Another acronym you need to master? First economics, now business administration, what’s next? Do not worry. What’s behind Business Administration You can find out what it is and everything that goes with it here.
Business administration terms – sub-areas of economics
The economy, more precisely the Economics, includes two sub-areas. The two areas are the Economics and the Business Administration.
Both Economics it is about researching and analyzing economic peculiarities, challenges and processes.
The Economics covers all topics that generally relate to the market. It is divided into two areas. The Microeconomics examines how households and companies make decisions and what effects they have. The Macroeconomics examines macroeconomic events.
The Business Administration covers all topics such as strategy, leadership, production, logistics and sales that affect an individual company.
Business administration terms – economics
In this section you will find the most important terms used in the Business happen. There is a short description for each term so that you can find out a little more about it and make it easier for you to get started.
Entrepreneurial action in Germany is regulated according to the provisions of various legal regulations and ordinances. The Civil Code (BGB) contains provisions on contract, property and labor law. The Commercial Code (HGB) contains regulations on company and corporate law. It applies to all merchants and traders. Other important legal areas include labor law, tax law and competition law.
company
A company is just that Surname of a merchant under whom he conducts his business and gives his signature. So it is the name of a company. This is defined in the Commercial Code, more precisely in Section 17 Paragraph 1 HGB. There are various company principles, which you can also find in the Commercial Code find.
Please note, however, that a company only applies to merchants. Sole proprietors who are not merchants do not have a company. Small businesses are not companies.
The legal form must always be included in the company name. Every company has to commercial register be entered.
There are different companies species. Companies are classified into the following types:
Type of companyExplanationExamplePersonal companyA partnership consists of the name of the person(s).Braun GmbH, Adidas AG, Piller GbR Property companyA property company contains the company’s activities in the name or the activity can be derived from the name. Tiefbau AG, Deutsche Bank AG, Autohaus GmbHFantasy companyA fantasy company contains neither the owner’s name nor the activity. So the name is fictitious. Apple Inc., UG, Zalando SEMixed companyA mixed company contains the owner name, fantasy name and activity. Audi AG, Ikea GmbH & Co. KG, Vitra AG
Operation
A Operation is an economic entity that produces goods. So in a company products manufactured or Services provided. You can see the company as that Location remember the production.
There are companies that strive to maximize profits and achieve the highest possible profitability. However, there is also market economy oriented companies, non-profit or public establishments.
profitability is a key figure given in percent. It indicates the amount of interest earned on the capital invested. The aim is to measure the economic success of a company.
Pursue
A company is a legal-economic entity Unit and can consist of several companies.
companies are market economy oriented. They act according to the commercial principle and all decisions that the company makes are based on legal regulations.
Companies can use their characteristics be classified. So there are companies that… Type of service provision, Industry or economic sector be classified. Other features include, for example: Size of a company in which Area it is active or what legal form it has.
In the example you will find different types of companies:
Benefits in kind company produce material goods using raw materials.
This could be the auto industry, which produces finished cars from steel and many other materials.
service company provide intangible services. These are, for example, transport companies, restaurants or insurance companies.
trading company buy products from different manufacturers and bundle them into a range in order to then resell it. These include supermarkets and online shops.
Delimitation of company, business and company
The three terms company, company and company are not synonyms for one and the same thing. Each term defines something different, even if they are often mixed together in everyday life.
One company is just the name of a company. This is legally protected. Every company must be registered in the commercial register. So you can find every company under its name in the commercial register.
The Operation is the place of production of products or the place where services are provided.
A Pursue is a part of the economy and can consist of several companies. However, a company can never consist of several companies. Companies are an organizational unit and pursue an economic interest.
When several companies come together under one management, they are referred to as a corporation.
Profit
Profit is a positive resultwhich denotes a surplus.
If you have a negative result, this is called a loss. In order for a company to survive, it is important to make a profit or at least make enough to cover all costs.
For example, if Apple sold around 237 million iPhones at a fictitious price of €1,000 each in the 2021 financial year, that corresponds to sales of €237 billion. For an iPhone 13 Pro, the production cost is approximately €490. If you now subtract the costs from the sales, you get that Profit. In our example, your result is a profit of around 121 billion euros. This example is greatly simplified so as not to be too complex. In addition to the production costs, many other costs such as marketing costs, packaging costs and transport costs are deducted.
Profits are also part of the income-surplus calculation. Income and expenses are compared here.
Sales volume
Sales are not the same as profits.
Sales volume denotes all revenuewhich are earned from the sale of products or services.
If you subtract your costs – including expenses – from sales, you get the result, which can be either a profit or a loss.
Do you still remember the big number from just now – it’s the amount that was earned before the costs were deducted. In the Apple example, 237 million iPhones were sold at a price of €1,000 each. That corresponds to one Sales volume of 237 billion euros.
proceeds
Revenue and sales are the same thing. However, note that proceeds only include the Sales are that from the Operating activity of the company. Revenue can result from the sale of goods or services or from renting and leasing.
Loss
Do you score one? negative result, you get a loss. Loss is the opposite of profit and can cause long-term economic damage. So a company should generate as little loss as possible.
Paragraph
Paragraph denotes the Crowd or that volume Goods or services sold by a company in a specified period Period. This makes it possible to analyze developments and find out whether the company has improved, worsened or stayed the same.
Let’s stick with Apple as an example. Apple sold 237 million iPhones in fiscal year 2021. Sales therefore amount to 237 million units.
yield
Yield is that Generic term all revenue the company. He refers to the increase in the value of goods and services. Income must be shown in the profit and loss statement and is offset against expenses.
In the example of Apple they are Yieldssuch as revenue from the sale of iPhones or increasing inventory expendituresuch as renting the warehouse or electricity for production.
Business administration terms – business administration
The Business Administration deals with internal economic processes – i.e. all processes and individual departments of a company.
This addresses questions about the fundamental orientation and function of companies, such as short- and long-term strategies, decisions regarding production, logistics, sales, marketing, accounting and human resources.
Possible Departments in a company:
- procurement
- production
- logistics
- marketing
- distribution
- Controlling
- I.T
- management
Every Department has their own Tasks and Goals. It is not only important to complete your own tasks, but also to promote collaboration with other departments. This allows an optimal result to be achieved.
With an optimal result, the materials and resources used can be used cost-effectively and even resources can be saved. A good result is not only environmentally friendly, it ensures survival and makes investments and future planning possible.