Business Management Engineering

Introduction

Every company or organization exists if it has benefits. Without those benefits, organizations lose
their ability to grow and develop, much less have the ability to compete against another
organization in the same field. To do so, they need to establish activities or processes that allow
them to achieve their objectives.

A company is defined as an economic and social unit for profit purposes, in which natural
resources, capital, technological resources, work, management and individuals are systematically
coordinated to carry out socially useful production in accordance with the demands of a common
good.

Today, organizations face a world where raw materials and other resources are scarce, and even
more so with technological changes that lead to the automation of companies, which force
entrepreneurs to improve their management techniques to manage each of the company's
resources.

In this documentary research work, we will learn about the importance of business management,
resource administration, and some administration and engineering tools that help organizations
grow and be more competitive in their changing environment.

1. Introduction to Business Management Engineering

Business management is a fundamental point of the entire company, and if good management is
carried out within the organization it will grow, but on the other hand, if poor management is
carried out the company will decline.

Good management involves a host of requirements that a company needs in order to achieve its
objectives and although from one point of view it seems simple, or that by following a method or a
series of steps good management could be achieved, the reality is that it is quite the opposite, it
requires an individual or a group of individuals who are truly capable of carrying out the actions
and making the necessary and correct decisions to generate good management in an organization.
Good management not only focuses on the company and what happens within it, but also deals
with organizational problems that affect its performance, its environment, the community, and
other organizations, maximizing the company's resources, maximizing its profits, reducing costs
and not forgetting good quality and customer satisfaction.

1.1 Business management in the 20th century

It is not possible to say exactly how, where or when business management originated, but many
historians claim that the management and administration of resources in an organization as a
modern discipline, has its beginnings at the end of the 19th century and beginning of the 20th
century.

Throughout the 20th century, there were three concepts in the area of business management and
administration that defined the way organizations work.

1. 1920 – 1930

The concept of Division of Labor is created, in which workers, motivated by salary, are dedicated
to simple, monotonous, repetitive operations, and any of the different activities that are carried
out in the production area, and thus by making everyone carry out an activity they believed that
optimal productive performance could be obtained within the organization.

2. World War II

Employers realize that workers can perform more creative and responsible work, thereby
improving the effectiveness and efficiency of productivity in the company, as employees feel
useful and important.

3. After the economic crisis of the 70s

Entrepreneurs realize that it is not enough to look for ways to increase economic resources, but
they also seek other objectives such as market expansion, product diversification and leaning
towards the trends of personification and improvement of quality, increasing not only the quality
of products and services, but also additional pre- and post-sale services.

1.2 Definition of engineering in business management

Engineering is a set of scientific knowledge and techniques applied to the invention, improvement,
and use of various industrial and business resources in all their different aspects, including the
solution and optimization of problems as well as the search for areas of opportunity that affect
people's daily lives.

Engineering is closely linked to human beings and the industrial revolution, constituting the basis
for the development of modern societies.

Management, like engineering, is supported and functions through people and groups of people
who together generate good results. Management provides people with the opportunity to take
on positions of greater responsibility and seek new options for improvement.

Based on the above, we can define business management engineering as the business activity that
plans, organizes, directs and controls an organization, which, together with people (directors,
executives, managers, employees, advisors, among others) can improve the productivity and
competitiveness of organizations by using scientific techniques and methodologies used by
engineering.

Today, organizations must take into account that business management forces every organization
to stay at the forefront of new developments in order to be more competitive and to be able to
operate in an environment that is becoming increasingly complex.

2. Main functions of engineering in business management

The definition of business management engineering identifies four functions which become the
basic pillars for its creation within the organization, which are:

Planning

Organization
Address

Control

The first of these is mainly used to combine the organization's resources in order to visualize the
projects that are intended based on the company's own objectives that are profitable for the
organization. In other words, it is about seeing the entire company as a whole and its
corresponding environment, seeing its needs and making the right decisions to make good use of
the company's resources and determining, if not the best path, an appropriate path that will lead
the company to achieve its stated objectives.

Organization is where all the company's resources are grouped together, making them work
together in an orderly and coordinated manner to obtain greater use of them and thus increase
the possibilities of obtaining greater and better results.

The third function is the management of the company, which, from the point of view of business
management engineering, involves one of the essential points that determines the success or
failure of an organization: communication.

