Laura

Premoli Business Planner @ Mediaset Premium laura.premoli@gmail.com

Business Concepts & the Role of Fct

Every year, cyclically, a company sees get dozens of hurricanes. The path can be traced, but then must be continually monitored. And then change the time the forecast Otherwise all dead

Business Concepts & the role of Fct

DAY BY DAY

ANTICIPATORY

DO NOT FORMALIZED APPROACH

PLANNING AND CONTROL SYSTEMS

MEDIA SUPPORT

Business Concepts & the role of Fct

The deni1ons on Planning:

Thinking about the future Try to Control the future (a;er expected, esEmated ...) Make decisions (as a basis for acEon plans ...) Decide in an integrated manner (interacEon between important decisions and acEons in organizaEons ...) Formalized procedure to produce an arIculated result, in the form of an integrated system of decisions (a plan broken down into strategies, programs, budgets, and objecEves spelled out in words and numbers ...)

Business Concepts & the role of Fct

Plan to ensure that the future is taken into account
- decisions brief consistent with the strategic choices of long - prepare for the inevitable, prevenEng the undesirable and controlling the controllable - program the unplanned (eg, the Eme of a chief execuEve ocer)

Plan in order to coordinate their activities

-integraEon of funcEons in the acEviEes -plan as a means of communicaEon choices and goals for the consent -raEonal connecEon between people

Plan to check
- if the schedule formalizes strategy formaEon, the control is to all levels (below, at and above) - "Remote control is the only opEon for the management of a large complex organizaEon.

Plan to be rational
- he formalizaEon leads to a deeper thought t - If intuiEon is not assisted by the planning, does not result in a valid decision - reduce the complexity of external forms manageable

Business Concepts & the role of Fct

Organization can plan ... (consider their future) with engaging in an exercise in formal planning.

Organization can plan ... (consider their future) without engaging in an exercise in formal planning.

Organization can formal plan ... without really plan (does not consider its own future).

anyway, the exercise will be useful to the organization!

Understanding how they form the strategic intentions of the top management and how these intentions can turn into strategy made

Business Concepts & the role of Fct

approaches: Strategic management may present with various conceptual
1. 2. 3. AnalyEcal / RaEonal Process Learning by doing Process Bocom-up & top-down Process

Business Concepts & the role of Fct

Reporting & Tableau de Bord Strategic Planning Asset & Liability Management (ALM)
Management by Objectives (MBO)

Budget Controlling profitability

Commercial Area
Channes. Prod Customers Segments

Controlling profitability
Commercial Area Finance Area
Cash Global Market

Finance Area
Cash Global Market

Management Control

Channels Products

Customer Segments

Risk Adjusted Performance Management

Risk Management

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Business Concepts & the role of Fct

Products

Business Model
Customers Channels

coherent

Organizational Model

Structure Processes

Strategic Relevance
TdB

Controllability

Strategic Relevance
Articulation of the objectives and results of measurements based on market and competitive profiles.
Check Profitability Comm.le Finanza

ALM MBO Budget

Controllability:
Cost Management CO.AN. ABC

CdG

FTP

Articulation / assignment of targets and measurements is consistent with the management tools and the autonomous decisionmakers.

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Business Concepts & the role of Fct

ALM System Planning system strategic

P R O C E S S

organizational variables

Tools
- Profitability customer / product -Cost Control - ..................

Control system management

System Risk Mgmt

Evaluation system / rewarding (MbO)

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Business Concepts & the role of Fct

Performance Measurement

Vision

Performance Measurement

Network Connection

Strategy

Commitment

Value Drivers Balanced Scorecard

Initiatives

Focus

Actions

Measure only what is appropriate to achieving the strategic objectives.

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Business Concepts & the role of Fct

From the 'elementary cell' to multidimensional aggregates

The functional architecture of the system Profitability provides for the recognition of components of profitability (costs, revenues, volumes, quantities, etc..) Through:

the analytical detection on the individual 'elementary cells' generating profitability and their classification in analysis dimensions; detecting synthetic aggregation on the different dimensions of analysis at different levels.

