Administration Program: Energy and Environment 3rd Semester Dr. Thomas Dirksmeyer 14th Lecture 15/01/2015
- 2. Objectives today • Studentswill have reviewed major aspects of taxation • Students will know the basic types of organisational structures in a company and the respective considerations for choosing one of them. • Students will have understood basic aspects of corporate strategy. Fundamentals of Business Administration • WS 2014/15 • Thomas Dirksmeyer 2
- 3. Major taxes • VAT - broad-based tax on final consumption - staged collection process (each business in the supply chain involved) - destination principle (charged in the country of final destination) • Corporate Tax - charged on corporate income - some countries (including Germany) have additional local taxes - different kinds of treatment of dividend payment • Role of transfer prices - important for taxing multinational corporations - tendency to shift earnings to low-tax countries Fundamentals of Business Administration • WS 2014/15 • Dr. Thomas Dirksmeyer 3
- 4. Fundamentals of BusinessAdministration • WS 2013/14 • Dr. Thomas Dirksmeyer
- 5. From task toorganisational structure Organisational structure derived from task analysis Fundamentals of Business Administration • WS 2014/15 • Dr. Thomas Dirksmeyer 5
- 6. Leadership – whatshould a boss be like? Fundamentals of Business Administration • WS 2014/15 • Dr. Thomas Dirksmeyer 6 Manager makes decision and announces it Manager ‚sells‘ decision Manager presents ideas and invites ques7ons Manager presents problem, gets sugges7ons, makes decision Manager defines limits, asks group to make decision Manager permits employees to func7on within defined limits Manager presents tenta7ve decision subject to change autocratic laissez-faire employee- centered boss- centered use of authority by the manager area of freedom for employees participative
- 7. How would youlike your boss to be? • Regarding your daily work • Solving problems in personal relationships with colleagues • Protecting your interests towards top management • Motivating you, creating the feeling everybody is doing something important Fundamentals of Business Administration • WS 2014/15 • Dr. Thomas Dirksmeyer 7 strong weak
- 8. How deep shouldthe structure be? • nobody likes to be at the end of a seemingly endless line of command: flat hierarchies have a lot of charm • No manager can efficiently manage dozens of employees: not too many direct reports per manager Fundamentals of Business Administration • WS 2014/15 • Dr. Thomas Dirksmeyer 8
- 9. What is themost logical structure? • The classical functional organisation Fundamentals of Business Administration • WS 2014/15 • Dr. Thomas Dirksmeyer 9
- 10. What is themost logical structure? • A branch per product - often gives each division a high level of independence • Difficult to make use of synergies in support functions Fundamentals of Business Administration • WS 2013/14 • Dr. Thomas Dirksmeyer 10
- 11. What is themost logical structure? • If the company‘s business is strongly geographically structured, it can make sense to organise the company structure in a similar way. Fundamentals of Business Administration • WS 2013/14 • Dr. Thomas Dirksmeyer 11
- 12. Line authority andchain of command • Classical line authority includes clear (if possibly lengthy) chains of command. Fundamentals of Business Administration • WS 2013/14 • Dr. Thomas Dirksmeyer 12 CEO President Vice President Vice PresidentVice President Region 1 Region 2 Region 3 District A District B District C Executive Vice President Executive Vice President
- 13. Matrix structure – achallenging type of organisation • Functional departments hold and lead groups of experts. • Daily work, however, is mostly done within project organisations Fundamentals of Business Administration • WS 2014/15 • Dr. Thomas Dirksmeyer 13
