Unit 1 Section 2 (Functional Areas)

GCSE Applied Business Harry Sandford

Part One

What is meant by functional areas of a business?

Functional areas are all different. They are each department in a business and they all consist of different things. These include; finance, admin and It support, human resources (also known as personal department), operations, marketing and sales, customer services and research and development.

Organisation charts shows the order of importance within the company. An example of this is in my school where the head teacher is at the top and then the deputy head below him and so on. In organisation charts they show levels of authority within a business. The most powerful person will be at the top and the person with the least amount of authority will be at the bottom. Usually in big business the chairperson of the board of directors will sit at the top of the organisation chart/hierarchy. The chairperson will help decide on the policies of the business with his fellow directors, who are elected by the shareholders to help run the company. The managing director would be in charge of the day to day running of the business to see if it is working efficiently and to re-lay information back to the chairperson. In some companies the managing director will be called the chief executive. There are five people with equal authority that will come next in a business, these being; the production manager, the marketing director, the sales manager, the personnel manger and the financial director. The marketing director and the financial director both have a seat in the board of directors hence their titles. In different types of business that sell different products or provide different services all have different names for these people, this is what they would be called in a stereotypical business. The more people within a business the longer the chains of command become. For example in a big business like Amstrad there would be very long chains of command with Mr. Sugar sitting at the top as the chairperson, in a small business with only 100 people in the company their would be much shorter chains of command. In each department there are many different managers these all have to answer to there senior manager, these are called middle managers. Some advantages of having established hierarchies for the employers are that specialized staff will work more efficiently, the clear chain of command will communicate more efficiently. Co-operation is easier, as mangers can speak for all of their staff they control and there is a clear unity of command within a business. The advantages for an employee would be that they know who their boss is of, or line manager, or supervisor is. They receive orders from only one manager or supervisor, their delegated department’s manager. Being in a separate section or department will give them a greater sense of unity and purpose. The disadvantages of having a hierarchy is that this will cause a rivalry between departments and this will be bad for the business as you do not want competition within the business although on the other hand it may cause employees to work harder and therefore maximise profits. Incompetent or

bullying heads of department may cause people to leave or not work to their full potential.

Below is an organisation chart for Richer Sounds. This shows the hierarchy of the business and it has a long chain of command with many different departments.

Part Two

Finance

A business must be able to keep control or their finances. Finances keep track of the money flow, prepare the accounts of customers, pay the wages and salaries and obtain capital resources. The finance department are responsible for making sure they have the right amount of money going out and the right amount of money coming in otherwise they could become bankrupt at the worst. A business must ensure that it keeps track of all their activities, including money coming in and money going out and they make sure that they use their money to the best advantage. Wages get paid on a weekly basis and the amount you get paid is by how high up you are in the business, for example if you were a managing director of a business you will get a considerable amount more compared to somebody working within customer services. There are three ways in which a person can get paid; timed rate, piece rate and commission. Timed rate is were a person will get paid on how many hours they work and how many days. For example working in retail will usually pay this you will be on £5.00 an hour and you will work 9-5, 5 days a week. Piece rate is were someone will get paid on how many or how much of one product they will make. This would usually happen in printing companies and production lines. They could get paid good one week, as they have worked hard, and bad the next week because they have been lazy. Commission is usually used in selling big things for example estate agents are paid on commission and so are employees of car companies selling from a showroom. Commission is when you get paid on a percentage of how much you will sell. So if a car salesperson would sell 10 cars in a week how ever much these add up too he will take 10% of this for his wages. You could get paid one week and bad another depending on how hard you work, this is similar to how piece rate works. Money and resources allow a business to be run and how many you have and how good they are depend on how good the business is. A business will have to keep a record of all of its finances, this is a law that business have to do this. The finance department will have to make sure money is available for all the departments to buy resources, this will help the business run efficiently so the better the finance department does the more profit and turnover the business will have.

