• Each functional area has its purpose for
achieving certain goals by performing
MGMT2006
Functional Areas
Functional Areas
• The functional areas in most organizations
include application systems to assist in:
– sales and marketing,
– manufacturing and production,
– financing and accounting as well as
– human resource management.
specific tasks.
• The output at each level is important for
input at the next level as the information
moves through the business from the
operational, tactical to the strategic level.
Sales and Marketing Systems
• The major functions include:
– monitor trends affecting new products and
sales opportunities, support planning for new
products and services, and monitor the
performance of competitors.
• Major application systems include:
– sales-order information systems, market
research systems, and even pricing systems.
1
 Manufacturing and
Sales and Marketing Systems
Production Systems
• Major functions include:
SYSTEM DESCRIPTION ORGANIZAT Flow of – scheduling, purchasing, shipping, receiving,
IONAL informat and engineering tasks.
LEVEL ion • Major application systems include:
Sales trend Prepare 3-year Strategic ^
forecasting sales forecasts | • materials resource planning systems
Pricing Establish prices Tactical /
(MRP), purchase order control systems,
|
analysis for products Manageme engineering systems, and quality control
and services nt | systems.
Order Enter, process, Operational
processing and track |
orders

Manufacturing and Production Manufacturing and Production

Systems Systems
SYSTEM DESCRIPTION ORGANIZATIONAL Flow of
LEVEL information

Facilities location Decide where to Strategic ^

locate new |
production |
facilities |
Production Decide when and Tactical/Management |
planning how many |
products should |
be produced |
|
Machine control Control the actions of Operational |
machines and
equipment

2
 Financing and
Financing and Accounting Systems
Accounting Systems
• Major functions include:
– budgeting, general ledger, billing, and cost SYSTEM DESCRIPTION ORGANIZATI Flow of
accounting. ONAL information
• Major application systems include: LEVEL

– general ledger, accounts receivable, accounts Profit Plans long-term Strategic ^

payable, and budgeting. planning profits |
Budgeting Prepares short- Tactical |
term budgets / Management |
|
Accounts Tracks money Operational
receivable owed the firm

Human Resource Systems Human Resource Systems

• Major functions include:
• personnel records, benefits,
compensation, labour
relations, and training.
• Major application systems
include:
– payroll, employee records,
benefit systems, career path
systems, and personnel training
systems.

3
 Human Resource
Business Processes
Systems

SYSTEM DESCRIPTION ORGANIZATIONAL Flow of • As you review the organizational levels,

LEVEL information
Human resources Plans the long-term Strategic ^
management groups and main functional
planning labor force needs | areas in any business, you should
of the |
organization | remember that all are based on the
|
Compensation
analysis
Monitors the range
and distribution
Tactical/Management
| business process that drives the profits
|
of employee
|
and staff and inner working of that
wages, salaries,
and benefits business.
Training and Tracks employee Operational
development training, skills,
and performance
appraisals

Examples of Business
Business processes
Processes
• It is the business process that establishes Functional Area Examples of business processes
Sales and marketing Identifying customers, creating customer
the flow of material, information, and awareness, selling products and services
knowledge as interrelated sets of Manufacturing and production Assembling product, checking quality,
activities. producing bills of materials

• Also, for each business, it is the process Finance & accounting Paying creditors, creating financial
statements, managing cash accounts
that creates unique ways to coordinate
Human resources Hiring employees, evaluating performance,
work, information, and knowledge and is enrolling employees in benefits plans
the backbone for methods in which
management chooses to coordinate that
work.

4
 Cross-functional business
processes
• Although the development of competitive products and
services in the business process are very important in
driving a business, cross-functional business processes
are even more effective.
• Many traditional companies have individual departments
of functional areas that are solely responsible for specific
functions. However, cross-functional business processes
go beyond the traditional boundaries among the sales,
marketing, manufacturing, and research and
development areas.
Wastage
• Finally, as in most businesses, processing
can incur wastage.
• This can be seen through a number of
ways, such as the in the elements of the
work system, or in the reports produced by
management at each level.
Cross-functional business
processes
• The concept is to group employees from different
functional specialties to complete specific sections of
work.
• Examples include using one employee to take an
application for an insurance policy from a potential client
through every step in the process, to the delivering of the
policy to the client. Another example would be using a
core group of employees in an order fulfillment process
where customers deal with one customer service
representative until the order is delivered to the
customer.
Wastage
Some examples of tangible and intangible forms of waste
in business processes include:
• defects in products that cannot now be sold,
• excess good produced which cannot be used,
• too early purchase of goods that now require storage
while waiting for processing or consumption,
• unnecessary processing or movement of people, or
both
• unnecessary goods being transported, and
• time spent waiting or idle until processing starts.