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


Learning Resource

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Resource Link:

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


The primary role of managers in business is to supervise other people’s

performance. Most management activities fall into the following


• 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


• 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 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 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.


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.


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





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


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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





Question 3

What function is responsible for ensuring that products and

services, which are produced or provided, meet high quality





Licenses and Attributions



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Introduction to Functional Areas (

/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

( license. UMGC has

modified this work and it is available under the original license.

Functional Areas of Business (


from Introduction to Business by Linda Williams and Lumen Learning is

available under a Creative Commons Attribution 4.0 International

( 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

validity or integrity of information located at external sites.

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