86.Describe kpi reporting process and give examples of main kpIs for different aspects of business activity.

KPI = Key Performance Indicator

KPIs aggregate multi-dimensional information in asingle measure for the purpose of

Planning

Coordination

Control

Incentives

There are three types of KPIs used in VBM systems

1. Profitability ratios are used for measuring the relative value realized in a particular period

Examples:

Return on Invested Capital (RoIC)

Cash Flow Return on Investment (CFRoI)  Simple and intuitive, but must be compared to hurdle rate (WACC)

2. Value creation measures determine residual profits and are used for measuring the absolute value realized in a particular period

Examples:

Economic Value Added (EVA)

Economic Profit (EP)

Cash Value Added (CVA)

Earnings less Risk-free Interest Charge (ERIC)

3/ Aggregated value measures are used for measuring the (change in) total value

Examples:

Discounted Cash Flow (DCF)

Market Value Added (MVA)

87.Due Diligence and Controlling

"Due diligence" = standard of care used while investigating a business/ company or a part thereof prior to signing a contract

 Example: process through which a potential acquirer evaluates a company or its assets for acquisition

 Result = Costs and valuation of risks and options

Definition of relevant unit

Definition of streams and of the relevant data/costs Screening of relevant data (HR, legal, financial/tax, IT infrastructure) and costs

Detailed analysis and discussion within the project team Baseline and Due Diligence Report

Typical deliverables of a Due Diligence:

Legal risk, models for the Due Diligence

Compliance risk report

Business case

Tax analyses (Vat in focus)

Performance assessment, duty and task analyses

Processes maturity assessment

Organisational analyses

Decision process analyses, KPI analyses

IT functions, support analyses

Security risks

Asset inventory analyses

88.Outsourcing and Due Diligence

OS (outsourcing) means that an OS provider takes over functions of an organisation

Typical OS areas:

Business processes

Business functions

IT processes

IT functions

Outsourcing is the contracting out of a business process, which an organization may have previously performed internally or has a new need for, to an independent organization from which the process is purchased back as a service. Though the practice of purchasing a business function—instead of providing it internally—is a common feature of any modern economy, the term outsourcing became popular in America near the turn of the 21st century. An outsourcing deal may also involve transfer of the employees and assets involved to the outsourcing business partner.

Two organizations may enter into a contractual agreement involving an exchange of services and payments. Outsourcing is said to help firms to perform well in their core competencies and mitigate shortage of skill or expertise in the areas where they want to outsource.

Companies outsource to avoid certain types of costs. Among the reasons companies elect to outsource include avoidance of burdensome regulations, high taxes, high energy costs, and unreasonable costs that may be associated with defined benefits in labor union contracts and taxes for government mandated benefits. Perceived or actual gross margin in the short run incentivizes a company to outsource. With reduced short run costs, executive management sees the opportunity for short run profits while the income growth of the consumers base is strained.[2] This motivates companies to outsource for lower labor costs. However, the company may or may not incur unexpected costs to train these overseas workers.[9] Lower regulatory costs are an addition to companies saving money when outsourcing.