Business Functions and the Activities of the business
Understanding Business Functions
Purpose of the 8 Business Functions
The eight business functions are interdependent to achieve overall business goals.
They must collaborate to ensure the survival and sustainability of the business.
Each function supports specific aims and objectives.
Example: The marketing function focuses on increasing sales or developing new markets.
Tasks are specific to each function's area of responsibility.
In larger businesses, functions are organized into departments, making them easier to identify.
Relationship Between Business Functions
The general management function is directly linked to all seven other business functions.
The financial and administrative functions handle gathering, storing, and processing information and financial records.
Skilled staff are sourced and appointed by the human resources function.
The Difference Between Management and Leadership
Leadership
A leader creates a vision and establishes direction for an organization.
Leaders focus on team-building and inspiring subordinates.
Management
A manager understands business goals and ensures that tasks are completed effectively.
Managers influence and guide human behavior to align with business objectives.
Communication styles differ:
Leaders typically communicate through charisma.
Managers communicate through structured management functions.
Differences in appointment:
Leaders are often considered to possess instinctive leadership skills, while managers are appointed to their positions.
The 8 Business Functions
General Management Function
Meaning: Sets the overall direction or strategy of the business, leading, organizing, and controlling all functions.
It has three distinct levels, each with its own roles and responsibilities.
Levels of Management
Top Level
Oversees activities across all functions to meet business objectives.
Comprises the CEO and directors.
Develops long-term goals, strategic plans, and business policies.
Middle Level
Responsible for specific departments within the business.
Makes medium-term tactical decisions to implement organizational plans.
Executes plans made by top-level management.
Lower Level
Focuses on controlling and directing day-to-day operations.
Makes short-term, routine decisions.
Implements instructions from middle management.
Management Tasks
Meaning: Tools used by organizations to complete projects efficiently by organizing and prioritizing related tasks.
The five basic management tasks are:
Planning
Organizing
Leading
Controlling
Risk Management
Management Tasks Explained
Planning
Evaluates existing activities and goals.
Different management levels formulate respective plans:
Top management formulates strategic plans.
Middle management formulates tactical plans.
Lower management formulates operational plans.
Various plans are considered to achieve specified goals.
Organizing
Brings resources together to achieve established goals.
Functions as the mechanism to execute plans, prioritizing resources in essential areas.
Organizes jobs within specific functions or departments.
Leading / Directing
Communicates what needs to be done and when.
Motivates employees to contribute effectively to business success.
Inspires team members to perform optimally and fosters a productive working climate.
Controlling
Establishes performance standards and ensures those standards are met.
Ensures business goals are achieved and that activities are carried out according to plan.
Identifies risks during the control process and compares actual results with management-set goals.
Risk Management
Identifies potential risks by examining risk-bearing activities within the organization.
Assists businesses in analyzing risks and their likelihood of occurrence.
Evaluates potential impacts of risks, including financial liability.
Controls risks by analyzing reports and trends in the operational environment.
Determines actions to handle risks using available resources alongside contingency plans and stakeholder communication.
Organizational Structure
Meaning
A system outlining how activities are directed to achieve organizational goals.
Activities include defining rules, roles, and responsibilities and determining information flow between company levels.
Factors Influencing Organizational Structure
Size of the organization
Strategy
Technology
Resources
Types of Organizational Structure
Functional Organizational Structure
Employees receive instructions from multiple managers.
Execution of plans determines reporting instructions.
Can create confusion for employees due to dual reporting lines.
Project Organizational Structure
Structured around temporary project teams.
Employees are drawn from various departments for specific projects.
Teams are formed to accomplish distinct project objectives.
Matrix Organizational Structure
Project-based structure where employees retain their department affiliations.
Projects are completed to a defined phase, at which point they are handed off to the next team for continuation.
Administration Function
Meaning
Responsible for collecting, processing, and distributing information for management decision-making.
Activities of the Administration Function
Management of Information:
Administrative staff must handle information accurately to avoid incorrect decision-making.
Responsible for managing various types of information:
Accounting records for financial statements.
Keeping business transactions current.
Cost accounting for competitive pricing analysis.
Handling of Information
Information is collected from both internal and external sources.
Correct and reliable information is vital for effective decision-making and operational success.
Office Practices
Covers the conduct and duties expected of administrative staff, including dress codes for employees.
Information Technology
Incorporates the use of electronic equipment to assist in various administrative tasks.
Facilitates communication and enhances efficiency in administrative functions.