Business administration and management, concepts and techniques

This module introduces the student to the concepts and techniques of business administration and management and to understanding the meaning, nature and scope of the function of managing a company or managing one of its subsystems. It allows to have an overview of the company, its functions, processes and components, and it allows understanding the business and business language.

module-administration-management-companies-book

It is aimed at understanding the operation of the company, globally as a system, of each of its parts or subsystems, of how each of the business decisions may affect the company as a whole, its economic and financial situation, and understand the company as an open system in continuous relationship with its environment.

It raises and makes known the problems associated with business activity, decision-making in the different fields of administration, as well as some of the techniques and tools available to facilitate their resolution. In general, it discloses the nature of managerial work, its necessary roles and skills.

It enables them to learn to analyze the economic and financial situation of a company and to know how to manage economic information for decision-making, as well as to develop skills for determining the vision, mission and objectives of the company within the framework of business ethics and know the bases of business planning and strategy for decision-making on processes, products, markets and territorial implementation.

In sum, the formal and total learning of the module induces an understanding of business organizations and their management:

• Classes and types of companies. Business functions. New organizational forms in the new economy. Integration of processes and resources in the company. Management of the company. Steps in the creation of a company.

The objectives of the module are those considered in the following table:

Chapter 1.- Company

1.1 Introduction

The company can be defined as an economic unit of production, characteristic of the market economy, in which, by combining capital factors (tools, machines, among others) and work, activities of production, distribution or performance of services are carried out, organized adequately in order to obtain, with risk, a profit or income.

Currently, its unique objective of obtaining benefits has been complemented by achieving certain global objectives:

• Economic: obtain benefits.Technical: produce necessary goods for society and its environment.Human: satisfy workers through adequate remuneration, correct treatment, and integrate them into the company.Social: attend to the needs of society. through taxes.

In general, the main characteristics that define any company are:

• The company is a set of production factors, understanding as such the elements necessary to produce (natural or semi-finished goods, labor factor, energy, machinery and other capital goods), marketing factors, since the products do not sell by themselves, and Financial factors, since to coordinate these factors, investments must be made and they must be financed in some way. Every company has aims, or objectives, that constitute the very reason for its existence. Traditionally, in the market economy system these ends have been associated with profit maximization. Currently, the range of objectives that is used is broader, although, if a central objective is to be pointed out, it would be that of maximizing the value of the company.The different factors that make up the company are coordinated to achieve its goals. Without this coordination, the company would not exist; it would be a mere group of elements that are not connected to each other and, therefore, incapable of achieving any objective. This coordination towards an end is carried out by another business factor, which is the direction of the company. The directing factor plans the achievement of the objectives, organizes the factors, is in charge of the decisions being executed and controls the possible deviations between the results obtained and the desired ones. Ultimately, this factor is responsible for joining efforts to achieve the overall objectives of the business system. The company is a system. A system is a set of elements, or subsystems, interrelated with each other, and with the global system,trying to achieve certain goals. Consequently, the evidence that the company is a system is deduced from the above.

1.2 Company in context

1.2.1 Concept and generalities

The company is the creative cell of wealth available to society; a wealth that allows economic development and the consequent access to culture, health, security and all the elements that provide well-being and quality of life.

Companies, as if it were some living organism, are born, develop and eventually die. From the traditional point of view, a first definition of an economic nature would be to consider the company as an entity that efficiently organizes economic factors, producing goods or services to satisfy the needs of the market and with the aim of achieving certain objectives, including profit..

The word company has its etymological root from the Latin prehendere, which means 'to undertake an activity that involves work or that presents difficulties', therefore, in a first approximation we could consider the entrepreneur as an entrepreneur, an acceptance that is currently valid although partial and incomplete.

In the French language, entrepreneur is an entrepreneur and in English entrepreneurship. Both expressions have the same meaning and indicate a facet of the entrepreneur, especially that of the creator of the company.

The birth of the company as it is currently considered begins in the Middle Ages, despite the fact that business activities existed from the earliest antiquity.

