Business Management (Meaning and Explanation)

We explain what business management is, its origin, functions and techniques. Also, why it is increasingly important.

kaori-ishikawa-business management — Kaoru Ishikawa created the private business management method called Kaizen.

What is business management?

Business management is the discipline that studies the relationships between business administration, production processes and the elements of cost, quality, logistics and distribution among others. Its objective is to guarantee and continuously increase the effectiveness and competitiveness of a given organization or corporation.

In other words, it is about applying constant innovation, from every point of view, to the world of business administration, as defined by the prominent Austro-American economist Joseph Schumpeter (1883-1950). In a strict sense, It is a specific branch of business administration often called today Business Management.

Business management goes hand in hand with the ever-changing world of technology, and finds in dynamics such as automation, computing and new technologies a set of tools that can be used to update and improve business performance in its different facets and levels.

See also: Management, Management in administration

Origin of business management

Although its antecedents can be traced in one way or another to any form of organization or company throughout history, this discipline took its first formal steps in the first half of the 20th century (academically in 1933 in Madrid, Spain), especially in the public and military sectors.

Its application to the private field came immediately, especially from the hand of specialists in certain productive stages, such as the Japanese Kaoru Ishikawa (1915-1989), one of the main exponents of the scientific or systematic method of constant improvement of administrative processes. This process of continuous improvement in the quality sector is known by the Japanese name of Kaizen.

Importance of business management

Business management is a very broad discipline, to which more and more attention has been paid nowadays. This is due to the growing demand in the business world for professionals capable of (re)thinking the business world according to the changing needs of the times, which requires experience or, failing that, academic training.

Functions of business management

Like other similar disciplines, business management focuses on the analysis of the organizational structure, taking into account the different aspects that can be improved. To do this, it usually emphasizes the four basic points of every production process:

Planning The prior arrangement of the objectives to be achieved, the methods and other characteristics of the business project.
Organization. The ideal distribution of the company's resources, taking into account their similarities, differences, destinations and other usable factors.
Communication The exchange of data and relevant information between the different parts of the organization, and also with the outside.
Control The making of strategic decisions based on the feedback dynamics possible from the information emanating from the production process itself.

Business management techniques

Business management is put into practice through a set of techniques applied to the different administrative processes of the organization, with the purpose of guaranteeing the viability of the business initiative in the long term. Some of these techniques are:

Strategic analysis. It consists of reviewing the social, political and economic environment in which the company is inserted, to identify scenarios external to it that may affect its performance.
Organizational management. Focused on the administrative process, it consists of reviewing the business structure for the future, to plan in advance the dynamics that the organization will need to approach the set goals.
Information technology management. It consists of the study of the company's communication strategies, from the point of view of new ICT or advanced communication platforms.
Financial management It consists of the review of the company's capital obtaining, management and investment processes, to achieve the greatest possibility of performance in the short, medium and long term.
Human resources management. It consists of reviewing the strategies for obtaining and maintaining the organization's personnel, from the point of view of the human and professional improvement of the company.
Environmental management. It consists of the evaluation of the company's performance in the face of environmental needs or the physical environment in which it is located: pollution, social responsibility, etc.
Operations management. It consists of the study of the logistics, supply and distribution processes that are specific to the company, and that usually involve raw materials, energy, supplies, routine services, etc.