- 14. Laundry & Home Care Georg Bara2a-‐Dragono Marke7ng Laundry Care, La7n America, Western Europe Ashraf El Afifi Middle East/Africa Pascal Houdayer Marke7ng Home Care, Business Development Dr. Marcus Kuhnert Financial & Business Controlling Prof. Dr. Thomas Müller-‐ Kirschbaum Research & Development, Supply Chain Günter Thumser Eastern Europe Beauty Care Michelle Cheung Asia-‐Pacific Dr. Stefan Huchler Supply Chain/Packaging Thomas Keller Eastern Europe/CIS, La7n America, Middle East/ Africa Norbert Koll* North America Michael Rauch Financial & Business Controlling Marie-‐Eve Schröder SBU Hair Jens-‐MarMn Schwärzler SBU Body/Skin/Oral, Western Europe Stefan Sudhoff Professional Adhesive Technologies Prof. Dr. Ramón Bacardit Research & Development Julian Colqui2 SBU General Industry, North America Jean Fayolle SBU Packaging Industry, La7n America Enric Holzbacher SBU Consumer/CraTsmen/ Building, Europe, Middle East/ Africa Paul Kirsch SBU Transporta7on/Metal Michael Olosky Asia-‐Pacific Dr. Ma2hias Schmidt Financial & Business Controlling Alan Syzdek SBU Electronic Materials Corporate FuncMons Wolfgang Beynio Finance/Controlling Dr. Andreas Bruns Infrastructure Services Bertrand Conquéret Purchasing Dr. Joachim Jäckle Financial Opera7ons Thomas Gerd Kühn Legal & Compliance Carsten Tilger Corporate Communica7ons Dr. Peter Wroblowski Informa7on Technology Example Top-level organisation at Henkel
- 15. Six key elementsin organisational design • Work specialisation - specialised workers for specialised tasks • Departmentalisation - grouping jobs and workers together • Authority and Responsibility - rights to issue orders, responsibility to account for results • Span of control - how many people can a manager supervise? • Centralisation and decentralisation - who buys the pencils for all your company? • Formalisation - how standardised and regulated should each job be? Fundamentals of Business Administration • WS 2014/15 • Dr. Thomas Dirksmeyer 15 after Robbins/deCenzo/Coulter
- 16. Business Strategy • Strategyis about formulation of major goals of a company. • Defines scope and direction of a company. • Aiming at the creation of long-term value (to the owners). Elements of a corporate strategy • Analyse competitive environment of your industry (e.g. “Five Forces”) • Decide how to position your products in the market (e.g. low-cost) • Decide how to develop your product portfolio in future • Use analysis of strengths and weaknesses to define your strategy Fundamentals of Business Administration • WS 2014/15 • Thomas Dirksmeyer 16
- 17. A company‘s strategy... • ... as explained to the public • Can you imagine what kind of company this is?
- 18. ... and somedetails about that strategy Fundamentals of Business Administration • WS 2014/15 • Dr. Thomas Dirksmeyer 18 OUTPERFORM • actively managing our portfolio • strengthening our top brands • launching powerful innovations • focusing on our customers and consumers. GLOBALIZE • Leverage strengths in mature markets and expand in emerging markets • Speed and efficiency SIMPLIFY • Extending shared services: new hubs, more • business processes • Integrated IT platform • Increased efficiency: driving value generation INSPIRE • Developing strong leaders • Talents & Performance • Managing diversity as a competitive asset portfolio innovation expand valueBUZZWORDS brands shared services
- 19. Business Strategy Porter‘s FiveForces Rivalry among competitors Threat of new entrants Bargaining power of buyers Threat of substitute products Bargaining power of suppliers Fundamentals of Business Administration • WS 2014/15 • Dr. Thomas Dirksmeyer 19 Supplier Power: Here you assess how easy it is for suppliers to drive up prices. This is driven by the number of suppliers of each key input, the uniqueness of their product or service, their strength and control over you, or the cost of switching from one to another. Buyer Power: Here you ask yourself how easy it is for buyers to drive prices down. Again, this is driven by the number of buyers, the importance of each individual buyer to your business, the cost to them of switching from your products and services to those of someone else. Competitive Rivalry: What is important here is the number and capability of your competitors. If you have many competitors, and they offer equally attractive products and services, then you'll most likely have little power in the market. Threat of Substitution: This is affected by the ability of your customers to find a different way of doing what you do. If substitution is easy and substitution is viable, then this weakens your power. Threat of New Entry: Power is also affected by the ability of potential competitors to enter your market. If it is easy to enter your market and compete effectively, or if you have little protection for your key technologies, then new competitors can quickly enter your market and weaken your position.
