Basic Departments & Functions in a Business Corporate

All businesses, no matter what the size, need some sort of organizational structure to operate properly. Businesses without a set organizational structure have problems implementing company policies and operating at efficient production levels. It is important to have an appreciation of the purpose and activities of these departments/functions.

A typical business organisation may consist of the following main departments or functions:

• Administration
• The Human Resources
• Marketing and Advertisement
• Sales
• Purchasing
• Research and Development (R&D)
• Production & Inventory
• Accounting and Finance

Administration

The chief executive officer, also called the company president, and any other managers involved in making decisions for the company are a part of the administration department.

Businesses need managers to oversee employees and implement company directives created by the president. Managers also typically interview and hire new employees for the company.

The Human Resources

Organisations are dependent on their employees. Consequently, their recruitment and selection require careful management. In recent years, the Human Resources function has attained a more important status as there has developed an increasing need (especially in service organisations) to ‘get the most’ from employees, in terms of customer service, for the benefit of the organisation.

The typical Human Resources functions are 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.

Marketing and Advertisement

The marketing and advertising department is responsible for developing product packaging, pricing and creative materials for informing potential customers of the company’s products & services. Additionally, the department may conduct research to discover the needs of its customers.

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

• Having the right product in terms of benefits that customers value.
• Setting the right price which is consistent with potential customers’ perception of the value offered by the product.
• Promoting the product in a way which creates maximum customer awareness and persuades potential customers to make the decision to purchase the product.
• Making the product available in the right place at the right time – including choosing appropriate distribution channels.

Sales

Sales departments are needed in companies that sell retail or wholesale items to other businesses or consumers. Sales departments coordinate their sales force to build customer relationships, meet particular revenue goals and pitch new products. The sales force may use a “push” or a “pull” method for attracting customers.

• Pull method: The pull method typically involves placing a salesman in a physical store to sell products.
• Push method: Sales departments using the push method usually instruct their sales force to call, email or visit prospective customers.

Purchasing

The Purchasing function is concerned with obtaining goods and services for use by the company. These will include, for e.g. 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 organisation (not just the Production function) including, for e.g. 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’. 

The ‘Purchasing Mix’ can be considered as making sure that the organisation has the right amount, of the right quality, at the right price, in the right place at the right time.

Research and Development (R&D)

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 organisation’s marketing activities to ensure that the organisation is providing exactly what its customers want in the most efficient, effective and economical way.

Production & Inventory

The production department orders inventory for production when needed, fulfills production orders specified by management and coordinates with the marketing and advertising department to make changes to products.

The Production function undertakes the activities necessary to provide the organisation’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

Accounting and Finance

The accounting department handles the bookkeeping for a business during the financial year. All revenue, expenses and company equity are tracked by the accounting department.

The Accounting and Finance function is concerned with the following:

• Financial record keeping of transactions involving monetary inflows or outflows.
• Preparing financial statements (the income statement, balance sheet and cash flow statement) 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