Introduction to Business Management

• The document contains study notes for the subject of "Economics and Business Management."
• It is intended for students who are taking Economia i Gestió d'Empreses in different courses at the URV
• The aim is to provide both the theoretical and practical foundations that make up the conceptual system of the company and those related to Business Administration

Introduction to the company

• The definition of a company has evolved over time, changing through different historical periods
• In the Middle Ages, the artisan model of business existed, grouped into guilds based on their trade
• From the 15th century onwards, Europe expanded commercially, leading to the creation of large trading companies in the 16th and 17th centuries
• The Industrial Revolution in the late 18th and early 19th centuries brought about new labor conditions, including the accumulation of capital, new technologies, and a new business mindset
• These conditions led to the emergence of large companies requiring a substantial workforce, resulting in the mass hiring of workers
• New organizational and business management techniques became necessary
• There isn't a single definition of a company
• A company can be defined from various perspectives, such as technical, economic, socio-political, and legal standpoints

Technical Point of View

• A company transforms inputs into outputs, either finished products or services
• The transformation process can range from simple to complex

Economic Point of View

• A company adds economic value by transforming inputs into outputs
• The objective is for its productive activity to be valuable to its customers, creating wealth by ensuring the utility of outputs is superior to that of the inputs

Sociopolitical Point of View

• Companies involve people, which is important for understanding their operations
• Understanding the interests, behaviors, and motivations of all participants is crucial

Legal Point of View

• A company is constituted by assets, has a net worth, and aims to generate profit
• It establishes relationships with shareholders, workers, customers, banks, and administrations, all regulated legally

Classic Point of View

• A company is a combination of production factors that are coordinated to produce and maximize profits

Current Point of View

• A company is an organization that transforms resources into goods and services to obtain profits

Definition of Organization

• An organization is a group of people consciously formed to achieve a common objective

Enterprise Elements

• For an organization to be considered a company, it needs certain elements:
  • Transformation unit: A unit that transforms inputs into outputs, increasing their utility or value
  • Management unit: A unit that organizes and directs the entire process, with a person or group in charge
• From this perspective, a company is a combination of ordered production factors under the direction and control of a businessperson, used in productive activity
• Companies exist to produce the products that people need

Company Elements

• Companies are made up of ordered factors grouped into active factors (people) and passive factors (economic goods)

Active Factors/People

• Factors act as human capital, responsible for putting other existing factors into operation
• Includes;
  • Capital owners, partners, or shareholders: They provide the necessary capital
  • Administrators or managers: They are responsible for the company's management, aiming to increase the company’s value
  • Workers: They offer their labor and knowledge in exchange for a salary, seeking better wages, social benefits, training, and job security
  • External groups: Clients, suppliers, financial entities, public administrations

Passive Factors/Economic Goods

• Represent classic economic factors, such as land and capital
• Broken down into:
  • Tangible/Material elements: - Physical resources: Infrastructure, lands, industrial buildings, machinery - Financial Resources: Available money and accounts receivable

Intangible Elements

• Non-physical elements that are more difficult to identify
• Include:
  • Intellectual capital: Knowledge and experience of those who work at the company
  • Structural Capital - Systematized knowledge of each organization - Each company is unique due to its internal processes, databases and work protocols - Technological - The company’s know-how on products -Organizational - Organization routine, work protocol, etc.
  • Relational - All knowledge the company has about its surroundings - The company builds up this relationship through client relationships, supplier relationships, competitors etc.

Types of companies:

• According to capital
  • Public: The company is owned or largely influenced by government
    • ADIF, AENA, Agència EFE, Correus, RTVE, Paradores de turismo de España, Sociedad estatal de loterías y apuestas del estado, RENFE.
  • Private: The company has exclusive ownership, and is owned by private individuals.
  • Mixed: The capital is split between public and private capital
    • Red Eléctrica de España, Iberia.

