Functional areas in business

A business is normally divided into core departments or functional areas which form the central
areas of activity for the company. The traditional four main functional areas of a business are
production, marketing, finance and personnel. In the modern era, however, as consumer demand
continues to evolve, businesses continue to expand, and as technology continues to improve,
many companies have found it necessary to have a research and development department as well
as an information technology (IT) department.

In a large organization, it is usually easier to identify separate functional areas because people
work together in departments. Each department carries out the tasks that relate to its particular
area. The main ones you are likely to meet in business are shown below.

· Production

· Research and development (R & D)

· Administration

· Customer service

· Marketing

· ICT

· Human resources

· Finance

· Sales

· Distribution

The purposes of functional areas

The main purpose of functional areas is to ensure that all important business activities are carried
out efficiently. This is essential if the business is to achieve its aims and objectives. In addition,
specific areas will be responsibility for supporting specific types of aims and objectives, for
example:

- Sales and marketing will be involved in achieving targets linked to developing new
markets or increasing sales
- Human resources will be involved in arranging staff training activities and supporting the
continuous professional development of all staff

- Finance will be expected to monitor and support aims and objectives linked to keeping
costs low to improve profitability

- Production will be set targets relating to quality or meeting planned production schedules

Fact file: All businesses have key functions to carry out, such as dealing with customers and
paying bills.

Teacher- Suggest the key functions that are carried out in the school.

Administration functions
· Collecting, distributing and dispatching the mail

· Storing and retrieving paper and electronic records

· Organizing meetings and preparing meetings documents

· Responding promptly to enquiries

· Preparing documents using word processing, spreadsheet and presentation packages, such
as PowerPoint

Customer service functions

· Answering customer enquiries about products and services

· Providing specialist information and advice to meet customer needs

· Solving customer problems

· Providing after-sales service, including replacing damaged goods, arranging for repairs or
for spare parts to be obtained and fitted

· Dealing with customer complaints according to company procedures

Activity 1

Compare your best and worst customer service moments as customers. What lessons can
you learn from these?

Distribution functions
· Ensuring all goods are appropriately stored before dispatch

· Ensuring goods for dispatch are securely packed and correctly labelled

· Checking vehicle loads are safe and secure

· Ensuring goods are dispatched at the right time

· Checking that all deliveries match orders precisely and notifying sales if there is a
discrepancy

Finance functions
· Producing invoices, checking payments are received and chasing up overdue payments
Recording money received

· Checking and paying invoices received

· Preparing the payroll and paying staff salaries

· Monitoring departmental budgets to check managers are not overspending

· Issuing regular budget reports to all departmental managers

Activity 2

Discuss the way in which money is handled and transactions are recorded in any
businesses where your parents work ?

Human resources functions

· Advertising job vacancies
· Notifying staff of promotion opportunities

· Receiving and recording all job applications, arranging interviews and notifying
candidates of the result

· Sending a contract of employment and other essential information to new staff

· Arranging staff training and encouraging continuous professional development

Activity 3

What would motivate you to do a good job? List the top five factors that would encourage
you to work hard, then compare your list with other people in your group

ICT functions
· Recommending new/updated systems and software to keep abreast of technological
developments and the needs of the business

· Buying and installing new hardware and software and providing information or training
as appropriate

· Assisting users who have computer problems

· Repairing the computer system when required

· Advising on/obtaining/issuing computer supplies and consumables

Activity 4

Find out the IT policy at your school the security measures that are in force to safeguard
the system.

Marketing functions
· Carrying out market research to obtain feedback on potential and existing products and/or
services
· Analyzing market research responses and advising senior managers of the results and
implications

· Promoting products and services through a variety of advertising and promotional

methods, e.g. press, TV, online, direct mail, sponsorship and trade shows or exhibitions

· Obtaining and updating a profile of existing customers to target advertising and

promotions appropriately Producing and distributing publicity materials, such as catalogues or
brochures

· Designing, updating and promoting the company website

Activity 5

Find out what promotional activities are undertaken by your school or college and why
these have been chosen.

Sales functions

· Organizing sales promotions

· Responding to customer enquiries

· Selling the product or service to customers, either over the telephone or face to face

· Preparing quotations or estimates for customers

· Negotiating discounts or financial terms for business customers

Production functions
· Ordering (often buying) stocks of raw materials from approved suppliers

· Storing and checking the stocks of raw materials

· Planning production schedules to maximize machine capacity and staff levels

· Producing or assembling the finished product

· Checking the quality of the product throughout the production process

R & D functions
Note that the exact activities will depend upon the industry.

· In the pharmaceutical industry, scientists research and develop new medicines and drugs

· In the food industry, technologists work with chefs to prepare new products such as ready
meals, sauces or flavorings.

· Electronic and IT companies concentrate on new technology products and software, such
as HD televisions, the X-box 360 and iPod accessories

· In the aerospace and car industries, engineers focus on improving performance and safety
whilst reducing emissions or noise.

· Designers concentrate on the shape and look, both internally and externally

Activity 6

Discuss with your tutor how the different functional areas of your school help to achieve
its aims and objectives.

Functional area and Links

Sales and Production - Sales must know production schedules and agree delivery dates of orders
with Production so customers are not promised dates which cannot be met. Production must tell
Sales about production problems which will affect customers.

Sales and Finance- Finance must know about customer enquiries to check their credit rating
before sales are made. Finance will be involved when discounts are agreed or when there are
problems with customer payments.
Distribution and Finance- Finance must know when goods have been dispatched so that invoices
can be sent out.

Distribution and Sales- Sales must be able to inform customers when deliveries are due and be
aware of any problems.

Sales and Marketing- Must liaise over sales promotions and adverts so that sales staff can
expect/handle enquiries.

Finance and all other departments- Finance monitors departmental spending and the achievement
of financial targets.

Human Resources and Finance- Will liaise over salary increases and bonuses.

Customer Service, sales and marketing - Customer Service must pass on customer feedback that
could affect future product developments or future sales.

R & D and Production - Liaise over new product developments and methods of production.

Human resources and other functional areas- HR handles job vacancies, promotion
opportunities, training courses and CPD for all areas/staff.