In feudal times a new social class was born, settled in the cities, which developed business and mercantile activities. The basic unit was the family had an artisanal and technical motivation. The cell of the primitive company was born. Model that still lasts today, made up of small self-employed entrepreneurs, companies with 1-3 workers called micro-companies.

In the 17th century, the Italian Republics flourished at their best and their economic potential came from their mainly mercantile companies that traded in every state in the world. The basic structure of Italian companies was a simple, technical-economic unit and in some cases surpassing the strict family dimension of the feudal era. The so-called mercantile capitalism was born.

The industrial revolution led by England during the 19th century presents a complex company, made up of multiple partners representing a profound change in the previous conception. Work organization is involved. Production is carried out in large industrial warehouses within which similar functional activities are grouped and the business economic unit was made up of production. It was the birth of industrial capitalism.

At this stage, the studies of methods and times and the organization of work began. At the beginning of the 20th century, the second industrial revolution began with the appearance of the combustion engine, electricity and electronics. The company becomes an even more complex unit. Public limited companies, company group structures and action on functional bases begin.

After World War II, a new stage begins, called international financial capitalism, where the company is considered an organization, its basic structure is made up of holdings, business groups, and its economic unit is simply a decision-making unit. Capital movements, portfolio management and financial resources led by multinational decision-making organizations.

This historical evolution of the company can be expressed in the following table:

COMPANY MODEL	SYSTEM ECONOMIC
STAGE	BASIC STRUCTURE	DEFINITION	MODEL OF ORGANIZATION ECONOMIC
Primitive company.	Family unit.	Technical unit.	Feudalism.
Commercial enterprise.	Simple unit, familiar or not.	Economic technical unit.	Mercantile capitalism.
Industrial company.	Complex unit, corporate, organized.	Economic unit of production.	International financial capitalism.
Company as an organization.	Complex unit, multinational, multi-company.	Decision unit.	International financial capitalism.

The company has played a very important role in the market economy, it has been an essential economic agent in the free or capitalist economy system. There are two main causes that justify the existence of companies:

1. The existence of market costs, risk or uncertainty.

Regarding the first cause, mention should be made of the contribution of RH Coase, the 1991 Nobel Prize in Economics, who indicates that market imperfections and uncertainty about transactions in it lead to the need for a new, different formula of regulation. of the market (invisible hand) overcoming the costs that originate.

In summary, he says that '… the operation of the market carries costs, and that by forming an organization and allowing an authority (entrepreneur) to direct resources (' visible hand ') certain of these market costs are saved. The entrepreneur has to carry out his function at an even lower cost, bearing in mind that he can obtain the factors of production at a lower price than the market transactions he replaces, because if he does not succeed, it is always possible to resort to open market'

In relation to the second cause, in addition to what Coase expressed, he deserves to pay attention to the study by FH Knight, who explains that uncertainty or lack of information is what really justifies the origin of the company.

The entrepreneur takes a risk when he hires certain factors at certain incomes and prices, hoping to be paid at the end of the process with a residual profit. Risk is what typifies the role of the entrepreneur.

Three fundamental questions follow from the above reflections:

1. The market is not a universal panacea, it is not always the best and most efficient solution. It is possible that this lack of efficiency comes from the same uncertainty, lack of information and, consequently, risk.The market mechanism, the invisible hand, presents irregularities and it is necessary for the company (the visible hand) to compensate for them. It will focus on the aspects where there is more risk, thanks to skills and techniques acquired by the entrepreneur.

Finally, the specific functions that, according to the proposed approach, the company is having as the main economic agent of the economy are detailed below.

1. Organizes, coordinates and directs the production process, allocating resources, carrying out transactions and establishing relationships in its environment. Anticipates national income by generating monetary income. It assumes and reduces market costs (transaction costs) and information costs (costs of identification).It assumes the inherent risk of economic activity. It develops the economic system, creating wealth, employment.

If the company has been defined as a set of interrelated elements that seek a common objective, it is necessary to first analyze the elements that make it up in order to better understand the business reality.

Two types of factors will first be distinguished:

1. Passive factors: Formed by classic economic resources, land and capital.

• Financial capital Technical capital

1. Active factors: formed by the members of the business system.

• Administrators and managers Employees and workers.

