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Functional areas within business

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1 Functional areas within business
This presentation contains an overview of the functional areas in business. Note for Students: If you wish to print out these slides, with notes, it is recommended that, for greater clarity you select the ‘pure black and white’ option on the PowerPoint print dialogue box.

2 Key functions in business
ICT Services Sales Distribution Administration The main functional areas Marketing Accounts/Finance This slide lists all the functional areas we need to think about. It is worth pointing out to at this stage that all businesses vary – many will not have all these different functions, others may have even more, some may have additional areas, such as design. However, this is a useful model to start with, as it covers the main areas which must be done by someone (or a group of people). Human resources Research and development Design Production

3 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 areas or departments A small business may have only 4 or 5 people, but these may include someone who is responsible for finance, an administrator and 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. These may be called departments – but not always!

4 Links between functions
Distribution HR R & D All functional areas must link together to achieve the overall aims and objectives Each functional area collects and stores information using ICT This information needs to be shared within thecompany This means cooperation and good communications, which obviously ICT plays a major part!! Sales Admin Marketing Design ICT Production 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 which production cannot make on time. Finance

5 Human resources Recruitment, retention and dismissal Health and safety Working conditions The main responsibilities of the human resources function Employee organisations and unions Training, development and promotion In a large organisation Human Resources 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 organisations but is often more structured in larger organisations – where there is also more scope for promotion. Not all firms have employee organisations or unions – and the former can be known by different names, eg staff association or works council. Fundamentally, however, it is an employee group which represents employee interests if there is no union. Health and safety may be part of HR but could 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 a key part of HR work.. Includes the legal rights and responsibilities of employer and employees

6 What information does the Human Resources Function need?

7 Marketing and Sales Activities include:
Both are concerned with customer needs. 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 methods 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. Sales Promotion

8 What information does the Marketing Function need?

9 Finance Concerned with money and future plans
Preparing accounts, eg invoices, management accounts, financial accounts for shareholders 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 survive. Finance is concerned with current money received/to be paid out and how to finance future plans (eg for expansion). There is a difference between management accounts (which give managers continuous information on financial affairs) and financial accounts which are a legal requirement at the end of each financial year. (NB The financial year can be selected by the company and does not have to accord with the tax year). It is important that a company regularly issues invoices and chases up poor payers to make sure that the cash flowing into the company is sufficient to pay the company bills (ie cash flow).

10 What information does the Finance Function need?

11 Research and development
Concerned with developing new goods/services and updating old ones Activities include: Technological developments Scientific research Design features Performance of product Research and development usually relies on marketing to obtain information on customer needs. However, it needs to develop products which can be made by operations and (usually) sold at a competitive price. Exceptions here could include Porsche or Gucci! The aerospace and drugs industries are the two highest spenders on R & D – aks yourself why. Remember that within this area there is a difference between design and performance (obvious examples are cars, televisions, computers and even jug kettles).

12 What information does the Research Function need?

13 Production (sometimes called 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 is producing cars. For this is needs a factory, assembly equipment, assembly workers and car parts. Operations can be more difficult to understand in a service organisation. However, useful examples are airports, hospitals, hotels and supermarkets. Quality Control is key if business reputations are to be developed. Today QC is mainly ‘in-built’ into all stages of production, to ensure the customer is satisfied, recommend the business to others and repeat business follows.

14 What information does the Production Function need?

15 Customer service Concerned with customer relationships
Activities include: Providing information Giving advice Providing credit facilities Delivering goods Providing after-sales service The range of customer service facilities will vary depending upon the type of business activity and size of organisation. You may be familiar with customer service desks in large stores and possibly in banks or 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 regarded as a key component of a successful business.

16 What information does the Customer Service Function need?

17 Administration The role of administration and ICT function
Clerical work, eg mail, record keeping Cleaning and maintenance Health and safety records The role of administration and ICT function Security 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 ‘Estates’ 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 Work Act. However, administrators may be responsible for routine paperwork such as accident reports, risk assessments etc for their own areas. It is important to realise that clerical or administrative work is not just routine or tedious. It is a key career path for many staff in an organisation, given the wide range of admin jobs and pay scales today. Many senior administrators undertake highly responsible jobs and their work is rarely low level or boring!

18 What information does the Administration Function need?

19 The use of IT Relates to all functional areas:
Support for software applications, electronic communications and electronic transactions Relates to all functional areas: Electronic communications (eg ) Data sharing or EDI (eg databases) Security systems (eg virus protection) External communications (eg Internet) Online support for customers (eg order tracking) Electronic transactions (eg EFT (linked to EDI)) Even a small business will have some IT facilities, although the range may be more limited. NB that electronic transactions relates to electronic cash registers and direct debits as well as payments over the Internet.

20 What information does the ICT Services Function need?

21 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) Remember every company is different!!. A large business which operates on an international basis may even be structured into different divisions, based on geographical location. A business which deals purely with industrial customers 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. Above all, the owner may wish to structure the company to suit his or her own preferences. Providing all the key activities are undertaken and there is cooperation and interaction between these areas, this is not a problem.

22 Investigating functional areas
Identify key functions Find out where these carried out (or by whom) Check names of key areas/departments Identify what information is collected and how Identify links between functions/areas Identify use of IT within/between functions and customers to access stored information or exchange information Note any problem areas When you read the Case Study, you will need to consider each of the above bullet points separately.


