Business Functions

Companies use factors of production (business inputs) to produce goods and

services as showed in the example.

Raw material Production process Final product

(input) at factory (output)

But before turning raw materials into a final product or service, every company
needs certain kind of functions to be executed as the chart described below.

Most companies have four main functional departments. These will be staffed by
people with specific skills and experiences in the work of their area.

1. Marketing
Is responsible for market research and for analyzing the results of such research
this department can correctly identify want customers want and need. The results
are share and discussed with other departments to choose the right product or
service. Once a product is available for sale, the marketing function will have to
make important decisions concerning its pricing, how and where to promote it and
how to sell it and distribute it for sale.

2. Finance

1
This department is responsible for the flow of money of the company, keeping and
analyzing accounts and providing financial information to the company owners and
directors.
Without the correct financial management, wrong decisions could be made that’s
why finance is a key department in all companies.

3. Human resources (HR) management

This department identifies what kind of workers are needed in the company, it
looks for, selects and trains workers. HR also develops rewards and recognition
programs to motivate workers to do a better job and also to retain employees.

4. Operations management
This department uses companies’ available resources to produce goods and
services. Their main function is to ensure production, maintain products quality,
and achieve high production efficiency.

Class Activity 2
1. Identify and allocate each of these decisions into the appropriate business
functional department:
a. deciding on stock levels for an important raw material
b. deciding what bank should be chosen
c. deciding how to motivate and maintain employees
d. deciding between using shops or a website to sell a new range of
clothing
e. deciding whether to promote a manager from within the business or from
another firm
f. deciding on how to raise cop$ 1000 million for a factory expansion
g. Deciding what fashion must be designed
2. Explain why it is important for all four business functions to work closely
together.