Importance of Business Management

Business management is essential when it comes to the dynamics of a market economy; Said management refers to the ability of an individual, the businessman, to observe scenarios within the economy that guarantee a reasonable profitability to generate in the same goods and services. This means that the role of accounting for economic opportunities falls on the entrepreneur and, based on this vision, mobilizing capital towards them. This phenomenon is key in the capitalism and it has been highlighted in different theoretical texts by various economists, standing out among all of them those of Joseph Shumpeter.

In a market economy, prices are defined based on supply and demand. Where the demand tends to exceed the supply, there will certainly be an increase in them. The business management seek these opportunities, channeling savings from the population (obtained through credits) in productive activities with high profitability as a consequence of this imbalance. This increase in supply will tend to lower prices again to an acceptable level; Given this circumstance, business activity will now seek to lower costs to maintain constant profitability levels.

As we see, it is business management the one that guarantees that the offer covers the demand in different productive activities, also generating procedures that make costs drop continuously and benefit the consumer. Thanks to this activity, capital is always oriented to produce what society demands for the satisfaction of certain needs, a circumstance that accounts for the efficiency of the market in terms of allocation of resources.

Perhaps the most important aspect to consider is the constant increase in the productivity that carries out the business. This particularity was studied and opportunely declared by Joseph Shumpeter, Austrian economist which focused especially on the impact of innovations in terms of the market. From his point of view, the business management stands out especially for looking for innovations that translate into new and better ways of producing, innovations that generate a break with respect to the past. Some examples of innovations mobilized by the business management that left aside a whole way of doing things are the printing press, the steam machine or the combustion engine. Indeed, they have significantly changed our entire lives.