Communication between senior managers and employees arises from the need to create a
comfortable and appropriate work environment in an organization in order to increase the
efficiency of employees' work and the competitiveness of a company.

Finally, there is control, which is the fourth and final function of business management, which
evaluates, quantifies and improves the progress of employees in the organization according to the
objectives that were initially proposed.

Taking these functions into account, they provide the organization with the possibility of
performing in the market; the management processes in the company are not independent, all
processes are interrelated.

2.1 Areas of engineering in business management

The areas of opportunity where business management engineering can be practiced present five
most important areas which we can mention:
1. Administration

Organizational Structure

Strategic Planning

Decision making

Policies and Procedures

2. Market

Sales Behavior

Customers

Competence

Market Strategy

3. Finance

Accounting

Profitability

Liquidity

Resource generation

Financial Planning

4. Production

Costs

Inventories

Plant Layout

Machinery and Equipment

Production Systems

Technology

Quality

Main problems in the production process:

5. Human resources

Recruitment and Selection

Training

Permanence

Employment status

3. Engineering techniques in business management

Business management addresses specific areas of the organization that, when improved, lead the
company on the right path. However, to achieve this, it is necessary to use engineering and
administration techniques that, when used correctly, make the company grow and develop in a
better way.

3.1 Strategic planning

There are several definitions of strategic planning, among the main ones we can mention the
following:

“The process by which members guide an organization, envision its future and develop the
procedures and operations necessary to achieve it” (Goodstein, et al., 1998).

“Strategic planning is considered a top management exercise that has little or no relationship to
the actual functioning of the organization” (Kastens, 1979).

“Strategic planning can be defined as an objective and systematic approach to decision making in
an organization” (David, 1990).

“Strategic planning is the managerial process of developing and maintaining a strategic direction
that can align the organization's goals and resources with its changing marketing opportunities”
(Kotler, 1990).

In other words, strategic planning is a process that begins with the establishment of organizational
goals, defines strategies and policies to achieve these goals, and develops detailed plans to ensure
the implementation of the strategies and thus obtain the desired ends.

It is also a process of deciding in advance what type of planning efforts should be made, when and
how they should be made, who will carry them out, and what will be done with the results.
Strategic planning is systematic in the sense that it is organized and conducted based on an
understood reality.

3.1.1 Importance of Strategic Planning

Nowadays, most organizations recognize the importance of strategic planning for their long-term
growth and well-being. It has been shown that if managers efficiently define the mission of their
organization, they will be better able to provide direction and guidance to their activities.
Organizations function better as a result and become more sensitive to an ever-changing
environment.

Strategic planning addresses fundamental issues and answers questions such as:

What business are we in and what business should we be in?

Who are our customers and who should they be?

Strategic planning helps in establishing basic purposes, objectives, policies and strategies, to
develop detailed plans in order to implement the policies and strategies and thus achieve the basic
objectives and purposes of any project and company or organization.

Strategic planning has some basic elements that show the importance of planning, which are:

Promote the development of the company by establishing methods of rational use of resources.

Reducing the levels of uncertainty that may arise in the future does not eliminate them.

Prepare the company to deal with any contingencies that may arise, with the greatest guarantees
of success.

Establish and define a vision for the future.

Establish a system for decision-making, avoiding hunches or empiricism.

Minimize risks and maximize opportunities.

Provide the elements to carry out the control.

Minimize potential problems and provide the administrator with excellent returns on his time and
effort.

Allow the executive to evaluate alternatives before making a decision.

Maximize the use of time and resources at all levels of the company.

3.1.2 Strategic Planning Process

The planning process tends to be more analytical than intuitive. Both intuition and analysis are
essential for good planning. Thus the process must be seen as a continuous medium between two
extremes, that is, from intuition to analysis.

In Morrisey's book Strategic Thinking (1996), strategic planning is defined as a system that unites
three types of fundamental plans, which are:

Strategic Thinking.

Long-Term Planning.

Tactical Planning.

Strategic Planning

Strategic thinking is the foundation for strategic decision making. Without this foundation,
subsequent decisions and actions may be fragmented and inconsistent with the long-term health
of the company. Strategic business thinking is the coordination of creative minds within a common
perspective that allows organizations to advance towards the future in a satisfactory manner and
achieve their objectives and interests. In this part, the vision and mission that the company seeks
are developed.