Admin and IT resources

This department ensures the business is running smoothly and keeps track of what the business is doing. They are quite important as they organise the main meetings in a business, more often than not they work as clerks. They ensure that collection and distribution of mail is happening and hires young workers to distribute it. They keep the records for all of the activities happening and make sure the meetings they have organised are running on time. They may also be in charge of the cleaning and the maintenance of the building or environment they are working in. They make sure that the business has got the best security it can and ensure the health and safety of all of staff. They also look after all the records of the company and file them in a systematically ordered way. They answer the phone calls and monitor all the queries and forward you to the department you require, they would also been in charge of the mail and the photo copying of papers. They make sure that staff have good attendance and will type up letters for staff. The business needs admin and it for the clerical work it does, this includes photocopying, writing letters and

Human Resources

This is also known as the personnel department. They specialise in recruiting and dismissing staff, they are also responsible for the training, development of the staff, for example if they have new equipment coming in they will organise the training for the staff. They promote of the jobs if they are wanted or needed. Once the business has the correct amount of staff they will make sure that they keep them. They HR department make sure morale and self esteem is kept high.

Operations

In the operations department they manage what the staff is producing and judge if it is good quality or bad quality. They ensure the use of the best products using the best methods. This department make sure that the have the correct resources to meet there aims and objectives. They also need to make sure there goods are the best quality for there customers. They use all sorts of staff for there jobs, the lowest to the highest, to provide the best goods and services to customers. The operations department have to consider; the factory layout, ensure the ...

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Operations

Marketing and Sales

Here is where the advertising work comes into the business; they promote the products with advertising, they are responsible for marketing research, promotion of the product and the sales of the product. Marketing and sales anticipate customer requirement, so they are always thinking ahead, they also have to satisfy customer’s needs and wants. They are in charge of promotion within a business. Promotion is the awareness of the business throughout the public, they gain new customers from advertising/promotion such as; TV, radio, internet, magazines, newspapers, cinemas and billboards. Some other method of promotion is; trade fairs, exhibitions, direct mail, sponsorship, product placement and publicity.

Market Research

Within marketing and sales there is a very important job for them to do, this is market research, this consists of identifying the customers you are selling too, what market are you aiming for young or old. Identify different trends in the business, what went well, what is going well and what you think is up and coming. They also need to identify possibilities in the market to try and bring something new to the market which nobody has done. For example apple are very good at this as they had the i-phone idea before anybody else, this shows that the market research department in apple is very good and is a strong link in the chain of command.

Customer Services

The customer’s service department provide information and advice to the public. Customer services provide they make sure that the customer receives a good level of service and when they come in they get what they want. Business’ need to ensure that they give their customers a good after sale service. For example MacDonald’s do not have a good after sales service because what they provide is consumable but Richer Sounds provide a great after sale service as they provide staff with the appropriate knowledge, using the HR department as they recruit the right staff. They also ensure that if a customers needs to find a product they will make sure that there staff are all trained for the right job so that there customers are happy and there goods are exactly what they wanted. The customer service department make sure that the loyalty to their customers is at a good standard.

Research and Development

This department have separate industries within it. These include; IT, computing, pharmaceuticals, telecommunications and car manufacture. Here is were the a lot of the money of in he business is spent on getting in new equipment, trying it out and seeing if it is more efficient than the equipment they had before. They also upgrade existing products e.g. walker’s research and development put a lot of work in to come up with ideas for new eye-catching designs for their crisp packets. An example of a pharmaceutical company is Glaxo Smith Klyne, this is the leading business that deal in pharmaceuticals. They have to be very careful when testing drugs as if they let it out and it has a severe impact on people they will get sued a lot of money and then be loosing out of profits.

Application Part 2

Richer Sounds

Finance

The main responsibilities of the finance department are; preparing financial documents of the Richer Sounds’ sales of goods to customers, such as invoices, credit notes and statements. John Currier is in charge of Finance. He is in control of the staff who works in accounts, payroll, purchase ledger and stock control. They control paying suppliers of stock promptly to take advantage of when they have offers on to pay less for more. The pay all the suppliers of electricity, heating and other overheads. They make credit checks on customers before they give them anything out on credit so they no they are able to pay it, they also check the bank statements of the business to make sure they are not losing money. In finance there is an IT department within it. This would look after the and produce all the financial documents; invoices, credit notes, bank statements etc. They communicate with the other departments using instant messaging and emails. They are also in charge of; the preparation of financial documents, making credit checks, checking and recording payments, the checking of all financial relating to the purchase of goods, monitoring the values of items held in stock, paying suppliers promptly, paying all other suppliers, checking bank statements, preparing the payroll, answering individual customer queries about stocks, preparing monthly managing accounts and costing new projects. Preparing financial documents in Richer Sounds is important because they will have to show their delivery company a receipt to show they have paid for their stock. They will swipe products on their bar codes so they no how much stock is in Richer Sounds and so that they are able to control their stock easier. They are in charge of paying all of their suppliers so that they can get stock in on time and so that they are able to stock all the goods they are advertising so customers are not disappointed. Prepare the payroll of their workers, this includes paying the staff and arranging all of the documents for the end of the tax year. One of the most important things they do is to prepare the monthly and yearly budgets reports. They do this so that they can allow for the business to spend on goods, paying the bills and paying their suppliers.

