Business Administration

Peter Thuis, Rienk Stuive

• Publisher: Routledge
• Year: 2019
• ISBN:
  9781000035889
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

Business Administration offers an integrated, practical approach to all key aspects of business administration and to how business processes are managed.

The authors highlight the function and relevance of business management in day-to-day business operations. Business Administration offers a single frame of reference for all chapters:

• Management success stories
• Management blunders
• Socially responsible business practice
• Key performance indicators
• Historical trends in business administration

This book is an indispensable tool in all degree programmes in which business administration is a key component, including Business, Economics and Law, as well as other economics and business programmes. A companion website featuring extra materials for lecturers and students is available at: http://www.mathematicsforfinanceandeconomics.noordhoff.nl

1

What is a business?

1 The business and business administration

2 Primary activities in businesses

3 Support activities in businesses

This book describes from a business administration perspective what a business is, how a business works and what the role of a business administration professional is in a business. In the first, introductory chapter the concepts of business, business administration and business administration professional are introduced. In the remainder of the book those concepts will be considerably expanded.

In Chapters 2 and 3 of this part we will explain how primary and support activities take place in businesses. These processes together determine to a great extent how the business operates.

In the second part of this book we will zoom in on specific business processes and further differentiate the primary and support activities identified in Part 1.

1

The business and business administration

Daily we have contact with many businesses. We wake up in a bed from Ikea, to the ringing of an alarm clock from Philips, snug under a quilt the name of whose producer we don’t even know. We get washed in a bathroom from Villeroy & Boch, using water from a local water utility. We check our mail on a BlackBerry from Research in Motion via Vodaphone, while eating cornflakes from Kellogg’s. Perched upon a bicycle or scooter or seated within a car from one business or another, we then hit the road, to be confronted for the rest of the day with hundreds of other businesses that deliver all sorts of goods and services to us, from those selling cable subscriptions and newspapers to the dentist and the notary public. And here we are not even mentioning the businesses which we do not yet make use of, but which throughout our day insist to us via advertising that we really cannot do without them.

In this chapter we set out what a business is. Then we deal with the body of knowledge known as business administration. The chapter is then closed out with a selection on management professions and the competencies involved with each.

1.1 The business

The study of business administration concentrates on businesses. But what precisely is a business? When do you speak of a business? And what different sorts of businesses are there? First we explain the difference between the concepts ‘organisation’, ‘business’ and ‘enterprise’. Then we lay out a simplified picture of a business’s operations, as an introduction to the subject.

1.1.1 Organisation, business and enterprise

Coca-Cola, The London Stock Exchange, Nike, Air France KLM, Apple, Amnesty International, the shop next door, a criminal organisation and a choir. We encounter organisations and businesses in all shapes and sizes. These organisations and businesses work in various ways, are set up in various ways. You may well aspire to work in one, while not in another. People work there for various reasons. It is thus important to differentiate the varying types from each other, because this determines which theories apply in which cases. For example, in a criminal organisation there is usually a clear boss and command structure, while in a hobby club leadership is rather less emphasized. The boss of Coca-Cola can earn handsomely, while at Amnesty that is not appropriate, for donors would disapprove. Following this sub-section we will attempt to apply a ranking to organisations and businesses.

The concepts organisation, business and enterprise are related, but signify different things, as we are about to make clear.

organisation business

An organisation is an instance of human cooperation with a specific purpose and the intention to be permanent. Organisations which produce goods and/or services or engage in trade with the intention of putting these on the market for sale we call businesses (alternatively: companies or firms). We distinguish between businesses intending to make a profit and those not:

• Non-profit businesses (also termed non-profit institutions). These attempt to deliver goods and/or services for general use at the lowest possible cost. A hospital, a city transportation authority and a water utility are examples of non-profit businesses.

non-profit businesses

• For-profit businesses (enterprises). That means that they realise a return on their products and/or services, which are a result of their own efforts, that is higher than the costs of making and delivering them. They try to earn money from them – this with the intention of making that profit available to the business owner as reward for his investment in the business. Examples of for-profit businesses are Volvo, Unilever and Sony, but there are also small and medium-sized for-profit businesses, such as the sweet shop on the corner.

for-profit businesses

FIGURE 1.1 The relationship between the concepts ‘organisation’, ‘business’ and ‘enterprise’

In Figure 1.1 the relationship between the concepts organisation, business and enterprise is depicted graphically. From the material that has been presented, it turns out that not every organisation is a business. An organisation is only a business if it produces goods or services. Also, it turns out that not every business is an enterprise. This last term actually applies only to businesses which are out to make a profit.

1.1.2 Businesses are organisations

As well as producing goods, delivering services and/or engaging in trade, a business is at its core an organisation. You can also view a business as an instance of human cooperation with a specific purpose and the intention to be permanent. This description comprises four important characteristics, and it is important to go into each more deeply since it is these that define what organisations are all about:

1 There are people in the organisation;

2 There is cooperation in the organisation;

3 There is a purpose to the organisation;

4 There is continuity in the organisation.

Item 1: There are people in the organisation

We study organisations and businesses in this book in which people are active. Strictly speaking, a pack of wolves or a herd of elephants is also an organisation in which there is cooperation in order to survive. Businesses are about people.

Item 2: There is cooperation in the organisation

The fact that people in businesses need to cooperate with each other as well and as skilfully as possible is one of the most interesting challenges for business administration. Man first began to work together with others because experience had taught him that in a cooperative arrangement you could accomplish more than individually.

Cooperation is worthwhile because then the so-called synergy effect can appear. This means that the result from the total cooperative arrangement is greater than the sum of the results from the individual performances. One example of the synergy effect is to be seen in a construction business that is building flats. Hundreds of employees of a construction business work together to make blocks of flats. If anyone tried to make his own block of flats all by himself, it would be unlikely to happen very quickly, even if he were a true jack of all trades.

synergy effect

If the construction crew work together in an organised manner, such as happens in any modern construction business, then production can amount to several complete, sellable blocks of...

Table of contents

• Cover
• Half Title
• Dedication
• Title Page
• Copyright Page
• Foreword
• Abbreviated Table of Contents
• Table of Contents
• Introduction
• Part 1 What is a business?
• Part 2 How does a business work?
• Part 3 How does a business administration professional work?
• Literature
• Illustration
• Index
• About the authors