Identify AND Elaborate ON THE Functional Areas OF Business Management PDF

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1. IDENTIFY AND ELABORATE ON THE FUNCTIONAL AREAS OF BUSINESS MANAGEMENT There are many different functional areas of business management; I will be focusing mainly on production and operations management, marketing management, financial management, and human resources management.

Production and operations management – this involves the task of producing the goods or service in the most efficient way.it involves planning, research and policy development. This is done by using of the business's staff (labour), machinery, building and raw materials. The marketing mix is used when products are developed so that customer needs are met, and the organisation meets its objectives.

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Product - the factors associated with producing them such as product features, new product development, and product life cycle.

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Price – This is related to ways of making money. There are variety of pricing strategies such as skimming prices (charging high prices at the beginning,(charging very low prices), predatory pricing (setting prices to get rid of a competitor), prestige pricing (setting the prices artificially high)

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Place – the means of getting the goods and services to the customer(a convenient place for customers)

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Promotion – the ways of making the customer aware of the actual product by (advertising, public relations, direct marketing, sales promotions) so that the product meets consumer expectations.

Product Marketers in a business must ensure that a business sells the products that meet customer needs and wants. The role of Production and Operations is to ensure that the business actually makes the required products in accordance with the plan. Based on:       

Performance Aesthetics Quality Reliability Quantity Production costs Delivery dates

Processes There are many different ways of producing a product. Management must choose the best process, or series of processes. They should consider:       

Available capacity Available skills Type of production Layout of plant and equipment Safety Production costs Maintenance requirements

Production and operations aims to satisfy consumer desires that are already established and so would concentrate its effort on promoting the desirability of the product. The organisation will concentrate on production efficiency and high volumes. In product the business relies on the product ‘selling itself’. The customer will favour those products that offer high quality and performance features. Once the product is created, the consumer just has to be convinced that they need it. There will have to be a substantial selling and promotion effort.

Marketing management – the marketing management team will try and maximize the level of sales by carrying out market research and promoting the goods or services. This includes aspects such as satisfying customer needs, developing products of superior value, setting competitive pricing and promoting products effectively.

Marketing involves identifying or creating a ‘need’ or desire, and then fulfilling it to the satisfaction of the customer. There are some key aspects which a marketing manager of a business needs to look into; 

Identify the needs of the customer, and segment the potential customers according to their needs.

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Input into the design of the products and services that will meet those needs.

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Price of the products and services, taking into account the costs involved, the competitors’ pricing and the customers’ ability to pay.

The 4 mediums used to advertise products   

Television Radio Newspaper

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Computer(browsing online)

Advertising examples        

Door to door sales Billboards Posters Pamphlets Catalogues Brochures Flyers Display

Making the consumer aware of the product          

Sales (e.g. 50% off) Discounts (market days) Buy 1 get 1 free Samples Vehicles in transit Business cards Calendars/desk calendars Sms/mms/social networking Magazines By word of mouth

Financial management – this is concerned with obtaining funds by way of loans, own capital, and using these funds to buy assets such as equipment, machinery and merchandise. The administration of these funds is influenced by strict budgets such as income, capital expenditure and cost budgets. This will keep a record of all money coming in and going out of the business. They have the responsibility for securing finances for future expansion and paying staff and suppliers.

Budgeting and financial control - a budget is a planning tool, based on the finances coming in and the amounts expected to be paid out. Each item of cost is ‘budgeted for, and planned by allocating it as part of the available funds. The aim is to prevent losses by sticking to the budget. A budget is therefore also a controlling tool. Financial reporting relates to the presentation and reporting of financial information. The financial statements that a business will produce are partly determined by the law of that country. Depending on this law and the type of organisation, some of these reports may need to be made available to the public. It means applying general management principles to financial resources of the enterprise.

Scope and elements of financial management 1) Investment decisions – includes in investments of assets 2) Financial decisions - the raising of finance from various resources which will depend upon decision on type of source, period of financing, and cost of financing. 3) Dividend decision - The finance manager has to take a decision with regards to the net profit distribution.

Objectives of financial management 1) To ensure regular and adequate supply of funds to the concern.

2) To ensure adequate returns to the shareholders this will depend upon the earning capacity, market price of the share, expectations of the shareholders.

3) To ensure optimum funds utilization. Once the funds are procured, they should be utilized in maximum possible way at least cost.

4) To ensure safety on investment, i.e., funds should be invested in safe ventures so that adequate rate of return can be achieved.

Functions of financial management 1) Estimation of capital requirements: A finance manager has to make estimations with regards to capital requirements of the company.

2) Determination of capital composition: Once the estimations have been made, the capital structure has to be decided. 3) Choice of sources of funds: For additional funds to be procured, a company has many choices like Issue of shares and debentures, Loans to be taken from banks and financial institutions and Public deposits to be drawn like in form of bonds. 4) Investment of funds: The finance manager has to decide to allocate funds into profitable ventures. 5) Disposal of surplus: The net profits decision has to be made by the finance manager.

6) Management of cash: Finance manager has to make decisions with regards to cash management. 7) Financial controls: The finance manager has not only to plan, procure and utilize the funds but he also has to exercise control over finances.

Human resources management - This involves all decisions which directly affect the people working in the organisation and enabling then organisation to achieve its goals and objectives. Management needs to see employees as the most valuable asset in the organisation. Ensures the business has the best staff for the job and that they are able to work effectively in a safe environment.

Managing the human resources department The manager of the human resources department is responsible for ensuring that department employees are well-versed in their areas of expertise. The various disciplines of human resources require expertise in compensation, benefits, safety, payroll, recruiting and training.

Knowledge of the Laws Managing the human resources department also requires knowledge of federal and state employment and labour laws and regulations that apply to human resources professionals. For example, the human resource manager will designate the HIPAA (Health Insurance Portability and Accountability Act) officer in charge of all medical and health-related records for the workplace.

Interaction with Executive Leadership An effective human resource manager is in constant communication with executive leadership. The human resource department is not a revenue-generating source. Consequently, it is important for an organization’s leaders to understand the return on investment (ROI) in human resources activities as a contribution to the company’s bottom line.

Employee Relations A human resource manager who stays in her office all day will not be effective at building strong relationships with employees. Another function of the human resource manager is to gain the trust and confidence of employees--the best way to establish trust and confidence is through daily interaction with the workforce.

The task of human resource management   

Helping to recruit the most suitable staff. Ensuring the conditions of employment is such that staff will remain in the business. Training of staff so that they become more suitable for the job.

Human resource planning This involves determining the number and quality of future employees. It involves 3 steps: Step 1: Job analysis and job description Job analysis is the process where relevant information is collected about the job. This aims to determine the employee is right for the job. This information is collected by job analyst by observing, interviewing or completing a questionnaire. The information is then put to paper called a job description (a summary of the job).

Step 2: Job specification This involves selecting and identifying the type of employees that suit the job. A job specification highlights the human skills needed for the job and will include items such as training, experience, communication and key responsibilities.

Step 3: HR forecasting and planning Continuous forecasts of the number (quantity) and quality of workers need to be carried out in order to ensure that the human resources supply balances with the human resource demands.

Recruitment The reason why recruitment is done is to ensure that there is a sufficient number of applicants apply for the sufficient amount of vacancies in the firm and that they are able to start when the firm needs them to....