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Business Concepts & the role of Fct

CUSTOMERS

MAIN DIMENSIONS

Sector Geographic Ares Channel Average Contracts Average Amount

RELATIONSHIPS CONTRACTS

MAIN DIMENSIONS

CHANNELS

MAIN DIMENSIONS

Sales Channel Management Channel .

financial product

PRODUCTS

MAIN DIMENSIONS product Service

VARIABLES MEASURING PROFITABILITY '(DATA)

economic variables Financial statistical variables

Sale interests commissions n. customer .... .

PERIODS

Monthly Quarterly Yearly

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Business Concepts & the role of Fct

Because planning can bring favorable outcomes within the organizaEon, it is crucial for the incorporaEon process as clear and shared by the organizaEon. The planning process is dierent from reality to reality, although it can always read the same basic objecEves as typical of strategic planning.
Corporate Guidelines (vision) Draw Business Plan Sharing with Top Management Revised Business Plan Board Approval

Analysis / Forecasts

Top-down Bottom-up

Review Corporate Plan

Annual Analysis

Define annual performance objectives

Capital Expenditure Budget

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Business Concepts & the role of Fct

Typical characteristics of the planning process:
PHILOSOPHY / NATURE OF JOB:
COERCIVE decisions of top management (or GM or Group ProperEes) place restricEons or prohibiEons to other agents (does not work or is not eecEve in systems market economy); BY ADDRESS: the decisions of top management on what "it is desirable to do" (aims) are linked incenEves for enEEes agreeing addresses; CONCERTED: The Management makes analysis on the economic incenEves and agrees with several subjects related to specic objecEves

FORMATION OF DECISIONS:
TOP TO BOTTOM (top down): the program is developing a "cascade" from the top management to other funcEons; FROM BOTTOM TO TOP (boUom up): the program is realized as a combinaEon of indicators that need to be coordinated and made consistent; MIXED: when trying to make consistent processes iniEated from above and from below.

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The Collaborative Planning

Business is usually OUTSIDE the Company. Playing in the same Team, is usually better to spent time fighting competitors in the market then fight colleagues within companys borders. Life is hard for everyone.

The collaboraIve planning

Collaborative Planning, Forecasting, and Replenishment is a nine-step approach to improving supply chain management, and ties demand planning and supply planning into one process. Participants can continuously verify the accuracy of each others demand forecasts and handle exceptions in real time using the same data sets. CPFR also uses performance feedback loops, such as how did I do on my forecasts?, to continually improve the systems efficiency. The CPFR holistic approach to improving collaboration is the next natural step in the battle to cut non value-adding costs in the supply chain.

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The collaboraIve planning

The Benefits, Value, and Purpose of CPFR The CPFR committee has developed target objectives for business benefits, which include the following: Increased in-stock Reduced average network inventory Increased sales Reduced operating expense Reduced cost of goods Reduced lead time/cycle time Decreased account receivables Reduced forecast error

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The Environment

THE AMAZONY IS A HIGHLY COMPLEX ENVIRONMENT WHERE COEXIST AREAS VERY DIFFERENT ONE TO EACH OTHER, OFTEN HIGHLY SPECIFIC

Sharing stretegic vision

can be very stressfull

The Environment
Division level
Alloy risk perception of shareholders for the capital risk. Allocate capital to individual Divisions. Provides management with the tools to verify the reasonableness of the bottom-up approaches.

Consolidated
Measuring the value of the strategic plan. Sensitivity of the strategic plan. Valuation of investments. Allocation of capital at the strategic level.

Top Down

Strategic Planning

measurement of performance

Allows you to bind the expected return of shareholders to the performance of the Divisions.

Periodic measurement of value creation. Reward system.