Long-term planning

Long-range planning is a process that brings together the management team to transform mission,
vision and strategies into tangible results in the future. Long-term planning leads to the
organization's position. Long-range planning should be viewed as a dynamic process and flexible
enough to allow and even encourage modification of plans in response to changing circumstances.
Long-term planning charts your journey to future success.

Tactical planning

Tactical planning is the process that helps the organization to pursue worthwhile opportunities,
improve results, avoid or minimize losses, and provide continuous feedback to take corrective
action when necessary.
Its purpose is to ensure that the company's performance in producing short-term results is
consistent with the strategic direction, in addition to achieving the most effective use of available
resources and achieving the objectives that were planned in the short term.

The following figure shows the stages of the strategic planning process, the way in which the
various sub-stages of each of the processes are formed: strategic thinking, long-term planning and
tactical planning; as well as the order and sequence in which each of its components are applied.

Strategic planning process - Business management engineering3.2 Marketing

The management of a company through marketing is a process by which the creation, design,
conception, price, promotion and sale of a good or service are planned and executed in an orderly
and coordinated manner, which satisfies the objectives of the organization.

Marketing is typically concerned with:

Organize sales

Create and manage products or services

Set prices for the customer or consumer

Market Entry Planning

Commercial communication (promotion, advertising, among others)

Business Research

3.2.1 Market research

Market research is a fundamental step in any business project, since a company sells products or
services and, of course, needs clients and consumers. Market research is nothing more than
analyzing who these customers are, what their needs or desires are, the expectations they have
for a certain good or service and how to respond to those demands.

Market research is not only focused on the organization's environment but also on aspects of the
company, such as human resources, finance, production, among others.
To carry out a correct market study, the following aspects must be taken into account:

Clients and consumers:

It is about determining who will buy or acquire the good or service; they may be other companies,
distributors, or the final consumer (the one who will use the good or service). It is important to
determine who they are, where they are, what they need and how to satisfy them, analyzing what
they base their purchasing decisions on.

Competence

Companies that offer products or services in the same (or similar) field that are aimed at the same
sector, client or consumer are analyzed. Likewise, you should have a clear picture of where you
are, what you sell, how you sell, who you sell to, what your advantages are, what your
disadvantages are, and if possible, know the reason for your success or failure.

Intermediaries

They are necessary if and only if the company is not going to sell its products directly to the
customer (in the case of services it would have to be a special case of service) because they
positively or negatively affect the image of the organization.

Suppliers

They directly influence the quality of the products or services handled by the organization. Those
that offer greater competitive advantages or, as is commonly known, “higher quality” and improve
the product or service to be developed must be identified.

3.2.2 Marketing plan

It is a document in which the different actions that must be carried out to achieve the desired
objectives are developed. In this plan, all the components of the company are taken into account,
consistent with the aforementioned strategic plan.

This tool is intended to determine the current situation of the company, based on significant
historical facts, and thus make projections and estimates regarding past sales, trends, price
behavior, among others.

Three important points are mentioned in the marketing plan:

Choosing the product sector, that is, who or what type of consumer the good or service will
satisfy, is dividing the market into segments according to the characteristics of a group such as sex,
age, purchasing power, religion, among others.

Product positioning, where the good or service will be placed to maximize its sales.

Choosing products to develop, some possible strategic orientations could be the elimination or
creation of products, there may be several factors that contribute to making this type of decisions,
such as the change of customers for certain tastes or fashions, raw material prices, specialization
in certain areas of production, among others.

3.2.3 Action plan

An organization's marketing action plan has four elements that, when executed correctly, will
bring the organization closer to meeting its objectives. These elements are made up of:

Products or services

These are tangible and intangible assets that the company is already marketing and that give it
identity and, above all, sales. Within the company, it is always necessary to clearly identify the
goods or services that comprise it and what objectives are met with each of them.

Added to this is the product or service portfolio (determines and classifies the type of tangible or
intangible asset that the company has), product differentiation (determines a series of
characteristics that differentiate one product from another within the company), brands, models
and packaging (allows the product or service to be identified and differentiated outside the
company, from the competition).

Price

It is the instrument that determines the value of a good or service, sometimes it is the main
decision factor between one product or another, and on the other hand, it also becomes an
important indicator of quality, prestige and competence.

