Business Administration: Principles and Practices

Posted on Dec 7, 2024 in Other subjects

Company: Definition and Core Concepts

A company is a structured system or group of individuals oriented towards service provision.

A service is something that is produced and consumed simultaneously; thus, it never exists in a tangible form. You can only see the result after the fact. Unlike goods, it cannot occur in one place and be sent to another, nor can it be stored.

Adaptive problems are external issues affecting the business, such as competition.

Administration: A Continuous Process

Administration is a continuous and systematic process aimed at achieving goals through people, supported by their major efforts, interrelated and coordinated actions. Effective and innovative management is essential to the overall success of any organization. Administration involves a structured group of people who work together to meet certain goals that individuals could not achieve alone. Management coordinates the human, material, and financial resources that make up an organization. Administration, then, is “mental discipline, common sense, and experience.”

Basic Functions of Administration

Operational functions identify where efforts are applied, and administrative functions solve the problem of how to do things. They are applied to all levels of operational functions.

• Planning function = what to do
• Organization function = how to do
• Direction function = execution
• Control function = check

Administrative Process

• Plan
• Organize
• Control
• Direct

Conceptual Basis for Analyzing Administrative Tasks

1. General Systems Theory: A practical problem cannot separate the psychological, economic, or technical aspects.

2. Companies are created and developed to meet human needs regardless of their nature, not only to make money.

3. Productivity depends not only on the technology used but also, and especially, on human beings.

4. Situational or Contingent Approach: Situational refers to occurrence by chance. Contingent means it may or may not happen.

Maslow’s Hierarchy of Needs

Humans are driven by requirements. If there are needs, there is motivation.

A need is no longer motivating once it has been satisfied.

Hierarchy of Needs:

1. Physiological
2. Security (employment, meeting requirements to keep the job)
3. Membership (belonging or acceptance) – feeling good as a person, having a good relationship with the company.
4. Recognition (esteem) – award for good performance.
5. Self-actualization (maximizing one’s potential and succeeding) – developing what one intends to do long-term, independent of the proposal (being the best).

Efficiency, Effectiveness, and Performance

Efficiency (Static): The ability to accomplish more with fewer resources (productivity). It is a minimum condition for survival, followed by success. It is concerned with making things right.

Efficiency (Timely): Achieving a result, sometimes regardless of the cost to do so. It is the need to solve a problem in the best way possible.

Effectiveness: The sum of efficacy (on what to do) and efficiency (how). It is the foundation of success, doing the right thing.

Performance of the Engineer

• Administrative (Management): To organize and improve what exists or is known (conformist and static).
• Business: Redirecting resources from areas of low consequence to areas of high or rising results. You must discard the past, what exists, and what is known. It is necessary to create the future (a vision that seeks new opportunities and innovation).

Companies are looking for new ways to evolve, such as using outsourcing. Therefore, it is necessary to renew and not stagnate. Do not let yourself be and wait for problems to come to blows; you have to be informed.

Steps to be Taken:

• Identify my skills and strengthen them.
• Establish contacts to find out what’s happening in the market (more information).
• Assume some degree of flexibility and tolerance to likely changes and take risks.

Relations and Functions of Business

1. For the Environment or Surrounding (External Relations)

a) Customers: There is competition that is trying to take away our clients. It is necessary to improve, innovate, and adapt to customer needs.

b) Suppliers: Always looking for the cheapest source is a mistake. The idea is to secure a vendor to ensure our customers are satisfied, no matter the cost.

c) Banks: It is difficult to have money for all business needs. Customers do not pay immediately. It is necessary to work with outside capital.

d) Shareholders: They provide the capital and require a reasonable profit.

e) State: It just takes profits by collecting taxes.

f) Provisional Institutions

g) Social Environment: Affected by political, economic, and relations with other countries.

h) Environment: Care to meet environmental standards and not affect the natural environment.

i) National and International Competition

2. Personal (Internal Affairs)

Operational functions: Activities that directly influence the production process.

Advisory functions of staff: They act through the operational functions without intervening directly in production. They serve or support the operational functions.

The consultant presents alternatives.

3. Alternative Approaches (Business, Mission, or Purpose)

Economic function: Efficient use of resources (efficiency).

Social function: Meeting the real needs of consumers or customers, providing a stable source of work and satisfaction for employees, and considering the environment.

Systems Theory

Analysis models of natural phenomena.

• Deterministic models: Processes that can be measured based on science and can be prevented from occurring (e.g., chemical phenomena).
• Stochastic models: Based on probability theory.
• Models in which there is synergy: Special forces that create situations that can be good or bad.

