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Organisation - Business Departments

Author: Jim Riley  Last updated: Sunday 23 September, 2012

A business is normally organised by its functions, e.g. marketing department, accounts department and so on. This is because being grouped together allows the functions to benefit from specialisation and division of labour. This leads to lower unit costs and a greater efficiency. However it can mean that there is departmental rivalry

Larger businesses might have a number of businesses within the whole company. This would be coordinated by a Head Office, where all the major decisions are made.

Other ways of organising the business could be more appropriate for different types of businesses:

Product – the functions are organised around the product – so at a business like ICI, who are the UK’s leading chemical manufacturer, a product manager would have a team of functions who would answer to them, like accounting, marketing and production

Geographical – a hierarchy might be split according to different places that the product is sold into – for instance a business may have a Far Eastern division of its business, which would take into account the different cultural and supply differences of the region

Market – the organisation is based on market segments – so an airline business like British Airways could concentrate on long haul, short haul, holiday makers, business clients and freight

A business whose decision-making comes from one place only is known as a centralised organisation. Normally Head Office will decide on the major elements of strategy, no matter where the manufacturing plants and sales teams are positioned around the country or globe. This means that there are good opportunities for economies of scale.

Other businesses, especially multinationals (see below) will opt for a more decentralised organisation – where the individual businesses within the whole company group, make decisions for themselves. This means that there is more opportunity to react to the changing marketplace (one of the advantages of a small firm). However there is a possibility that these businesses (who may well be in different parts of the world) might be duplicating research or not bargaining in such as strong position as a bigger overall company.

When a business reaches a certain size then it might split into different departments. These departments will specialise, employing people with expertise in these areas.

The main departments in a business might be:

Department

Role

Accounts

Provides a detailed record of the money coming in and going out of the business and prepares accounts as a basis for financial decisions

Human Resources or Personnel

Deals with all the recruitment, training, health and safety and pay negotiations with unions/workers

Production

Makes sure that the production plans are met on time and products of the right quality are produced

Purchasing

Buys all the raw materials and goods required for production

Sales and marketing

Sales function deals with all aspects of selling to customers; the marketing function carries out marketing research, organises advertising and product promotion



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Revision quizzes for business students

Starting a Business

Sources of Finance for a Startup
Franchising
Cash Flow Forecasting for a Startup
Creating & Protecting Business Ideas
Startups and Understanding the Market
Market Research for a Startup
Locating the Startup Business
Choosing a Legal Structure for a Startup
Employing People in a Startup
Generating and Protecting a Business Idea
Using Breakeven in Decision-Making

Finance

Revenues
Breakeven Basics
Costs, Revenues and Profits
Business Costs
Using Budgets
Using Breakeven in Decision-Making
Investment Appraisal Basics
Financial Strategies
Measuring and Improving Profit
Improving Cash Flow
Working Capital
Balance Sheet
Income Statement
Financial Efficiency Ratios
Profitability Ratios and ROCE
Liquidity Ratios
Gearing

Marketing

Competition
Products & Brands
Place (Distribution)
Promotion
Pricing
Price Elasticity of Demand

Business Organisation

Basics of Business Growth
Business Activities
Legal Structure Basics
Franchising
Sole Traders and Partnerships
Limited Companies
Generating and Protecting a Business Idea
Organisational Structures

People

Working in Teams
Communication Basics
Communication Methods
Workforce Planning
Recruitment, Selection & Training
Employee Motivation
Organisational Structures

Operations

Operational Objectives
Critical Path Analysis
Scale and Resource Mix
Lean Production
Capacity Management
Customer Service Basics
Managing Quality
Operational Decision-making
Using Technology in Operations
Working with Suppliers

Economic Environment

Economic Sectors
Government Spending & Taxation
Inflation
Unemployment
Interest Rates & Monetary Policy

Business Strategy

Leadership styles
Business Culture
Change Management







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