Communication

It totally influences as a marketing tool to achieve the positioning of one or several products in the
market, since it will determine the possibilities of success, failure and survival of the company.

Communication encompasses:

Advertising

Direct marketing

Personal selling

Public relations

Sales promotion

Distribution

It is the way in which the company's goods or services will be delivered to its clients or consumers,
which includes:

Distribution channels

Points of sale

Logistics

Consumer-channel relations strategy

3.3 Financial Plan

A financial plan is a series of steps or objectives used by an individual or business, the progressive
and cumulative achievement of which are designed to achieve an ultimate financial goal or set of
circumstances, for example, eliminating debt, preparing for retirement, among others.

This often includes a budget that organizes an individual's finances and sometimes includes a
series of specific steps or goals for future spending and saving of income. This plan allocates future
income toward different types of expenses, such as rent or utilities, and also sets aside some
income for short-term and long-term savings. A financial plan sometimes refers to an investment
plan, which allocates savings to various assets or projects that are expected to generate future
income, such as a new business or product line, stock in an existing company, or real estate.

In business, a financial plan can refer to the three main financial statements (balance sheet,
income statement, and cash flow statement), created within a business plan. Financial forecast or
financial plan can also refer to an annual projection of income and expenses for a company,
division, or department.

A financial plan may also be an estimate of cash needs and a decision on how to raise the money,
such as through loans or issuing additional shares in a company.

3.3.1 Budgeting

For business management engineering, the creation of budget plans is a cornerstone for the
development of the organization, since it views the entire organization in a numerical, that is,
accounting, way, from raw materials, machinery, human resources, everything has a “weight sign.”
Well, a for-profit organization has an implicit objective, which without having to be in the mission
or vision of the organization is underlined, it wants to maximize its profits, and minimize costs.

To achieve this, there are tools in the accounting, financial and engineering fields to meet the
economic needs of the company and still apply good management of economic resources, and
these are budgets.

A budget is nothing more than a financial plan and a list of all expected expenses and income. This
is a savings, loans and spending plan.
3.3.2 Importance and types of budgets

Budgeting helps plan current operations by forcing managers to consider how conditions may
change and what actions should be taken now and by encouraging managers to consider before
problems arise. It also helps coordinate the organization's activities.

Other essential elements of the budget include:

Control of resources

Communicate plans to multiple responsibility center managers.

Motivate managers to strive to achieve budget goals.

Evaluate the performance of managers

Provide visibility into business performance

Below we will see some types of budgets for the management of economic resources:

Sales budget an estimate of future sales, often divided into two units and dollars. It is used to
create company sales goals.

Production budget an estimate of the number of units that must be manufactured to meet sales
goals. The production budget also estimates the costs involved in manufacturing various such
units, including labor and materials. Created by product-oriented companies.

Cash flow/cash budget a prediction of future cash flows and expenses for a given period of time. It
usually covers a period in the short-term future. The cash flow budget helps the company
determine when revenues will be sufficient to cover expenses and when the company will need to
seek outside financing.

Marketing budget an estimate of the funds needed for promotion, advertising and public relations
in order to market the product or service.

The project budget is a prediction of the costs associated with a particular company project. These
costs include labor, materials and other related expenses. Project budgets are often broken down
into specific tasks, with budgets allocated to each task. A cost estimate is used to establish a
project budget.

Revenue budget consists of the government's tax revenues and the expenditure gathered from
these revenues. Tax revenues are made up of taxes and other duties that the government levies.

Expenditure budget includes data expenditure items.

3.4 Production and quality

Production or manufacturing is a term used essentially for the production of a tangible good to
satisfy a need. Business management engineering uses engineering methodologies and techniques
to find and adapt the correct model to manage all the resources involved in the creation of a
product.

Quality is the characteristic of products or services that satisfy, to a greater or lesser degree, the
needs of the customer from all possible points of view, such as use, functionality, material, respect
for the environment, safety, reliability, among others.

Production and quality are closely linked, quality management engineering allows the use of three
important quality terms:

Quality control

These are mechanisms and activities that serve to ensure that the company's estimated quality
expectations are met.

Quality systems

They are a set of activities and procedures linked to the organization's resources for continuous
improvement in each of the manufacturing processes for the production of a product.

