Administration (business) - New World Encyclopedia (2022)

In business, administration consists of the performance or management of business operations, involving the making or implementing of major decisions. Administration can be defined as the universal process of organizing people and resources efficiently so as to direct activities toward common goals and objectives. Modern business management theory identifies six key functions of an administrator in an organization: Planning, organizing, staffing, directing, controlling, and budgeting. Skillful administration is essential to the success of any business or organization and requires a wide range of knowledge and skills.


  • 1 Definition
  • 2 Administrative functions
  • 3 Master of Business Administration (MBA)
    • 3.1 Careers in business administration
  • 4 Notes
  • 5 References
  • 6 External links
  • 7 Credits

Early in the twentieth century, management came to be regarded as a science, and specialized “business schools” began offering a Master of Business Administration (MBA) degree in business administration. MBA students are exposed to a variety of subjects, including economics, organizational behavior, marketing, accounting, finance, strategy, decision sciences, operations management, property management, international business, entrepreneurship, marketing, human resources, information technology management, telecommunication, supply chain management, and project management. Graduates acquire practical skills as well as theoretical knowledge, and qualify for mid-level management, executive and administrative positions in commercial, not-for-profit, governmental and academic institutions. MBA degrees are offered by colleges and universities in many countries. The economic crisis of 2008 raised questions about whether business schools provide enough guidance or training in business ethics. The activities of administrators of some of the large financial institutions that failed suggests a business culture that disregards social responsibility in its quest for profit.


The word “administration” is derived from the Middle English word administracioun, which is in turn derived from the French administration, itself derived from the Latin administratio—a compounding of ad ("to") and ministratio ("give service").

“Administration” is a broad concept open to many interpretations. In business, “administration” typically refers to the performance or management of business operations, involving the making or implementing of major decisions. Administration can be defined as the universal process of organizing people and resources efficiently so as to direct activities toward common goals and objectives.

In a company, Administrator can serve as the title of the general manager or company secretary who reports to a corporate board of directors. This title is archaic, but, in many enterprises, this function, together with its associated finance, personnel and management information systems services, is what is intended when the term "the administration" is used.

In some organizational analyses, management is viewed as a subset of administration, distinct from executive or strategic work and specifically associated with the technical and everyday aspects of an organization's operation. In other organizational analyses, “administration” is used to refer to the bureaucratic or operational performance of mundane office tasks, usually internally oriented and reactive rather than proactive.

Administrative functions

Skillful administration is essential to the success of any business or organization. Modern management theory identifies six basic functions of a business administrator:

  • Planning is deciding in advance what to do, how to do it, when to do it, and who should do it. A plan maps the path that an organization must follow to achieve its goals. The planning function involves envisioning the future direction of a business, establishing intermediate goals and determining the steps necessary to achieve them. A good planner anticipates future needs and requirements and prepares for them in advance. Potential hazards or obstacles must be identified and contingency plans developed so that the business does not come to a standstill if they occur. Administrators engage in both short-range and long-range planning.
  • Organizing involves identifying responsibilities to be performed, grouping them into departments or divisions, assigning them to appropriate individuals, and specifying organizational relationships. The purpose is to achieve coordinated effort among all the elements in the organization. Organizing must take into account delegation of authority and responsibility, communication among individuals and departments in the organization, and span of control within supervisory units.
  • Staffing means filling job positions with qualified employees and ensuring that enough workers are available when required. It involves determining staffing needs, writing job descriptions, recruiting and screening candidates to fill the positions, training them in the necessary skills, implementing employment policies, and rewarding and retaining existing employees.
  • Directing is leading people in a manner that achieves the goals of the organization. Good leadership involves proper allocation of resources, establishment of an effective support system, and the creation of an environment that encourages employees to work to their maximum potential. Directing requires exceptional interpersonal skills and the ability to motivate people. A good director is successful in balancing the demands of productivity with the needs of individual staff members.
  • Controlling is the evaluation of quality in all areas of the business and detection of potential or actual deviations from the organization's overall plan. Proper control ensures high-quality performance and satisfactory results while maintaining an orderly and problem-free environment. Controlling includes information management, measurement of performance, institution of corrective actions, and planning for emergencies.
  • Budgeting is an important part of most administrative functions. It ensures that the organization’s financial goals are met. Budgeting includes the planning and implementation of an overall budget, the design of financial reporting systems, and the application of budget controls.

Master of Business Administration (MBA)

Today many universities and colleges offer a Master of Business Administration (MBA) degree in business administration. MBA programs expose students to a variety of subjects, including economics, organizational behavior, marketing, accounting, finance, strategy, operations management, international business, information technology management, supply chain management, and project management. Students traditionally study a wide breadth of courses in the program's first year, then pursue a specialized curriculum in the second year. Full-time students often seek an internship during the interim to gain on-the-job experience.

