The three basic functions of a firm, as Heizer and Render (2009, p.4) have outlined, are applicable to all firms and organisations; whether private, government, non-profit or any other type of organisation. These basic functions can be outlined as follows
Marketing is the part of the firm that is concentrating on generating client demand for the product or service that the firm is producing or providing.
Heizer & Render (2009, p.5) provide some good examples of marketing departments in different businesses, some examples can be:
- Commercial Bank – Marketing of loans (mortgage, personal, commercial etc.) which brings in the demand for which the latter two points of this discussion are involved in (mainly 3 – Productions/Ops.).
- Internet Service Provider – Marketing of Internet connectivity, shared website hosting, dedicated website hosting, backup services.
- Food Store Chain – Marketing opening of new branches, weekly/monthly specials on food products etc.
2) FINANCE / ACCOUNTING
As I have covered in previous posts, accounting is a vitally important function of a business. Accounting measures the performance of the organisation as well as makes sure the income is collected and the debts are paid (Heizer & Render, 2009, p.4).
Thomas (n.d.) sums the importance of accounting as a function in business as
- Allowing business owners to see where profit and losses are being made (Profit and Loss)
- Allows business owners to see where and how cash is being spent (Cash Flow)
- Shows whether profits are large enough to cover expenses (Balance Sheet)
- Helps aid financial decisions.
- Required to adhere to tax legislations
All of these areas of accounting apply to all types of businesses.
3) PRODUCTION / OPERATIONS
This is where operations management comes in to play. Whether the organisation provides manufactured goods or intangible services, or a combination of both the processes are part of the production/operation function. As Heizer & Render put it (2009, p.4), this function “creates the product”.
There are some notable differences between services and goods but as Heizer & Render show (2009, p.11); even organisations which seem very much “goods” (eg: automobiles), they still require a level of service (vehicle finance, vehicle delivery). The same goes with service heavy organisations (eg: consulting), which mostly have an element of goods as well (eg: printed reports). Heizer & Render (2009, p.11) point out that one of the only “pure service” providers are those that provide counselling.
Some examples of operations in different organisations are:
- Commercial Bank – Tellers, transaction processing, cheque clearing, facility design and layout, vault operation, maintenance and security (Heizer & Render, 2009).
- Software Development – facility design and layout (placement of personnel), communications, training, client liaison, quality assurance and control, product development, product design and maintenance.
All of the above 3 functions are imperative to the operation and success of an organisation.
Heizer, J. & Render, B. (2009) Operations Management. Ninth Edition. Prentice Hall: New Jersey.
Thomas, C. (n.d.) Why is accounting important in business? [Online] eHow. Available from: http://www.ehow.com/facts_5003375_why-accounting-important-business.html (Accessed: 7 May 2011).