Functional areas within business This slide lists all the areas covered in the scheme. It is worth pointing out to students 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).

Key functions in business Customer services Administration and IT support Operations The main functional areas Marketing and sales Finance Students needs to understand that 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. Again, students may find it useful to note here that these may be called departments – but not always! Research and development Human resources

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 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 operations cannot make on time. (This is mainly covered in chapter 1.6)

Links between functions HR R & D All functional areas must link together to achieve the overall aims and objectives This means cooperation and good communications Ops IT Admin Sales CS Marketing Human resources is a key focus of Unit 2, so only an overview is required in this Unit. In a large organisation this 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 fully covered in Unit 2. Finance

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 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). This is the major focus of Unit 3. It is useful to point out here the 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 also worth pointing out the importance of regularly issuing invoices and chasing up poor payers to make sure that the cash flowing into the company is sufficient to pay the company bills (ie cash flow). Includes the legal rights and responsibilities of employer and employees

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. 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. Finally, it is helpful if students do not gain the impression that all clerical or administrative work is routine and tedious, given the wide range of admin jobs and pay scales today. Many senior administrators undertake highly responsible jobs and it is unhelpful if students who may work with such staff or talk to them as part of their investigations have the idea that their work is low level or boring!

Administration and IT support Clerical work, eg mail, record keeping Cleaning and maintenance Health and safety The role of administration and ICT function Support for software applications, electronic communications and electronic transactions Security Customer service is covered in depth in Unit 2, so only a brief overview is required for this Unit. The range of customer service facilities will vary depending upon the type of business activity and size of organisation. Most students will 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 appreciated by all students.

Operations Concerned with the main business activities Obtains and converts resources of the business into goods/services, ie Buildings and land Equipment People Materials This slide links to the student’s own investigations. At this stage students do not need to be too concerned about links/IT and problems as these are fully covered in 1.6. Note that the requirements of the boards differ in relation to the range of functional areas. OCR students must select three, AQA students do not have to cover HR or Customer Services and Edexcel students need to investigate all areas.

Marketing and Sales Activities include: Both are concerned with customer needs. Market research Activities include: 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. Students should be able to suggest the types of buildings, equipment, people and materials required in each case. Tutors may wish to include the concepts of Purchasing under Operations (which may be a separate department in a large organisation) – as well as Quality Control. Today QC is mainly ‘in-built’ into all stages of operations and further information is provided in the Student Handbook. Sales Promotion

Customer service Concerned with customer relationships Activities include: Providing information Giving advice Providing credit facilities Delivering goods Providing after-sales service 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.

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 – students could perhaps suggest why. It is also useful for students to understand the difference between design and performance (obvious examples are cars, televisions, computers and even jug kettles).

The use of IT Relates to all functional areas: Electronic communications (eg email) Data sharing (eg databases) Security systems (eg virus protection) External communications (eg Internet) Online support for customers (eg order tracking) Electronic transactions (eg EFT) This slide re-emphasises this point, given the differences students are likely to encounter when they undertake their investigations. 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.

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) Even a small business will have some IT facilities, although the range may be more limited. Note that electronic transactions relates to electronic cash registers and direct debits as well as payments over the Internet. Students could usefully suggest the types of software applications used in business and other relevant examples under each heading.

Investigating functional areas Identify key functions Find out where these carried out (or by whom) Check names of key areas/departments Identify links between functions/areas Identify use of IT within/between functions and customers Note any problem areas This presentation contains an overview of the functional areas in business. Note for tutors: 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.