Corporate Management - Study Notes

Updated on May 15, 2025

Introduction

Corporate management or business management, is an important tool for shaping a company and coordinates all current and future activities, such as the allocation of (human) resources or the definition of management measures. Depending on the application context, a distinction is made between:

• Institutional view / corporate management in the narrow sense: “Who leads?” - This means the management of the company by a group or individual persons / managers who have the corresponding authority within the company.
• Functional view: “How is leadership carried out?” - Refers to all management activities to make decisions that are decisive for the existence and future of the company.
• Process perspective: "How is leadership performed?" - Refers to all actions necessary for the successful management of the company. This can take place at various management levels within the company.

Tasks of Corporate Management

Institutional

The tasks range from fundamental decisions, such as the choice of legal form, location and also the definition of the object of the company, to strategic corporate planning, which primarily involves the analysis of market competition and the implementation of appropriate measures in order to achieve future success.

One can therefore differentiate between:

• Internal leadership : design of the company, definition of basic structures and processes
• External leadership : Consideration of mutual influences from the corporate environment

Functional/ Process-based

This includes all actions necessary for the successful management of the business, regardless of the management level at which these actions occur. The following (classical) subfunctions can be distinguished:

Corporate planning and goal setting

“What if?” – this question is central to corporate planning and should contribute to the conceptual design of future, operationally relevant processes, structures and results.

There are various relevant areas, such as production planning, personnel planning, or financial and sales planning. Furthermore, a distinction is also made between

Strategic planning
formulates basic objectives with a timeframe of five years

Tactical planning
also known as medium-term planning, formulates concrete goals that are to be implemented within a time frame of two to five years

Operational planning
The focus is on entrepreneurial value creation, i.e., the company's efficiency and effectiveness in serving its customers' needs in the market. The time horizon here is a maximum of one year.

organization

A correspondingly targeted framework of planning is deployed to turn visions into reality.

Personnel deployment

Filling positions with competent personnel

Management / Leadership

The individual actions are targeted in order to optimally implement planned activities

Control / Controlling

Target-actual comparisons allow for early detection and countermeasures. Furthermore, experiences are collected and documented throughout the entire process so that they can be incorporated into future plans/projects or, if necessary, improved.

Since these subtasks are related to each other, they can be understood as a process.

Leadership Approaches

In addition to the goal of maximizing profits, other aspects of successful business have increasingly emerged in recent years. Three management approaches are distinguished:

Environmentally oriented approach

In response to environmental pollution and global warming, not only ecological development but also the lifestyle of the population and demographic change are being taken into account in corporate management.

Value-oriented approach

It is considered a key concept in modern corporate management. Sales, turnover, and profit are the key metrics and are intended to ensure the company's survival. The interests of investors are therefore paramount.

Socially oriented approach

The social order determines entrepreneurial goals: humanity, alongside economic efficiency and productivity, is paramount. This implies the goal of efficient business operations while simultaneously meeting social demands, such as reasonable working hours and fair wages.

Level-oriented approach

These represent the essential and classic approach to corporate management. The company is divided into three levels:

• Top management: responsible for the long-term and strategic direction.
• Lower management : responsible for operational business; e.g., creating production plans.
• Middle management: is to be understood as the link between the strategic and operational levels.

The Rules of Corporate Management: Corporate Governance

Definition

Corporate governance refers to the principles of corporate management. As a legal and de facto regulatory framework, they are intended to contribute to the management of the company and ensure monitoring in the interests of all important stakeholders. This is intended to prevent or limit opportunistic behavior by stakeholders, for example, due to conflicting interests or loopholes caused by potentially incomplete contracts. Corporate governance can therefore be viewed as a corporate constitution.

Key Rules

• Accountability - Ensuring that employees in leadership and management positions are responsible for their decision-making process and consequent actions.
• Fairness - Equal treatment of all involved stakeholders in the running of the company, including but not limited to employees, shareholders, customers.
• Transparency - Provision of clear and authentic information about the company's finances, operations, future plans, and more.
• Ethics - Upholding high ethical and legal standards in the company's operational framework.

What constitutes a strong system of corporate governance? Common elements include - board of directors, stakeholder engagements and rights, risk management, financial reporting and disclosure, etc. A company's approach to compensation and sustainably have become increasingly important as well.

Robust coroporate governance has an impact on:

• the building of trust and confidence
• fraud prevention
• fair treatment of key stakeholders
• promoting ethical behaviour

 

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