Applied Business †Strand B Theory Essay

Functional Areas within the Business I am going to describe the work carried out by at least three functional areas of Asda, I will explain how these areas work together to support the business activity and I will evaluate how effectively these functional areas work together to achieve the aims and objectives of the business. The areas I am going to investigate are finance, IT and marketing and sales. There are 7 main functional areas within businesses customer services, administration and IT support, marketing and sales, human resources, research and development, finance and operations. However not all businesses use these areas. Sole traders might do every function by themselves and some businesses may use only a few functional areas or make sure that employees are able to work in each functional area In large businesses people work together in these separate functional areas. The areas concentrate on and carry out certain functions. All functional areas link together to achieve aims and objectives. Good communication and co-operation is needed. Functional areas can be organised by charts such as the one below. Fig. 1 Customer service Customer service is concerned with customer relationships. Their activity is to â€Å"identify and satisfy customer needs†. They provide information, credit facilities, after sales service, deliver goods and give advice. Examples of this include, if a person has a problem with a new product such as a washing machine, then they will phone up customer services and someone will talk them through what they have done so that they can try to correct the mistake such as not switching the washing machine on. Good customer services mean happy customers. An example of good customer services is a shop e.g. furniture. If a person bought a piece of furniture then they could get customer services in the form of the retailer suggesting other products that could be better suited to the job which the consumers want the product for. The retailer could also offer for the furniture to be delivered or installed where the customer wants it. Bad customer services annoy people and make them not want to use the company again. An example of bad customer services is if you order a phone and it doesn’t turn up on time. You then ring customer services and have to spend about 2 hours of your time and your phone bill on something that should be a simple process. Customer services is very important as if a company was only focused on selling goods or services, then people would not feel comfortable or happy with the business and so would not want to use it, the business might then loose customers. The times 100 website tells us â€Å"High quality customer service helps to create customer loyalty†. The website also tells us that customers are not only interested in buying a product, they are also interested in the services that they receive when they enter the shop such as a nice welcome and good refund polices for faulty products. Customer service also gives advice on what a customer could do if they had a problem. Companies such as Portakabin have mottos that focus purely on customer service. Portakabin’s motto is ‘Quality – this time, next time, every time’ they apply this to both products and customer services. Businesses know that if a customer gets a good service that seems to be less of a ‘chore’ than usual then they will be more likely to return and use the business again. http://en.wikipedia.org/wiki/Customer_service tells us â€Å"Customer service is the provision of service to customers before, during and after a purchase.† The GCSE Applied Business FOR OCR book tells us that â€Å"customer service is all about providing this positive experience†. Customer services are expected to provide information, give advice, provide credit facilities, deliver goods and provide an after sales service. As information required can vary from customer to customer, it is unlikely that a customer service assistant will know the answer to every question or query that a customer could ask. However, this is not drastically important, whats more important is that the query is dealt with well, this means that there is a â€Å"friendly smile† and â€Å"a promise to find out quickly† as the GCSE Applied Business FOR OCR book tells us.advice is also important as the advice is personal to the customer, wheras information is personal to the product. Credit means that items are received by the customer immediately but they pay for it over a set time, maybe several months or years. The GCSE Applied Business FOR OCR book tells us â€Å"customers often require credit when they buy an expensive item such as a car†. http://www.bized.co.uk/cgi-bin/level2/typein.pl?module=busactivityfunctional12 Administration and IT support Administration and IT support are concerned with clerical work, such as mail and record keeping, health and safety, security, cleaning and maintenance and provide support for software applications, electronic communications and electronic transactions. For example, if a person within the business accidentally downloads a virus, then admin and ICT will need to know and they will then be able to sort out the problem. If something like this goes unchecked for too long then there is a chance that the virus could spread and then the whole network could fail. This could mean major problems for the business. IT is used in businesses in many ways. Such as: * To Store information about products on databases * To make calculations such as working out the profit using spreadsheets. * To provide advertising using computer graphics packages. * To process information and other document’s using word processing programs * To communicate internally by fax, e-mail and other methods using ICT * To create presentations * To create websites to promote the business and provide information about the business. It is very useful within businesses as it saves time. For example when trying to find a document, if it was on paper and not a computer then a person may need to spend a lot of time searching through piles of paper just to find one document. Marketing and sales Marketing and sales are concerned with customer needs. They do market research, promotion and sales. So they have to research into what customers want such as if a customer wants a futuristic computer screen and power pack then marketing and sales would have to see whether such a computer had been created yet, and if not then talk to someone about creating one. They are also responsible for promoting new products and making people want to buy them. They have to differentiate the product to make it more attractive to customers, they have to skim, maximise, premium price, penetrate, capture & distribute and they have to analyse the product lifecycles. Marketing and sales use the SWOT analysis to analyse the existing position. This presents the: Strengths Weaknesses Market Opportunities External Threats The market can be segmented so that businesses can concentrate on one segment only. There is a big difference between marketing and sales as marketing is where you are trying to get the best products for your customers whereas sales is where you are trying to convince your customer that you already have the best products and where you are selling these products. Marketing the segment can help the marketing department understand its market better. Sales people have to convince their customers that the product that they are selling is the best around. The marketing department of, for example Cadbury’s, may carry out research to find out what flavour chocolate is most desired among their customers. They will ask customers which products they would like to be improved and which products they would like to see developed. E.g. Cadbury’s shortcake biscuit chocolate could be improved to make them crunchier and a new product with orange chocolate in it could be developed. Market research can be carried out by using primary or secondary research methods, or both. Primary research is where data and information is collected first hand. This ensures that the information is original and up-to-date. However, this