Core Concepts of Business Management

Principles of Management

• Division of Work
• Authority and Responsibility
• Discipline
• Unity of Command
• Unity of Direction
• Subordination of Individual Interest to General Interest
• Remuneration of Personnel
• Centralization
• Scalar Chain
• Order
• Equity
• Stability of Tenure of Personnel
• Initiative
• Esprit de Corps

Planning

The role of management in defining goals, determining strategies to achieve them, and integrating and coordinating activities through plans.

Organizing

A management function that involves determining which tasks need to be done, who performs them, how they are grouped, who reports to whom, and where decisions are made.

Personnel Integration

This involves staffing positions within the organizational structure and maintaining those positions with qualified individuals.

Controlling

The administrative role of monitoring actual performance, comparing it to a standard, and taking corrective actions when needed.

Directing

A management function that involves motivating subordinates, influencing individuals and teams as they work, choosing the best communication channels, and engaging in other aspects of employee behavior.

Efficiency vs. Efficacy

Efficiency: The ability to achieve maximum results with minimum investment. It is defined as doing things right.

Efficacy: Completing activities to achieve the organization's goals. It is defined as doing the right things.

Macroenvironment

These are all the basic conditions in the external environment of an organization. This part of the environment forms a general framework for management decision-making.

• Economic Conditions
• Sociocultural Conditions
• Political and Legal Conditions
• Technological Conditions
• Ecological Conditions

Microenvironment

This is composed of the real people and organizations with which the company directly interacts.

• Customers
• Suppliers
• Competition
• Regulators

Business Classification

1. By Number of Employees
2. By Sales Volume
3. By Economic Activity
4. By Legal Structure and Capital Constitution

By Number of Employees

• Microenterprise (1-4 employees)
• Small Business (5-49 employees)
• Medium Business (50-199 employees)
• Large Business (200+ employees)

By Sales Volume

• Microenterprise (annual sales less than 2,400 UF)
• SME (Small and Medium Enterprises) (annual sales between 2,400 UF and 100,000 UF)
• Large Companies (annual income greater than or equal to 360,000 UTM)