It could be expanded with a third factor, which would be the organizational structure and also, in the personnel section, it could be expanded with customers, suppliers and the local social environment.

Recalling the above, it can be stated that the company constitutes a complex entity based on three fundamental bases:

1. The company is a technical system made up of a set of processes, technologies and methods, which are developed in one or more plants and through one or more companies. The company is a group of people with different objectives and roles oriented to one objective. common through an appropriate organizational structure. The company is an open system to the environment, maintains a constant relationship with customers, suppliers, competitors and social and political agents.

One of the ways to approach the conceptual definition of a company is to study it through its dimensions:

1. Functional dimension: it is an organized and alternative activity to the market with profit motive. It represents the justification for the role that the company plays in the market economy, highlighting the figure of the entrepreneur. Consider the company as an organization. Technical-economic dimension: productive activity of goods and services. It focuses on productive transformation, explained by production and cost functions. Consider the company as a production unit. Economic-financial dimension: Economic activity that creates added value and money. It is the vision of financial and international capitalism. Consider the company as a financial unit. Legal-commercial dimension: activity generating contractual activities among the factors. Consider the company as a unit of decision. Social dimension: activity composed of human and power relationships. It is the most important activity and lately it has been given more attention. It constitutes a complex design of communications and existing relationships within a group of human beings. Consider the company as a social system.

The company could now be defined as follows:

1.2.2 Historical evolution of the company concept

The first theoretical formulation of the concept of business was produced with the study of microeconomic theory and market theory, in the late nineteenth and early twentieth centuries.

More than a theory of the company, it was a theory of supply and demand, supported by the principle of the invisible hand and of economic equilibrium.

Then new revisionist currents emerged, some from microeconomics and others from the theory of business administration. With them began a period of approximately thirty years with a large number of theories detailed below:

1. Business firm theory (T. Veblen, 1904)

1. Theory of specialization against risk. (FH Knight, 1921)

1. Market cost theory. (RH Coase. 1937)

1. Organization theory. (HA Simon, 1956 and 1957)

1. Theory of contingency (Paul R. Lawrence and Jay W. Lorsch, 1965) The company is an integrated system formed by the structure, the situation and the mutual interrelations that allows to carry out the first strategic analyzes and anticipate the future. Theory of property rights (AA, Alchian and H. Demsetz, 1972) Company concept based on team production. Organizational hierarchy theory (0. E. Williamson, 1971-75)

1. Organization Boundary Theory (KJ Arrow, 1974)

1. Agency Theory (MC Jensen and WH Meckling, 1976)

1. Contract theory (SNS Cheung, 1983) Company concept based on the contract of factors with differentiated characteristics of market transaction contracts. Theory of the company as a system (Bueno 1974)

1. Theory of the company as an organization (E. Bueno and FJ Valero, 1985) Concept of the company as an open socio-technical system made up of various aspects to achieve efficiency and competitiveness with the environment.

The last two approaches, that of the system company and the company as an organization, could summarize the theoretical knowledge of the current moment. They constitute a continuity to the contingency theory explained above that will be attempted to explain in a little more detail.

This theory starts from the basic premise that the company is an open system and with a mixed nature between the social and the technical, that is, made up of a series of value relationships, some based on technology and others on human relationships.. The effective organizational structure will require that its design adequately adjust to the contingency factors of the environment. Effective structural design will also require internal coherence between the various design parameters.

The theory that attempts to analyze the contingent factors of the environment and the parameters of structural design is later assumed and synthesized by Henry Mintzberg in his book 'The Structuring of Organizations'.

The company is an open system and, in addition, a social one, made up of elements that are people, who pursue a set of objectives and adopt behavioral guidelines. Furthermore, a social system is itself specific in the sense that it cannot be defined only by its code, but also by its ability to modify this code itself and transform it voluntarily.

Any system and consequently the company can also be decomposed into subsystems that have the same characteristics of the system from which they come.