IT and Finance

IT in richer sounds is a key part in their business. Although in many businesses Admin is a main part in a business but Richer Sounds do not have a separate admin department. Julie Abraham runs the IT department. She is supported by Darren Woodward, IT Manager; Phil Brindley, Deputy IT Manager and Scott Wood, IT assistant. The IT team is responsible for all areas of IT Support. They are not responsible for the company website as this is overseen by our Marketing department as some people would think they would be in charge of this. They would help the finance department by filing all of their documents and they make sure they are always backed up onto many different devices so that they will always be able to have a copy of them if they loose the main copy. They do this to make sure that Richer Sounds are not spending too much and this will help to increase the profits of Richer Sounds and help them not overspend and go into serious debt. They can pay their employees through internet banking and this is very quick and means that everyone will have their money on time and in the bank. They can put a program in place were it will pay every body monthly or weekly according to what it says in their contract and exactly how much they are owed. This saves time and then employees can get on with different jobs. They can check the deliveries have been made through the internet and see if everything is in the warehouse, this reduces theft and they know how much the owe the supplier or if the supplier owes them stock. The check each sales of the stores so that the business knows which product is selling well and they can buy more stock of this product to increase profits. They know if products are failing in the market and are only being bought by minorities so that they can not buy these products again.

Operations

In the operations department within Richer Sounds Josh Clayton is the head of this department. He is assisted by his wok team in leading the distribution service, the repairs service and the stock control. They set the stores budgets so they know how much they can spend on different things such as; stock and needed tool or machinery. This will influence other functional areas such as marketing and sales in case they need to change their marketing theories to attract new customers. They also need to check that all the stores are meeting the companies aims and objectives, this will be good so that Richer Sounds can maximise their profits, increase profitability which is one of their aims. They need to get regular feed back from each store in case they need to change ideas in different stores by attracting new customers. They need to know whether the customers are happy with the store and if they feel prices are too high they will always change for the customers needs.

Marketing and Sales

The marketing department takes care of the; marketing, design and the point of scale. The point of scale is headed by Dan Burnham, he is the merchandising director. In the design part the employees in this section produce A3 newsletters which Richer Sounds issue every fortnight as well as their advertisements which they place in the national press and in specialist magazines. They would need to make advertisements simple so that the customer understands what is being advertised and therefore buy the product if needed. This will also attract new customers and help them sell more products through their internet store also. In the marketing department they will analyse feedback from customers and therefore be able to comply with the customers needs and therefore sell more products. They also need to design new ways of attracting new customers to Richer Sounds, one of the main way of doing this is through the post by sending advertisement through the door and then the customers are able to visit the website, visit the stores and buy through their website. The designers will look at designing new ways of attracting customers also through their fortnightly leaflet that they send out. They also would be looking at advertisement in many different places for example in the national newspapers.

Customer Service

Customer service is very important to Richer Sounds. The Director in charge of the customer service department is John Clayton. Every employee who works in the customer service department reports to John, who is also responsible for the running of the Store Operations. This is because excellent customer service is needed at all times in all of the Richer Sounds stores. They make sure that their staff are trained well enough and check that they can help customer’s needs whatever the situation is. They look after a call centre to make sure that the customers are happy with their goods they have bought or if they have problems with their good customer service is their on the end of the phone to help. The last thing they look after is a service and repairs sections were they are able to help customers with faulty goods or service their goods, for example if a customer has a problem with his new television he has just bought they will be able to work out what the problem is, fix it or replace it. Here is a list of what the customer service department takes care of overall; knowledgeable and friendly staff, a national call centre, a corporate sales section, mail order and web sales, a dedicated order line for free catalogues, specialist customer service staff, a dedicated service and repairs section, well laid out, welcoming stores with easy access, demonstration rooms pets welcome policy, competitive prices, 100% satisfaction guaranteed or money back, brand new products by known manufacturers, full access to technical back-up and spare parts, computerised stock control system, web access in stores.

