Business Define: The word business refers to a company or enterprising entity engaged in commercial, industrial, or professional activities. Businesses may be for-profit companies or non-profit organizations that pursue a charitable objective or contribute to a social issue. A firm’s scale varies, from sole proprietorships to worldwide corporations, and may range in size from tiny to massive.
The term “business” refers to individuals’ efforts and activities to create and sell commodities and services for profit, as well as the organizations that undertake these tasks.
The epicenter of all business is money, which comes from selling a product or service with the expectation of making a profit. In most instances, the customer is willing to pay more for a commodity than its fair market value because it is practical and believes it will increase. The owner then uses this excess revenue to pay expenses, expand into new markets, or raise himself.
Businesses are deemed “for-profit” because they make money by selling their products and services for more than the price paid to acquire them. This profit can be distributed as dividends to stockholders, used for the growth of the business, giving back to the community through charities, given to employees in the form of higher salaries, or retained within the business until it becomes necessary to replace or update equipment, facilities or technology. On the other hand, if a company fails to earn enough money from its sales efforts, it will not be able to pay expenses and eventually fold.
For the sake of simplicity, it is best not to think of a business as a single entity but rather as a combination of two distinct parts: the customers, who provide revenue for the company through their purchases, and products/services, which are what creates this revenue. The former includes money, while the latter provides value. In this context, it is clear that businesses must constantly strive to fulfill these two conditions to survive:
They need satisfied customers—people willing to keep buying from them even if their competitors lower their prices.
Their products/services must offer more value than they cost—that is, they should be charging higher prices than their competitors are charging.
Businesses are not static entities but rather dynamic organizations that evolve to cope with the changing realities of an ever-changing world. Some businesses fail while others succeed, but for those that do survive, they must continue planting the seeds of innovation to grow and compete in a fiercely competitive environment where new technologies, increasing globalization, shifting demographics, and escalating environmental concerns are constantly altering the playing field. No matter what business you are in or how well it performs now, constant change is necessary if you want your company to be around next year—or even five years from now.
Define Business Administration
The administration of a business is the management and supervision of it. This entails keeping a plethora of paperwork, monitoring and overseeing every department, and staffing and managing teams of workers. The business administration department in a company includes the following functions: preparing, organizing, staffing, and directing. It also involves controlling resources, planning business activities, and providing a structure for business decisions. A person responsible for carrying out these activities is called a manager, although this term may also apply to the combined roles of owner/founder and manager.
In more giant corporations, there are usually dedicated managers within each department who oversee the day-to-day operations. In smaller companies or in cases where there is only one employee (the owner), management of the company requires no specialized skills beyond those required by employees of any type.
The main tasks involved with administering a company include:
These tasks require good written and verbal communication skills and the ability to coordinate multiple ongoing projects.
Business administration can be divided into two parts:
1) Support Services: Support services are those that answer questions like “How do we get our products out the door?”
2) Strategic Planning: Strategic planning asks questions like “How do we grow our company ten years from now?”
Administration encompasses all of the tasks involved in running an organization effectively. This task includes filing paperwork with state and local governments about the nature of their business, hiring employees, developing procedures to ensure consistency among employees’ duties and responsibilities, monitoring the quality of products and services, managing the budget, etc.
Administration employs personnel in positions that range from accounting clerks to marketing personnel to human resource managers. A person engaged in administrative work may be called a coordinator or administrator (although not all administrators are coordinators), with variations in job description depending on the size of the company involved.
Define Business Acumen
Business Acumen is the ability to:
1. Recognize situations within and outside of your business that require a business decision.
2. Identify and assess relevant information about those situations so you can make well-informed decisions.
3. Evaluate options for addressing the situation in light of that information. The best option is selected under such circumstances primarily because it maximizes one or more critical outcomes important to your business or organization rather than because it makes someone feel good.
4. Execute the chosen course of action effectively and efficiently, primarily by leading others who need direction to accomplish their part in executing it; and monitoring and adjusting your approach as necessary in light of changing realities to ensure its excellence over time (its excellence over time means that you are continually enhancing the value of the decision itself. Each time you make a decision, there is an opportunity to learn from it and improve your ability to make future decisions).
Business Acumen is primarily about making effective business decisions. Making effective business decisions requires knowledge, skills, mental models (organizing frameworks for how we understand reality), habits of mind (the ongoing cognitive processes by which people frame situations in particular ways), values (desirable goals held by an individual or group), vision (seeing what others do not see and acting on what they overlook) and leadership (the capacity and willingness to guide and inspire others, so they contribute as much as possible toward achieving shared outcomes).
Business Acumen can be developed through:
b) Training and
Business Acumen can be applied to many different types of decisions, including:
1. Decisions about how to maximize the value created by your business (be it greater short-term or long-term profits or other values important to your business);
2. Decisions about how best to organize and lead your business (including leadership of teams and individuals, managing for excellence, and making difficult choices;
3. Decisions that affect people’s lives outside your organization (customers, suppliers, communities, etc.).