Learning objectives © Boardworks Ltd 2009 1 of 34 Learning objectives What different functional...

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© Boardworks Ltd 20091 of 34

Learning objectives

What different functional areas exist within businesses?

What activities does each functional area perform?

How do functional areas rely on each other?


Delivering key functions

Businesses must be run efficiently to achieve their aims and objectives.

In medium or large businesses, such as Tesco, the functions are performed by individuals working as members of functional areas, or departments.

How many departments do you think a Tesco store might have? What are they?

In small businesses, individual people complete the functions.

To be able to sell products, specific functions must be performed by the staff regularly.


Case study: Thorpe Park and Tesco

Do you know what jobs each functional area performs?

Company: Thorpe ParkMission: achieve aims and objectives

Company: TescoMission: achieve aims and objectives

Which departments would help these companies complete their missions?

Marketing SalesCustomer ServicesResearch & Development.

Human Resources Finance & AccountsAdministration IT Support


Human Resources (HR)

Human Resources (HR), also known as Personnel, is the functional area in a business that performs tasks relating directly to the employees:


Case study: Tesco

Tesco is the UK’s biggest private sector employer with over 260,000 employees. Its core purpose is: to create value for customers to earn their lifetime loyalty.

How do you think the Human Resources department affects the other departments?

Tesco manages its staff through its HR department. It offers them benefits, such as childcare vouchers, share schemes and pensions, to initially attract them to the company and also to stop them from leaving.


Finance and Accounts

Finance and Accounts record and manage the revenue and costs of the business to calculate how much profit or loss it has made.

How do you think the Finance and Accounts department affects the other areas?


Administration and IT Support

The Administration and IT Support functions are responsible for a range of tasks which help the business to run smoothly.

clerical tasks manning the reception deskcleaning and maintenancehealth and safety assessmentssecurityhardware/software support network management.

How do the Administration and IT Support functions affect the other departments?

If the following duties are not performed properly, the other functional areas will not be able to complete their tasks and the business might fail its customers:


Operations and Production

The Operations function is central to any business, no matter what its size. Its chief purposes are to:

obtain resources necessary for the business to produce goods or provide servicesorganize the resources in the most efficient and effective way possible.

The Production function is responsible for providing customers with whatever the business offers. This usually takes the form of either producing goods or offering services, e.g. Ford manufacture cars, a firm of solicitors offers legal advice to clients.


Marketing

The role of the Marketing function is to promote the goods or services that the business offers by making customers aware of them. Tasks that the marketing team undertakes include:

conducting market research to find out what customers wantdeveloping products in line with customers’ needs and wantscarrying out promotional activities in order to make customers aware of the business’s services, e.g. advertising, publicity.


Sales

Some products are personally sold to customers by specially trained sales staff from the Sales department.

Customers often like to ask for advice when buying expensive products. A salesperson can offer this advice and encourage the customers to spend more.

The Sales department is often split into further subdivisions:

Sales staff sell within the store.

Sales representatives travel to the customers.

Telesales staff sell over the telephone.

Merchandisers display the products strategically.


Customers are the most important part of any business.

Customer Services

offering information, advice and credit facilities

arranging deliveries

providing after-sales service

managing complaints.

How does the Customer Services team affect the other departments?

The Customer Services team has a number of tasks:

The Customer Services department is responsible for looking after customers’ needs to make them feel valued.


Unless a business is continually expanding and developing its range of products, it is unlikely to succeed.

Research and Development (R&D)

Declining sales reduce the business’s income, so large businesses often have a Research and Development team to improve their existing products and to invent new ones.

Sales for a new product should gradually increase – provided that the marketing mix fits the market requirements. However, sales will begin to level and then decline. This sequence is called the product life cycle.

How does the Research and Development function affect the other departments?

Product life cycle


Case study: Thorpe Park

In March 2006, after 11 months of building, Thorpe Park opened the ride Stealth. It is Europe’s fastest and tallest launch coaster, but at £12 million, it was a very expensive project to undertake. The R&D department designed Stealth, but the Marketing department were also involved in considering:

cost

price to charge customers

practicality: where, when, how

profit.


Independence of functional areas

Departmental links are essential in order to meet the aims and objectives of the business. This is known as interdependence, as departments depend on each other.

In a small business, links between different functional areas are often informal and regular.

In larger businesses, people may work in separate areas and rarely meet each other but they still need information and support from each other in order for the business to run efficiently.


Interdependence situations

To highlight the interdependence of different functional areas, think about these scenarios.

Explain the likely effect on the achievement of targets if the following situations occurred at Cadbury’s:

1.Marketing do not advise their Production department that they have launched a £1 million advertising campaign for Giant Buttons.

2.Finance do not tell Production that there is a 5% budget cut. 3.Customer Services do not inform Research and

Development that there have been a record number of complaints about a recently launched chocolate bar.

4.Finance do not advise IT Support that they have purchased new financial management software.

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