Bottom Up

measurement of risk

Allows operations managers to verify ex ante the potential volatility of the results for each individual transaction. Allows product pricing, taking into account the risk.

Bounds checking. Verification of capital risk. Intraday risk.

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The Interpretation of Strategy

The interpretation of the Directional Strategy can be tough. It is necessary to be sure to be talking the same langauge in order to provide the correct translation of Strategy in Operational.

InterpretaIon of Company strategy

What is the direction to the bottom of the company?

Vision

What actions should be taken to realize his vision? In what must excel ('do wells') to achieve the strategic objectives? How can measure the degree of achievement of the objectives?

Strategy

Critical Success Factors Key Performance Indicators

Financials Customers Processes Learning

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InterpretaIon of Company strategy

The BSC encourages the management to 'prioritize' strategic objectives.

Vision
Vision: Where are we going?

Strategy
Strategy: Which Actions?

Strategic Objectives
Increase Profits

Become one of the top 5 European players in the market segments targeted by exploiting the strengths of organization and new market opportunities. Contribute to the overall profitability of the Group ROE reaching a minimum of 10% and achieving a significant cost reduction.

M e e t t h e d e m a n d s o f o u r customers and exceed their expectations through a greater 'flexibility' of products and services offered. Operate as a 'business partner' for customers in key sectors through a deep knowledge of their business, their competitive environment and their needs. Match and exceed industry standards in terms of the level of service to customers.

Focus on customers / key sectors

The flexibility of the offer

Customer satisfaction

Brand recognition

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InterpretaIon of Company strategy

FCS
To satisfy our shareholders, which we should reach financial goals? Increased revenue Business planning and cost management

Strategic Objectives
Increase Profits

Financials In order to achieve our financial goals, how should we appear to our customers? Understanding of customers' needs availability value Proposition Focus on Customers Relations multi-product Coherent communication strategy To satisfy our shareholders and customers, what business processes must we excel at? Customer management Global Networking Standardization of elementary products Capacity for innovation Cross-Selling Efficiency in transactions distribution capabilities Coordinated marketing process To realize our vision as we learn and improve? Executive Committee Market research, strategic and competitive positioning Consistent internal communication Skills of key products Bridging the skills gap Marketing information system of local / global Integrating information systems

Focus on customers / key sectors

Customers

The flexibility of the offer

Customer satisfaction
Processes

Brand recognition

Learning

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InterpretaIon of Company strategy

FCS
To satisfy our shareholders, which we should reach financial goals? Increased revenue Business planning and cost management Risk Management, Risk-Based Pricing and RAROC In order to achieve our financial goals, how should we appear to our customers? Understanding of customers' needs availability value Proposition Focus on Customers Relations multi-product Coherent communication strategy To satisfy our shareholders and customers, what business processes must we excel at? Customer management Global Networking Standardization of elementary products Capacity for innovation Cross-Selling Efficiency in transactions distribution capabilities Coordinated marketing process

KPI
ROE Cost/Income % icrement revenues Sales Data % Clients with more than one product Revenues for key clients Execution time of the transaction Customer Satisfaction Index Lag Lag Lag Lag Lag Lag Lag Lead Lag

Financials

Customers

Process
To realize our vision as we learn and improve? Executive Committee Market research, strategic and competitive positioning Consistent internal communication Skills of key products Bridging the skills gap Marketing information system of local / global Integrating information systems

No. of proposals issued % Contracts signed by agents Number of cross-selling Territorial coverage% Customer visits to target % success Average cost per transaction Status of the Marketing Plan Status of strategic initiatives % Employees with goals Coverage skills Progress IT projects Status of the research program Status of the communication plan Index of employee satisfaction

Lead Lead Lead Lag Lead Lead Lead Lead Lead Lead Lead Lead Lead Lead Lead

Learning

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InterpretaIon of Company strategy

Criteria
Balanced

Description
Indicators, internal and external, must be balanced on the four dimensions of the BSC (Financial, Customer, Process, Learning) and should be the focal point of business activity. The lead indicators of performance are drivers that allow you to monitor the progress of performance during their execution. The indicators are lag indicators to measure the performance of past actions.

