Functional Areas of Business
What you'll learn to do: Identify the primaryfunctional areas within a business and describetheir contribution to the organization
The decisions about how best to use the factors of production to provide
the goods or services of the business require a team of people working in
a variety of jobs. As businesses grow larger and their products and
services become more complex, the number of functional areas within a
business grows. Each functional area makes specific and valuable
contributions to the organization as a whole. In this section we will
explore some of the most common functional areas in a business and how
each contributes to the overall success of the business.
Learning Outcomes
• Identify the primary functional areas within a business
• Identify key people and explain the activities within each
functional area
Introduction
Learning Resource
Functional Areas of Business
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Resource Link: https://leocontent.umgc.edu/content/umuc/tus/hrmn/hrmn495/2225/learning-resource-list/functional-areas-of-business-.html#
Just as different functions in the human body are performed and
regulated by different organs, different functions within a business are
performed and controlled by different parts of the business. One of the
reasons for separating business operations into functional areas is to
allow each to operate within its area of expertise, thus building efficiency
and effectiveness across the business as a whole. The key functional
areas of a business are the following:
• Management
• Operations
• Marketing
• Accounting
• Finance
Management
The primary role of managers in business is to supervise other people’s
performance. Most management activities fall into the following
categories:
• Planning: Managers plan by setting long‐term goals for the business,
as well short‐term strategies needed to execute against those goals.
• Organizing: Managers are responsible for organizing the operations
of a business in the most efficient way, enabling the business to use
its resources effectively.
• Controlling: A large percentage of a manager’s time is spent
controlling the activities within the business to ensure that it’s on
track to achieve its goals. When people or processes stray from the
path, managers are often the first ones to notice and take corrective
action.
• Leading: Managers serve as leaders for the organization, in practical
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as well as symbolic ways. The manager may lead work teams or
groups through a new process or the development of a new product.
The manager may also be seen as the leader of the organization
when it interacts with the community, customers, and suppliers.
Operations
Operations is where inputs (factors of production) are converted to
outputs (goods and services). Operations is like the heart of a business,
pumping out goods and services in a quantity and of a quality that meets
the needs of the customers. The operations manager is responsible for
overseeing the day‐to‐day business operations, which can encompass
everything from ordering raw materials to scheduling workers to produce
tangible goods.
Marketing
Marketing consists of all that a company does to identify customers’
needs and design products and services that meet those needs. The
marketing function also includes promoting goods and services,
determining how the goods and services will be delivered, and developing
a pricing strategy to capture market share while remaining competitive. In
today’s technology‐driven business environment, marketing is also
responsible for building and overseeing a company’s Internet presence
(e.g., the company website, blogs, social media campaigns, etc.). Today,
social media marketing is one of the fastest growing sectors within the
marketing function.
Accounting
Accountants provide managers with information needed to make
decisions about the allocation of company resources. This area is
ultimately responsible for accurately representing the financial
transactions of a business to internal and external parties, government
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agencies, and owners/investors. Financial accountants are primarily
responsible for the preparation of financial statements to help entities
both inside and outside the organization assess the financial strength of
the company. Managerial accountants provide information regarding
costs, budgets, asset allocation, and performance appraisal for internal
use by management for the purpose of decision‐making.
Finance
Although related to accounting, the finance function involves planning
for, obtaining, and managing a company’s funds. Finance managers plan
for both short‐ and long‐term financial capital needs and analyze the
impact that borrowing will have on the financial well‐being of the
business. A company’s finance department answers questions about how
funds should be raised (loans vs. stocks), the long‐term cost of borrowing
funds, and the implications of financing decisions for the long‐term health
of the business.
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Answer the following questions to see how well you
understand the topics covered in this chapter. This short
quiz does not count toward your grade in the class, and you
can retake it as many times as you wish.
Use this quiz to decide whether to study the chapter
further or move on.
Choose the BEST answer.
Question 1
What business function is responsible for making sure that
organizational strategies and goals are aligned with staffing
plans?
operations
management
accounting
Question 2
InfoTech is a computer application firm based in Silicon
Valley and has been responsible for introducing some of
the highest rated applications available for personal
productivity. Two brothers originally founded the company,
but they quickly realized they needed to convert the
Check Your Knowledge
Correct!
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business into a corporation and establish functional areas
within the company to handle various aspects of
operations. The company is now considering expanding
operations by building a production facility in another
country. The Board of Directors has approved this move,
and now it will become the responsibility of which
functional area to secure the necessary funding for the
expansion?
marketing
accounting
finance
Question 3
What function is responsible for ensuring that products and
services, which are produced or provided, meet high quality
standards?
finance
accounting
operations
Licenses and Attributions
Correct!
Correct!
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Introduction to Functional Areas (https://courses.lumenlearning.com
/wmopen‐introbusiness/chapter/functional‐areas/) from Introduction
to Business by Linda Williams and Lumen Learning is available under
a Creative Commons Attribution 4.0 International
(https://creativecommons.org/licenses/by/4.0/) license. UMGC has
modified this work and it is available under the original license.
Functional Areas of Business (https://courses.lumenlearning.com
/wmopen‐introbusiness/chapter/functional‐areas‐of‐business‐2/)
from Introduction to Business by Linda Williams and Lumen Learning is
available under a Creative Commons Attribution 4.0 International
(https://creativecommons.org/licenses/by/4.0/) license. UMGC has
modified this work and it is available under the original license.
© 2023 University of Maryland Global Campus
All links to external sites were verified at the time of publication. UMGC is not responsible for the
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