BUSINESS EDUCATION

GRADE 9: Planning and Organizing the Business January 2021

FUNCTIONAL AREAS OF A BUSINESS

Businesses often split their work into different departments or functional areas. Each of these functional
areas will have specific tasks to complete. The main functional areas are:

1. PRODUCTION
2. MARKETING
3. HUMAN RESOURCES/PERSONNEL
4. FINANCE/ACCOUNTS

1. PRODUCTION

The productions department is responsible for making the product or providing the service. It is their
responsibility to ensure that the product or service is of the required quality to satisfy the customer. The
main functional activities carried out by the production department are:

• Production Of Goods Or Services

• Buying Raw Materials
• Control of Quality

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Production of Goods or Services
This involves making the goods or services, choosing the most suitable production method and
distributing finished goods to customers or retailers.

Buying Raw Materials

The productions department will choose suppliers that provide the most cost effective and high-quality
materials.

Control of Quality
The production department selects the best quality methods to ensure that a product or service is of an
acceptable standard.

2. MARKETING

The marketing department is concerned with finding out the needs and wants of potential customers and
promoting the business’s products or services. The main functional activities carried out by the marketing
department are:

• Advertising
• Market Research
• Promotion
• Selling Products
Advertising
Goods and services are often advertised on television or radio to inform customers about products. It is
the job of the marketing department to decide how and when to advertise and to develop advertising
campaigns.

Market Research
To find out if a product or service will be successful a business will use market research. Market research
is the process of gathering information on customers’ needs and wants. This can be done
through questionnaires, observations or interviews.

Promotion
The marketing department will decide which form of promotion would be best suited to the product such
as a percentage discount or buy one get one free.

Selling Products
The marketing department is responsible for increasing sales of a product through correct pricing and
designing attractive packaging.

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 3. HUMAN RESOURCES/PERSONNEL

The human resources department manages the people who work for the organisation. The main functional
activities carried out by the human resources department are:
• Recruitment and Selection
• Staff Training
• Industrial Relations
• Health and Safety

Recruitment and Selection

This is the process of finding the best people to come and work for the business.

Staff Training
It is the responsibility of the human resources department to give staff the training required to enable
them to provide a good quality service to customers. Training will improve staff skills and can increase
quality and profits.

Industrial Relations
This refers to the relationship between the employer and the employee. This includes: working conditions,
grievances and contracts of employment.

Health and Safety

The human resources department needs to ensure that all staff work within the guidelines set out in the
appropriate health and safety legislations.

4. FINANCE/ACCOUNTS

The finance department is responsible for managing the money coming into and going out of the business.
They will deal with all the financial aspects of the business such as paying suppliers, paying staff wages
and receiving payments from customers. The main functional activities carried out by the finance
department are:

• Raising Finance
• Preparing Budgets
• Preparing Final Accounts

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Raising finance
It is the responsibility of the finance department to ensure a business has enough money to pay bills. To
do this they may be required to raise extra finance. This can be done through applying for bank loans or
grants.

Preparing budgets
It is important for a business to plan ahead so they can see how much money is expected to come into and
out of the business. To do this a business uses a budget which is prepared by the finance department.

Preparing final accounts

Final accounts are required by all businesses to see how much profit or loss has been made and what the
business is worth. The final accounts are prepared by the finance department.

See the table below for additional activities performed by each department/functional area.
Functional Area/ Department Functional Responsibilities

Production • Procuring raw materials

• Converting raw materials into finished goods

• Maintaining factory equipment
• Developing quality control measures for the business’s product
• Developing production budgets and cost estimates to pass on to the
finance department
• Maintaining production records
• Maintaining an effective inventory system
• Warehousing finished goods.
Marketing • Conducting market research

• Designing the business’s product

• Developing a price for the product
• Developing sales and promotion strategies for the product
• Distributing the product
• Providing after-sales service or support
• Maintaining good public relations.
Finance/Accounts • Preparing the financial statements for the business

• Making all payments on behalf of the other departments

• Accounting for all revenues received by the business
• Developing and maintaining a payroll system
• Developing budgets for the organisation
Human Resources /Personnel • Recruiting and training employees

• Terminating or firing employees

• Conducting performance evaluations and suggesting employees best
suited for available promotions
• Resolving conflict between management and employees
• Disciplining workers where necessary
• Maintaining proper staff records
• Ensuring that the work environment is safe and healthy for employees.

References
Balliram, R., Budd, P., Emmanuel, E., Guiness, M., Husbands, R., McCloskey, J., & Ragoo Bitu, R.
(2016). Principles of Business for CSEC Examinations. London: Macmillan Publishers Limited.

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