Lead and Lag Indicators

Integration

The company's vision and strategic objectives are integrated and linked to performance indicators. These indicators should be complementary and not conflicting. The company sets targets that represent a tool to assess whether the desired objectives have been achieved. Indicators should be available at low cost and within a reasonable time. Indicators should be simple, clear, shared and accepted by the recipient in order to encourage desired behaviors.

TGT

Availability User Experience

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The Environment

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InterpretaIon of Company strategy

The BSC can be applied to different levels of the organization as a tool to measure performance in a top-down approach.
BSC Strategic

Measures to express synthetically the achievement or otherwise of strategic high-level business.

Executive

BSC Funtional

Functions
BSC Individual

Measures for the monitoring of process / critical functions to the achievement of strategic objectives.

Individuals

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InterpretaIon of Company strategy

What business am I in? making fundamental choices Business Model Innovation

Industry model Innovation

Revenue model Innovation

Enterprise model Innovation

INDUSTRY TRANSFORMATION
transformed the music industry through a new way of connecting hardware with software to download music with iPods/ iTunes product & service combination redefined the PC value chain and industry model by using a direct to customer sales model

PRICING / REVENUE MODEL

innovated the pricing model by giving away razors and making money on the blades shifted the revenue model from product / rental based to a subscription based annuity model

INTEGRATION
Fast Fashion model is supported by a highly integrated business model along its value chain

SPECIALIZATION
created a highly specialized Telco business model by focusing only on its key differentiators marketing, sales and distribution and partnering for everything else

HORIZONTAL MOVES
Moving from one value chain to another, leveraging its brand across industries including airline, media and telecoms

VALUE PROPOSITION
Cirque du Soleil reconfigured offering and value elements to transform the circus experience

EXTERNAL COLLABORATION
innovative R&D collaboration model connect & develop, sourcing over 50% of ideas externally

Budgeting & Evaluation

Every Budget needs reviews through the year. If a Budget does not require revisions, it means that nothing interesting happened, so the market is mature and in decline BETTER TO LEAVE!

BudgeIng and EvaluaIon

Balanced Scorecard

The Balanced Scorecard is a balanced system of objectives, measures, targets and initiatives that collectively describe the vision and strategy of a company and the way in which they can be implemented.

Balanced Management System

A Balanced Management System is a system of corporate governance that is based on the BSC to communicate the corporate vision, create a shortcut with the common strategy and develop business planning through a process of strategic learning.

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BudgeIng and EvaluaIon

Management Problems
Vision blurred. Proliferation of projects. Alignment of management with strategic goals. Systems profitable inconsistent. Management process inefficient.

The Role of the BSC

It helps to communicate clearly the vision to the entire organization and to obtain the consent of the manage-ment. Focuses on the initiatives more closely linked to the business strategy. Can overcome the vision for 'functional silos' and aligning divisional and individual goals with business. Attach awards to performance. I s a p r e r e q u i s i t e f o r t h e development of a 'learning organsation'.

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BudgeIng and EvaluaIon

BSC improves the performance measurement business adding to traditional financial metrics new criteria that measure customer, internal processes, innovation and learning.
To satisfy our shareholders, which we should reach financial goals?

In order to achieve our financial goals, how should we appear to our customers?

FINANCIALS
Obiettivi Misure Target Iniziative

ENVIRONMENT / CUSTOMERS
Obiettivi Misure Target Iniziative

LEARNING VISION & STRATEGY

Obiettivi Misure Target Iniziative

Obiettivi

Misure

PROCESSES PROCESSI
Target

Iniziative

To realize our vision as we learn and improve?