24 Functional Areas and ICT
Photo: © 2007 Jupiterimages Corporation © Boardworks Ltd 2007

25 Learning objectives Why must the functional areas within a business work together? How does ICT help the different functional areas perform their tasks efficiently? How does ICT help businesses save money? Why is ICT vital for security and safety? 25 of 25

26 Communication The functional areas in a business can work on the same or different projects. Ultimately, they share the same goal: achieve the aims of the business. It is, therefore, very important that they cooperate and communicate with each other and the customers. Communication should be fast, efficient and inexpensive; ICT can ensure this happens. It can be very expensive to install but can then lead to cost savings. Photo: © 2007 Jupiterimages Corporation What methods of communication do you think are used between the functional areas?

27 Uses of ICT in business ICT (Information and Communication Technology) can make organizations more efficient by saving money and improving quality. ICT is used for: internal communications data sharing security systems external communications online support for customers electronic transactions production. ICT helps the functional areas work together: and intranets allow quick communication internally between functional areas and documents to be attached and sent. Data can be shared about customers, employees, goods etc. by storing it on a database which staff can access. Security ensured by producing back up copies of records can be made in case of damage, virus protection installed to protect software and password log-ins to restrict access to files. The Internet allows businesses to communicate externally by: finding information; conducting market research; buying things; ing customers; advertising on their own and other websites, on pop-ups and search engines. Online customer support by customers receiving a confirmation when they purchase something, being able to check the status of their order, check their previous purchases and be able to have queries answered by . Bar codes allow businesses to change prices easily because they do not have to use price tags and minimize human error. EPOS (electronic point of sale) can be linked to bar code readers to store information about what is bought on computer to help maintain stock control and the Marketing team update customer profiles. Customers can also purchase goods by EFT (electronic funds transfer), meaning they can pay for goods by credit or debit card and get cash back, or they can transfer from their online bank account into another account or pay their bills. Businesses can also purchase stock by EDI (electronic data interchange) which means their order and payment are all done via computer by automatic transfer between bank accounts. The production of goods is quicker and more efficient because of ICT, such as CNC machines which help maintain quality control because they reduce the level of difference between goods produced, e.g. the sizes of nails. CAD (computer aided design) reduces the amount of waste created and performs quality tests to maintain quality control. Health and safety has also been improved by ICT because dangerous jobs are now performed by computer controlled machines instead of human workers. Photo: © 2007 Jupiterimages Corporation Photo: © 2006 Jupiterimages Corporation Try to think of some specific examples of how ICT helps functional areas work efficiently.

28 Simple ICT . . . MAXIMUM impact!

29 Bar codes and EPOS Sophisticated till systems are used in shops and catering outlets which require a bar code to be scanned to produce the price of an item. EPOS (Electronic Point Of Sale) is used for all products. It involves linking bar code scanners to the central stock control system – a computerized database which monitors all sales and produces detailed reports. Photo: © stock.xchng

30 Electronic purchases at Tesco
Purchases inside Tesco stores and on their website are processed electronically. The data from each purchase is stored in a database. The functional areas access that information and use it to perform their tasks and assess whether or not they are meeting their objectives. Marketing, for example, build up customer profiles. This helps them target the right market segments. Tesco’s loyalty card, ‘Clubcard’, has enabled it to construct the UK’s largest database. Possible answers: Finance & Accounts department can update the records of the business’s income from the customer database periodically. Administration and Customer Services can use it to help them answer queries from customers. Sales can use the data to help them understand which sales promotions are the most effective. Research & Development can use it to see what products are selling well and selling badly, and if this is correlates to their designs. Photo: © Tesco PLC To find out information about Tesco Clubcards visit: How could Tesco’s other functional areas use the data from EPOS to perform their tasks?

31 A business example. . .

32 ICT at Thorpe Park Below are some of the uses of ICT at Thorpe Park.
Internet sales security Possible answers: Communication: , mobile phones, walkie-talkies, intranet, Internet etc. Databases (usually bespoke) for customer information kept by Marketing, for staff records by HR, financial transactions, etc. Software packages such as Microsoft Office for word processing, spreadsheets, giving presentations, design work etc. Photo: © Thorpe Park For further information on Thorpe Park, visit their website: cash registers ride control Can you add any more uses for ICT at Thorpe Park to the spider diagram?

33 The security of premises
The security of every business and organization is taken very seriously and ICT plays a vital role. At Thorpe Park, walkie-talkies are used by the staff to relay security information. Each department has its own channel so that all of the staff within a department can be in constant contact with each other and with the other departments. CCTV (closed circuit television) cameras are used in most premises and are linked to video recorders and monitors which security guards watch. Alarms that are set off automatically send security alerts, either to the police or the fire service. Photo: © 2007 Jupiterimages Corporation

34 Ride safety at Thorpe Park
Many of Thorpe Park’s rides use computer control systems to ensure safety. They are fed by mechanical levers and have optical or magnetic sensors to detect the speed, number and frequency of the carriages. This information is visible on a screen watched by the operator in the control cabin. The system detects faults and potential problems. It also monitors the locking of safety bars and a ride cannot start until they are locked. Photo: © Thorpe Park For more information on Thorpe Park visit: Why are these safety measures necessary?

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