Purchasing, Warehousing and Distributing

The responsibilities of the purchasing department of Richer Sounds are; ordering all the stock, to maintain good relations with the customers, chasing late deliveries with the suppliers, informing the supplies with any discrepancies or delays with deliveries, deciding the selling prices of the goods, checking the stores competition checklists, monitoring stock levels and advising on special deals which could be made in the future. After the purchasing department have ordered the items it then gets delivered to the warehousing department. This is where the goods will be stocked until they are needed to be delivered to the shops when the stores need them. When the goods arrive to the warehouse, they have to complete a booking form, this includes; recording the time and date, which supplier it came from and the type and volume of goods that are being delivered. They secure they goods in very safe warehouses which are staffed 365 days a year and have CCTV cameras guarding the perimeter and warehouse. All vehicles have to gain admittance by the front gate and there are regular patrols with dogs. The goods are stored on pallets and moved by electric fork lift trucks. They use electric trucks because they create less pollution than other types and this is good for the environment. Then after this they distribute their goods to their stores, this is easily done as they know were all the stock is and how much is going in and out of the warehouse at each time. The stores send in their orders each Friday and then they will be delivered within the next working week.

Part 3 Communication

Functional areas within businesses need to communicate effectively so information is not misled and so correct information can be passed on to everyone who works in the business. There are various ways in which communication can take place, to make people aware of info they have notice boards, memos, email, fax. These are just some example of this. Each functional area needs to carry out lots of different tasks. They are dependent on communication for tasks to run smoothly, and for people to understand information that is being given to them. It is important that the information that is being relayed is effective and correct. In a business it is very important that effective communication is being used, effective communication is when each department is aware and knows of all the operations so that errors are not apparent and can be stopped ASAP. The business needs to make sure the communication is successful by within their functional areas; this is when the communication between for example Admin and IT (a functional area within a business) communicate with each other using methods such as E-mail or Telephone. Communication can take many forms; these include E-mail, Fax, Notice Boards, Memos, Text Messaging, and Meetings. The business has to make sure that all these are working properly and effectively and making sure each type of communication is being considered.

There are different channels of communication, they are upwards, downwards and sideways. An example of upwards communication could be within a business if say somebody had lost their memory stick or a certain piece of information the cleaner may contact someone if they have found it and they would contact a member of staff who is a higher rank than them so that they can put a note on the notice board or send out an email to everyone in the department. Downwards communication is where a member of staff who is higher ranked and higher paid would communicate with a member of staff who is lower on the businesses hierarchy. Side wards communication is where a member of staff would communicate with another member of staff that is the same importance as them and is on the same level of authority.

Electronic Transactions; these help the business keep information more secure and provide more ease when customers buy products online such as PayPal. Examples of this are transfer of funds online, stock control, invoices, bar code systems and ordering systems. These allow the business to monitor its administration and operations. They are for transferring funds from one account to another, for stock control, for invoices, for the control of bar code systems and for ordering new services.

Security Systems; these are to do with internal and external methods of communication. These are made so that a business can insure it provides all internal security and provides its customers with more control over their products they buy. More technology and better technology has been made to increase the security of people’s confidential information, password protection and security against viruses. External security would be the safety of their products in their warehouses as they have 24 hour CCTV cameras, regular patrol watches, an authorised access station for only wanted guests no un-wanted guests and pass word protection on any important files within the warehouses.

Online support; this has external and internal advantages. These systems are used to the advantage of staff and customers, this are used to keep the customers getting correct information and allows them to download new software. For example dell have an online support and they provide customers with new downloads to make their computer faster and better to use. These create new opportunities for businesses so they can make more profit, these were not available before the advance in technologies and they have helped businesses a lot.

Facilities to share common data; advances in technology has meant that there are more places and easier places to access information you want. A business can now easily communicate this information to customers and remain informed on their opinions so they can make alterations to their business to help them be better.

