Business Functions (PDF)
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This learning material introduces the six core functions of business: Human Resources (Cultivate), Strategy (Contemplate), Information Management (Compile), Operations (Control), Marketing (Connect), and Finance/Accounting (Calculate). It details the activities within each function, and how they work together.
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1-1 What is Business? 1-1 Lesson Text What is Business? In this lesson we are going to talk about the 6Cs. Not the 6Cs of nursing (care, compassion, courage, communication, commitment, and competence), and not the 6Cs for general education (critical thinking, collaboration, communicat...
1-1 What is Business? 1-1 Lesson Text What is Business? In this lesson we are going to talk about the 6Cs. Not the 6Cs of nursing (care, compassion, courage, communication, commitment, and competence), and not the 6Cs for general education (critical thinking, collaboration, communication, creativity, citizenship, and character). No, we are going to talk about the 6Cs of business. o what are the 6Cs of business? Well if you were to google them, you wouldn’t find S them. We made them up as a way to remember the six functions of business. And so our 6Cs are: Cultivate, Contemplate, Compile, Control, Connect, and Calculate. ut first, what is business? Wellbusinessmeans afor-profit or non-profit organization B involved in commercial, industrial, or professional commerce. In that definition, industrial means anything manufactured, from cars to software; and commercial simply means the pursuit of a profit margin, whether by selling industrial goods, making a commercial loan, or cutting grass; and professional refers to customized, knowledge-based services provided for a fee, like a tax accountant or lawyer. k, now we know what business is, but what does business do? Well, business is about O people managing business functions. So now we will match our 6Cs with the terms that are more commonly used to describe business functions: ultivate – Human Resources C Contemplate – Strategy Compile – Information Management Control – Operations Connect – Marketing Calculate – Finance/Accounting What activities are part of the six business functions? ow you might be thinking, business has a lot more than six functions, doesn’t it? Like N what about manufacturing, or new product development, or promotion? Well business does indeed have many more activities involved with it, but they are all subsets of these six functions. For example, manufacturing is a function of operations, and promotion is one of the eight functions of marketing. Product/service management is also a function of marketing and is all about improving existing products and developing new products in order to meet customer demands. o with all that said, business is about managing these six functions: Human S Resources, Strategy, Information, Operations, Marketing, and Finance/Accounting. o be sure, this lesson intends to give a brief overview of the six business functions. We T will cover each one in greater detail in other lessons. What is the Human Resource (HR) Function? First, let’s talk about people. We used the word Cultivate to describe Human Resources. Human Resourcesrefers to the people assets who workfor an organization, and the usiness function responsible for recruiting, hiring, onboarding, training, evaluating, and b terminating employees. Business is all about people. ure, cool products are very helpful, but people are the ones who manage the other five S business functions. Business starts with people, and great companies cultivate, serve and develop their people. Dreams and visions and missions and strategies all come from people. What is the Strategy Function? peaking of strategy, Contemplate is the next word in our 6Cs – we use it to describe S the business function Strategy. To better understand strategy though, first let’s discuss mission, which means a company's purpose; its reasonfor being; the problem it is solving. It keeps the organization on the same page, focused on the journey to achieving its mission. Great companies are anchored in their mission, which is what informs everything else, including strategy. Strategy is a route or plan of action designed to achieve certain goals and objectives. nglish writer Lewis Carroll said, “If you don't know where you are going, any road will E get you there.” So companies contemplate their mission, and then they use strategy to help achieve their goals and objectives. What is the Information Management function? ext is Compile – that is the word we are using to describeInformation Management, N which is a business function that involves people, processes, and systems that collect, organize, store and secure relevant data and information, and makes it accessible and useful for making informed decisions. And these days, information and technology go hand in hand. Former U.S. President Ronald Reagan said, “Information is the oxygen of the modern age.” And Satya Nadella said “Information technology is at the core of how you do your business and how your business model itself evolves.” Great companies use technology to gather and compile and analyze data in real-time in order to make informed decisions. The Operations Function ext is Control, representing the business function called Operations.Operationsis the N daily functioning of an organization, managing the inputs and outputs, and includes manufacturing, purchasing, and logistics. hink about the engine that runs the car – that’s operations. Operations controls the T moving pieces and parts of a business. And Operations has its own functions, like manufacturing, that it’s responsible for. What is the Marketing Function? k, then we get to Connect, our word for Marketing.Marketingis the enterprise and O pursuit of ideation, creation, communication, and delivery of profitable products and services to targeted customers for their benefit and for the benefit of society as a whole. Marketing is all about connecting a business to its target market. And marketing has its own functions, eight functions actually, including the famous 4Ps that live at the heart of marketing strategy. What is the Finance/Accounting Function? astly, we arrive at Calculate, our word for Finance/Accounting. Finance and Accounting L are actually two different disciplines. But they work together.Accountingis the process of recording, maintaining, and reporting an organization’s financial transactions and records. AndFinancefocuses on the management ofthe assets, liabilities, equity, and cash flow of an organization, financial analysis like ROI and ROE, and financial planning of future growth. (We will cover ROI, ROE, and other financial measures in other lessons). So let’s tie all six business functions together! et’s say you love making candles, it’s your passion. So you already have your people, L or Human Resources, in place – you! If you inspire others to join you, make sure you c ultivateyour teammates by training and providing them all the tools necessary to be successful. nd let’s say you arecontemplatinga way to makeeco-friendly candles. So your A mission might be to “provide clean scents for the senses, one candle at a time." nd then the business functions of Strategy, Information Management, and Marketing A work together tocompileinformation in order to betterunderstand how toconnectwith your target market. nd also using Marketing and Information Management, you contemplate a Strategy A whereby you decide, in order to compete with other candle makers, to sell your candles online through your website and offer same day delivery. Then Operations is the control center and ensures qualitycontrolduring manufacturingand distribution. And as you make sales, you use the Accounting function to record and calculate sales transactions. nd through Finance, youcalculatehow much cash is needed to continue funding A operations. As you can see, all six business functions work together. 