Functional areas within business

This presentation contains an overview of the functional areas in business.

Note for tutors:
If you wish to print out these slides, with notes, it is recommended that, for g
reater clarity you select the `pure black and white' option on the PowerPoint print
dialogue box.
Key functions in business
Operations
Finance
Research and development
Human resources
Marketing and sales
Administration and IT support
Customer services
The main functional areas
This slide lists all the areas covered in the scheme. It is worth pointing out t
o students at this stage that all businesses vary many will not have all these d
ifferent functions, others may have even more, some may have additional areas, s
uch as design. However, this is a useful model to start with, as it covers the m
ain areas which must be done by someone (or a group of people).
Delivering key functions
In a small business, will be done by individuals
In a medium/large business, will be done by individuals working in functional ar
eas or departments
Students needs to understand that a small business may have only 4 or 5 people,
but these may include someone who is responsible for finance, an administrator a
nd sales staff. Some people may have dual roles (eg finance and human resources)
. The situation is different in a larger businesses where groups of people work
in functional areas. Again, students may find it useful to note here that these
may be called departments but not always!
Links between functions
All functional areas must link together to achieve the overall aims and objectiv
es
This means cooperation and good communications
Sales
Finance
Marketing
Admin
IT
CS
Ops
R & D
HR
The critical point is that functional areas must work and link together for the
business to be successful. For instance, sales cannot promise to deliver goods w
hich operations cannot make on time. (This is mainly covered in chapter 1.6)
Human resources
Includes the legal rights and responsibilities of employer and employees
Health and safety
Employee organisations and unions
Training, development and promotion
Working conditions
Recruitment, retention and dismissal
The main responsibilities of the human resources function
Human resources is a key focus of Unit 2, so only an overview is required in thi
s Unit. In a large organisation this would be the first point of contact for all
job applicants. Working conditions relate to the facilities available, hours of
work, pay rates. Continual training and development is a key feature of many or
ganisations but is often more structured in larger organisations where there is
also more scope for promotion. Not all firms have employee organisations or unio
ns and the former can be known by different names, eg staff association or works
council. Fundamentally, however, it is an employee group which represents emplo
yee interests if there is no union. Health and safety may be part of HR but coul
d be under the remit of a separate Health and Safety Officer who may or may not
be working in the HR department. Legal rights and responsibilities are fully cov
ered in Unit 2.
Finance
Concerned with money and future plans
Preparing accounts, eg invoices, management accounts, financial accounts for sha
reholders and Inland Revenue
Preparing wages and salaries
Obtaining capital and resources, eg money for expansion or to pay for resources
such as equipment and materials.
Finance is critical because if the company fails to make a profit it will not su
rvive. Finance is concerned with current money received/to be paid out and how t
o finance future plans (eg for expansion). This is the major focus of Unit 3. It
is useful to point out here the difference between management accounts (which g
ive managers continuous information on financial affairs) and financial accounts
which are a legal requirement at the end of each financial year. NB The financi
al year can be selected by the company and does not have to accord with the tax
year.
It is also worth pointing out the importance of regularly issuing invoices and c
hasing up poor payers to make sure that the cash flowing into the company is suf
ficient to pay the company bills (ie cash flow).
Administration and IT support
Cleaning and maintenance
Support for software applications, electronic communications and electronic tran
sactions
Security
Health and safety
Clerical work, eg mail, record keeping
The role of administration and ICT function
This function is often decentralised in that admin staff work in all departments
, cleaning and security may be sub-contracted, maintenance may be in a separate `E
states' department in large organisations (such as a hospital) and IT support may
be a separate department! Health and safety may cause confusion as this is also
listed in HR. Fundamentally, legal responsibility lies with the senior managers
and all employees have a legal responsibility under the Health and Safety at Wor
k Act. However, administrators may be responsible for routine paperwork such as
accident reports, risk assessments etc for their own areas.
Finally, it is helpful if students do not gain the impression that all clerical
or administrative work is routine and tedious, given the wide range of admin job
s and pay scales today. Many senior administrators undertake highly responsible
jobs and it is unhelpful if students who may work with such staff or talk to the
m as part of their investigations have the idea that their work is low level or
boring!