Emails can be used in both external and internal communication, this is because they can be used to communicate within a functional area or to another functional area and they can be used to contact suppliers and or other companies. The advantages of an email are that they are very quick and you can write a lot of information in one email. The disadvantages of emailing somebody is that they can be misled very easily as there is no emotion in an email, it will not show any sarcasm, happiness or sadness and therefore the information can be misled easily.

Intranet systems are only used internally as you would usually have to have a login ID and a password to access these files if you were an employee. These are a good efficient way to communicate within a business because somebody who is higher in the hierarchy will be able to communicate easily with people below them as they can put vital and important information on there.

Conferences are used only internally within a business. These are used so that people are able to tell certain information to certain groups of staff or individuals in the business. It is a good way of communicated with a small group of staff or one functional area or part of a functional area as everybody will take in the same information at the same time. It is good for feedback within the business like what the employee think is going well and what can be improved within the business to make the environment better to work in.

Meetings can be used internally and externally. They can be used externally because if the company want to communicate with a supplier or if they wanted to merge with another company they would have to arrange a meeting with them and then discuss what they needed to discuss in the meeting. They can also be used internally as people within a business are always having meetings. This is a good way of communicating like conferences to smaller groups as large groups will be hard to get together and their may not be a big enough room for a meeting like this to take place. These meetings help functional areas communicate with each other and within their own functional area.

Internal communication is when the people within the business communicate with each other to get correct and useful information to the right place at the right time. An example of this is when a teacher would need to communicate with another teacher in a school, they would use a meeting to communicate with them or put a note up on the notice board. Some examples of this include the intranet, e-mails and some tools for presentation

External communication is when the people within the functional areas of a business communicate from within the business to a business or retailer or customer using certain methods. This is very important to keep in contact with external bodies such as customer, suppliers and supporting firms. These methods include; telephone, email, fax, TV, radio, billboards, leaflets. These are usually to communicate with customers to promote their products and so that customers are more aware of the services the businesses provide.

Part Four

Email – they use emailing for a quick and an instant message. Some other advantages of e-mail are that it provides an instant and cheap way to communicate within a business and between businesses and customers. A “hard copy” (meaning a paper copy) is kept and the receiving end and the sending end to back up if the internet is down or the email does not get through. But the disadvantages of this are the computer systems could be down or you could not have an internet connection. Some other disadvantages are that some people may not have access to a computer or they do not have an email address. Some information could be misled and you may not get the emotions of somebody for example if somebody was angry with a fellow worker and they said they wanted something doing now then the person receiving the email would not be aware of this and not take it so seriously. Email is used in all functional areas and is very useful. They are used especially in Admin and ITC. This could be used internally mainly within functional areas and to other functional areas of the business. It can also be used externally to advertise and inform the customers and suppliers of what they want. Email contributes mainly to admin and ICT, as ICT mainly only use the computers it would b e logical for them to use email to communicate with each other and every other functional area within the business. Email would help businesses achieve their aims and objectives by being a very efficient way of communicating and getting information from A to B very quickly and so that the information is not misled so that it is not incorrect. Emails will help businesses operate efficiently by having a very quick and efficient way of communicating with your own functional area or outside it to another functional area. This will help them meet their aims and objectives as it will decrease the amount of confusion between functional areas and within functional areas, therefore it will then help them achieve their highest standards of a business and help them achieve their aims and objectives.

Meetings – Meetings are a very efficient way of communicating within a functional area of a business. More often than not they will be used in a business for example at a secondary school they will have faculty meetings once a week to get information from each other and for the head of faculty to communicate to the other teachers in the faculty. An advantage of this is that a whole department or functional area can all be enlightened at once and not to be told in dribs and drabs such as emails. As some of the staff may not check their emails everyday a meeting on the other hand is something that everyone would have to attend and the would all be paying attention and so that they can all gather information at the same time and that nobody is left behind. This is mainly used internally to inform staff of new plans that are being put forward and for people to propose new plans. They may be used externally but in very rare occasions, one of these occasions could be when a supplier would like to meet up with the business if they are not happy or if they would like to ask for more money. Meetings are important to each functional area of a business because if you did not have meetings there would be no very efficient way of communicating within a business. If you did not have meetings not every person in the business will no about new plans if they need to. Meetings will help businesses achieve their aims and objectives by being able to get information efficiently into peoples mind. It is a good way to decrease the amount of misled information and therefore decrease any confusion in people’s minds. This will help a business and different functional areas within a business to communicate efficiently therefore they will be able to operate to their full potential as information between functional areas is not being misled.