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BudgeIng and EvaluaIon

Analyze the attractiveness of the company to shareholders. Traditional financial indicators (ROI, ROE, ROA) and performance indicators weighted risk from a risk / return and value creation (EVA).
PROCESSI

Performance measures to monitor financial issues may differ significantly in relation to the different developmental stages of the Company / Business Unit and strategic guidelines adopted.
strategic issues strategic issues
development turnover increase productivity Using asset
Proportion of target customers Index Cross selling Rates of cost reduction % Indirect costs of turnover Rationalization cap. oper. Rate using fixed assets.

development turnover increase productivity Using asset

Return product / customer % Profitable customers Unit cost of product Unit cost transaction Payback period

strategic issues
development turnover increase productivity Using asset
Growth rate turnover / segment % Sales from new products Turnover per employee Investment% of sales % R & D costs of revenues

Decline

Maturity

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BudgeIng and EvaluaIon

Identifies customer / market segments in which the company wants to compete and describes how to create value and satisfaction of customer needs. Quantitative indicators of the competitive position in the target segments in terms of profitability, market share and acquisition, loyalty and level of customer satisfaction.
Sales by customer segment / target market Market share ......

PROCESSI

Volumes & market share

% New customers % Sales from new customers .... ...

acquisition new customers profitability client

Margins per customer

retention and loyalty customers

Average age of clients in the portfolio Turnover by age band customers Growth rate of sales per customer ... Indici ad hoc da interviste/questionari

Customer satisfaction

BudgeIng and EvaluaIon

Identify critical processes in which the Company must excel to offer the value proposition necessary to attract and retain target customers and meet the expectations of financial azionisiti.
PROCESSI

Indicators of effectiveness, efficiency and innovation of key business processes.

Customer Needs

R&D

Project

Production

Marketing

Distribution

After Sales

Customer Satisfaction

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BudgeIng and EvaluaIon

Analyze the ability to learn and improve the company must achieve to secure long-term growth and organizational development. Indicators related to the three key elements of a learning organization: human resources, organizational procedures and systems.
PROCESSI

productivity human resources retention resources Turnover key figures Average length of employment for key Company turnover / average turnover of the sector ...... motivation / satisfaction Training
% Resources to train Number of hours training provided by resource ......

Information Systems
% Workstations with SI on-line % Workstations connected with systems Work group N access to databases or Internet connections ......

Ad hoc questionnaires N suggestions per employee % Suggestions adopted ......

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BudgeIng and EvaluaIon

'A strategy is a set of hypotheses about cause and effect, linking all Measures ultimately to financial indicators'. (Kaplan & Norton)
The design of the system of BSC requires the identification of re-lations between objectives in different perspectives through to a chain of cause-effect relations that express the sequence of assumptions underlying strategy. Each indicator constitutes an element of the chain, which communicates at a glance the major significance of the Strategy.
FINANCIALS
ROE Margins Volums Operative Margins

CUSTOMERS
Image Market Share

PROCESSES
Unit cost N.Producs Mktg $ % distributors

LEARNING
HR productivity % Training Motivations

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Reporting

Everybody can right down a number. Not everybody can interpretate that number

ReporIng
COMMERCIAL DEVELOPMENT Volums N. customers
Prospects New Customers Old Customers Lost Customers Market Share ........ ........ ........ ........ ........ ........ ........ .......

PROFITABILITY Net Income Volumes

Services

Products REVENUES Net Income Operative Costs EFFECTIVENESS Customer Service

Operational effectiveness (Average waiting time) Service Quality

Volumes COMMERCIAL EFFETIVENESS Volums Operative Costs

Operations

.. .. .. .. .. .. .. .. .. ..

PRODUCTIVE EFFECTIVENESS N. operations Operational Costs

Operative Costs

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ReporIng
The reporting allows you to assess the progress of the plans: status, achievement of targets, next steps and feedback.

