Business Management Unit 1

Organization (Basic Definition)

A group of people using tangible and intangible resources to carry out activities organized to achieve a common objective or goal .

Firm/Company (Specific Definition)

A specific type of organization that combines resources to produce/deliver goods and services, providing added value to stakeholders .

Company vs. Organization

All companies are organizations, but NOT all organizations are companies; companies are typically profit-oriented and pursue value creation .

The three dimensions of a firm

Technical, Sociological, and Economic dimensions.

The firm as a Technical and Economic unit

It transforms resources into products/services (technical) while generating economic value (economic) .

The firm as a Socio-political unit

It is formed by people whose decisions and objectives are determined through political processes .

The firm as a Decision unit

Owners or managers establish a structure and formal relations to achieve set objectives .

Elements: People in a firm

Includes owners, managers, employees, and sometimes external consultants .

Elements: Intangible resources

Data, information, knowledge, brands, name, and reputation .

The company as a System

An open, artificial, and socio-technical system.

System: Globality

Actions in one part of the system will affect all other parts of it.

System: Synergy

The components of the system create a combined effect greater than the sum of their individual parts.

Open System (Definition)

A system that interacts with its environment by importing, transforming, and emitting energy/resources .

Feedback (System Theory)

Information imported into the system that allows for the operation and control of activities.

Equifinality

The ability of a system to achieve the same goals through different paths or methods.

Operational Subsystems

Supplying, Production, Marketing, Finance, Human Resources (HR), and R&D .

General Management Subsystem

Responsible for global performance, coordinating all other subsystems, and planning/organizing/controlling .

Management as a "Universal Human Activity"

Occurs whenever people take responsibility for an activity and consciously try to shape its progress and outcome.

The four main tasks of Management

Planning, Organizing, Leading, and Controlling .

Primary vs. Secondary vs. Tertiary Sector

Primary (raw materials), Secondary (manufacturing/transformation), Tertiary (services) .

SME Criteria: Microfirm

ANE (Employees):<10 , Net Sales volume nsv <900.000 , and Total Assets <450 000

SME Criteria: Small Enterprise

ANE (Employees) <50 , Net Sales volume <10mio , and Total Assets .<5 mio

SME Criteria: Medium-sized Enterprise

ANE (Employees)<250 , Net Sales <50mio, and Total Assets .<25mio

Criteria: Large Company

ANE (Employees)>250 , Net Sales >50mio, and Total Assets >25mio

The "Two Consecutive Years" Rule for SMEs

A company only acquires or loses its SME status if it exceeds or falls below the limits for two consecutive years.

Legal Criteria: Sole-proprietorship

A business owned by one person who has unlimited liability for all debts .

Legal Criteria: Corporations

Business entities like Joint Stock Companies where owners have limited liability (they only risk what they invested).

Legal Criteria: Mutualistic Organizations

Non-profit entities such as Cooperative societies and Mutual companies.

Ownership: Family vs. Non-Family

Criteria based on whether the property is controlled by a specific family or diverse shareholders.

Listed vs. Non-listed companies

Listed companies have shares traded on a public stock exchange; non-listed are privately held.

Management Challenge: Business start-ups

Securing funding to launch, creating internal systems, and generating enough cash to continue.

Management Challenge: International businesses

Managing diverse activities across many cultures and balancing central control with local initiative.

Firm Elements: People

Includes owners (who provide capital), managers (who coordinate), employees (who work), and external consultants .

Firm Elements: Physical Resources

Consists of fixed assets (long-term equipment/buildings) and current assets (short-term materials/cash).

Economic vs. Legal Criteria

Economic criteria relate to size and activity, while legal criteria relate to ownership type and legal form .

System Characteristic: Artificial

A company is "artificial" because it is created by humans, not naturally occurring.

System Characteristic: Social-Technical

It is "social" because it involves people and "technical" because it involves processes and tools.

Management: Technical Perspective

Focuses on efficiency and the optimal allocation of resources to maximize output .
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Management: Sociological Perspective

Focuses on human behavior, group goals, and the firm as a socio-political unit .
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The Task of Planning

Defining objectives and deciding on the activities and resources needed to achieve them.
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The Task of Organizing

Establishing a structure of relationships and assigning tasks to specific people/units.
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The Task of Leading

Influencing and motivating people to work toward the organization's goals.

The Task of Controlling

Monitoring performance and correcting deviations to ensure goals are met.
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Classification by Activity

Primary sector (extraction), Secondary (industry/transformation), and Tertiary (services/commerce) .

Classification by Ownership: Private vs. State

Private companies are owned by individuals/entities; State-owned are controlled by the public administration.

Classification by Scope: Specialized vs. Diversified

Specialized firms focus on one narrow activity; diversified firms operate in multiple different business areas.

Legal Form: Partnership

A business where two or more people share ownership; often involves "unlimited liability" in European civil law .

Legal Form: Corporation (Joint Stock)

A legal entity where ownership is divided into shares; liability is limited to the amount of capital contributed.

Non-Profit: Foundations

Organizations established to provide funding or support for specific social or cultural causes.

Management Challenge: SMEs

Generating enough funds to survive, innovate, and enter new markets.

Management Challenge: Professional Business Services

Managing highly qualified staff who deliver customized and innovative services.

Management Challenge: High-tech Businesses

Maintaining constant innovation in markets that change very rapidly.

The "Start-up" Exception for SME Data

For new firms that haven't closed accounts yet, data is based on reliable estimates made during the year.