A traditional classification could be the following:

1. Technical subsystem: a transformative scientific-technical aspect that adds value to the factors. One of its most characteristic aspects is productivity, the performance of the process measured as a ratio of factors and products. Management subsystem: the organized command of all the economic activities of the company. A key expression is the efficiency and effectiveness of the system, meeting objectives and with a high degree of total quality. Human subsystem: set of people with their behaviors and motivations. Its basic principle is the satisfaction of the personnel that make up the company and its environment. Cultural subsystem: values ​​and rules of conduct that influence the company. Its result is organizational development seeking the overall efficiency of the system, allowing flexibility and adaptation to changes in the environment. Political subsystem: aspects of power and force that affect company relations. The important aspect is balance, ensuring that the forces involved in the organization are balanced.

The first three subsystems form a more integrated basic block and the last two, also related, are a consequence of the structure of the first.

Thus, the company could be defined as an open sociotechnical system composed of five organizational elements: technical subsystem, human subsystem, management subsystem, cultural subsystem, and political subsystem (power) and that pursues basic objectives.

The company pursues common goals and objectives. These basic objectives constitute the integrating element of the system and allow it to move towards stable equilibrium.

1.3 Business classification

1.3.1 Company classes

There are certain principles, or laws, that are applicable to all companies. Along with them, there are peculiarities for each type of company and, even, according to each company, the situation in which it finds itself and the contingency that arises. The variety of companies is huge, as are the classifications that could be targeted. But the main ones are the following:

• According to its size, according to who owns it, according to its legal form, according to its activity, and according to the scope of its activity.

As for the size of the company, a distinction is made between small, medium, and large companies, without agreement on the criterion for measuring size (volume of assets, volume of sales, size of own capital, number of workers, between others) or on the dimensions that companies must have to belong to one or the other class. In this sense, however, it is worth noting a type of company that is becoming more and more frequent, the small and medium-sized company (SME), which according to the definition of the European Union, is one that has no more than 500 workers, nor net fixed assets of over 75 million Euros, not more than a third of its capital in the hands of a larger company.

In relation to who owns the company, a distinction is made between private companies (in which the capital is owned by individuals), public companies (whose capital is owned by the State or any public body), mixed companies (whose capital belongs partly to public entities and partly to individuals).

According to its legal form, a distinction is made between the company governed by an individual entrepreneur, who is a natural person, and the social company, which is a legal or social person. In business law, it is distinguished, although depending on the country: Sole Shareholder Company, Limited Company, Limited Liability Company, Limited Partnership, Collective Society, and Cooperative Society.

According to their activity, and as will be seen, companies can be classified by economic sectors: primary, secondary or industrial, and tertiary or services. Within each of them, different classifications can be established, depending on the level of disaggregation used (agricultural, fishing, mining, iron and steel, transportation, banking, tourism, among others).

Depending on the scope of its activity, a distinction is made between local, provincial, regional, national, and multinational companies.

1.3.2 Legislation (legislative field)

Every company must have a declared form of incorporation, both for reasons of operational efficiency in fulfilling its purposes, and for legal, fiscal and public interest reasons.

In this sense, companies can also be classified according to their legal aspect. This aspect is especially relevant since it is mandatory to establish itself as one form or another of a company; with its consequent conditioning factors.

The ownership of a company will correspond to a natural person if it is an individual company and to a legal person if it adopts any of the following social forms: collective, limited, anonymous, limited liability, cooperative and anonymous labor.

a) Individual company

The entrepreneur is the natural person who exercises in his own name, by himself or through a representative, an activity that constitutes a company.

The individual merchant is liable for his debts unlimitedly with all his present and future assets.

b) Social enterprise

Commercial companies are legal entities that facilitate the distribution of the capital, the risk and the necessary activity among various people, which advantageously replace the individual merchants.

The commercial company is not only a contract; it is institutional in nature. Once the mercantile company is established, it will have legal personality in all its acts and contracts. The consequences of legal personality for society are:

• It confers the status of subject of law, with full legal capacity. It attributes patrimonial autonomy. It supposes separation of responsibilities between the company and the partners; Each partner responds with the contributed or committed capital. The company has its own and exclusive name, a domicile and a nationality. The company, both internally and externally, acts through its organs.

