quality of service.

. aims to create in its stores an environment which makes shopping easy,

interesting and comfortable.

For example, in 1993 Tesco introduced Value lines, which offer exceptional

value for money, followed by New Deal Pricing on leading commodities and

brands in 1994. In 1996, Tesco introduced Unbeatable Value with the pledge

that nobody would sell the equivalent product for less price.

E3

Organisational functions.

All organisations require resources to carry out their functions. One way

of judging the success of a business is to compare the resources it uses

with the value of the product that results. For example if it is a small

business running by it’s owner, for example small shop, so it doesn’t need

any workers, large piece of land and big capital, owner can work alone. But

if it is a very large business like car manufacturing so it requires a lot

of workers, very large piece of land and big capital.

The resources of the business.

One way of considering the resources used by a business is to classify them

into the factors of production. The main capital of production are capital,

labour and land.

- CAPITAL refers to any manufactured product used by the

business to make other products. This category

therefore includes all machinery, vehicles and office

equipment used in businesses. It also includes the

company’s buildings.

- LABOUR is the human resources used by business

organisations during production.

- LAND – site on which the business is located and

natural resources it might use.

- ENTERPRISE – owners and shareholders.

Functional areas.

All businesses combine factors of production as an essential part of their

production activities. To combine these factors, to engage in production

and to achieve their objectives organisations undertake a number of

functions. The major business functions include:

. finance

. production

. human resources

. administration

. research and development

Business requirements for functional areas depends on its size, for example

small business might merge many of these functions within their

administration department, with responsibility in the hand of one or two

people. As a business grows the number of people required to carry out

these functions increases.

The financial function.

Extensive use of IT

Produces standards

cost data

Customers Auditors Inland

Revenue and

(price list) (accounts)

Custom & Excise

(information

relating

to tax liability)

Figure 1.3: The financial function

A separate department normally carries out the finance function of the

business. The finance department carries out a number of key activities:

. records all financial data

. chases up slow payers

. collects payments from customers

. provides information to external bodies

. analyses costs

. advises board of directors

. monitors and analyses financial data

. advices managers and budget holders

Production function.

Production covers all the activities that must be undertaken to make the

firm’s products, from the receipt, of raw materials through to the output

of the final product. The production function concentrates primarily upon

planning and controlling the various stages of production so that the most

efficient use is made of business resources.

Production manager responsible for:

. maintaining supplies of components and raw materials to ensure

continuous production

. ensuring that the precise requirements of customers are met

. monitoring quality to insure that finished products meet the quality

standards expected by customers

. using resources – people, machinery and production space – as

efficiently as possible to make the business competitive in the

markets in which it trades.

One of the most important issues in production is quality. Modern

businesses compete just as strongly on the quality of their goods and

services as they do on price.

For example it is vital for a washing machine manufacturer to produce a

high-quality product. If the machine is not reliable or does not have a

wide range of functions, customers are more likely to purchase a

competitor’s product.

Figure 1.4: The links between the production function and other

departments

The human resource function.

Personnel management considers the tasks involved in managing people –

recruitment, selection and so forth – as separate elements. It does not

take into account how these elements can combine to achieve organisational

objectives.

The personnel management approach makes decisions relating to recruitment,

training and pay systems independently, without considering the impact the

individual decisions have on each other aspects of management and the

achievement of corporate objectives.

Human resources management (HRM) elevates the effective use of a business’s

labour force to an issue to be considered by senior managers as an

essential element of the organisation’s strategy. This approach has raised

the profile (and salaries) of those employed in human resource management.

The human resources function engages in a number of activities to ensure

employees are utilised affectively. These activities are carried out with

the aim of contributing to the achievement of the business’s objectives.

Workforce plan sets out likely future needs for labour and how these needs

might be met. Achieving the workforce plan involves the human resource

function in a number of day-to-day activities.

. recruiting employees – both internally and externally

. training new and existing employees

. paying salaries

. dealing with disciplinary matters and grievances

. overseeing industrial relations, by seeking to avoid disputes and

maintain harmonious relations and constant production

. developing and monitoring an employee appraisal system designed to

assess performance, set targets for achievement and identify any

training needs

Figure 1.5: Developing a human resources plan

The marketing function.

The marketing department carries out a wide range of functions on behalf of

the business. Essentially marketing is communications. The marketing

department communicates with a number of groups inside and outside the

business as it carries out its tasks.

Marketing activities:

. keeping customers satisfied

. discovering the needs of customers and advising the production

function accordingly

. carrying the responsibility for ensuring the effective distribution of

products to wholesalers and retailers

. liasing with marketing agencies to provide the necessary expertise

(small firms)

. if the firm is an export, the marketing department may have contact

with government agencies.

Marketing provides the organisation with information about its customers

and its markets. Effective marketing can offer businesses a number of

benefits:

. early warning of changes in consumer tastes and fashions through

regular market research

. knowledge about competitors and information regarding competitors’

product

. the means to present the company in a positive light through public

relations activities

. allowing the firm to improve the quality of its products by

coordinating and analysing customer complaints

. providing a catalyst for growth by forging relationships with

distributors, retailers and customers in new markets

. supplying consumers with the products they want and giving high levels

of customer satisfaction, which might permit a business to charge

higher prices thereby increasing its profitability.

The administration function.

The scope of the administration department varies enormously between

organisations. In a small business the administration function might

incorporate a number of the functions like finance , personnel and

marketing. However, larger organisations are more likely to operate a

specialist administration department.

A typical administration department has a number of functions:

. Administration department carries out organisation’s IT system.

. Clerical and support service. Information processing, data processing,

filing and reception services can be provided to all areas of the

organisation.

. Security and maintenance. These services are essential to the smooth

running of the business and to the effective operation of other

business functions such as production in particular.

. In some businesses, the administration function takes responsibility

for important public relations activities such as customer services.

The research and development function.

The nature of research and development (R&D) varies enormously between

businesses. Traditionally, the term research and development is taken to

refer to scientific research undertaken by firms producing manufactured

goods, high technology products or pharmaceuticals. However, R&D is equally

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