Functional areas of a business

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​Introduction

Different functions within a business are performed and controlled by different parts of the business. One of the reasons for separating business operations into functional areas is to allow each to operate within its area of expertise, and building efficiency and effectiveness across the business as a whole. There are five key functional areas of a business, which are as follows:

  • Management
  • Operations
  • Marketing
  • Accounting
  • Finance

Management

The primary role of managers in business is to supervise other people’s performance. Most management activities fall into the following categories:

  • Planning: One main role of a manager is creating a plan to meet company goals and objectives. This involves allocating employee resources and delegating responsibilities, as well as setting realistic timelines and standards for completion.
  • Organizing: Along with planning, a manager’s organizational skills can help to ensure a company or departmental unit runs smoothly. From establishing internal processes and structures to knowing which employees or teams are best suited for specific tasks, keeping everyone and everything organized throughout daily operations are important functions of management.
  • Controlling: A large percentage of a manager’s time is spent controlling the activities within the business to ensure that it’s on track to achieve its goals. When people or processes stray from the path, managers are often the first ones to notice and take corrective action.
  • Leading: Managers should be comfortable and confident commanding their team members’ daily tasks as well as during periods of significant change or challenge. This involves projecting a strong sense of direction and leadership when setting goals and communicating new processes, products and services, or internal policy.

Operations

Operations is where inputs (factors of production) are converted to outputs (goods and services). Operations is like the heart of a business, pumping out goods and services in a quantity and of a quality that meets the needs of the customers. The operations manager is responsible for overseeing the day-to-day business operations, which can encompass everything from ordering raw materials to scheduling workers to produce tangible goods.

Marketing

Identifying customers’ needs and designing products and services that meet those needs comes under the marketing division of a business. The marketing function also includes promoting goods and services, determining how the goods and services will be delivered, and developing a pricing strategy to capture market share while remaining competitive. In today’s technology-driven business environment, marketing is also responsible for building and overseeing a company’s Internet presence (e.g., the company Website, blogs, social media campaigns, etc.). Social media marketing is one of the fastest growing sectors nowadays within the marketing function.

Accounting

Accountants provide managers with information needed to make decisions about the allocation of company resources. This area is ultimately responsible for accurately representing the financial transactions of a business to internal and external parties, government agencies, and owners/investors. There are two types of accountants:

  • Financial Accountants: They are primarily responsible for the preparation of financial statements to help entities both inside and outside the organization assess the financial strength of the company.
  • Managerial accountants: They provide information regarding costs, budgets, asset allocation, and performance appraisal for internal use by management for the purpose of decision-making.

Finance

The finance function involves planning for, obtaining, and managing a company’s funds. A company’s finance department answers questions about how funds should be raised (loans vs. stocks), the long-term cost of borrowing funds, and the implications of financing decisions for the long-term health of the business.

​Introduction

Different functions within a business are performed and controlled by different parts of the business. One of the reasons for separating business operations into functional areas is to allow each to operate within its area of expertise, and building efficiency and effectiveness across the business as a whole. There are five key functional areas of a business, which are as follows:

  • Management
  • Operations
  • Marketing
  • Accounting
  • Finance

Management

The primary role of managers in business is to supervise other people’s performance. Most management activities fall into the following categories:

  • Planning: One main role of a manager is creating a plan to meet company goals and objectives. This involves allocating employee resources and delegating responsibilities, as well as setting realistic timelines and standards for completion.
  • Organizing: Along with planning, a manager’s organizational skills can help to ensure a company or departmental unit runs smoothly. From establishing internal processes and structures to knowing which employees or teams are best suited for specific tasks, keeping everyone and everything organized throughout daily operations are important functions of management.
  • Controlling: A large percentage of a manager’s time is spent controlling the activities within the business to ensure that it’s on track to achieve its goals. When people or processes stray from the path, managers are often the first ones to notice and take corrective action.
  • Leading: Managers should be comfortable and confident commanding their team members’ daily tasks as well as during periods of significant change or challenge. This involves projecting a strong sense of direction and leadership when setting goals and communicating new processes, products and services, or internal policy.

Operations

Operations is where inputs (factors of production) are converted to outputs (goods and services). Operations is like the heart of a business, pumping out goods and services in a quantity and of a quality that meets the needs of the customers. The operations manager is responsible for overseeing the day-to-day business operations, which can encompass everything from ordering raw materials to scheduling workers to produce tangible goods.

Marketing

Identifying customers’ needs and designing products and services that meet those needs comes under the marketing division of a business. The marketing function also includes promoting goods and services, determining how the goods and services will be delivered, and developing a pricing strategy to capture market share while remaining competitive. In today’s technology-driven business environment, marketing is also responsible for building and overseeing a company’s Internet presence (e.g., the company Website, blogs, social media campaigns, etc.). Social media marketing is one of the fastest growing sectors nowadays within the marketing function.

Accounting

Accountants provide managers with information needed to make decisions about the allocation of company resources. This area is ultimately responsible for accurately representing the financial transactions of a business to internal and external parties, government agencies, and owners/investors. There are two types of accountants:

  • Financial Accountants: They are primarily responsible for the preparation of financial statements to help entities both inside and outside the organization assess the financial strength of the company.
  • Managerial accountants: They provide information regarding costs, budgets, asset allocation, and performance appraisal for internal use by management for the purpose of decision-making.

Finance

The finance function involves planning for, obtaining, and managing a company’s funds. A company’s finance department answers questions about how funds should be raised (loans vs. stocks), the long-term cost of borrowing funds, and the implications of financing decisions for the long-term health of the business.