Many programs allow students to specialize or concentrate in a particular area. Standard concentrations include accounting, corporate strategy, decision sciences, property management, economics, entrepreneurship, finance, general management, human resources, international business, marketing, information systems/information technology, telecommunication, organizational behavior, project management, and operations management. Unspecialized MBA programs often focus second-year studies on strategic management or finance.

The MBA degree originated in the United States during the late nineteenth century as the country industrialized and companies sought out scientific approaches to management. The Tuck School of Business, part of Dartmouth College, founded in 1900, was the first institution to confer advanced degrees (masters) in the commercial sciences. In 1908 the Harvard Gradute School of Business Administration was established; it offered the world's first MBA program, with a faculty of 15 plus 33 regular students and 47 special students. The University of Chicago Graduate School of Business first offered working professionals the Executive MBA (EMBA) program in 1940, and this type of program is offered by most business schools today.

In 1950 the University of Western Ontario in Canada awarded the first MBA degrees outside the United States,[1] In 1955 the Wharton School of the University of Pennsylvania established the first business school in Asia, the Institute of Business Administration, Karachi in Pakistan. In 1957, INSEAD became the first European business school to offer an MBA program, followed in 1964 by IESE (first two-year program in Europe), UCD Smurfit Business School in 1964, Manchester Business School and London Business School in 1965, The University of Dublin (Trinity College) and the Rotterdam School of Management in 1966, the Cranfield School of Management in 1967 and in 1969, the HEC School of Management (in French, the École des Hautes Études Commerciales) and the Institut d'Etudes Politiques de Paris.

In 1991, IEDC-Bled School of Management became the first school in the ex-socialist block of Central and Eastern Europeto offer an MBA degree. More recently, the European School of Management and Technology (ESMT) became the only international MBA school in Germany. The MBA degree is offered by universities worldwide, and has been adapted by both developed and developing countries.[2]

Accreditation bodies, such as The Association to Advance Collegiate Schools of Business (AACSB), the Association of Collegiate Business Schools and Programs (ACBSP), and the International Assembly for Collegiate Business Education (IACBE) [3] exist specifically for MBA programs to ensure consistency and quality of graduate business education. Business schools in many countries offer MBA programs tailored to full-time, part-time, executive, and distance learning students, with specialized concentrations.

Careers in business administration

An MBA program equips its students with theoretical knowledge as well as practical skills. An individual with a business administration degree qualifies for mid-level management, executive and administrative positions in every conceivable commercial, not-for-profit, governmental and academic institution, or for work as a business consultant or in a government business development agency. An MBA program also prepares entrepreneurs to start their own businesses.


  1. Richard Ivey School of Business Page showing awarding of first MBA in 1950. Retrieved August 22, 2018.
  2. John R. McIntyre and Ilan Alon (eds.), Business and Management Education in Transitioning and Developing Countries: A Handbook (Armonk, NY: ME Sharpe, 2005).
  3. IACBE, Benefits of Accreditation. Retrieved August 22, 2018.


ISBN links support NWE through referral fees

  • Chandler, Alfred D. The Visible Hand: The Managerial Revolution in American Business. Cambridge, MA: Belknap Press. 1977. ISBN 978-0674940512
  • Cohen, Peter. The Gospel According to the Harvard Business School. Garden City, NY: Doubleday, 1973. ISBN 978-0385027243
  • Fischgrund, Tom. The Insider's Guide to the Top Ten Business Schools. Boston: Little, Brown, 1983. ISBN 978-0316283816
  • Hamel, Gary, and Bill Breen. The Future of Management. Boston, MA: Harvard Business School Press, 2007. ISBN 978-1422102503
  • McIntyre, John R., and Ilan Alon (eds.). Business and Management Education in Transitioning and Developing Countries: A Handbook. Armonk, NY: ME Sharpe. 2005. ISBN 978-0765615046
  • Mintzberg, Henry. Managers, not MBAs: A Hard Look at the Soft Practice of Managing and Management Development. San Francisco: Berrett-Koehler Publishers. 2004. ISBN 978-1576752753
  • Peters, Thomas J., and Robert H. Waterman. In Search of Excellence: Lessons from America's Best-Run Companies. New York: Harper & Row. 1982. ISBN 978-0060150426
  • This article incorporates text from the Encyclopædia Britannica Eleventh Edition, a publication now in the public domain.

External links

All links retrieved April 28, 2021.


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