Key business functions

1. Operations

• Transforming raw materials (inputs) into finished products (outputs).
• Production goods (tangible products) and deliverance of service (intangible product)
• In operations consistency is referred to as quality
• Quality is about meeting production standards
• The main role of the production process to manufacture a good or deliver a service with a high degree of quality
• The production process refers to the transformation of products.
• Quality management/control refers to minimizing variations to defined limits, building systems to ensure variation is minimized and within these limits
• E.g Coca-Cola’s Northmead factory has set limits of 2 ml either side of 375 ml
• Quality assurance means to involves putting into place systems and procedures that make sure an error or fault will not happen
• E.g storing fresh meat at below 4 degrees Celsius will prevent salmonella bacterium

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2. Finance

• Sources of funds (sales revenue, borrowing (debt finance), owners contribution (equity finance), expenditure of funds

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3. Marketing

• Plan, price, promote + distribute products

• A total system of activities designed to plan, price, promote and distribute products to present and potential customers.

• The role of marketing is to develop of product that customers want

• Marketing oriented companies place the ‘customer’ at the center of their thinking

• The marketing concept is a business philosophy that states that all sections of the business are involved in satisfying a customer’s needs and wants while achieving their business’s objectives

• The marketing plan needs to be integrated into all aspects of the business; Operations, Finance, Human resources

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3. Human Resources (HR)

• Management between employers and employees (has a huge effect on how marketing, finance and operations are done).

Marketing

• Plan, price, promote + distribute products
• A total system of activities designed to plan, price, promote and distribute products to present and potential customers.
• The role of marketing is to develop of product that customers want
• Marketing oriented companies place the ‘customer’ at the center of their thinking
• The marketing concept is a business philosophy that states that all sections of the business are involved in satisfying a customer’s needs and wants while achieving their business’s objectives
• The marketing plan needs to be integrated into all aspects of the business; Operations, Finance, Human resources

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Identification of target market

• Target market refers to a group of customers with similar characteristics who presently, or may in the future, purchase the product
• 3 approaches to Target Market
•  1) The mass market 2)

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Marketing Strategies (the four p’s)

1. Product

• Refers to all the benefits a good or service offers to a customer
• Design and style features
• Quality level
• Image and brand
• After sales service
• Warranty
• Products incorporate tangible and intangible features 
• Product life cycle - the life of a product over four stages: Introductions, Growth, Maturity and Decline
• Positioning - the image of the product in the minds of customers compared with competing products

1. Price

• The payment required to purchase a product. 
• There are a number of pricing strategies that can be used 
• Penetration pricing is prices set below the market standard
• Skimming pricing is prices set above the market standard

1. Promotion

• The methods used by a business to inform, persuade and remind customers about its products
• Position - how a product is viewed by the community
• E.g Tv, sponsorships, social media, billboards, posters
• Person Selling - sales representative help customers, explain the benefits, inform
• Sales promotion - (Below the line promotions) attract customer interest 
• Public relations (publicity) - communications with customers without having to pay to get the message across
• Advertising - paid communication, includes tv, radio, newspapers

1. Place (distribution)

• Refers to the distribution channels used to move finished products to the final consumer
• Intensive distribution - as many outlets as possible e.g coke
• Exclusive distribution - 
• 3 main types of distribution 
• Producer to customer - no intermediaries, nearly all services
• Producer to retailer to customer - the retailer is the intermediary (bulky of perishable)
• Producer to wholesaler to retailer to customer (e.g consumer goods)

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Human Resource Management

- The effective management of the relationship between employer and employees

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Human resource Cycle

1. Acquisition

• Hiring new employees
• Planning: identifying staffing needs; jobs analysis (determining the exact nature of the position to be filled)
• Recruitment: attracting people to apply for the position in the business; internal and external recruitment
• Selection: choosing and hiring the most qualified; testing and interviewing

1. Development

• Improving employees skills and abilities 
• Induction and training: teaching employees new skills; helping employees learn tasks associated with their jobs and to improve their skills
• Skills inventory; cimple the skills of the employee

1. Maintenance

• Motivating employees to remain with the business
• Monetary benefits: rewarding employees efforts through financial compensation
• Non-Monetary benefits: rewards such as improved working conditions

1. Separation

• Employees leaving the business

• Voluntary: employees leaving on their own terms; retirement, resignation

• Involuntary: employees being asked to leave; retrenchment, dismissal

• Unfair dismissal; discrimination, 

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Finance

• Main source of business income is sales
• Businesses can also sell land, machinery, equipment, licenses - anything that the business owns
• Businesses record these transactions, funds 

Income statement (profit/loss statement, revenue statement)

• For a period of time
• 1st of July a business needs to know how much stock it has to sell - opening stock
• Purchases (of stock) 
• 30th of June a business takes a stock take - closing stock 
• Opening stock + purchases - closing stock = cost of goods sold
• Sales - Cost of goods solds

= Gross profit

- expenses

=Net Profit

• Revenue - money coming into business
• Expenses - money coming out of business
• To compare the amount of sales with the actual costs of goods sold
• Identify whether stock is too expensive
• Identify all business expenses
• Enables the adoption of cost management strategies

Balance sheet

• For a particular day

Assets

• Something the business owns e.g cash, property, stock
• Current assets - can be converted to cash within a year
• Non current assets - longer then one year to convert to cash
• Accounts receivable - Business is waiting for customers to pay

Liabilities 

• Something the business owes e.g mortgage, overdraft
• Current liabilities - pay it back within a year
• Non current liabilities - longer than a year to pay back
• Accounts payable - owed to suppliers

Owners equity

• Belongs to the owners e.g capital, profit
• Contributed to the business by owners

OE = capital + net profit - drawings

Drawings 

• Funds taken out of the business by an owner for personal use

Cash flow statement

• Shows the flow of cash into and out of a business
• Over a period of time usually over a 12 month period
• Typical cash inflows: sales, interest earned
• Typical cash outflows: taxes, wages, rent, insurance, payment to suppliers, borrowings

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Net cash flows = cash inflows - cash outflows

Accounting equation

• Assets = Liabilities + Owners Equity

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Financial management

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Accounting 

• The management tool that is concerned with providing information on the financial affairs of a business

Finance

• Concerned with where the business sources its funding

Sourcing

• Where will the funding come from
• Once a business has secured funding

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Cash flow

• Refers to the cash that comes in to the business and the cash that comes out
• Involves anticipating cash expenditure

Stewardship

• Making sure that the businesses finances are spent ethically - to grow the business
• Act free of self interest

Cost management

• Trying to maximize profits
• A business succeeds when it can minimeis cost whilst maintaining quality

Risk management

• Not making risky investments as a business e.g Bitcoin

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