Commercial management (also known as commercial administration)[1] is overseeing and handling an organization’s functions and activities involved in the process of exchanging goods, services, or other valuable assets, as well as any income-generating activity; in order to achieve and sustain profitability while minimizing risks and costs.[2] In other words, commercial management is "the identification and development of business opportunities and the profitable management of projects and contracts, from inception to completion".[3]
Overview
editCommerce refer to the actions that involve the exchange of goods, services, or value between an entity and its customers, suppliers, or partners.[4] Consequently, all activities of an organization that pertain to purchasing, selling, or generating revenue are classified as commercial activities,[5][6] and must be effectively managed.
Commercial management involves optimizing an organization’s resources, investments, and market opportunities while minimizing risks and costs. It focuses on developing and maintaining efficient commercial processes to ensure maximum profitability, quality, and service, aligning organizational goals with daily operations for long-term sustainability.[2] Thus, commercial management plays a significant role in shaping the business landscape of an organization, using mutual cooperation to drive growth and innovation in an increasingly competitive market.The Chief Commercial Officer (CCO) is the highest official responsible for monitoring and directing the activities and growth of the organization in key areas of commercial management such as marketing, sales, supply chain and logistics, finance, product development and customer relations.[7]
Although commercial management and business management exhibit considerable similarities, commercial management adopts a more specialized approach, focusing more on directing an organization’s commercial operations; whereas business management encompasses the broader oversight of a company’s overall functions.[8]
Roles
editThe role of a commercial manager is diverse. In the case of many businesses, the role of the commercial manager typically involves overseeing a range of responsibilities, including sales, marketing, contract management, negotiations, and the development of relationships with both customers and business partners.[9] Those who work in the commercial departments of large multinational organizations may have specialized responsibilities in sales, marketing, contracting and negotiation, finance, logistics or property management. In smaller businesses, commercial managers will be expected to handle all of these different roles themselves, rather than overseeing a department containing a team of experts in each area.[3]
Commercial management within an organization is also applied at policy levels.[clarification needed] Commercial policies relate to the rules or practices that define how business will be conducted and the standard terms under which external relationships will be conducted. Many of these policies are reflected in the terms of any contract in which the organization engages. At a transactional level, commercial management is applied through the oversight of trading relationships to ensure their compliance with business goals or policies and to understand or manage the financial and risk implications of any variations.
In public sector
editCommercial managers in the public sector are primarily responsible for managing contracts and procurement, optimizing the use of resources, maintaining supplier relationships, and overseeing the commercial aspects of the organization's projects.
Within the UK government, civil service competency includes the ability to "[achieve] commercial outcomes".[10] An "uplift in commercial and contract management capabilities" among staff in government and the wider public sector engaged in project and programme delivery has been seen as an important efficiency goal. A "Contract Management Capability Programme" was initiated in 2018 to secure training, development and accreditation in contract management, including the commercial elements of delivering government programmes.[11]
Structure
editAs a multifaceted discipline, Commercial management serves as the backbone of any organization's operational and strategic framework. It encompasses a wide range of activities, including:
Sales
editSales constitutes a fundamental aspect of commerce, that directly contributes to generating income. The effective management of the entire sales process—encompassing forecasting, strategic planning, performance measurement, and the practical application of sales techniques—significantly enhances revenue outcomes.[12]
Marketing
editMarketing is a main component of commerce that focuses on the process of providing goods and services to consumers by identifying and addressing their needs and desires. Key marketing activities, including the identification of customer needs, market positioning, product promotion, and the cultivation of brand loyalty, are instrumental in driving sales growth.[13][14]
Supply chain management
editSupply chain management has a significant role in commerce by ensuring the right products and services are sourced at the best prices while maintaining quality and timely delivery.[15] It focuses on managing the flow of goods and services from suppliers to end customers.
Economic analysis and evaluation
editEconomic analysis is an integral part of commercial management which facilitating informed decision-making, as it primarily involves the evaluation of costs and benefits, and better allocation of resources. It involves identifying, measuring, estimating, and evaluating the inputs and outputs of alternative activities or projects, followed by a comparative analysis to determine the most optimal option.[16]
Finance
editMonetary resources play a fundamental role in commercial transactions. The field of commercial management is closely intertwined with financial management, which concentrates on the optimal allocation and utilization of financial resources;[17] especially in areas of budgeting, cash flow management, and profitability analysis.
Communication management
editCommerce is inherently a social interaction.[18] In commercial activities, effective communication management is essential for fostering relationships with all stakeholders, including customers, suppliers, creditors, team members and the public.[19]
Contract negotiation and management
editContract management is a process that supports commercial management by overseeing the preparation, negotiation, execution, and monitoring of legally binding agreements and associated risks.[20]
Project management
editProject management is closely tied to commercial management, especially in project-based industries (construction, engineering, IT, etc.).