Memos – a memo is a note or some sort of information being left in your desk, your computer (maybe a post it note on your computer) through an email. These are usually used in schools when for example a parent of a child phones in and says “why has my child got a detention” this will be written down on a a2 piece of card called a memo, with the information of who called and the time and how the were feeling: angry, upset, disappointed. This will then be left in the teacher’s pigeon hole and then they will be able to get back to the parent ASAP. In each business memos are very important if you have a large amount of staff. They would be used in every functional area to inform staff about meetings or new plans, they are not very reliable as people may not take note of them and may not be reading them on a daily basis. A memo is not a great way of communication so therefore will not be enable any functional areas to work at their full potential, this is therefore a bad way of communicating as it is slow and in-efficient. This will then not help the business achieve its aims and objectives but may help in a smaller business but this will not work in a larger business as there is too many people to communicate with and it will be a waste of paper.

Fax – in a business they use fax machine to send faxes internally (within a business) and externally (from the business to somewhere out of the business). They are not used as much in businesses nowadays but are still very effective and quick and get to the point if used in a business. The advantages of this are that businesses that have up to date technology can now send a fax to an email address so it is using two methods in one. It saves time instead of scanning a document and attaching it to an email it will do it in half the time and is more efficient. The disadvantages of using fax are that technology has been updated and some businesses do not use fax machines any more. Fax may not be important in each functional area of a business as most business nowadays do not use it as technology has advanced but if it was used it would be used in administration.

Agendas – an agenda is used in and before a meeting to help everyone who is attending to prepare and know what the topics are going to be. It can be sent through email or left on your desk before the meeting, this helps people can information and investigate into the points made in the agenda. These are used every day in businesses for example an advantage of these are they help the staff who are in the meeting gather information and prepare for the meeting and also if a person comes in late to a meeting they are able to catch up on points made .On the other hand the disadvantages are people may get misled and gather wrong information about the wrong departments. Agendas are also used in external communication, this is because if Richer Sounds wanted too meet up with a new supplier, they would have to set out an agenda with what they were going to talk about in the meeting so that they were not wasting time. Agendas are good ways to use you time in meetings, it will structure out a meeting and therefore people will no what will be discussing as every person attending the meeting will have an agenda.

Minutes – these are the official record of a meeting. These would state the date and place of the meeting, list the names of the people present and who is the head speaker of the meeting. These would record the decisions made in the meeting and what are the important points made by people present. The advantages of this are that people get a copy of the minutes passed on by them and they can work on the points made in the meeting and would be able to be reminded of good points made and makes notes on them. The disadvantages of this are the time it takes to type up and to hand out to the staff and how time consuming it is.

Intranet - intranet is an online bulletin board that allows different functional areas to view each other progress and communicate effectively within the business. Some examples of this are in a school they would have a network of computers connected together with logins and passwords to access personal information and documents. This is mainly uses internally because it is used in the computers around the business. Intranet is a network of computers linked together for many people within the business to look at. Sometimes it is not very efficient because people may be busy and not have time to look at the bulletins being placed on the intranet, so it is not very efficient in that sense. Richer Sounds use intranet to show their new designs to the other staff, this will give them positive feedback about how it is good and how it can be improved.

Telephone – telephones are used for internal and external communication. This is used to directly contact somebody on an urgent matter, if you have to talk to someone quickly to remind them or inform them a.s.a.p. This is good for communicating efficiently as there will be no mistakes being made and the emotion in your voice is shown, for example sarcasm will be shown as it won’t be in e-mails. It may be become a disadvantage if you want to contact many people saying the same thing, there is a lot of people missing calls due to meetings and other important matters therefore may take long to communicate with a lot of people. This is were an email is better because you could send an email to many recipients and this will be a more efficient way of communicating. The telephone will be frequently used in businesses such as Richer Sounds.

Unit 1 Section 2 (Functional Areas)

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