Business Fundamentals: Environment, Functions, and Organizational Systems
Business Environment and Context
Companies operate within a context or environment that involves a number of factors that influence, to a greater or lesser extent, the functioning of business organizations. This set of factors is divided into two main categories:
- Macroenvironment: Factors over which the company has no control.
- Microenvironment: Elements on which the company can intervene and influence.
Core Business Functions and Functional Areas
Core business areas are known as functional areas and are directly concerned with the departments or divisions within the organization. The main functional areas are:
- Production Area: Composed of all functions relating to the production of goods and services.
- Sales or Marketing Area: Business functions related to sales, promotion, and market analysis.
- Finance Area: Related to the search for and management of capital, as well as the company’s accounting functions.
- Human Resources Area: Personnel functions, including the protection and management of staff and company assets.
- Administrative Area: General administration of the company, which includes four key management functions:
- Planning
- Organizing
- Directing
- Controlling
The Company as a System
A company is a system coordinating production (natural resources, labor, and capital), funding, and marketing to achieve its goals and objectives. While the fundamental objective is often to maximize profit, companies may also pursue other objectives, such as social goals.
Characteristics of the Enterprise System
The enterprise system exhibits several key characteristics:
- Open System: It receives a series of inputs and sends out various outputs. Everything that happens outside the company affects and influences its decisions. The combination of different elements or subsystems interacts synergistically, achieving better results.
- Global System: Any influence received from its subsystems or elements impacts others and the entire company.
- Self-Regulating: It adapts to any situational change.
Every system consists of four main parts: Inputs, Processes, Outputs, and Control.
The company takes the necessary resources (staff, machines, materials, etc.), which become part of the operating subsystem. The execution of processes allows objectives to be met, resulting in outputs (products, services, capital, etc.). Its elements are interrelated, producing exchanges and relationships between the different functions.
Control is established to determine the degree of compliance with established plans and goals. If the generated output deviates from limits, a process of feedback begins, modifying inputs to ensure that the outputs conform to the desired range. The system adapts to meet its organizational objectives.
Organizational Structure and Charts
The company’s organizational structure is the scheme of hierarchy and division of roles that compose it. We can distinguish two primary types of organization:
- Vertical Organization: Based on the principle of hierarchy and unity of command, where orders originate from the highest level. This structure often makes team work difficult.
- Horizontal Organization: Based on the principle of division of labor, specialization, and functionality. It breaks the unity of command and strongly supports team work.
The organizational structure directly influences the perception that an employee may have of their working conditions and professional performance. An increasingly common practice is the outsourcing of certain functions, which involves removing some services outside the company.
Types of Organizational Charts (Organigrams)
The graphical representation of the organizational structure is achieved through organizational charts. These can be distinguished based on their display format:
- Horizontal: Displayed from left to right.
- Circular (Round): Concentric circles, displayed from the inside outwards.
- Vertical: Displayed from top to bottom.