Reductionist Approach and Analytical Perspective

• Examination of the parties independently.
• “If we sink too much into the component parts of an object, what we gain in meaning we lose in content.”

Systematic Approach

• Write instead of decomposing.
• Integrating rather than dividing.
• Do not negate the value of the analysis as a tool of scientific method, but emphasize the need to use it without losing sight of the interaction between the parties under study.

General Theory of Systems

A base to resolve and manage the modern enterprise.

• An analysis of the whole (internal and external interactions).
• Explain phenomena that occur in reality.
• Predicting the future behavior of reality.

This allows the engineer to make broader decisions.

Prevent the increasing specialization of science from leading to a lack of communication between professionals of different disciplines.

System Definition

A system is a set of interrelated objects coordinated with each other to achieve one or more objectives.

A cluster is a set of objects between which there is no net interaction.

Synergy: The effect of the interplay or interaction between the parts of a system. The synergy that is generated is defined as: the whole is different from the sum of its parts. There is synergy when the examination of the parts in isolation cannot explain or predict the behavior of the whole.

Piecemeal Approach to Administration

When managers pay too much attention to highly specialized areas, they may lose sight of the overall objectives of their business since the contribution of a particular subsystem is relevant to the overall system.

This inattention to the total system can be deliberate in the sense that the manager of a department or a subsystem decides to enhance his own performance at the expense of the overall operation. It is necessary to be outstanding in all areas of the company to achieve balance. More likely, such neglect is not malicious but the product of ignorance of the interaction of its decisions with other business segments. The important thing is to recognize the existence of synergy.

The consequence of synergy is to predict the behavior of a variable, taking into account the induced effects on other variables.

System Approach

The General Systems Theory (GST) is a powerful tool for explaining the phenomena that occur in reality and also makes it possible to predict the future behavior of this reality.

Principles or Assumptions that can be Divided into Reality

• The principle of synergy: The ratio of whole and parts.
• The principle of recursion: Division ordered vertically at all, and there is a hierarchy in which lower systems are contained in the above systems.

Recursion

Recursion refers to the fact that a synergistic object—a system—is composed of parts with such characteristics that they are themselves objects, synergistic or systems. With the idea of recursion, the role of all parties is analyzed: the reduction or enlargement is to join separate parts, but if you integrate elements that are entirely within a larger whole.

Highlights of Recursion

• The reductionist: Divide the whole into parts, while the idea of recursion is analyzed in terms of all parties.
• Systems consist of individuals and therefore are indivisible systems.
• The principle of recursion shows that what is applicable to the system is applicable to the above system and subsystem.

Viability

Viability is the ability to survive and adapt a system in a medium of exchange.

A viable system is one that survives and is authenticated by its environment, adapting to demands so that the export of positive flows out to the environment is able to acquire from the same half its inflows (or the energy necessary for the continued development of its processing function).

Models of Systems

Open Systems

An open system interacts with its environment, importing energy, processing that energy in some way, and finally exporting the converted energy.

Closed System

A closed system is capable of carrying out this activity on its own.

Schematic of an open system:

Current Approach to Input/Output (Flow Approach)

a) Clearly identify the systems and subsystems and study the relationships between them. They must be related; each subsystem must have an entry and exit.

b) Identify in a simple way the existence of so-called bottlenecks (imbalances between the subsystems, namely what is failing, because it generates knowledge that can be formed by poor communication between the subsystems).

c) Identify those subsystems that are critical and should receive special attention from the analyst.

Entropy and Negentropy

Entropy is the change from a more orderly or organized state to a less organized or disorganized state. It is a well-defined natural force that tends to measurable destabilization.

Negentropy: A measure of order or organization. It is an internal force that manifests itself in open systems.

You can define the company as a structure in which there is some internal order that is not the product of chance (the management company is looking to break the entropy).

The entropy of closed systems is always growing and therefore tends to a limited life. The entropic effect in open systems tends to a limited life, but they are offset by negentropy.

Top of Organicity (Collective Effort) (Dynamic Equilibrium Systems)

Can be explained by:

1. The Newtonian explanation: A body remains at rest or changes its motion unless a force acts on it, and every action has a reaction. The combination of both effects cancels each other out, reaching a statistical equilibrium.

2. The explanation of the theory of systems: Based on the total system variability compared to the variability of its parts is lower and that the systems have a mechanism of homeostasis (self).

The principle of agencies to operate to the extent that the system is able to generate excess energy.

External factors that produce entropy in an enterprise: technology and competition.

The proper management information and help maintain negentropy.

Closed systems are not viable: the entropy is gradually destroyed and are unable by themselves to generate some kind of negentropy