The Company

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2.

The Company
Organizational Departments and Functions

⚫ Business organizations typically consist of a number of departments or functions and


it is important to have an appreciation of the purpose and activities of these
departments/functions.
Typical Business Organization Departments and
Functions
A typical business organization may consist of the following main departments or functions:
1. Production
2. Research and Development (often abbreviated to R&D)
3. Purchasing
4. Marketing (including the selling function)
5. Human Resources Management
6. Accounting and Finance
1. The Production Function
The Production function undertakes the activities necessary to provide the
organization's products or services. Its main responsibilities are:

⚫ production planning and scheduling

⚫ control and supervision of the production workforce

⚫ managing product quality (including process control and monitoring)

⚫ maintenance of plant and equipment

⚫ control of inventory

⚫ deciding the best production methods and factory layout.


2. The Research and Development Function
The Research and Development (R&D) function is concerned with developing new
products or processes and improving existing products/processes.

R&D activities must be closely coordinated with the organization's marketing activities
to ensure that the organization is providing exactly what its customers want in the most
efficient, effective and economical way.
3. The Purchasing Function
The Purchasing function is concerned with acquiring goods and services for use by the organization.
These will include, for example, raw materials and components for manufacturing and also production
equipment.

The responsibilities of this function usually extend to buying goods and services for the entire organization
(not just the Production function), including, for example, office equipment, furniture, computer
equipment and stationery.

In buying goods and services, purchasing managers must take into account a number of factors –
collectively referred to as ‘the Purchasing mix’ namely, Quantity, Quality, Price and Delivery.
4. The Marketing Function
Marketing is concerned with identifying and satisfying customers needs at the right price. Marketing involves researching what
customers want and analyzing how the organization can satisfy these wants.

A fundamental activity in marketing is managing the Marketing Mix consisting of the ‘4Ps’: Product, Price, Promotion and Place.

⚫ Product. Having the right product in terms of benefits that customers value.

⚫ Price. Setting the right price which is consistent with potential customers’ perception of the value offered by the product.

⚫ Promotion. Promoting the product in a way which creates maximum customer awareness and persuades potential customers to
make the decision to purchase the product.

⚫ Place. Making the product available in the right place at the right time – including choosing appropriate distribution channels.
5. The Human Resources Function
The Human Resources function is concerned with the following:

⚫ Recruitment and selection. Ensuring that the right people are recruited to the right jobs.

⚫ Training and development. Enabling employees to carry out their responsibilities effectively and make use of their potential.

⚫ Employee relations. Including negotiations over pay and conditions.

⚫ Grievance procedures and disciplinary matters. Dealing with complaints from employees or from the employer.

⚫ Health and Safety matters. Making sure employees work in a healthy and safe environment.

⚫ Lay-off procedures. Administering a proper system that is seen to be fair to all concerned when deciding on redundancies and
agreeing redundancy payments.
6. The Accounting and Finance Function
The Accounting and Finance function is concerned with the following:

⚫ Financial record keeping of transactions involving monetary inflows or outflows.

⚫ Preparing financial statements for reporting to external parties such as shareholders. The financial
statements are also the starting point for calculating any tax due on business profits.

⚫ Payroll administration Paying wages and salaries and maintaining appropriate income tax and national
insurance records.

⚫ Preparing management accounting information and analysis to help managers to plan, control and make
decisions.
Task
Discuss the following questions with your partner:

⚫ What do you think are the disadvantages of a departmental organization? (Think


about managers and employees)

⚫ Which department would you like to work in? Which wouldn’t you? Think about the
functions you would be good at and those ones which you wouldn’t be as good at.

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