Every mercantile company, before beginning its operations, must state its constitution, covenants and conditions in a public deed, which will be presented for registration in the Mercantile Registry, corresponding to the place of domicile of the Company. Both formalities, writing and registration are also required for any subsequent modification of the original contract.

Company classes:

- Collective society

It works under a collective name or company name made up of the name of all the partners, some of them, or one, and must add in the last two cases the name or names that express the words 'and company'.

All partners have the power to go to the direction and management of common businesses without the partner's participation in social management being measured by the amount of their capital contribution.

The partner has to contribute to society, putting in common funds, goods, industries (work, service or activity in general) or any of these things.

The company has patrimonial autonomy and is liable for its debts with its assets, although the partners are also liable for social, subsidiary, unlimited and jointly and several debts.

- Simple Limited Partnership

The most significant characteristic is the existence of two classes of partners, the capitalist or limited partners and the collective partners and the different responsibilities of each other, which differentiates them from the collective, although both maintain similar aspects.

The company name is formed with the name of all the collective partners, some of them or only one, and in these last two cases the words 'and company' must be added, and in all those of 'limited partnership'.

The limited partner contracts the main obligation to contribute a certain part of the share capital.

The limited partner is prohibited from including his name in the company name and meddling in administration operations.

The collective partners respond to third parties with all their assets, limited partners have their liability limited to the funds contributed in the event of losses generated by the company.

- Limited partnership for shares

The capital is divided into shares, and the contributions of the limited partners (limited liability) are in shares.

The company name is the name of any of the collective partners adding 'and company' and 'limited partnership for shares' or' s. com. for a. '

- Anonymous society

The main reason for the existence of the Public Limited Company as a form of company is the need to avoid the inconveniences of the individual and collective companies; the division of capital into shares, their mobility through their incorporation into essentially negotiable securities and the individual limitation of the risk to the capital represented by the shares owned, make it the preferred company, especially for large and medium-sized companies.

The minimum share capital is established that it may not be less than 60,010 euros.

The company name will always have a commercial character, therefore there cannot be civil corporations. Its name will be freely chosen, as long as it does not adopt an existing name, always followed by the words 'Sociedad Anónima' or 'SA'.

The bodies of the Public Limited Company are: the general meeting of shareholders (meeting of duly called shareholders; sovereign deliberative and decision-making body by majority that expresses the corporate will with its agreements), and the administrators (governing and executive body, in charge of the permanent management of the company and representing it vis-à-vis third parties. It may be a sole administrator, two joint administrators acting jointly, several administrators acting in solidarity, or a board of directors, which may delegate part of its powers to one of its members -deputy directors- or grant powers to third parties -powered-).

- Limited society

Limited liability companies arise due to economic reasons, which advise extending the benefit of the limited liability of partners to small companies, without the inconveniences that a public limited company generates.

The minimum share capital is established that it may not be less than 3,005 euros.

The share capital is made up of the contributions made by each of the partners and divided into shares, and not shares.

The social participations do not have the character of securities, they cannot be represented by means of titles or book entries, and in no case can they be called shares.

Membership does not imply personal responsibility for social debts.

The company name must necessarily include SRL or SL

The bodies of the Limited Company are: the general meeting of partners (as the body that expresses the corporate will in its agreements), and the administrators (who are the executive body in charge of the permanent management of the company, and to represent it in your relationships with third parties).

These characteristics mainly distinguish it from the anonymous one, as it does not have the share capital divided into shares. And compared to personalistic companies, highlights the limited liability of partners. The partner of the limited liability company only risks the amount of the shares he has subscribed.

- Labor Society

This type of company allows you to opt for the form of a Public Limited Company or Limited Labor Liability Company.

Corporations or limited liability companies in which the majority of the capital stock is owned by workers who provide personally and directly paid services, whose employment relationship is for an indefinite time, can be classified as a 'labor company'.

The name must include the indication 'Sociedad Anónima Laboral' or 'Sociedad de Responsabilidad Limitada Laboral' or its abbreviations SAL or SLL.

The share capital is divided into registered shares or shares according to the case.

