The objective of this section was to develop a basic simulation concept for decision support. In the strategic planning of a company, planning in the narrower sense in the form of decision-making preparation is in the foreground. Targeted analysis of the complexities of the questions: how the company currently behaves, what happens around the company, and what the company should do, generates action alternatives that reflect the entrepreneur’s goals. This must be geared to the operational consulting in the strategic environment. A theoretical analysis of the determinants influencing the strategy of a company shows that in the strategy development for most agricultural companies the management consultancy must focus on Porter’s standard strategy of cost leadership.
Models used for business consulting must take into account the course of a business decision. In the development, they must be designed so that they are flexibly applicable and a continuous development is possible. To this end, the model development is chosen in the form of an evolutionary prototyping approach.
A problematic aspect in the conception of a model for financial planning is that so far hardly any models have been developed which make it possible to operate practice-oriented financial planning. In the sense of a problem-adequate model solution, the simulation was finally presented in the form of the simulative risk-opportunity analysis. This approach makes it possible to create a graphic target value comparison of individual alternatives in an elegant manner and to derive action consequences from this.
This section aims to develop a simulation framework for mapping financing decisions. To do so, it will first be necessary to review key aspects of financing and their restrictions, which are mainly the result of firms’ limited access to the capital market.
Another problem derives from the use of simple heuristics in the financial planning decision, as they are easy to use but also subject to restrictive assumptions. “Leverage” models for optimizing the debt capital can eliminate some shortcomings, but are unsuitable as decision models.
With the help of complete financial plans, the deficiency can be overcome, so that they form the basic framework for further model building.
The financing of an enterprise refers to measures of fundraising and repayment as well as the arrangement of the payment, information, control and security relationship between enterprise and investor. The funding can be systemized according to the following criteria:
1. According to the criterion of the legal status of the capital providers and the capital liability one differentiates between self-financing and debt financing.
2. According to the criterion of maturity of the forms of financing, short, medium and long-term financing can be subdivided, whereby time differentiation can be chosen relatively arbitrarily.
3. After the financing, a distinction is made in start-up financing, expansion financing, refinancing and reorganization financing.
4. According to the criterion of the source of funds, a distinction is made from the company’s point of view in external and internal financing.
In the agricultural sector, financing is limited to self-financing in the form of self-financing from profits and capital release and debt financing, usually through bank loans or leasing. Borrowing represents the most important part of the risk-influencing financing of an agricultural
because there is a right to a timely repayment and the cost of the financing varies considerably due to the interest rate risk.
The following section therefore deals with the different possibilities of debt financing through bank loans and leasing. A detailed description of the wide range of financing options (eg supplier credit) is omitted here, with reference to the corresponding basic literature such as U. BODMER (1998) or PERRIDON AND STEINER (1999).
Another important contribution to financing in the agricultural sector is the retained profits, depreciation and disposal of assets. This type of financial provision inevitably results from the performance-based process and, in detail, does not require detailed elaboration for the understanding of this work, since it implicitly results from the description of the financial plan. Rather, the focus is on the practice-relevant forms of financing bank lending and leasing.
The bank loan
In order to do justice to the later model considerations, it seems sensible to first classify the bank loans according to their terms. Although loans are usually divided into short-term, medium-term and long-term maturities in financing practice, in this work, deviating from this classification, a classification is to be made only in the short and long term. A short-term loan is thus understood as a loan with a term of up to one year, which is referred to as a current account in this work and serves as a bridging loan in the event of a temporary capital requirement due to an extraordinary charge. On the other hand, in the sense of this work the long-term loan is understood as a multi-year credit agreement in the form of a real credit or personal loan.
The long-term loan
The term long-term loan encompasses a type of loan that can be summarized from a large number of non-uniform, contractual contracts. The contractual formulations of the individual loans can have considerable divergences with regard to interest rate, repayment, term, amount of disbursement, collateralization, etc. Within the framework of a customer-oriented marketing strategy, the credit institutions shape the product, price and condition policy according to target groups and the range of services offered in the non-standardized area thus receives a flexibility that meets customer needs.