Status
Financials Customer Process Learning
Finanziaria

Monitoring KPI
KPI
ROE Costs/Income
Clienti

Intervention
Actions

Status (%)

Activity

Start

Deadline

Sales Info

Highlights

Apprendimento Processi

Processes

Training & Learning

Feedback

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ReporIng

The dashboard is a tool for planning commercial address and control, aimed at facilitating the planning, management and monitoring in commercial activities. The dashboard is intended to be a means of support for: irect the business D aximize the effectiveness from the perspective of proactive actions M onitor the results to readjust the marketing effort. M he logic with which it was designed and built is to complement, not replace, the normal T tools already provided in the set of tools reserved for figures of front line

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ReporIng
Advantage Systemic vision Matching product-customer DescripIon Chances of nding a single system of data compared to assess on the basis of benchmark Provides the assignment of objecEves to the manufacturer to dierent types of customer, minimizing the risk of push sales(more expensive) Allows you to address the individual business acEviEes, guiding and monitoring not only the achievement of results Ability to enable Emely acEon specic training, linked with the skills idenEed as prioriEes

Commercial eciency and proacEve management skills development

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Definition of KPI

DeniIon of KPI
The adoption of criteria for measuring risk-adjusted performance allows management to better connect the performance of organizational units to business outcomes. Most companies follow a development path system? Performance measurement based on certain milestones.
Connection with the creation worth for shareholders

Financial Indicators

Financial Indicators + indicators efficiency / Effectiveness

Performance Indicatoris

Approach Balanced Business Scorecard

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DeniIon of KPI
Main reasons for the evolution of KPI definition

Internal:
diversification of business requires tools to measure performance risk weighted more sophisticated; the increased level of competition (caused by the consolidation of the market) requires innovative strategic planning tools; need for allocation of resources (capital, personnel, ...) in an efficient way to improve profitability.

External:
management of analysts' expectations.

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DeniIon of KPI

ROE =

UN PN

(Net Income) (Equity)

Advantage
Simplicity (easy to communicate internally and externally, easy to measure).

Disadvantage
Basis of accounting. Does not consider the riskiness of the business. PN approximation is inadequate to the shareholders.

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DeniIon of KPI
Represents the net 'normalized' net cost of capital allocated to the business divisions.

EVA =

(Incomes - Costs)
Net Income (normalized)

hb

Capital

Capital Cost

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DeniIon of KPI
The Break-even point (BEP) identifies the level of sales - expressed in units of product or monetary value - needed to cover all costs incurred

BEP =

Total Fixed Costs Contributions Costs

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DeniIon of KPI
IdenIcaIon of available resources:
Characteristics Tangible Resources financial Tangible Resources physics Intangible resources technology Intangible resources reputation
Bankable Ability to create internal capital Plant and machinery Capital Land and buildings Material of Patents / Copyrights / know-how R & D Technical expertise / Scientific Brands, customer loyalty Reputation (with suppliers, customers, government and non-government) Training, work experience Adaptability Motivation / faith of the employee

Indicators
Debt / equity ratio Credit rating Net Cash Flow Market value of fixed assets Alternative uses of fixed assets

# Of patents performance Royalty Costs of R & D Asset value of brands % Incidence regular customers Faith supplier Qualification of employees salary Turnover% incidence

Human Resources

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Main Mistakes

Main Mistakes
General Structure
Generic and not strategic. Perspectives are not integrated. Undefined values. Lack of connections with the operational structure. Levels of application blurred.

Indicators
Purely financial? (Balance). Not aligned to the strategy and not related to CFS (relevance). Too many indicators. Not accessible or can not be measured. Misleading indicators (simplicity). Static (flexibility and improvability).

Implementazione
Top-down approach, lack of consent of the management. Roll-out 'premature'. Connection 'accelerated' the reward system. Too many people, too much time.

Filosofia di fondo
Measurement for control, not for communication. Only reporting tool rather than planning. Reserved for management.

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