This thesis deals with the questions, whether there is a correlation between strategies and financial Key Performance Indicators (KPls) and, how their mutual interdependence developed over time. The author wants to find out if the KPls are changed, if the strategy is changed consequently and if that change, again, affects the KPIs.
Therefore, this work selectively focuses on the evaluation of annual reports between 2009 and 2018 and the development and application of an adjusted Balanced Score- card (=BSC) through the further investigation of its financial perspective.
Key figures make a significant contribution to the management of organisations, as they create transparency by providing information about the corporate performance and the progress towards its stated goals - its strategy. lndicators and strategies seem inevitably linked, so that they lose their meaning or significance with- out each other.
Due to a study on key performance indicators of PwC in the year 2017 in Luxembourg with over 40 executives surveyed, only 45 % of respondents believed their key performance indicators monitor the performance of long- term strategic goals and 31 % are not clearly aware of the link between their KPls and their long-term strategy. Those are alarming numbers.
Often companies use too many, outdated or even too few KPls and the progress of the company's KPls towards its strategic objectives is not regularly updated and communicated to the staff and workforce. A lack of information makes the general company performance be the main reason for the executives for monitoring KPls.
The need for change is known as 52 % of the executives surveyed see a need for improvement of their currently followed set of KPls. One of the challenges which affected the companies surveyed within their KPl process - including a lack of standardised processes across the industry - is the unclear business strategy and the KPls' irrelevancy towards the existing business/strategy itself.
This arises the question how target-oriented do German companies align their KPls and how much do they depend on the corporate strategy? ls there a correlation definition the reason why the strategy reference does not become clear and should the KPls be adapted or even changed in the long term? Which strategy leads to which KPls, and which value drivers influence them?
Table of Contents
1 INTRODUCTION
2 THEORETICAL BACKGROUND
2.1 KEY PERFORMANCE INDICATORS
2.1.1 Key figures
2.1.2 Differentiation of key performance indicators
2.2 STRATEGY
2.2.1 Delineation
2.2.2 Strategy classification
2.3 STRATEGIC CONTROLLING TOOLS
2.3.1 Definition
2.3.2 Balanced Scorecard
2.4 DAX COMPANIES
2.4.1 Deutscher Aktienindex
2.4.2 Annual reports
2.4.3 Presentation of six DAX companies
3 METHODOLOGY
3.1 SAMPLE SELECTION
3.2 ANNUAL REPORTS
3.2.1 Strategy classification
3.2.2 Selection of key performance indicators
3.2.3 Development of key performance indicators 2009 – 2018
3.2.4 Interrelation between key performance indicators and strategies
3.3 ADJUSTED BALANCED SCORECARD
4 RESULTS
5 CRITICAL APPRAISAL
6 CONCLUSION
Objectives and Topics
This thesis examines the correlation between corporate strategies and financial key performance indicators (KPIs) in major German companies. The central research question investigates whether a prevalence of mutual interdependence between strategic orientation and financial KPIs exists, and how these relationships evolve over time within the context of reporting cycles.
- Theoretical definitions of key figures, KPIs, and corporate strategy concepts.
- Methodological analysis of annual reports from six DAX-listed companies.
- Implementation of an adjusted Balanced Scorecard to map strategic financial impacts.
- Evaluation of cause-effect relationships between strategic shifts and financial metrics.
Excerpt from the Book
1 Introduction
Key figures make a significant contribution to the management of organisations as they create transparency through providing information about the corporate performance and the progress towards its stated goals – its strategy. Indicators and strategies seem inevitably linked, so that they lose their meaning or significance without each other.
Due to a study on key performance indicators (=KPIs) of PwC in the year 2017 in Luxembourg with over 40 executives surveyed, only 45 % of respondents were of the opinion that their key performance indicators monitor the performance of long-term strategic goals and 31 % are not clearly aware of the link between their KPIs and their long-term strategy. Those are alarming numbers as “[KPIs] are more in the spotlight than ever before due to the real need for guidance in the current market uncertainty and volatility, coupled with the abundance and diminishing cost of data.”
