ROLE OF PSYCHOLOGY IN BUSINESS ADMINISTRATION

Psychology is the science of behavior and cognitive process; where as Administration (Business) is the organizing of Humans and resources effectively so attain common goals. So just by going through the definition we can understand the relationship between psychology and business administration; that business are comprised and exist only due to human beings and if we can describe, explain, predict, control and modify human behavior1 we can manage business more effectively and efficiently2. In this way we can create opportunities for the business and all the stake holders to take business to new horizons, if we can control the (major) human factor related to any business. There are many subjects and fields of business administration in which Psychology can be helpful: HRM3: If business executives can understand the mental level of the recruited personnel, they can employee those who are more productive to the business and well understand their further needs and compensation plans. Marketing: Customers are the ultimate link in the business cycle. Psychology enables businesses to understand the behavior of the customers and so provides and a competitive edge; making firms built to last. Finance: Economic resources are the back bone of any business. If Finance managers are well educated in the field of Psychology they can better predict the needs of different projects/ departments etc. thus making the budgeting and financial process more close to reality and decreasing the probability of deviating from the budgeted amounts. Organizational Behavior: Every organization act as a human being showing its own behavior, through its culture. If employees can understand this culture through the knowledge of Psychology they can make them selves more culturally fit for the organization.

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5 major goals of Psychology major goals of Business Administration Human Resource Management

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Economics: Psychology makes business to understand the market trends more resourcefully, thus providing an upper hand to business decision makers. International Business (Comparative) Management: Equipped with the art of Psychology mangers of MNCs become are able to comprehend and choose the best international market for there products. USA is one the top in producing best Business Administrators; one reason is that; Business Administration and Management and Psychology are the first and second most popular undergraduate majors in the U.S.4, and for good reasons. It enables business administrators to understand the organization and human behavior and so they are able to deliver 100% and gain mutual benefit for them selves (career development) and for the organization (wealth maximization). I strongly agree that Psychology must be made a compulsory part of Business Administration in Pakistan also.

Source: Palo Alto University (website) USA

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