- 20. Five generic competitivestrategies • Strategies differ in the way a competitive advantage is pursued and Fundamentals of Business Administration • WS 2014/15 • Dr. Thomas Dirksmeyer 20 overall low-cost strategy broad differentiation strategy focused low-cost strategy focused differentiation strategy best cost provider strategy broad cross-section of buyers narrow buyer segment / market niche low cost differentiation
- 21. Five generic competitivestrategies • Low-cost provider strategy - Achieve lower overall costs than rivals, targeting a broad spectrum of customers - usually by underpricing rivals. • Broad differentiation strategy - Seek to differentiate you product against rivals’ in ways that appeal to a broad spectrum of buyers • Focused low-cost strategy - Concentrate on a narrow buyer segment (or market niche), outperform rivals by having lower costs. • Focused differentiation strategy - Concentrate on a narrow buyer segment, outcompete rivals by offering customized products that better appeal customers. • Best-cost provider strategy - Satisfy customers by meeting expectations on product quality and features while beating their price expectations. Fundamentals of Business Administration • WS 2014/15 • Dr. Thomas Dirksmeyer 21
- 22. Exercise: • Find examplesfor these strategies in - the German food retail market (Edeka, Rewe, Aldi, Lidl, Penny ... )? Are there any niche players in this market? - the market for smart phones - the European car market • What would a company need to do to follow a low-cost provider strategy? • What would a company need to do to follow a focused differentiation strategy? Fundamentals of Business Administration • WS 2014/15 • Dr. Thomas Dirksmeyer 22
- 23. How can alow-cost leadership be established? • All essential activities in the value chain need to be cost efficient – and better than others - capture economies of scale - take advantage of learning curve effects - operate at full capacity - employ advanced production technology - reduce workforce - consider outsourcing, but also vertical integration • Alternative approach - “revamp the value chain” by eliminating cost-producing activities - eliminate intermediate sales channels (e.g. by direct sales) - close cooperation with suppliers (e.g. just in time supply) Fundamentals of Business Administration • WS 2014/15 • Dr. Thomas Dirksmeyer 23
- 24. How can afocused differentiation be established? • Defining and developing product and target group need special care - carefully designed, unique product - develop product that is hard to duplicate (innovation, patents) - well-defined group of buyers - special attention to buyers’ needs (desires, wishes, ... or costs) to maintain buyers’ loyalty Fundamentals of Business Administration • WS 2014/15 • Dr. Thomas Dirksmeyer 24
- 25. Text-book example: Nespresso Essential successfactors: • global reputation of the brand • global brand community (e.g. club membership) • exclusive route to market (flagship stores, internet boutique) • high quality • innovation in technology Fundamentals of Business Administration • WS 2014/15 • Dr. Thomas Dirksmeyer 25 Source: Gamble, Thompson, Peteraf
- 26. The BCG matrix- a favourite tool in portfolio analysis This matrix symbolises growth potential and the company’s market share of individual business products or segments: Stars Products with high market share in fast growing markets Cash Cows Products with high market share in stagnating, mature markets Question Marks Products with low market share in fast growing markets Poor Dogs Products with low market share in stagnating markets Relative market share Industrygrowthrate high low highlow Fundamentals of Business Administration • WS 2014/15 • Dr. Thomas Dirksmeyer
- 27. What conclusions result fromthe BCG matrix method? • Stars - high growth potential, good starting position - require investment to become the next cash cow • Question Marks - high growth potential, but weak starting point - attractive for investments, have the potential to become stars, - need close observation concerning progress, risk to become dogs • Cash Cows - good position today, but little or no growth potential - keep investment to minimum level - use revenues from cash cow to invest into growth areas (stars) • Dogs - weak position today, little growth potential - do not invest, consider desinvestment 27 review Fundamentals of Business Administration • WS 2014/15 • Dr. Thomas Dirksmeyer
- 28. SWOT - atechnique to identify a company’s competitive position internal analysis external analysis strengths weaknesses opportunities threats situation analysis
- 29. SWOT descriptions factor descriptionaction strengths those potential factors that make a firm more competitive than its direct competitors maintain, build & leverage weaknesses both potential limitations and defects ingrained in an organisation and/or weak factors relative to direct competitors remedy or exit opportunities future factors that allow the organisation to improve its relative competitive position prioritise and optimise threats those future factors that reduce the firm’s relative competitive position counter
- 30. SWOT analysis: listkey issues internal strengths internal weaknesses 1 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 10 10 external opportunities external threats 1 1 2 2 3 3 4 4 5 5 6 6 7 7 8 8 9 9 10 10 Fundamentals of Business Administration • WS 2014/15 • Dr. Thomas Dirksmeyer
- 31. external threat (template) description namenumber probability: xxxxx impact: xxxxx
- 32. SWOT analysis: genericanswers internal strengths internal weaknesses 1 access to capital / money 1 lack of capital 2 experienced workforce 2 high labor costs 3 local experience in target market 3 no experience in target market 4 strong range of products 4 small product range 5 essential know how / patents / licenses 5 no core competencies 6 low production costs 6 7 good customer service 7 8 established financial controlling 8 9 9 10 10 external opportunities external threats 1 growing market 1 political intervention / regulation 2 few competitors 2 shrinking markets / economic crisis 3 falling trade barriers 3 strong competitors 4 expand into new product line 4 adverse demographic development 5 expand into new countries 5 6 expand into new customers groups / new market segments 6 7 7 8 8 9 9 10 10 Fundamentals of Business Administration • WS 2014/15 • Dr. Thomas Dirksmeyer
- 33. OT priority matrix 0 1 2 3 4 5 6 7 8 9 10 01 2 3 4 5 6 7 8 9 10 probability impact This matrix is used to identify the most relevant opportunities and threats: For each opportunity and threat, determine the probability of this to happen and the impact it potentially has. Naturally, the ones with high probability and high impact should be concentrated on. Fundamentals of Business Administration • WS 2014/15 • Dr. Thomas Dirksmeyer