- Cooperative Society

Cooperatives are companies that, with variable capital and democratic structure and management, associate people with common interests or socio-economic needs to the system of free membership and voluntary withdrawal, for whose satisfaction and in the service of the community they carry out business activities, charging the economic results to the members once the community funds have been attended, depending on the cooperative activity they carry out.

There are two types of cooperatives:

• First degree, whose partners can be both natural and legal persons, public or private. The number of members will be limited, but never less than five. Second degree and subsequent degree, here the members are other cooperatives. They will be integrated, at least by two cooperatives.

The organs of the cooperative society are: general assembly, governing council, and auditors.

- Foundation

In a general sense and from a sociological point of view, a non-profit organization funded by its own funds and created to maintain and provide social, educational, charitable, artistic, scientific and other aid in the field of human well-being.

In most modern foundations the field of work is educational in nature: founding scholarships, supporting research in the professional field, among other activities.

Other foundations pursue goals in one or more of the following fields: healthcare, leisure, religion, international relations, race relations, public administration, economics, or other facets of social prosperity.

- Mutuality

Companies responsible for distributing social risks among their affiliates. The mutuality, in the strict sense, is an association formed voluntarily and not for profit to correct social needs.

Today these types of companies function organically as a company that seeks the distribution of a dividend not material, but moral, security and confidence in the future.

- franchise

It is a commercial formula between two parties, the franchisor and the franchisee, both reach an agreement that is reflected in a contract.

This document reflects the rights and obligations of both parties, the goods and services provided by the franchisee, the financial conditions, its duration and the renewal period.

The franchisor contributes the know-how, that is, knowledge of the company, the brand, licenses and patents and all its documented experiences.

The franchisee contributes the investment, his work, the direct management and the operation of the business.

The franchisor reports the possibility of increasing its distribution network without making large investments, total control in the distribution of the product. There is no employment relationship, but a contract between independent entrepreneurs.

He reports to the franchisee that the business is already shot in the market, brand image, technical assistance, technical and business training, advertising, and financing facilities.

In franchises, the entrepreneur (dealer) offers a product or service under a legal contract with the franchise owner who, in turn, provides the distinctive elements of the company (the name, image, signs, facilities, design, patents etc.), a system of operations and other services. To obtain a franchise, the entrepreneur pays an initial amount and then a percentage on sales; the entrepreneur operates under the rights and restrictions of the contract.

- Society of companies

Reciprocal Guarantee Societies: they are societies made up of small and medium businessmen, associated to seek greater possibilities of financing through guarantees and guarantees provided to their partners by the society itself. The capital and the regime of liability of its partners for social debts, are governed by rules analogous to those of the corporation, and with respect to the rights of the partner, the nature of mutualists of the company predominates.

It is a limited liability company in the sense that the partners are liable for social debts.

Its corporate name will be SGR

The company is governed by the general meeting and the board of directors.

Unions of companies: the concentration of capital and industrial forces sometimes leads to the total merger of commercial companies.

• Concentration manifests itself in simple unions, all of which retain legal independence, although they lose economic autonomy to a greater or lesser degree. The concentration of companies is presented under a simple contractual form. Other times, the bond of union does not have that nature and is purely financial, the bond between companies is produced by the capital of some in the capital of others. Cartel or union (contractual union): they almost always unite companies interested in the same phase or cycle of production, in order to limit and regulate reciprocal competition in the market and achieve as much as possible its dominance. Holding (non-contractual union):When you want to achieve a stronger union, you go to the system of involving some companies in the capital of others to the extent necessary to impose a unitary situation in the development of their activity. Thus, there is a dominant society over the others. Temporary business unions: they constitute a system of collaboration between entrepreneurs for a certain period of time or indeterminate for the development or execution of a work, service or supply. Sometimes these unions are made as a strategic alliance; through which sometimes synergistic results are achieved, for example, development of new products in situations of highly competitive innovation environments. This allows the sharing of resources and capacities in an integrated way,preserving the independence of partner organizations, increasing the value and advantages and reducing the costs and risks of each company.

In this sense, the Corporations, increasingly common in developed countries, are a combination of companies -business-; where resource flows are established between said businesses, for the acquisition, diversification, growth, and / or coordination between the component units.

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