ISE 320:

Engineering
Economy
How a Business Works
March 2015

Objectives
To provide an overview of how a

business works
To review typical organizational
structures, and how engineers fit into
them
To discuss how departments interact
with one another
To discuss information flow for some
common business transactions
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Where to Start?
Starting your own business:
Find something you are passionate about
Is there a market for that product or service? How
will I find customers to let them know what I can
offer?
What do customers want? How much will they pay?
Can I provide it to them at a profit?
Are there competitors? Barriers to entry?
How much start-up capital will I need? Where will I
get it?
Who can advise/help me? Tax, finance, legal,
technology
Will I hire people?
Where will I work? How will I pay the bills while Im
getting this company going?
3

Typical Company Structure

CEO/
President

Sales

Finance

Production

Supply
Chain
(sometimes
)

Engineering
(sometimes
)

Quality

Admin

Human
Resources

IT

Legal

Typical Company Structure

Sets sales strategy; oversees

sales budgets, sales team
performance, compensation;
maintains key customer
relationships

Market research,
competitor analysis,
brand mgmt, advertising
& promotions

Supports
customer; may
expedite orders,
request
Inside
Customer
information from
Sales
Service
customer,
document
complaints
Application
s Engineer
Supports selling
process without
travel.
Take/process
orders,
prepare/follow up
on quotes
5

VP Sales

Marketing

Outside
Sales
Sales
Engineer

Visits customers to
identify/ scope
opportunities and
close deals; travels
frequently

Typical Company Structure

Execute
Execute and
and
report
report on
on day-today-today
financial
day financial
transactions
transactions

Prepare
Prepare budgets
budgets and
and other
other
forward-looking
forward-looking financial
financial
analyses
analyses

Finance
(CFO)

Financial
Reporting
Financial
Analysis
Analyze
Analyze
financial
financial
results
results and
and
help
others
help others in
in
the
the
organization
organization
to
to understand
understand
how
how to
to use
use the
the
info
info

Budgeting
&
Planning

General
Ledger
Accts
Payable
Accts
Receivabl
e
Fixed
Assets

Treasury

Oversees
Oversees financial
financial reporting
reporting
and
analysis;
key
and analysis; key role
role in
in
developing
strategy,
developing strategy,
evaluation
evaluation of
of financial
financial
impact
impact of
of decisions
decisions
Calculate,
Calculate,
review,
review, and
and
analyze
analyze cost
cost of
of
product;
product; ensure
ensure
transactions
transactions
conducted
conducted at
at
proper
cost
proper cost

Cost
Accountin
g

Ensure
Ensure all
all accounting
accounting
transactions
transactions recorded
recorded
properly
properly
Accurately
Accurately record
record vendor
vendor
invoices
and
process
invoices and process vendor
vendor
payments
payments

Manages
Manages cash
cash for
for the
the
business,
business, including
including
day-to-day
day-to-day cash
cash
needs
as
well
needs as well as
as
longer-term
banking
longer-term banking
&
& financing
financing
relationships
relationships

Accurately
Accurately prepare
prepare customer
customer
invoices
invoices and
and record
record customer
customer
payments;
payments; pursue
pursue collection
collection of
of
unpaid
invoices
unpaid invoices
Accurately
Accurately record
record acquisition
acquisition of
of
fixed
assets;
calculate
depreciation
fixed assets; calculate depreciation
expense
expense

Typical Company Structure

Oversees
Oversees daydayto-day
to-day
production
production

Oversees
Oversees day-to-day
day-to-day
production
production operations;
operations;
evaluates
performance;
evaluates performance;
develops
develops strategy
strategy for
for capacity
capacity
utilization
utilization and
and expansion
expansion

VP Production

Production
Mgmt
Production
Control
Production
Supervisor

Mfg /
Process
Engineer
Schedule
Schedule and
and
prioritize
work;
prioritize work;
may
may expedite
expedite
when
when required
required

Maintenanc
e
Design
Design &
& improve
improve
processes;
processes;
document
document work
work
instructions;
instructions; scope
scope
&
& source
source new
new
equipment
equipment

Supervise
Supervise and
and train
train
production
employees
production employees

Maintain
Maintain
equipment,
equipment,
including
including
preventative
preventative
maintenance
maintenance
and
and equipment
equipment
repair.
repair. May
May
perform
perform
machine
machine
changeovers.
changeovers.

