After successful completion of the course, students are able to:

• forecast future sales, cost and profit via forecasting tools in R
• construct mathematically and calculate flexible Cost-Volume-Profit (CVP)-budgets under uncertainty in R
• manage CVP-budgets over time in an uncertain business environment (conceptually and in R)
• construct and operationalize latent variables and perform related statistical analysis
• design and implement strategic enterprise management systems

The course consists of four parts:

• Part A) Flexible CVP-Budgeting under Uncertainty: Risk-based performance management is the management of the performance that takes the future uncertainty explicitly into account. In the enterprise context the Cost-Volume-Profit (CVP)-framework is a comprehensive modeling approach. It starts with forecasting the future sales volumes and it associates the corresponding costs and profits. The calculations are performed in the software package R.
• Part B) CVP-Budget Management under Uncertainty: The CVP budget manager is responsible for keeping the actual cost, volume and sales developments over time in line with the budgets. For this she needs to control the budget realizations periodically and to update the forecasts according to the new information revealed at run-time.
• Part C) Forecasting and Latent Variable Analysis: Budgets are distinct from forecasts. Traditionally forecasts are an essential input into the budgeting process and the budget is the output of the process. There are different methods to make good forecasts. Next to the forecasting topic this part also covers latent variable analysis. With this analysis latent, i.e. not directly observable variables are measured and analyzed with respect to manifest, i.e. observable variables. The analysis is applied in the Enterprise Risk Management context and it is performed with the “lavan” package of R.
• Part D) Strategic Enterprise Management: At the strategic management level the concepts of the Boston Consulting Group (BCG) are presented by an external lecturer to give the students insights into the professional state of the art in the strategic management domain.

Imagine, your are hired by a company as an assistant of the management board. You have two responsibilities:

1. You are supporting the Chief Financial Officer (CFO) in the Cost-Volume-Profit (CVP)-budgeting process and in the CVP-budget management over the year.
2. You are supporting the Chief Executive Officer (CEO) in the strategic planning process.

In this course you acquire the knowledge, skills and competences needed for this job via a constructivist teaching methodology, i.e. learning by doing case studies.

• Final exam with calculation & case examples and multiple-choice questions
• Preparation for the lecture via reading assignments and homeworks
• Project work
• Case presentations and discussions in the lecture

• Cost-Volume-Profit (CVP) framework for integrated planning and control of sales volumes, costs and profits
• Proactive double loop management systems
• Software package R (see R in a nutshell-document)