Business development
editBusiness development is the processes of developing and implementing growth opportunities in enterprises.[21] Commercial managers ensure that these new opportunities are pursued in a financially viable, efficient, and compliant manner.
Strategic management
editCommercial management involves shaping and executing strategy by analyzing market needs and aligning them with the organization’s capabilities.[20]
Legal affairs
editCommercial management relies on commercial law expertise to ensure that the organization's business operations are conducted in accordance with legal requirements.
Risk Management
editIdentifying, assessing, and managing risks and threats that could impact the financial stability and reputation of the organization.[22]
By integrating these diverse areas, commercial management plays a crucial role in driving revenue growth, ensuring legal compliance, optimizing logistics, and maintaining financial stability. This holistic approach not only helps companies achieve short-term success but also enables them to plan for sustainable long-term growth.[3]
Specialized academic degrees
editThere are academic programs around the world, ranging from bachelor's to doctoral degrees, that equip professionals with specialized knowledge in conducting and managing commercial affairs:
See also
editReferences
edit- ^ "BACHELOR IN COMMERCIAL AND MARKETING ADMINISTRATION – UNAD". Retrieved 2025-01-16.
- ^ a b "What is commercial management?". Universidad Europea. 2023-10-18. Retrieved 2024-12-28.
- ^ a b c Institute of Commercial Management, "What is Commercial Management?" Archived 2017-12-05 at the Wayback Machine
- ^ "Commerce Definition & Meaning | Britannica Dictionary". www.britannica.com. Retrieved 2024-12-03.
commerce: activities that relate to the buying and selling of goods and services
- ^ "COMMERCIAL". Cambridge Dictionary.
commercial: relating to buying and selling things / intended to make a profit
- ^ "commercial". Collins Dictionary.
- ^ "CCO (chief commercial officer)". Cambridge Dictionary.
- ^ "What is Business Management?". und.edu. 2024-08-14. Retrieved 2025-01-13.
- ^ "COMMERCIAL MANAGER". Cambridge Dictionary.
- ^ Civil Service Human Resources, Civil Service Competency Framework 2012 - 2017, update published 2015, accessed 24 November 2023
- ^ Government Commercial Function, Contract Management Capability Programme, published April 2023, accessed 24 November 2023
- ^ "Sales Management | Universal Marketing Dictionary". 2018-05-24. Retrieved 2025-01-09.
- ^ Drucker, Peter (1954). The Practice of Management. New York: Harper & Row. p. 32.
- ^ McCarthy, Jerome E. (1964). Basic Marketing. A Managerial Approach. Homewood, IL: Irwin.
- ^ "SUPPLY CHAIN MANAGEMENT". Cambridge Dictionary.
- ^ Norbert, Edomah. "Economics of Energy Supply". Reference Module in Earth Systems and Environmental Sciences. doi:10.1016/B978-0-12-409548-9.11713-0.
- ^ "Financial Management". Kaplan Financial. Retrieved 2025-01-07.
- ^ "commerce". Merriam-Webster.
- ^ Van Riel, Cees B.M.; Fombrun, Charles J. (2007). Essentials of Corporate Communication. New York: Routledge. p. 205.
- ^ a b "The difference between Commercial Management and Contract Management". news.worldcc.com. Retrieved 2025-01-02.
- ^
Compare: Houterman, Joyce; Blok, Vincent; Omta, Onno (2014). "Venture capital financing of techno-entrepreneurial start-ups: drivers and barriers for investments in research-based spin-offs in the Dutch medical life sciences industry". In Therin, Francois (ed.). Handbook of Research on Techno-Entrepreneurship: How Technology and Entrepreneurship are Shaping the Development of Industries and Companies. Elgar reference collection (2 ed.). Edward Elgar Publishing. p. 169. ISBN 9781781951828. Retrieved 2015-07-23.
Business development (BD) involves all activities, developing products and technologies so that they can be commercialized, building relationships with potential partners
- ^ Cybellium. Risk Management Exam Review: A Comprehensive Guide to Excelling in Risk Management Exams. Cybellium. p. 3. ISBN 978-1-83679-348-9.
- ^ "Bachelor Commercial Management". Lusófona University.
- ^ "Athabasca University". Athabasca University. Retrieved 2025-01-08.
- ^ "MSc Commercial Project Management - course details (2025 entry)". The University of Manchester. Retrieved 2025-01-08.
- ^ "Master of Commerce - ANU". programsandcourses.anu.edu.au. Retrieved 2025-01-08.
- ^ Otago, University of (2023-03-06). "Doctor of Commerce (DCom)". www.otago.ac.nz. Retrieved 2025-01-08.