Company Size

• Businesses usually directed by owners unless they get too large, where the roles separate

Indicators to measure size

• Volume of sales, own capital, number of employees or beneficiaries
• European Union classification which have three indicators
  • Sales Volume
  • Number of workers
  • Volume of active people

Classifications:

• Micro-companies: less than 10 workers with less than 2 million euros
• Small businesses: Between 10 or 49 workers with less than 10 million euros
• Medium enterprises: Between 50 to 249 workers with less than 50 million euros or 43 million euros

Activity Sector Classifications

• Industrial company: Production of goods through the transformation of material and raw goods.
  • Extractive companies: Exploitation of natural resource (sectorprimari), companies that are agriculture, farming, fisheries etc.
  • Transforming companies: Transformation to create materials or products.
  • Secondary sector companies

Classification based on area

• National companies: Exists in the country
• International companies: Exists outside the country
  • Export companies: Sels their products abroad.
  • Multinational: Operate outside of the companies’ original country

Classification based on benefit use

• For profit: Maximize benefit
• Non profit: Benefiting, reinvesting into the company

Classification based on shape

• Companies or individual worker
• Companies with societal shape

The principles of business activity

• The regulations generally not written that regulate businesses
• Four principles; Profit, Economicity, financial stability, quality

Profit

• Companies exist to become more profitable
• When companies obtain profitability it can be said has grown patrimonially
• An increasing net worth is a sign of success

Economy

• Resources are limitied, which includes the price
• Companies have to be economical with their resource
• The company must organize itself to be produce services at a low price

The importance of Financial Stability

• When a company obtains a profit a nd economy, it has to maintain itself financially.
• A financial equilibrium guarantees the company will have the adequate funds to deal with problems

Quality

• Make sure products maintain a minimum amount of service and duration
• It’s the principle of quality that indicate the company accomplishes the minimum criteria

Functional areas

• Functional areas help aid an enterprise
• To achieve the objectives of an enterprise
• Each of the areas are important to consider

Five fundamental areas:

• Administrators or leaders
• Operations areas
• Commercialization department
• Human resource department
• Finances

Administrators & Directors

• Getting objects from the company through the use of available factors
• Within a company operators and administratives
• Administrators; synonym for managers or director

Operations

• When a chef is making food he is demonstrating service
• The painting, worker etc. - Obtaining services or products is a collective necessary activity

Market

• The market has an entity who helps market demand and market it
• Commercialization exists in the concept of marketing
• The company selects the areas where it will invest money
• Investment objectives are aligned the companies investment

Human Resources

• Previously to this, human resources meant sending them to the work and the tasks required
• Now their tasks include: - Personel Planning: Determine any personal necessities that happen - Recruit & Select: Attract sollicitants to take nessesary teste - Formation: Train workers so they can obtain better results - Rendemnt Evaluation: Evaluate level - Set Compensation

Juridical view of the company

• The company develops services to benefit the net worth of it’s patrimony.
• In first class there is always the physical, second class there is juridical
• Companies in physical form have an agreement for contracts made by independent people.
• They have to administer capital for operation
• The business is physical as the same owner.
• Responsability is unlimited

Main advantage:

• Easy to control all operations
• The worker is solely responsible for his work

Company Juridical

• Made by a society when juridical parts unite with each other.
• It determines the capital

The distincts parts of companies that has Juridic value.

• Its own juridical value and responsibility

Responsabillities include debts and obligations.

• Types are societats limitée anómines etc.
• Responsibility limited “SL” has a limited responsability.
• Every group invests a limited share.

Aspects of a society:

• Social denomination
  • All identities has to be identified juridically.
• Social Objective
  • The state has to define it in the social economic activity.
• Social capital
• Value contributed by partners with a minimum import based on the society type.
• Junta General - General board of advisors

Fiscal Enterprise

• The public administration can power financially - Can define it as a money transfer for all citizens
• Division into three groups
  • Taxes: - Is the tax of civil servants

Special Contributions

• Is the public’s needs regarding a collective benefice.
• Taxes:
  • A contribution of the tax.

IRPF

• What constitutes the tax.
  • Is the revenue for the company minus losses
  • The tax revenue is higher.