The Functions of Business - GMGT 1010

Class Overview

  • Topics covered: functions of business, value chains, key functional areas of business include:

    • Human Resource Management (HRM)

    • Finance

    • Accounting

    • Supply Chain Management

    • Operations Management

    • Marketing

Value Chains

  • Concept of value chains: a sequence of activities that organizations undergo.

    • Key activities include acquiring resources, day-to-day operations, and leveraging outputs.

Key Components of Value Chains

  1. Inputs

    • Acquiring necessary resources such as:

      • People

      • Money

      • Other resources

  2. Conversion Processes

    • Day-to-day operations that transform inputs into value-added products and services.

  3. Outputs

    • Utilizing value-added outputs for commercial gain (i.e., selling products/services).

Critiques of Traditional Value Chains

  • Two key drawbacks to traditional value chain frameworks:

    1. Failure to connect inputs and outputs:

      • Managers often overlook how outputs are linked to inputs.

    2. Linear treatment of components:

      • Components often treated sequentially, disregarding their interaction and the processes connecting them.

Example: Conventional Value Chain at Interface Inc.

  • Demonstrates components of the value chain:

    • Inputs

    1. People

      • Hiring qualified individuals.

      • Enabling productive work and better job opportunities.

    2. Money

      • Acquiring financing for growth.

      • Accountable use of funds.

      • Returns to shareholders and reinvestment in future growth.

    3. Other Resources/Organizations

      • Purchasing raw materials from suppliers.

      • Manufacturing products (e.g., carpet).

Transition from Value Chains to Value Loops

  • Concept evolution from linear value chains to more dynamic value loops which include:

    • Various inputs, conversion processes, and outputs include:

    • Environmental resources (sociocultural, natural, political-legal, economic/technological).

  • Core Business Functions at Asper

  • Highlighting the central courses focused on key business functions:

    • Accounting

    • Finance

    • Marketing

    • Operations Management

    • Supply Chain Management

    • Human Resource Management (HRM).

Human Resource Management (HRM)

  • Focus areas include:

    • Finding suitable personnel.

    • Training and development.

    • Compensation methodologies.

    • Promotion strategies.

    • Dismissal procedures.

  • Note: The HRM process includes:

    1. Acquire Members (Inputs)

    2. Day-to-Day Management (Conversion Processes)

    3. Member Outcomes/Training (Outputs)

  • Source: DYCK, B. AND M. NEUBERT, Pages 12-13.

Finance

  • Definition (from Asper website):

    • “Raising money (financing) and spending money (investing) and deciding on the best ways to accomplish these tasks.”

  • Importance: Every business decision has financial implications; deep knowledge of financial concepts is vital for management students.

  • Source: DYCK, B. AND M. NEUBERT, Pages 13-15.

Accounting

  • Overview:

    • The field concerns the measurement of wealth and the financial impacts of transactions.

  • Good accounting practices lead to informed decision-making.

Supply Chain Management

  • Focus: Inter-organizational logistics, ensuring optimal acquisition of supplies from other organizations.

Operations Management

  • Definition:

    • Refers to directing and controlling processes that transform inputs into finished products and services.

  • Categories include both production management and service operations.

Marketing

  • Definition:

    • “Planning and executing the conception, pricing, promotion, and distribution of ideas, goods, and services.”

  • Significance: Marketing impacts daily life and encompasses various tasks from product packaging to market dissemination.

  • The marketing function is known to be broken into four key elements:

    1. Product

    2. Price

    3. Place (Distribution)

    4. Promotion

Fitting It All Together: Management Domains and Value Chain Elements

  • Three elements of a value chain include:

    1. Inputs

    2. Conversion processes

    3. Outputs

  • Domains of management corresponding to the elements:

    1. HRM - Members (people)

    2. Finance & Accounting - Money (chrematistics)

    3. Supply Chain Management & Operations Management - Other organizations/resources

  • Marketing aligns with selling outputs.

Summary of Key Focus Areas

  • HRM: Managing people.

  • Finance: Raising and investing money.

  • Accounting: Measuring and counting financial metrics.

  • Supply Chain Management: Managing inter-organizational relationships.

  • Operations Management: Converting inputs to outputs.

  • Marketing: Selling organizational outputs.