• Familiarise with the Entrecomp approach to Management literacy: Write specific reference to the competences and sub-competences envisioned by EntreComp ad instrumental for financial literacy
• Assess your progression in management literacy: In the context of this unit, you will find available a 8-level progression model that you can use to self-assess your new competences of knowledge on the matter
• Exploit new tools, frameworks and techniques for strategic management: At the end of the module, we will present readers with robust and consolidated management frameworks for businesses and operations that can be easily applied in ICH sectors.

The topic of financial education and literacy is extremely relevant and very much debated. All large International organisations seem to be particularly proactive in this specific training area.

The World Bank, OECD, International Labour Organisation, United Nations all developed their own international scale initiatives aimed at strengthening financial literacy – with particular reference to marginalised and disadvantaged communities, developing countries, rural areas, women and other targets at high risk of socio-economic marginalisation.  The efforts go on…

…for instance, as we speak, the European Commission is collaborating with the OECD to develop a Financial Competence Framework for the EU.

The Entrepreneurial competence framework developed by the JRC of the European Commission lists “Financial and Economic literacy” as a stand-alone competence to nurture, develop and strengthen a sence of initiative and entrepreneurial spirit.

Financial and Economic literacy belongs to the second training area of the framework, the one related to RESOURCES, along with:

The EU Commission’s choice to gather this competence with the other listed in the previous slide is very interesting: while all the other competences of this area refer to attitudes and mindset, 2.4 is the only one at high technical-intensive coefficient.

In the view of the European Commission, being proficient in the basics of finance and economics is as a strategic resource for excellence and performance as being motivated, focused and inspired.

Eventually, you should keep this in mind when dealing with difficult circumstances that challenge your spirit, but also your technical and sector specific knowledge…

As per framework, the competence is described as follows:

By assessing the previous table, we might notice that 2.4 is a competence with a three-dimension focus:

1. Budgeting and cost structuring
2. Finance-wise decision making
3. Operative sustanability

In other words, the EntreComp seems to link the same training areas for both entrepreneurial aspirations and resilience to the concrete and actual profitability of the idea: a keen sense of initiative and a fiery motivation might lead to a disaster if numbers (i.e., €) are not rationally pondered…

A great idea might not be necessarily financially viable (due to prohibitive investments or unsustainable profit margins). On the other hand a profitable idea is always a great idea to consider and work on…

The EntreComp framework lists four detailed threads linked to competence of no. 2.4 that are instrumental to master at least the essentials of finance and economics:

For each of these threads, users can self-assess their proficiency level by referring to the 8-dimension progression model developed by the framework and generally applied to each thread of each competence. 

This competence is really about familiarising oneself with common terminology used in business and management:

Budgeting is about being able to forecast cash flow needs per each cost category.

Each function requires a certain amount of economic resources to perform their given tasks: the final budget assigned to each function/process/team (depending on the label of the cost category) will result from reliable and robust estimations based, for instance, on benchmark with historical data.

Skillful budgeting comes with experience: as activates move on throughout time, entrepreneurs gather a critical mass of references and experience that will help them to better orientate their future budget-related decisions.

There are several methodologies that can be applied for budget planning and forecasting, we will go through them in the second unit of this module.

…in other words, finding people willing to invest in the organisation/business idea in exchange for an interest rate.

The “traditional” funding source is represented by the banking system. However, nowadays there is a very large cohort of stakeholders from both the public and private sector that can be of interest for this specific tasks:

For further details please refer to the next unit.

As per EntreComp framework, understanding taxation is about:

In the course of this unit, we want to provide users with consolidated tools and models that they can rely on to strategize their organisations. The tools that you are going to be exposed to represents the key essentials of your management literacy and will support you in:

Please consider that these tools have not been developed in reference to a specific sector or industry. As such, they fit perfectly to Intangible Cultural Heritage and the markets you normally operate in.

As of today, the BMC remains the favourite tool for aspiring and established entrepreneurs to frame and conceptualize the business model of their organisation.

By business model we refer to the way in which an organisation/business generates value and pursues economic sustainability.

The BMC is intended to be printed out and filled in by participants with post-it notes, graphs, drawings…whatever they feel might generate a contribution. Typically, it is a teamwork activity but there is no real boundary to its use. Participants brainstorm together on the very core elements contributing to the definition of the business model.

The BMC includes nine clusters of resources to which these core elements might refer to. As users might notice, the design of the tool does not suggest a standard fill order…as a matter of fact, users can proceed as they wish for themselves.  Here is a tentative guideline for your consideration:

Talking about (8.) Cost Structure and (9.) Revenue Streams, we take this opportunity to go back to the EntreComp’s thread of Budget so as to present the most common methodologies for cost structuring and budget forecasting:

Source: Michael E. Porter, Competitive Advantage, 1985, p.87

Another acclaimed model to “visualise” a firm’s value equation is the so defined Value Chain. In the view of this framework, an organisation is an ongoing process of activities that transform raw materials in goods and services for the public.

Business' activates are divided into two categories:

Source: Michael E. Porter, “How Competitive Forces Shape Strategy”, Harvard Business Review, May 1979 (Vol. 57, No. 2), pp. 137–145.

We also own to Michael Porter another cornerstone of strategic business management.

The Model of Five Forces is a reference framework to analyse and assess the competitive dynamics of a specific industry/sector. The framework includes five variables (“forces”) shaping competition and the competitive challenges faced by an organisation.

For further details on the framework, please visit: How Competitive Forces Shape Strategy, HBR by Michael E. Porter

Other authors integrated Porter’s efforts with new contributions and identified other sources capable of influencing the competitive potentials of an organisation:

Deming, W.E., 1950. Elementary Principles of the Statistical Control of Quality, JUSE.

If you read any management handbook recently, it is highly possible that you stumbled across things such as Lean Manufacturing, Total Quality Management (TQM), Just In Time (JIT): audit framework applied in Japanese industry from the second half of the last century.

In reality, they all take inspiration from a US author, W. Edwards Deming, who came in contact with Japan's’ industrials after the second World War.

As of today, the DEMING cycle remains one of the most consolidated, robust and reliable framework to evaluate organisational processes and their compliance to internal monitoring standards.

The model owes its large-scale diffusion to its great ease of application, user-friendliness and linearity.