1.0 INTRODUCTION
Every business organization performs efficiently and effectively
when all its departments work hand in hand with one another. There are many arguments
about which functional area would be the most
important department for the
long-term development of a business Organization.
There are four main functional areas in a business organization and
these are marketing, human resource, operations and finance. This note examines
how these functional areas interrelate and interact with each other during the
course of the operation of an Organization. In specific terms, it examines how
finance relates to the other functional areas of business.
2.0 OBJECTIVES
By the end of this note, you should be able to:
discuss the main functional areas of a business Organization
explain how finance is related to the other functional areas
discuss strategic management in business Organization.
3.0 MAIN CONTENT
3.1 The Main Functional Areas of Business Organization A
s stated earlier, there are four main functional areas of a
business Organization. These functional areas interact with each other for the smooth
operation of the business. These areas are marketing, human resources,
operations management and finance.
1. Marketing: Claire
Capon (2000) says marketing is the first department of the whole organization to
be considered. That is to say, marketing is the most important part of an Organization
activity. Marketing, which is an essential department of an Organization, can
affect the business activity immensely. Relatively speaking, marketing, which
is concerned with identifying customers’ needs and wants, drives the whole Organization.
This department is an internal area with regard to research, analysis,
and supervisor and so on. Furthermore, it is related to the external
environments as well. Thus, the marketing department plays important roles in
both external and internal environments. What it does is to notice every change
about the outside world and predict the kinds of products or services the clients
may want. Michael Porter, of the Harvard Business (1980s) suggested that Organizations
should dominate specified markets, or segments of specified markets, and make
it as hard as possible for others to enter the market (Colenso, P: 1980). This
is a suggestion of a corporate strategy and; it is a means to enhancing
competitive advantages of an Organization.
2. Operations Management: Operations management refers to making
decisions on the design of products or services and the resource inputs needed.
The operations department is responsible for the production of the goods. It is
also responsible for the cost of producing those goods and the price at which
the goods are to be sold.
3. Human Resource Management: Human resource management is an
integrated general department that involves identifying the Organization’s
demand for human resources with particular skills and abilities. Human resource
management should be concerned with the new workers at present. In other words,
human resource management department should make a strategic plan in training, recruitment
and selection of new staff.
4. Finance
Department: Financial department is concerned with raising capital for smooth
business operations and ensuring that sufficient revenue is guaranteed to cover
the cost of any expenditure. The finance department is saddled with the responsibility
of ensuring that there is enough money for the whole business organization to
function properly.
3.2 Finance and the Other Functional Areas of Business As far as the
internal environment of the business organization is concerned, the four main
functional areas are integrated as a whole. They do not work along but work
together towards the overall aim to plan for the future. How finance
interrelates with the other functional areas is explained thus:
1. Finance and Marketing: As mentioned earlier, financial marketing
is concerned with raising capital for the smooth operations of a business and
ensuring that sufficient revenue is generated to cover the cost of any finance
raised. On the other hand, after the finance is raised and the products are
produced, the marketing department should bring the products to the market and
do the best to sell enough goods in order to make large profits for the whole
business Organization. Marketing demands creativity and innovation. Further,
new product development is a method of creating, developing and keeping a
competitive advantage of an Organization. The marketing department depends on
the finance department for fund to carry out research and development without
which creativity and product innovation become difficult.
2. Finance and Operations Management: Operations management
is saddled with the responsibility of producing goods and services to satisfy
consumer wants and needs. While finance department is required to make sure
there is enough money for the whole organization to function properly, the operations
department is responsible for producing the goods considering the cost. The
operations management could determine cost and sales price. It works with the
finance department to reach a final decision on making profits according to the
cost and the price.
3. Finance and Human Resource Management: Human resource management
makes strategic plan in training, recruitment and selection of new staff. Since
the aim of business is to make profit through the satisfaction of consumers’
wants and needs, whenever there is the need for product innovation to target consumers,
there is a corresponding need for staff to be trained or recruitment towards
such area of experience or competence. This recruitment training and retraining
can only be made possible through financing. Therefore, a strategic plan in
training, recruitment and selection of new staff is realize d through proper strategic
management in finance.
3.3 Strategic Management in a Business Organization
As far as an organization is concerned, each functional area has
its own strategic management. Strategic management includes understanding the strategic
position of an Organization, strategic choices for the future and turning
strategy into action. Strategic management penetrates into different functional
areas and helps the organization enhance its own competitive advantages.
Therefore, it is essential for an organization to choose proper strategies in
each functional area in order to form a corporate strategic plan.
3.3.1 Strategic Management in Marketing
Marketing is about identifying customers’ needs and wants. It is important
to use effective marketing strategy with regard to a certain Organization.
Management should ensure that they are customer-oriented instead of being
product-oriented. Therefore, we can conclude here that customer-oriented
management is a sort of effective strategic management in marketing, which can
keep the industry growing even if there are no obvious opportunities.
3.3.2 Strategic Management in Finance
As far as an organization is concerned, strategic thinking is
significant for the growth of an Organization. For finance, the capital is an
essential element of a certain Organization. Hence, it is a good idea to issue ordinary
shares to raise capital in order to think for the future.
3.3.3 Strategic Management in Operations
Strategic management
in operations is essential as well. For instance, a sales of vegetables
(cabbage, for example) can display it on his table alongside other ingredients
needed for making salad (such as tomatoes, pepper, onions, etc). In addition,
the seller can also put the profitable goods in such a place that customers can
easily reach them. This will increase sales and also improve the overall
profitability of the business. Therefore, choosing proper strategic management
in operations management can help the organization achieve success more easily.
3.3.4 Strategic Management in Human Resource Management
The recruitment of employees is crucial to an organization as
well. The staff with skills and abilities can provide customers with
satisfactory products and services. The recruitment of employees also helps the
organization achieve its strategic goal efficiently. This is because recruitment
process ensures that appropriate applicants are selected to work together to realize
the objectives towards the strategic
direction of an Organization.
4.0 CONCLUSION
Finance is related to the other functional areas of a business
hence, it is crucial for the realization of business goals and objectives.
Finance, should therefore, be properly managed as it provides the life wire of
a business. Even though finance is crucial, achieving goals of an organization needs
the co-operation of the four main functional areas.
5.0 SUMMARY
This note has examined the functional areas of business-finance, marketing
operating management and human resource management. It also looked at the
relationship between finance and the other functional areas of business. It
also explained the importance to an Organization, the choice of proper
strategies in each functional area in order to form a strategic corporate plan.
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