#9 Key Question: How does the corporate target system influence the company’s market engagements?

A corporate target system sets the direction for the strategic business development of the entire organization, encompassing companies, business units as well as hierarchical levels from top management to the shop floor. It enables a homogeneous and integrated top-/down target structure, from divisional, profit and cost center goals to individual performance objectives for managers and employees starting with the overall aims of the company. The following rationale applies:

  1. The highest corporate aim: Long-term profit maximization of the entire enterprise according to the Economic Principle.
  2. Corporate success drivers for profit maximization: Sustainable competitive superiority in differentiation, customer value and cost efficiency as corporate bedrock for maximum value creation. The successful implementation and exercise of these three success drivers leads to above-average growth, revenue and margin development .
  3. Strategic levers for growth and efficiency superiority: Competitive growth is accomplished through gaining market share in existing markets and entering new markets. Increased cost efficiency is determined by the achieved margins on revenues on the market side and incurred cost of the internal value transformation. These four strategic levers provide the arena that need to be addressed by the company to live up to the Economic Principle of profit and value maximization.

The corporate target system of long-term oriented profit maximization requires the achievement of above average competitive growth and value contribution by penetrating current markets and developing new markets on the basis of superior competitive differentiation, customer value and cost efficiency. According to the laid out requirements of the corporate target system the approach to market needs to be aligned accordingly with clear implications for  the entire marketing mix, determining the specifics of offering and pricing policy, communications and sales/distribution strategy per market. These instruments need to achieve the target system’s benchmarks in a sustainable, long-term oriented way, market by market. Along with the targeted sales volumes and prices in the market all costs necessary for a respective market engagement need to be planned in detail and reflected in quantified business and financial plans. These plans provide the benchmark for performance fulfillment and thus the realization of the company’s goals, yearly month by month. The result of each market engagement is predefined by the corporate target system: Profit maximization by above average growth and efficiency based on superior differentiation, customer value and efficiency.

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