Quality management

Activities that were created for management and planning aimed at implementing a strict quality
policy, organizing processes and establishing strict parameters for the acceptance or rejection not
only of the final product, but of the production process.

3.4.1 Advanced Total Quality Tools

Reliability: refers to the compatibility of a measurement. As it is said to have high reliability if it
produces consistent results under constant conditions. It is the life span of a product or good
without presenting faults or errors.

TPM: It is a management system that supports the development of the industry and allows
production equipment to always be ready. With the participation of all the staff that make up the
company. They allow for constant improvement in the productivity and quality of their products or
services by focusing on preventing defects, errors and failures in their human, physical and
technical resources.

Six Sigma: Six Sigma seeks to improve the quality of process results by identifying and eliminating
the causes of defects (errors) and minimizing variability in manufacturing and business processes.

It uses a set of quality management methods, including statistical methods, and creates a special
infrastructure of people within the organization (“Black Belts”, “Green Belts”, etc.) who are
experts in these methods. Each Six Sigma project carried out within an organization follows a well-
defined and quantified sequence of steps to achieve financial goals (cost reduction and/or
increased profits).

3.5 Human resources

Talking about human resources is an important topic for the organization; human resource
planning within business management engineering is necessary to be able to develop the daily
activity of an organization and thus be able to improve it.

Human resource management is a process by which the human resources necessary to achieve the
planned objectives are established, located in the current real situation of the company, thus
developing a competitive advantage over other companies in the same field.

In order to make the most of the potential of human resources, it is necessary to motivate,
organize and coordinate these resources, improving the work environment, taking into account all
current labor legislation, so that human resources can develop a profile that is committed to the
organization's objectives and it is easier to achieve the desired goals.

Good hiring is a tool of business management engineering, to choose the right members for the
company so that it can grow, develop and have the profile that the organization needs to improve,
but motivation is also an important tool. If the managers of any company are not considered
“good” at their jobs, nothing worthwhile can be expected from their subordinates. The level of
employee motivation is directly related to good management. Administration creates and
maintains an environment conducive to greater efficiency and performance of personnel in an
organization.

4. Business management as new business development

An SME or a family business can be created from the beginning with four steps that will make the
difference between the success and failure of a new business, which are:

Business plan: A business plan is a series of interrelated activities to start or develop a business or
organization with a planning system that seeks to achieve specific objectives. The plan defines the
stages of development of a company or a project within an existing company; it is a guide that
facilitates its creation and growth.

Business structure: refers to all the responsibilities that correspond to each member within a
company and the types and structures of business that are regularly established, such as:
individual ownership, types of companies, among others.

Accounting: The use of accounting in management is extremely important, as it manages the

inputs and outputs of economic resources, and will also determine the growth of the new
organization or project, whether or not there are financial resources to invest and grow.

Checklist: This tool is a questionnaire-based guide for SMEs and family businesses to help prepare
a complete business plan to determine whether these ideas can be implemented and turn them
from just an idea or a dream into a reality.

5. Conclusions

No company can survive without management, because management is essential in all group
efforts are required to be directed towards the achievement of common goals. Today,
management conscious of the importance of management can hardly be more prominent. It is
said that anything but management amounts to nothing.

There is no more important area of human activity than management, since its task is to do things
through others and, as we saw in this research document, business management engineering
focuses on human activities, on how to improve the daily lives of people both outside and inside
an organization.

Some underestimate the importance of management in business, but recent research has shown
that this is certainly not the case. The input of labor, capital and raw materials can never be
converted into production without the catalyst of management. Administration is a dynamic that
gives life to an element of an organization. In its absence, production resources remain
underutilized and can never be converted into production. In fact, without effective management,
no country can become a nation. Business management engineering is basically a group activity
and management plays an important role in increasing the effectiveness and efficiency of an
organization.

6. Thesis Suggestion

“Creation of a strategic business management plan that contributes to the optimization of

recyclable solid waste in the “Modesto Escalona” market in the city of Rio Blanco Veracruz”

Aim:

Develop a strategic business management plan, identifying, analyzing and improving the measures
necessary for better use of solid waste generated in the Modesto Escalona market in the future.

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Morrisey, George, Strategic Thinking Building the Foundations of Planning, 1st. ed., Prentice Hall
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