Functional Areas of Business
Functional Areas of Business
Functional Areas of Business
The most
popular and commonly used classification is as follows.
Finance
Marketing
HR
Production
In addition to this Communication also plays a major important role within the
organisation. Though this is not usually advocated as a separate function,
communication plays a very important cross functional role.
There is no fixed rule in setting what the functional areas of a business are. For
instance in certain organisations IT, Transportation, Logistics, Consultancy and
Analysis can be considered as an important function.
Functions essential to develop the goods or services and making it reach the final
consumer are called Task Functions. These are the basic activities of the
organisation which are related to the actual completion of the productive processes
and directed towards specific and definable end results.
There are other functions which are not directed towards specific and definable end
results. These are referred to as Element Functions. This usually includes human
resource management, IT, maintenance, quality control etc.
There are several key factors which determine the basis in which an organisation
could be grouped.
Nature of the product or service offerings For instance if the company is into
IT services, IT essentially becomes a main functional area
There are overlaps in functional areas. For instance production managers may
do a considerable amount of marketing activities though marketing is a
separate functional area.
There needs to be communication between the functional areas and there are
set of activities which are done by the functions collectively. Therefore the
organisation is a more complex setup.
Finance Function
Three key areas of the finance function can be introduced.
Management Accounting
o
Financial reporting
o
Two main tools used by financial reporting are the balance sheet and
the PnL.
Marketing Function
Marketing involves identifying or creating a need or desire, and then fulfilling it to
the satisfaction of the customer.
Following are the key aspects which a marketing function of a business needs to
look into.
Identify the needs of the customer, and to segment the potential customers
according to their needs
Input into the design of the products and services that will meet those needs
price the products and services, taking into account the costs involved, the
competitors pricing and the customers ability to pay
Involved in marketing the products and services, ensuring that they are
available at the place and time to suit the customer
Provide the after sales service, etc. to ensure the satisfaction and loyalty of
the customer
Product This includes the actual product and the factors associated with
producing them such as product features, new product development,
product life cycle
Price This is related to ways of making money from the business. There
are variety of pricing strategies such as skimming prices (charging high
Place the means of getting the goods and services to the customer
Target the market segment out of the segments pick one or more
segments
There are some myths about marketing. Some of the common myths are as follows.
At the departmental level HR mangers are more concerned with day to day
personnel matters such as organisation of work, allocating job roles, standards of
worker performance, safety, on the job training. In one aspect every line manager is
a HR Manager at the departmental level.
HRM is important due to few main reasons.
People management is not only important for key business performance but
also for quality, technology, competitive strategy or research and
development which affects the bottom line.
Training and development is another key area in HRM. Some of the benefits of
training are as follows.
Training has two broad areas, on the job training and off the job training.
In order to reap the full benefits of training there has to be planned and systematic
approach to the effective management of training. Some of the prerequisite factors
are as follows.
Performance appraisal is another key area within HRM. Performance appraisal refers
to a process in which the organisation attempts to identify the levels of performance
of different individuals. Performance appraisal systems could take both quantitative
and qualitative formats. More often than not the schemes are a combination of the
two.
An effective appraisal scheme therefore offers a number of potential benefits to
both the individuals and the organisation.
There are few questions which needs to be answered on who should be appraised
and who should undertake appraisal.
The conventional notion is to use a senior person to do the appraisal on a junior
individual. However there are issues on whether the senior manager has the
professional skills to conduct an appraisal or whether appraisals should be done for
senior managers as well.
There are different HR practices across the world. Multinational corporations which
have a parent country but are in operational in different other countries have four
main approaches to understanding its HRM practices.
Polycentric approach This is where each subsidiary develops its own HRM
practices
Production Function
The production and operations function is an important one because it is through
this that the output is provided for the customer, from which the business makes
revenues for continued survival. The management of this function is heavily
dependent on the type of product because very different production methods exist
and different products also require different emphases in the organisation of
operations. For example, if the product is an expensive sports car, then attention to
quality and safety will be very important. If the product is crude oil, rate of flow from
the oil wells is important.
As in the other functions, production function is also interrelated with the other
functions. For instance if the production function proposes to upgrade the
production equipments in order to achieve higher production outputs, this decision
has to be coordinated with the finance function in terms of doing an investment
appraisal. Further any changes in production technology have an impact on the
work force and therefore this has to be coordinated with the HRM function.
There are few main concepts in the production function.
Total Quality Management - TQM relates to the idea that a focus on quality
should pervade the whole organisation. It is not just about checks made on
random products as they leave the production process; instead, the drive for
quality is concerned with all processes, materials and work practices, and
enters into every level of the organisation.