Operations
Concerned with the main business activities
Obtains and converts resources of the business into goods/services, ie
Buildings and land
Equipment
People
Materials
Operations is easy to explain in a manufacturing industry, e.g. Ford's operation i
s producing cars. For this is needs a factory, assembly equipment, assembly work
ers and car parts. Operations can be more difficult to understand in a service o
rganisation. However, useful examples are airports, hospitals, hotels and superm
arkets. Students should be able to suggest the types of buildings, equipment, pe
ople and materials required in each case.
Tutors may wish to include the concepts of Purchasing under Operations (which ma
y be a separate department in a large organisation) as well as Quality Control.
Today QC is mainly `in-built' into all stages of operations and further information
is provided in the Student Handbook.
Marketing and Sales
Both are concerned with customer needs.
Sales
Promotion
Market research
Activities include:
Small companies may not have a marketing function as such, but contract this out
to a specialist company who will undertake market research and advertising for
them. However, all companies will be interested in promoting sales, though metho
ds will differ depending upon whether they serve industrial or private customers
. The actual sales force can vary from highly qualified technical specialists (e
.g. in the aerospace and pharmaceutical industries and for industrial plant and
equipment) to store staff working in retail outlets such as Next and Boots.
Customer service
Concerned with customer relationships
Activities include:
Providing information
Giving advice
Providing credit facilities
Delivering goods
Providing after-sales service
Customer service is covered in depth in Unit 2, so only a brief overview is requ
ired for this Unit. The range of customer service facilities will vary depending
upon the type of business activity and size of organisation. Most students will
be familiar with customer service desks in large stores and possibly in banks o
r building societies. Customer service `on-line' is becoming more common, especially
for firms which sell on-line (Dell computers is a good example). The importance
of customer service to the customer who has a difficult query, a problem with a
purchase or is buying something very expensive or difficult to transport should
be appreciated by all students.
Research and development
Activities include:
Technological developments
Scientific research
Design features
Performance of product
Concerned with developing new goods/services and updating old ones
Research and development usually relies on marketing to obtain information on cu
stomer needs. However, it needs to develop products which can be made by operati
ons and (usually) sold at a competitive price. Exceptions here could include Por
sche or Gucci! The aerospace and drugs industries are the two highest spenders o
n R & D students could perhaps suggest why. It is also useful for students to un
derstand the difference between design and performance (obvious examples are car
s, televisions, computers and even jug kettles).
The use of IT
Relates to all functional areas:
Electronic communications (eg email)
Data sharing (eg databases)
Security systems (eg virus protection)
External communications (eg Internet)
Online support for customers (eg order tracking)
Electronic transactions (eg EFT)
Even a small business will have some IT facilities, although the range may be mo
re limited. Note that electronic transactions relates to electronic cash registe
rs and direct debits as well as payments over the Internet. Students could usefu
lly suggest the types of software applications used in business and other releva
nt examples under each heading.
Functional variations
No two businesses are the same!
Functions will vary because of:
Size and scale of business
Activities of business
Type(s) of customers
Needs of customers
Preferences of owner(s)
This slide re-emphasises this point, given the differences students are likely t
o encounter when they undertake their investigations. A large business which ope
rates on an international basis may even be structured into different divisions,
based on geographical location. A business which deals purely with industrial c
ustomers is likely to be different to one which deals with the public. A retail
store is organised differently to a town hall or hospital or school/college. Abo
ve all, the owner may wish to structure the company to suit his or her own prefe
rences. Providing all the key activities are undertaken and there is cooperation
and interaction between these areas, this is not a problem.
Investigating functional areas
Identify key functions
Find out where these carried out (or by whom)
Check names of key areas/departments
Identify links between functions/areas
Identify use of IT within/between functions and customers
Note any problem areas
This slide links to the student's own investigations. At this stage students do no
t need to be too concerned about links/IT and problems as these are fully covere
d in 1.6. Note that the requirements of the boards differ in relation to the ran
ge of functional areas. OCR students must select three, AQA students do not have
to cover HR or Customer Services and Edexcel students need to investigate all a
reas.