Business Management: Definition, Principles, and Importance

Management Definition

Administration comes etymologically from the Latin, meaning "action to manage." The latter term is composed of ad and minister, which together mean "to serve." This implies that administration is an activity devoted to service and cooperation.

Purpose of Management

The aim of administration is to get the company to achieve productivity, i.e., a balance between efficiency and effectiveness.

• Efficiency: The ability to minimize the resources consumed to achieve the objectives of the organization. "Do things right."
• Effectiveness: The ability to determine appropriate goals. "Do the right things."

Importance of Management

Administration is very important in this era, full of complexities, changes, and uncertainties. Sustaining a business and competing with others depends on adequate administration of its resources, thus allowing enterprises to obtain the best equipment, plants, services, humanitarian relations, etc. This is why administration in an enterprise is essential.

Administrative Principles

1. Unity of Command: A single person must direct each group of subordinates.
2. Authority: Everyone should have a person who directs them.
3. Unity of Direction: A single program for each activity.
4. Centralization: All activities must be handled by one person. Note: Currently, structures make this not very functional.
5. Subordination of Individual Interest to the General Interest: Benefits should be sought for the majority.
6. Discipline: There should be discipline for the proper functioning of the company.
7. Division of Labor: Everyone should be assigned the work to be done.
8. Order: Everything in its place and a place for everything.
9. Hierarchy: The authority of each hierarchical level must be respected.
10. Fair Compensation: Pay according to work and reality.
11. Equity: The benefits must be shared.
12. Stability: The employee must feel secure in their work.
13. Initiative: The employee must be allowed to determine how things should be done.
14. Team Spirit: Everyone must work together.