Typical Company Structure

Plan for
Sets sourcing strategy;
acquisition of
responsible for inventory
products and
Supply
management; maintains key
services,
Chain
supplier relationships
including
inventory and
equipment
Purchasin
Manages movement of
Logistics
materials: to, from, and
Identify and
g
within production facility
manage potential
suppliers;
Pick, pack, and ship
Shipping/
negotiate
Sourcing
product to customers.
Receiving
contracts and
Receive and put away
close deals; may
product from suppliers.
travel
frequently
Use
sales
Plan, schedule, and
forecasts and
Planners
Traffic
manage movement of
production plans
product outside of
to decide when
production facility.
and how much
Pick and deliver materials
Material
Buyers
inventory to
for production; put away
Handling
purchase
finished goods; conduct
Execute purchase
cycle counts
8
orders; expedite

Typical Company Structure

Designs products,
and new features
of existing
products

Engineering

Design
Engineerin
g

Creates
drawing
s

Drafting

Sets technical strategy;

participates in strategic
planning, sourcing, and new
product development

Applicatio
ns
Engineerin
g

Manages and
updates designs and
drawings; may
participate in sales
process. Usually
creates bill of
material and
production
traveler/router
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Typical Company Structure

Design processes
and methods for
overseeing quality of
results
Design,
Design, document,
document,
and
oversee
and oversee
inspection
inspection criteria
criteria
and
and methods
methods
Design
Design &
&
implement
implement
methods
methods to
to
evaluate
internal
evaluate internal
compliance
compliance with
with
company
policies
company
policies
Oversee
Oversee
compliance
compliance with
with
regulatory
regulatory
requirements,
requirements,
including
including
documentation
documentation and
and
record-keeping.
record-keeping.
Interact
Interact with
with
regulatory
regulatory

Quality

Quality
Assurance
Quality
Engineer
Internal
Audit
Regulator
y

Quality
Control
Incoming
Inspection
In-process
Inspection
Final
Inspection

Design, implement, manage

quality systems; responsible for
understanding and managing
regulatory obligations

Supplier
Quality
Supplier
Quality
Engineer

Evaluate
quality systems
and practices
at suppliers;
likely to travel
a lot

Inspect incoming
materials for
compliance
Inspect materials
during production
Inspect materials
after production is
10
complete

Typical Company Structure

Sets
Sets people-related
people-related
strategy
strategy and
and oversees
oversees
administration
administration of
of
employee
employee care
care

Administratio
n

Human
Resources
Accurately
Accurately
document
document hours
hours
worked
worked and
and
wages
wages earned
earned for
for
payment
payment to
to
employees
employees
Manage
Manage
employee
employee
benefits
benefits and
and
accurate
accurate
transaction
transaction
processing
processing
Manage
Manage process
process
to
find
and
to find and hire
hire
new
new employees
employees
Oversee
Oversee
processes
processes to
to
evaluate
evaluate
employee
employee
performance
performance
Design
Design &
&
implement
implement
compensation
compensation
policies
policies

Informatio
n
Technology

Legal

Payroll

Infrastructure

Benefits
Administratio
n

Software

Talent
Acquisition

Hardware

Performance
Mgmt

Business
Analyst

Compensation

Administrative
Administrative functions
functions vary
vary
greatly
greatly in
in organizational
organizational structure
structure
Administrativ
e Support

Creates,
Creates,
reviews,
reviews,
manages
manages
contracts
contracts and
and
legal issues
Manage
Manage technology
technology legal issues
infrastructure,
infrastructure,
including
including servers,
servers,
security,
security, disaster
disaster
recovery,
Manage
recovery, etc.
etc.
Manage software
software
applications;
applications; plan
plan and
and
execute
upgrades
execute upgrades and
and
implementation
implementation of
of new
new
tools
tools
Manage
Manage hardware;
hardware; plan
plan and
and
execute
upgrades
and
execute upgrades and
implementation
implementation of
of new
new
equipment
equipment

Bridge
Bridge between
between IT
IT and
and
users
of
technology;
help
users of technology; help
people
people use
use technology
technology
more
more effectively
effectively

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