can be time consuming and costly. Secondary research is where data and information that already exists is used. This data is usually free, and easily available. When a business has market research, they will decide the â€Å"marketing mix† for the product or service. The marketing mix, consists of product, price, promotion and place. Also known as the 4Ps. Businesses must decide what the product or service should be, including whether it needs to be packaged, what the customer wants and whether an after sales package is required. They must decide how much the product should cost. Where the product or service is promoted is also important, as-well as how it is promoted. Where the product is sold is also an issue, the product must be in a suitable location which is also easy to get transportation to. The use of the 4Ps can increase sales, if used well and correctly. It is likely that all marketing mixes will be slightly different and many factors can influence this. The product and customers are just two of these factors. Sales staff may be employed by businesses which will not only rely on promotion and advertising, to sell the product or service. Sales staff are employed to make contact with potential customers and try to sell products. Human resources Human resources are concerned with health and safety, recruitment, retention, dismissal, working conditions, training, development and promotion, employee organisation and union. This includes legal rights and responsibilities of employer and employees. So they have to hire and fire staff, make sure that staffs are happy and retained and make sure that their working conditions are satisfactory. They are in charge of training new staff and developing their skills and promoting able staff and responsible for managing all of the people who work within the business. If legal action is taken in the name of an employee, then human resources are also responsible for that along with organising employee unions so that workers can have their say. The human resources department can also be called personnel. Human resources are in charge or recruitment and have to ensure that vacancies are filled to the best o their ability, the best and most able workers are employed this means that human resources has recruitment procedures for trained staff to follow in order to recruit the most appropriate workers. Human resources are also in charge of retention which means that they are in charge of keeping staff, if they do not retain good staff then they will have to hire and train another person, this takes time and money and so it is very important that human resources keeps employees happy. Human resources are also in charge of dismissal; this means that they are in charge of monitoring workers and dismissing the ones, which are not working efficiently. Businesses usually provide an induction programme fair terms and conditions of employment, good working conditions and appraisal interviews in which employees can talk â€Å"to their managers about their performance and future prospects†. Human resources also need to ensure that physical working conditions are to a standard, which workers accept. If there is a problem with their environment and the workers are not happy, then it is likely that they will not be working to the best of their ability. Working conditions also relate to job content, which means what the job includes, promotion prospects, training opportunities and welfare policies, which include loans and medical checks. Working conditions must be maintained otherwise workers will become unhappy, which could cost the company a lot of money, especially if lots of workers decide to leave the business. Human resources also need to ensure that workers are trained suitably for their jobs. The human resources department may have a training officer or a training section. Human resources will have to keep staff training records, monitor the training budget and as the GCSE Applied Business FOR OCR book tells us, they will be responsible for â€Å"overseeing the procedures for applying for training†. Some workers may wish to develop their skills, this is usually called ‘staff development’ as opposed to ‘staff training’ because the staff are not learning new skills but developing their present skills. Companies may pay for activities that assist staff development and these may be run in the workplace. Staff may be keen to improve their abilities and skills because this may lead to a promotion and better job prospects. Human resources will also oversee promotion prospects, and will decide whether or not a worker is good enough or a promotion. Human resources will also be associated with trade unions and employee organisations. The GCSE Applied Business FOR OCR book tells us that senior members of human resources may have to â€Å"negotiate with trade unions on behalf of management.† Human resources often have to supply information on health and safety issues, and ensure that the Health and Safety at Work Act is being followed and used correctly. Research and development Research and development are concerned with developing new goods and services and updating old ones. If a person comes up with a new and good idea then research and development are in charge of making sure that that idea is looked into. If scientific or technological developments occur then there may be new products developed. A change in ‘customer buying behaviour’ can also cause this to happen. So if marketing and sales come to them with a customers query about futuristic computers then they become in charge of that. Research and development have to work with designers to design and produce good quality and good value for money products to entice customers. Research and development use many different methods of research to find out what customers or potential customers want. They may do surveys, questionnaires, and Internet research and could obtain either primary or secondary research. A lot of the time it will be of more use to the company to obtain primary research as then the company will know how up to date the research is. The company will also know, with more certainty, that the research is reliable. Finance Finance are concerned with money and future plans, preparing accounts, such as invoices, management accounts, financial accounts for shareholders and inland revenue. They are also concerned with preparing wages and salaries, obtaining capital and resources, such as money for expansion and to pay for resources such as equipment and materials. Finance is sometimes considered as the most important functional area within a business. Finance is needed at all points in a businesses life as when they are starting up they will need to buy assets. When they are â€Å"up and running† they will need finance to determine that they are breaking even, this is to say that they must ensure that the money coming in (the input) is matching the money going out (the output). It is important that businesses break even otherwise they will make a loss and can even go into debt. Finance is also important for growing businesses, as they will need to buy more assets and either break-even or make a prof it. This will cause them to expand and grow. Operations Operations are concerned with the main business activities. They obtain and convert resources of the business into goods or services. They make decisions such as what to do with land, buildings, material, and jobs for workers and buying new equipment. In a company such as Argos operations would include processing a persons order; however in a company such as Gillette, operations might include making a batch of razors. The use of IT The use of IT relates to all functional areas because of: * Electronic communications e.g. Email * Data Sharing e.g. Databases * Security systems e.g. virus protections * External communications e.g. Internet * Online support for customers e.g. Order tracking * Electronic Transactions e.g. EFT Functional variations No two businesses are the same. Functions will vary because of the: * Size and scale of the business * Activities of the business * Types of customers * Needs of customers * Preferences of owners