Three business administration terms you should know
Executive Education / 27 February 2020
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Programme Manager
Annette Blank's main focus is on the practical design of banking topics for different target groups and their implementation in appropriate forms of learning and training units, such as certificate courses, seminars or blended learning concepts.

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All corporate decisions are based on business administration factors. Each step up the career ladder – whether as team leader, project manager, specialist or recent career changer – brings greater decision-making responsibility. So you should know what the business administration terminology you will undoubtedly encounter in the course of your career actually means. In this article, we explore three important business administration terms that may help you in your working life.

1.Investment decisions

Every investment represents a decision-making conundrum, because the ultimate aim is to select the ideal investment opportunity from a multitude of available investment alternatives.

A variety of static and dynamic investment processes are available for substantiating an investment decision; we cover them all in our Business administration in practice seminar series. For example, we show you how to decide whether carrying out project A will be more advantageous than carrying out project B – or whether it might be best to avoid all the projects under consideration.

2. (Key) indicators

To what extent can you be certain that a company will be solvent in the future? To answer this question, people use various financial indicators. For example, a financial analysis determines a company’s static indebtedness ratio by correlating debt and equity capital. A high debt-equity ratio may be interpreted as a high financial risk.

How great is a company’s future earning power? This question can be answered by recourse to earnings-related indicators. For example, a company’s overall return on equity, which is the ratio of profits plus interest on debt capital to aggregated capitalisation, indicates the in-house rate of return on capital invested by the company. This is a reliable indicator of earning power.

3. Stakeholders (in a company)

Joe Kaeser, CEO of Siemens, is meeting with representatives of the Fridays for Future movement. The meeting is being held due to Siemens’ decision to provide a traffic-signalling system for a coal-mining project in Australia. Coal used as an energy source releases large amounts of CO2.

In the past, corporate strategies focused on shareholders, meaning that the interests of the company’s owners and shareholders were paramount. Shareholders seek to maximise the market value of their equity share. The company’s market value, as a quantitative measure of entrepreneurial performance, is based on share-price increases, distributed dividends and convertible stock options.

Recently, this approach has changed. Now attention is focused on the stakeholder approach. Alongside financial and business objectives, this approach also embraces social responsibility and social acceptance.

We have already explored the differences between shareholder and stakeholder approaches in another blog post.

Our three-day compact seminar “Business Administration made simple” is intended for anybody with an interest in business administration, including beginners.