Understanding the Enterprise as a System and its Administrative Subsystems

Posted on Sep 11, 2024 in Economy

UNIT 1: THE ENTERPRISE AS A SYSTEM

Characteristics of the Company as a System

  • Open Systems: Companies are open systems, meaning they interact with their environment.
  • Technical Systems: Companies rely on individuals with specific knowledge and skills.
  • Psychosocial Systems: Companies are comprised of people working together in groups.
  • Mixed Systems: Companies consist of both tangible (e.g., assets) and intangible (e.g., knowledge) elements.
  • Organized Structure: Companies are structured according to an organizational model.
  • Characteristic Functions: Companies have specific functions aimed at achieving predetermined goals.
  • Goal-Oriented: Companies are driven by the pursuit of common, pre-defined objectives.
  • Dynamic: Companies evolve over time, transitioning through various states.
  • Self-Regulating: Companies possess mechanisms to ensure they stay on track toward their objectives.

The Company as a System

A company is a system of interconnected elements arranged within an organizational structure. It operates through characteristic functions to achieve shared goals, evolving through a series of states over time.

The Company and its Environment

Types of Environment

  • General Environment: This environment impacts all businesses within a society. It encompasses factors such as:
    • Technological advancements
    • Cultural norms
    • Social trends
    • Demographic shifts
    • Economic conditions
    • Educational policies
    • Natural resources
    • Legal frameworks
  • Specific Environment: This environment is unique to each company and includes:
    • Consumers:
      • Distributors of products and services
      • End-users of products and services
    • Suppliers:
      • Raw materials
      • Capital goods
      • Components
      • HR suppliers
    • Competitors:
      • Front suppliers
      • Front end-users
    • Socio-political:
      • State intervention in the company
      • Political attitude towards the industry
      • Relationship with unions
    • Technology:
      • Search technology needs and business sector
      • New product development and improvement of existing

Objectives of a Company

Definition

Objectives are clearly defined and shared goals that a company strives to achieve through its actions and strategies.

Function

Each element within a company contributes to the overall objectives through its specific activities and functions.

Types of Objectives

  • Economic: Generating financial profits and achieving economic sustainability.
  • Technological: Advancing and developing new products and services to meet societal needs.
  • Human and Social: Providing personal and professional satisfaction to employees and contributing positively to society.

ITEM 2: SUBSYSTEMS IN BUSINESS ADMINISTRATION

Administrative Function

The administrative function is responsible for guiding the company towards its goals. Its key responsibilities include:

  • Directing the company to achieve predetermined goals.
  • Overseeing the operation of various functions to meet their objectives.
  • Managing business relations within its environment.

Concept of Management

Management is a sequential process that involves planning, organizing, directing, and controlling a company’s resources to achieve its objectives.

Functions of Administration

  • Planning: A rational decision-making process that establishes company goals, outlines necessary actions, and allocates resources.
  • Organization: Defining the formal structure of tasks, authority, and communication within the company.
  • Direction: Guiding and influencing employees to voluntarily contribute to the achievement of company objectives.
  • Control: Monitoring performance, identifying deviations from plans, and taking corrective actions.

Meaning of Management, Direction, and Administration

  • Direction: A function of administration focused on motivating and guiding employees towards company objectives.
  • Management: An executive function encompassing planning, organizing, directing, controlling, and supervising the implementation of projects, with accountability for results.
  • Administration: The management of daily activities and functions required for the company’s operation.

Roles of Executives

Individuals in management roles typically perform these roles:

  • Interpersonal: Leader, representative, or coordinator (depending on their position).
  • Informational: Monitor, spokesperson, or disseminator (based on information flow).
  • Decisional: Entrepreneur, disturbance handler, resource allocator, or negotiator (based on their authority).

Business Decisions

  • Strategic Decisions: Made by top management, these decisions have a significant and long-term impact on the company and are difficult to reverse.
  • Tactical Decisions: Made at lower levels, these decisions have a moderate impact and can be reversed, although with potential costs.
  • Operational Decisions: Made by operational managers, these decisions are routine, have an immediate impact, and are typically reversible.