This article provides information about the Important Functions of Business:
The various functions of business can be grouped into the following broad categories:
1. Production Function;
2. Marketing Function;
3. Finance Function;
4. Human Resource Function;
5. Management Information Function;
6. Innovation (Research & Development).
1. Production function:
Production is the creation of goods and services with the help of certain processes. The production of goods depends essentially on the organisation of men, money, materials, and facilities into a smoothly operating business. In modern organisations, production is highly organised, mechanized, and specialised mass production, and, therefore, its overall charge is entrusted to the Production Manager.
A production manager has four basic responsibilities in this regard : (i) to ensure the production of goods and services in specified quantities, (ii) to meet the specified time schedule or delivery dates, (iii) to fulfill the quantity requirements, and (iv) to perform all production operations at the minimum cost.
In order to fulfill these responsibilities, the production manager has to perform a number of functions, such as production planning, production engineering (concerned with design of tools, jigs, and installation or equipment), plant layout, plant building, materials handling, purchasing, inventory management, work improvement and work measurement, production control, and the maintenance of physical environment of production.
2. Marketing function:
Marketing is the process of getting goods and services into the hands of the consumer with a view to satisfying the needs and desires of consumers and producers. In other words, the marketing function creates a process through which producers and consumers are brought together in an exchange relationship and transfer of ownership takes place.
For this, the marketing manager must make judicious decisions regarding 4 P’s: (i) product (decisions about new product development, packaging, branding, etc.); (ii) physical distribution (decisions about marketing channels, and policies and procedures relating to warehousing, transportation, etc.); (iii) promotion (involving advertising, salesmanship, sales promotion, and publicity); and (iv) pricing (policies and procedures relating to the setting up of profitable prices).
3. Finance function:
Finance function of business is basically responsible for three decisions and their proper implementation, viz., (i) investment decisions (financial planning, capital budgeting, etc.) (ii) Financial decisions (capital structure—fixed and working; short and long-term and (iii) dividend decisions.
Business maintains relationship with financial markets including institutions and major shareholders and also takes care of other concerns such as share buybacks, capital raising sources of borrowings and risk management.
4. Human Resource (HR) function:
The HR function deals with the human side of business. It is concerned with increasing the effectiveness of human performance in any organisation. Specifically stated, the HR function aims at obtaining arid maintaining a capable and effective workforce, motivating the employees individually and in groups to contribute their maximum to the fulfilment of organisational goals.
In order to accomplish the goals of dynamic HR management, the HR manager has to undertake the following functions : (i) selection—determination of manpower requirements, job analysis, nature and sources of recruitment, employee selection, and induction and follow-up; (ii) training—human resource development; (iii) promotions and transfers, (iv) employee compensation—wage and salary administration; (v) employee involvement and welfare activities; and (vi) industrial relations—industrial discipline, industrial unrest, trade unionism, and workers’ participation in management. For the accomplishment of these functions, the personnel department renders specialised services.
5. Information function:
Like production, marketing, finance, and human resource, the information function is equally important in a modern business. It is being increasingly recognised that the modern business cannot be managed without the assistance of efficient information function. The information function is basically concerned with records.
The net result of the preparation of records is the generation of a mass of “information”, and therefore, the purpose of information function is to collect, generate, and communicate, in clearly and easily intelligible form the information to all those who need it, especially to executives for purposes of decision making and policy formulation.
Thus, information cell acts as a storehouse of valuable information and real brain behind every activity of a business concern. The responsibility of performing this function should be entrusted to the information manager in the organisation because information function is a specialist function requiring an expert knowledge and technical skill in this area of the operation. The scope of information function in a modern business is very wide.
The information manager is generally burdened with the following three broad functions: (i) information function (receiving and collecting, recording and preserving, arranging and analysing, and providing information); (ii) operational function (such as systems and procedures, records management, etc.); and (iii) public relations function.
“An innovation is the implementation of a new or significantly improved product (good or service), or process, a new marketing method, or a new organisation method in business practice, workplace organisation or external relations.” Thus, innovation, which means creativity as well, is more of a philosophy and the entire business function needs to adopt it.
Here in terms of new product development we are talking about Research and Development. In this age of increasing rivalry among competing firms, the importance of innovation is hardly exaggerating. Normally businesses innovate through product or process.
Innovation often is stimulated by creative thinking on the part of people who are willing to think ‘outside the box’.
The above description clearly explains that these functions of business are (1) basic in nature, and (2) mutually dependent. Each has a separate objective and should be so organised and performed that it contributes to the realisation of the objectives of the other. This will ultimately help realise the overall objectives of the business. This process of one function realising its own objectives and also contributing to other’ objectives is known as the ‘End-means Chain’.