The Functional Areas of Business (Edexcel IGCSE Business): Revision Note

Functional areas and their roles in business

• Departments are functional areas within a business, and usually every employee is assigned to a specific department

  • A functional area is a group of workers with similar skills and expertise who carries out a specific organisational role

  • Businesses often split their work in this way to improve efficiency with specialists capable of working at a high standard on their allocated tasks

  • These business functions are sometimes outsourced to specialist service providers

    • This can reduce costs and ensure access to advice from specialists who may be expensive to employ directly

Functional areas

Human Resources

• The HR function is responsible for managing the workforce within an organisation and ensuring employee welfare, including

  • Recruitment and selection

  • Training and development

  • Maintaining healthy industrial relations

  • Ensuring compliance with health and safety regulations

Finance

• The Finance department is tasked with managing the organisation’s money, including

  • Recording all incoming and outgoing financial transactions

  • Collecting debts owed to the business

  • Ensuring that bills and salaries are paid on time

  • Setting and maintaining budgets

  • Conducting financial forecasting

  • Managing banking operations

  • Preparing the annual financial report

Marketing

• Marketing focuses on understanding the needs and wants of both existing and potential customers, including

  • Researching the market to plan products that meet consumer demand

  • Organising their distribution

  • Persuading customers to purchase a company’s goods or services

  • Determining pricing tactics that attract and retain customers

Production

• The production function is centred on creating the product or delivering the service that the business offers to customers, including

  • Ensuring the quality of output

  • Sourcing and purchasing raw materials and components

  • Managing the design and testing of new products

  • Inventory management

• Functional areas need to work together effectively to achieve business aims and objectives

Examples of functional areas working together