A successful business concept develops with functional areas that concentrate on different domains of the business. Based on the requirement of the business processes, skills and tasks, the functional areas can be different from business to business. Some basic functional areas such as finance and marketing are common to almost all types of businesses.
When starting a business or continuing a business, the management can implement new functional areas based on the requirement of the business. However, it is important to implement these functions based on the business process and the nature of the business.
There are five main functional areas that can be identified. However, these are not the only functional areas but the most commonly identified business functions regardless of the business industry.
1. Human resources
Unless the business operates as a single-person business, it needs human resources to maintain the business process. Human resources are considered one of the most important assets in any business organization. Human resources functional areas can include assigned staff to manage employees and the policies of the organization.
Human resources functions can be formally structured or informal. However, it should ensure consistency and clarity of communicating organizational policies, standards, and objectives to the staff. Apart from that, continuous communication should be maintained with the employees and their feedback should be obtained to ensure employee satisfaction and retention with the organization.
Apart from that, encouraging employees and providing them with the necessary training and development opportunities are highly important. The training and development can be related to the jobs they are assigned to or it can be related to their personal development.
2. Strategy
This is considered the ‘brain’ of any business organization. Strategies are long-term business decisions made by the organization in order to achieve the set goals and objectives. It explains how the goals and objectives will be achieved through business functions and how, why, and when the vision and mission will be accomplished by the business at the end.
Strategies should be able to analyze the competitive business environment and determine the current and future opportunities for the business and how these opportunities should be used to take maximum advantages from them. Apart from that, strategies should also be able to identify the weaknesses and the threats that the business may face and take necessary actions to minimize or eliminate the adverse impact from those factors on the business process.
Conducting analyses such as SWOT analysis, PESTEL analysis, and Porter’s five forces analysis may be helpful for the businesses to identify and foresee the change requirements to the business. It will also be helpful for the business to differentiate the product from the competition to achieve a competitive advantage in the target market.
3. Finance
Finance is considered a business function that is necessary for all businesses regardless of the industry they are operating. It is important because most businesses require loans and investments when starting up the business as well as operating. Since finance plays a key role in business functions, it is important to maintain proper financial records all the time to measure the success of the organization.
the financial records should be accurate, realistic and should be able to use for future finance forecasts. The finance functional area should be able to form a picture of potential revenue and expenditure through the past financial data which will help for the management decisions about the business processes.
4. Marketing
Marketing is an essential part of communicating the product details to the target market. Since marketing and sales activities directly help to gain revenue, the marketing function should have a clear understanding of the potential customers and the target market that is most suitable for the product or service.
Most new businesses use an ‘outside-in’ marketing approach to fully understand the customers, their behavior, preferences, and expectations in order to provide a solution for their unmet needs through the product or service.
Apart from that, the marketing functional area has the responsibility of identifying the best method of communicating the product details to the customer while creating a positive impression on the customer about purchasing the product.
5. Operations
Operations business function in most organizations not only includes the equipment used but also the business processes. From supply chain management to ensuring customer satisfaction, there are many processes involved in providing the best possible product or service to the customer.
The smooth flow of all these operations should be monitored and the errors should be rectified at the initial stage. That will help to improve the quality and the productivity of the business operation and it will also help to improve the profits of the organization.