Business Administration and Management
COMPANY
A company is a set of elements organized and coordinated with the direction, oriented towards a set of objectives, acting under conditions of risk. The purpose of a company is its mission or the reason for its existence as an economic unit.
ELEMENTS OF A COMPANY
- Human Factors: People who have a direct link with the company.
- Material Factors: Economic goods of the company.
- Organization: A set of authority relations, communication, and coordination that guide the group activity of humans.
- Environment: Conditions that influence the performance of the employer’s factors.
FUNCTIONS OF THE COMPANY
- Production Area: Responsible for creating goods or services.
- Human Resources: Organizes and manages the staff of the company.
- Financing and Investment: Responsible for raising funds for the operation of the company and its investment policies.
- Commercial: Markets and distributes the product.
- Supplies: Manages the acquisition of necessary resources.
ENTREPRENEUR
A person who seeks to make decisions in the company to achieve identified objectives and tries to maintain balance between the elements, acting in terms of risk.
FUNCTIONS OF AN ENTREPRENEUR
- Planning and designing an action plan.
- Managing resources.
- Organizing and coordinating activities.
- Monitoring progress and results.
CLASSIFICATION OF COMPANIES
ACCORDING TO SIZE
- Economic standards
- Engineering
- Property
- Organizational
ACCORDING TO ACTIVITY
- Primary
- Secondary
- Tertiary
ACCORDING TO PROPERTY OF CAPITAL
- Private
- Public
- Mixed
LEGAL FORM
- Individual
- Partnership
GROWTH
DOMESTIC GROWTH
Refers to increasing its production capacity.
EXTERNAL GROWTH
Refers to the acquisition, control, or merger with other companies.
MULTINATIONAL COMPANIES
They arise from a process of broadening markets by large businesses, where results are offset and overall balance is achieved due to high strength and technology.
SMEs (SMALL AND MEDIUM-SIZED ENTERPRISES)
Companies with 50 to 250 employees and sales between 5 and 10 million. They often have limited business training, short financial resources, technological obsolescence, flexible organization, integration of personnel, and creative employment.
COMMERCIAL LAW
Part of the law that regulates economic activity.
PERSONAL INCOME TAX (PIT)
A direct and progressive tax on the income of individuals. It has 5 parts:
- Income from employment
- Income from real estate
- Investment income
- Income from economic activity
- Profits and losses
CORPORATE INCOME TAX (CIT)
A direct personal tax that applies to companies and other legal entities. Income is formed by the sum of all income and gains, and the tax rate decreases with patrimonio. The CIT is 35% and 30%.
VALUE ADDED TAX (VAT)
A tax on the value added. It is an indirect tax that falls on consumption. Value added is the difference between the value of goods produced and the cost of raw materials and other intermediate goods used to produce them. VAT taxes the following:
- Delivery of goods and services provided by businessmen and professionals
- Acquisitions of goods
- Imports of goods
The scope of the tax is mainland Spain and the Balearic Islands. Repercutido – to enter or input = devolver. VAT rates:
- Super: 4%
- Reduced: 7%
- General: 16%
FEES
Money paid for benefits made to a public entity, in return for a public service.
CONTRIBUTIONS
Charges that are paid to a public entity by an individual, but whose benefit is invested not only for the taxpayer but for the whole community.
TAXES
Payments required by the general government without a direct consideration for the taxpayer.
PLANNING
Involves setting goals, marking strategies to achieve them, defining company policies, and establishing criteria for decision-making.
CLASSIFICATION OF PLANS
- Goals: The fundamental aims pursued by the company.
- Objectives: Realistic and achievable with minimal unforeseen impacts.
- Policies: Basic principles guiding specific decisions.
- Procedures: Steps to follow to execute an action.
- Rules: Strict guidelines on what can and cannot be done.
- Budgets: Quantified plans.
STAGES OF THE PLANNING PROCESS
- Analysis of the starting situation.
- Fixing resources.
- Creation of alternatives.
- Evaluation of alternatives.
- Choice of one of the alternatives.
- Diversion control.
ORGANIZATION
The function that aims to design a structure in which all functions are defined and each person in the company knows what they must do.
STAGES OF ORGANIZATION
- Determine the hierarchy of controls.
- Define functions of each level of command.
- Establish channels and responsibilities with well-delimited authority.
- Determine how communication should flow in every way.
Taylor sought to rationalize work, eliminating downtime and marking the exact movements each worker had to make to increase productivity.
ORGANIZATION CHART
A graphic representation of the structure of a company’s organization in a synthetic and simplified form, providing an overview of the main characteristics of its structure.
DECISIONS
According to Forrester, it is the process of converting information into action, with the action taken being the set of decisions at a particular time. Decisions are frequently based on institutions from whom the taking is made.
STAGES OF DECISION MAKING
- Having a clear goal.
- Gathering necessary information.
- Providing forecasts.
- Designing alternatives.
- Selecting an alternative.
- Taking planned actions.
- Setting controls to detect whether forecasts are being fulfilled.
DECISION MATRIX
Facilitates analysis and serves as a starting point for solving a problem. It is composed of Strategies, States of Nature, Expected Outcomes, and Prediction of the probability of occurrence in each state of nature.
DECISION CRITERIA
Depending on the situation:
1. Decisions under certainty:
Occurs when the state of nature is known, and the different outcomes should be valued in economic terms to choose the best one.
2. Decisions under risk:
Can be taken when all probabilities of the states of nature are known, allowing the choice of the decision that will bring the most benefits (P1 * D1 + P2 * D2 + P3 * D3).
3. Decisions under uncertainty:
The case where the employer is unable to estimate the probability of each state of nature occurring. In these cases, the determination is taken subjectively. There are 4 types of criteria:
a. Wald’s pessimistic criterion:
This criterion assumes the worst-case scenario for each strategy. There are two types of criteria to use:
- MAXI MIN criterion: Maximum among the minima, where the entrepreneur chooses the highest among the lowest values to minimize potential losses.
- MINI MAX criterion: Minimum among the highs, used when the decision matrix has unfavorable values, choosing the minimum value among the maximums.
b. Optimistic approach:
The strategy that should be chosen provides the best result. It’s called the Max-max criterion, choosing the maximum among the top values.
c. Hurwicz criterion:
A combination of pessimistic and optimistic approaches, based on a coefficient of optimism between 1 and 0. The coefficient is subjective. Only the maximum and minimum values for each strategy are considered. For example, if the coefficient is 0.7: (600 * 0.7) + [25 * (1-0.7)]
d. Savage criterion:
Used by people who are afraid of making mistakes and regretting them. It proposes a new array, replacing the original values with differences or biases resulting from failing to choose the best strategy. This matrix shows what is left of winning by choosing a wrong strategy.