You’ve probably heard of business administration many times, but what exactly is business administration? Business administration is a part of the subject economics. To put it simply, it deals with an individual company and its operational activities. Other areas of economics are, for example, jurisprudence, economic policy, economics, business ethics and basic economics.
In this article you will find out which topics are particularly important in business administration.
Business Administration – Definition
Business administration (in short: BWL) considers economic processes from the point of view of an individual company or an individual company. Furthermore, all operational tasks are planned, controlled and optimized with the help of business administration.
the Business Administration is one of the more modern sciences. Modern business administration has only developed in the last hundred years. Previously, business administration was not a science in its own right, but there were only economic methods, such as double-entry bookkeeping.
Business administration covers an exciting and varied subject area. It combines many other sciences and depicts them in the operational context. The basics of mathematics help you in accounting and theories of psychology are used in business management. With business administration, you certainly won’t have a monotonous subject in your timetable.
But what distinguishes business administration from other economics?
Quite simply: Business administration focuses on the internal and external operations in the immediate environment of a company, while economics (VWL) focuses on all processes within a country.
Business Administration – Topics & Areas
In the following we give you a brief overview of the most important topics in business administration.
The company as an economic and social system
A company is not just one economicalbut also one social system. The main task of every company is to sell products or services. This generates profit.
However, a company is not only important for the economy, but also for many social aspects. People spend a lot of time at work and interact with other companies in their lives. Social norms prevail within a company. There are rules that must be followed. All this characterizes a company as a social system.
Explanations of terms
Various terms have already been mentioned in the operational context. But what exactly do the terms business, company or company mean. In everyday life, the three terms are often used as synonyms. In business administration, however, the terms are differentiated.
Of the operation is the place where the work is done. Goods are produced there and services are provided.
That company is the totality of all employees and objects.
the company in a business context is just the name under which business is conducted.
business goals
Business goals are diverse these days. While in the past only economic goals, such as profit optimization, were in the foreground, many companies today also focus on social or ecological goals. Social goals can be the improvement of the workplace or the implementation of societal expectations, while ecological goals are anchored in environmental protection and sustainability. The goals of a company can also be distinguished by whether they are planned for the long term or for the short term.
stakeholders
The stakeholders of a company can also stakeholders to name. A company needs to interact with different groups. These groups can be divided into internal and external stakeholder groups.
The internal stakeholder groups are represented directly in the company, such as the company’s own employees, managers or equity providers (e.g. investors or shareholders).
The external stakeholder groups are indirectly linked to the company, such as customers, suppliers or competitors.
Business Administration – Corporate Governance/Management
Corporate leadership, also known as management, describes the leadership of economic organizations.
In doing so, we will address a few key questions:
- Who Leads?
- What is led by?
- How is it managed?
Figure 1: Possible division of a company – each department has different tasks and is managed by a different department head
leadership techniques
As a manager of a company, you are responsible for many employees. In order for the work to make sense, managers must use the right methods to lead their own team in a structured manner. Leadership techniques can help with this.
Corporate philosophy
Corporate mission statements are written statements about corporate tasks and goals and about the management concept of an organization.
The terms company philosophy or business philosophy can also be used. In the case of company mission statements, it is usually only about the desired ideal state, the target state. Guidelines are given for the behavior of employees both internally and externally.
For example, many companies strive for family friendliness. This is the desired target state. With the help of prescribed behavior and targeted investments, for example company kindergartens, a company tries to adapt its current situation to the corporate mission statement.
corporate identity
Corporate Identity (CI) describes the identity of a company. The corporate identity is the totality of all characteristics of a company.
The CI can also be seen as a personality or self-image of a company. It is the visual appearance of the company that appears in society or in public. All this should make a company unmistakable and unique.
For example, uniform company colors lead to an unmistakable company appearance. If one speaks of the color magenta in connection with telecommunications, one usually thinks of Deutsche Telekom. When you think of a yellow delivery vehicle, you probably immediately associate it with Deutsche Post.
motivation theories
A team is often only as strong as its weakest link. Unmotivated and bored employees can lower the morale of the entire team. Therefore, a good manager must know how to motivate his people in order to keep the processes in a company running. The usual motivation theories help here. The motivation theories usually come from psychology and have been expanded for the operational context.
management models
Successful corporate management requires a certain foresight. In order to ensure precisely this foresight, most companies fall back on a management model. A management model makes it easier for managers to make long-term decisions.
change management
In a world that is changing ever faster, managers must be able to react quickly and flexibly. Most of the time, changes cannot be stopped, but managers can learn to integrate them appropriately into day-to-day business. To handle this, change management helps.
Change management means translated change management and includes all tasks that have to be carried out in a company when changing or revising processes, strategies, values or behavior.
central areas of a company
For easier organization, companies are divided into central areas. Since the tasks in business administration can be very diverse, the individual departments can better specialize in their area by subdividing them into central areas.
accounting
Accounting is defined as the planning, management and control of all liabilities and assets of a company.
Accounting must therefore continuously record, evaluate and monitor what is happening in the company.
As a rule, there is a subdivision into external and internal accounting. External accounting is aimed at all institutions and people outside the company. External partners should be informed about the status of the company.
Internal accounting, on the other hand, is aimed at internal decision-makers. It is intended to serve the planning, control, documentation and control of operational processes. To help and for better classification, various economic key figures and variables are calculated in accounting.
Financial and HR accounting
Financial and personnel accounting are two central areas of responsibility in accounting. While financial accounting deals with all cash flows in a company, it is the task of personnel accounting to take care of all matters related to payroll accounting.
Operational value chain
In most manufacturing companies, raw materials go through a value-added process. The raw materials are bought on the procurement market, modified in production and resold to customers on the sales market.
Figure 2: Possible operational value chain
materials management
Materials management describes all operational processes that have to do with procurement, transport and warehousing. Furthermore, the tasks of disposal of substances and reuse are part of it.
production
Production or manufacturing describe the main task of an industrial company. New finished products are to be created from materials. These finished products go through a value-added process. In order to refine the materials, companies use labor and resources.
Unit volume
The task of sales is ultimately to sell the produced goods on the market. Marketing tools can help with this. Sales is the final stage of operational processes. Only with him will goods be sold and profits made. The money raised can be used to buy new raw materials and the value-added process starts all over again.
company formation
Before a new company can appear on the market, it has to be founded. When founding a company, there are a number of things to consider, such as the choice of legal form (e.g. GmbH, AG, GbR). This is important because some legal forms entail a different level of liability on the part of the partners. But once all the basic questions have been clarified, the new company can enter the market as a new supplier.
Business administration – the most important things
- Business administration considers economic processes from the point of view of individual companies.
- Business administration offers many different subject areas:
- In management, the employees are led
- In accounting, various invoices and…