We assume that the world economic situation will be subject to heavy fluctuations, even following the economic crisis. This makes it difficult to make reliable projections. Furthermore, the printing industry will continue to be subject to considerable structural adjustments – basic conditions for our customers have already significantly changed over the past decade.
Overall, this presents considerable challenges for our management and control system. We must ensure that all the Group’s units worldwide vigorously pursue our strategic thrust and simultaneously promptly realize the cost-reduction goals while continuing to be in a position to respond quickly to changes in the markets. In addition, it is important to regularly and continuously monitor not only the risk environment, but the effectiveness of measures by which we counter individual risks as well.
Our highest corporate goal at present is to absorb the impact of the world economic crisis on our business development to the greatest extent possible and to increase the Group’s independence from cyclical fluctuations. The Group’s corporate organizational structure was reorganized at the beginning of the financial year in order to be in a position to best pursue the various strategic thrusts. In order to quickly put our program Heidelberg 2010 into operation, this has been made the responsibility of, and put under the direct management of, the four members of the Management Board. They work closely with the ‘Program Management Office’, which is comprised, for example, of the head controller and the head strategist. This organizational unit coordinates and controls the implementation of 400 individual measures. A total of 130 members of senior management are participating in this program at present.
This ensures a systematic and sustainable reduction in the Heidelberg Group’s break-even point. We have begun to streamline the process organization throughout the Group and among all the regions and areas in order to reduce structural costs. We are cutting back the number of employees, especially among central units. We will also reduce costs by means of structural adjustments.
Planning that is not entirely reliable, comprehensive changes, and structural adjustments: the management of risks is of enormous significance in times of crisis because the financial scope to take action is noticeably restricted. Nevertheless, also of importance are the questions of how strategic competitive advantages will develop in view of the crisis and changes within the Group and how we can make sure that we take advantage of opportunities when the economy picks up once again.
The management of risks and opportunities is an integral part of our strategic planning, it is part of all annual controlling and reporting processes, as well as of our medium-term planning process. Heidelberg’s controlling operation continuously generates up-to-the-minute quantitative and monetary information based on internal sources of information. As the graph on the right shows, comparisons of targets vs. the actual performance of all developments of significance for the development of business are pursued continually. We have shortened the planning cycles of our control system. At least on a monthly basis, we compare target figures with the actual values of all developments that are significant for our business development. We place the highest value on the flexibility and adaptability of our planning systems to ensure our ability to react immediately to changed underlying conditions or current developments. Based on the figures obtained as well as a wide range of data from the corporate environment, we continually generate various scenarios in order to undertake countermeasures against risks and take advantage of opportunities. We subject this scenario information to sensitivity analyses, thereby determining a range of expectations for our future business development.