Often companies use too many, outdated or even too few KPIs and the progress of the company's KPIs towards its strategic objectives is not regularly updated and communicated to the staff and workforce. A lack of information makes the general company performance be the main reason for the executives for monitoring KPIs.
The need for change is known as 52 % of the executives surveyed see a need for improvement of their currently followed set of KPIs. One of the challenges which affected the companies surveyed within their KPI process - including a lack of standardised processes across the industry - is the unclear business strategy and the KPIs' irrelevancy towards the existing business/strategy itself.
This arises the question how target-oriented German companies align their KPIs and how much do they depend on the corporate strategy? Is there a correlation between the strategic alignment and the selection of KPIs? Could their partially imprecise definition the reason why the strategy reference does not become clear and should the KPIs be adapted or even changed in the long term? Which strategy leads to which KPIs and which value drivers influence them?
Summary of Chapters
1 INTRODUCTION: Outlines the significance of KPIs for management transparency and introduces the core research question regarding the correlation between strategic alignment and financial performance metrics.
2 THEORETICAL BACKGROUND: Provides fundamental definitions for KPIs, corporate strategies, and controlling tools like the Balanced Scorecard, establishing the framework for the subsequent analysis.
3 METHODOLOGY: Details the sample selection of DAX companies and explains the qualitative approach used to classify strategies and analyze KPI development within annual reports.
4 RESULTS: Presents the findings regarding strategic classifications and the observable connections between specific strategic measures and financial KPI outcomes across selected companies.
5 CRITICAL APPRAISAL: Discusses limitations of the research, including the influence of external environmental factors and the challenges of establishing direct causal links in complex organizational structures.
6 CONCLUSION: Summarizes the key insights, noting that while a general correlation is present, a conclusive demonstration of mutual interdependence remains difficult and suggests paths for future research.
Keywords
Key Performance Indicators, KPI, Balanced Scorecard, BSC, Corporate Strategy, DAX, Strategic Controlling, Financial Performance, Annual Report Analysis, Business Strategy, Performance Management, Value Drivers, ROI, EBIT, Strategic Alignment.
Frequently Asked Questions
What is the primary focus of this thesis?
The work focuses on analyzing how financial key performance indicators (KPIs) in large German companies relate to their declared corporate strategies over a ten-year period.
What are the central thematic fields?
The core themes include strategic management, the application of financial ratios, performance monitoring via Balanced Scorecards, and the interpretation of annual corporate reports.
What is the primary research question?
The research asks whether a significant correlation between corporate strategies and financial KPIs exists and how their mutual interdependence develops over time.
Which scientific method is utilized?
The author employs a qualitative content analysis of annual reports from 2009 to 2018 to classify corporate strategies and track the corresponding development of specific financial KPIs.
What is addressed in the main body?
The main body covers the theoretical basis of KPIs and strategic tools, the methodology for extracting and categorizing strategy data, and the empirical application of an adjusted Balanced Scorecard to evaluate company performance.
Which keywords characterize the work?
Key terms include Balanced Scorecard, Key Performance Indicators, Strategic Controlling, Corporate Strategy, and DAX Companies.
How is the Balanced Scorecard applied in this work?
The author uses an adjusted version of the Balanced Scorecard, focusing specifically on the financial perspective to map cause-effect relationships between strategic objectives and quantifiable financial results.
Which companies serve as case studies?
The study investigates major German DAX companies, specifically detailing the strategies and financial developments of organizations such as Daimler, BASF, and Bayer.
Why are annual reports chosen as the data source?
Annual reports are the primary source because they provide a publicly accessible, transparent, and structured overview of a company’s strategic goals and financial performance over time.
What is the main finding regarding strategy-KPI correlation?
The study finds that while companies do align KPIs with strategic goals, a definitive and conclusive correlation is difficult to demonstrate due to environmental volatility and complex internal dynamics, highlighting the need for more granular future research.
- Citar trabajo
- Anonym (Autor), 2019, Financial Key Performance Indicators and the strategy of six DAX companies. An analysis, Múnich, GRIN Verlag, https://www.grin.com/document/1129932