1-1 Glossary Glossary: 1. A ccounting: The process of recording, maintaining, and reporting an organization’s financial transactions and records. 2. Business: A for-profit or non-profit organization involved in commercial, industrial, or professional commerce. 3. Finance: Focuses on the management of the assets, liabilities, equity, and cash flow of an organization, financial analysis like ROI and ROE, and financial planning of future growth. 4. Human Resources: Refers to the people assets who work for an organization, and the business function responsible for recruiting, hiring, onboarding, training, evaluating, and terminating employees. 5. Information Management: A business function that involves people, processes, and systems that collect, organize, store and secure relevant data and information, and makes it accessible and useful for making informed decisions. 6. Management: Planning, organizing, staffing, controlling and leading people, processes, and assets in order to achieve a goal or task in the best way possible. 7. Marketing: The enterprise and pursuit of ideation, creation, communication, and delivery of profitable products and services to targeted customers for their benefit and for the benefit of society as a whole. 8. Mission: A company's purpose; its reason for being; the problem it is solving. 9. Operations: The daily functioning of an organization, managing the inputs and outputs, and includes manufacturing, purchasing, and logistics. 10.Return on Equity (ROE): ROE is a measure of a company’s financial performance, calculated as net income divided by total shareholder’s equity. 11.Return on Investment (ROI): ROI measures the gain or loss generated on an investment, compared to the amount of money invested; ROI is usually expressed as a percentage. 12.Strategy: A route or plan of action designed to achieve certain goals and objectives. 13.Tactic: A specific procedure or action used to support strategy, in order to achieve goals and objectives. 14.Vision: An aspirational view of the future, that if the company is successful in accomplishing its mission, the company and/or world might look a certain way. 1-1 Glossary Quiz uman Resources H Refers to the people assets who work for an organization, and the business function responsible for recruiting, hiring, onboarding, training, evaluating, and terminating employees. Accounting The process of recording, maintaining, and reporting an organization’s financial transactions and records. Management Planning, organizing, staffing, controlling, and leading people, processes, and assets in order to achieve a goal or task in the best way possible. Strategy A route or plan of action designed to achieve certain goals and objectives. Business A for-profit or non-profit organization involved in commercial, industrial, or professional commerce. Return on Equity (ROE) ROE is a measure of a company’s financial performance, calculated as net income divided by total shareholder’s equity. Marketing The enterprise and pursuit of ideation, creation, communication, and delivery of profitable products and services to targeted customers for their benefit and for the benefit of society as a whole. Information Management A business function that involves people, processes, and systems that collect, organize, store, and secure relevant data and information, and makes it accessible and useful for making informed decisions. Mission A company's purpose; its reason for being; the problem it is solving. Finance Focuses on the management of the assets, liabilities, equity, and cash flow of an organization, financial analysis like ROI and ROE, and financial planning of future growth. eturn on Investment (ROI) R ROI measures the gain or loss generated on an investment, compared to the amount of money invested; ROI is usually expressed as a percentage. Tactic A specific procedure or action used to support strategy, in order to achieve goals and objectives. Operations The daily functioning of an organization, managing the inputs and outputs, and includes manufacturing, purchasing, and logistics. Vision An aspirational view of the future, that if the company is successful in accomplishing its mission, the company and/or world might look a certain way. 1-1 Lesson Quiz . Complete the outline with the correct term. 1 The Six Functions of Business: i. Human Resources ii. Strategy iii. Information Management iv. ____________ v. Marketing vi. Finance/Accounting Answer: A (Operations) . What is the definition of business? 2 Answer: B (A for-profit or non-profit organization involved in commercial, industrial, or professional commerce.) . Complete the statement with the best term. 3 Business is about ___________ managing business functions. Answer: C (people) . Business means a for-profit or non-profit organization involved in commercial, industrial, or 4 professional commerce. What is the meaning of industrial? Answer: D (Items that are manufactured.) . Business means a for-profit or non-profit organization involved in commercial, industrial, or 5 professional commerce. What is the meaning of commercial? Answer: A (The pursuit of a profit margin.) . Business means a for-profit or non-profit organization involved in commercial, industrial, or 6 professional commerce. What is the meaning of professional? Answer: B (Customized services provided for a fee.) . Which business function is responsible for recruiting, hiring, onboarding, training, evaluating, 7 and terminating employees? Answer: C (Human Resources) . A company’s purpose, reason for being, and problem it is solving is its: 8 Answer: D (mission) . Which business function is a route or plan of action designed to achieve certain goals and 9 objectives? Answer: A (Strategy) 0. Which business function is about collecting, organizing, storing, and securing relevant data 1 and information in order to make informed decisions? Answer: B (Information Management) 1. Which business function deals with the daily functioning of an organization, managing the 1 inputs and outputs, and includes manufacturing, purchasing, and logistics? Answer: C (Operations) 2. Which business function is the enterprise and pursuit of ideation, creation, communication, 1 and delivery of profitable products and services to targeted customers for their benefit and for the benefit of society as a whole? Answer: D (Marketing) 3. What is the process of recording, maintaining, and reporting an organization’s financial 1 transactions and records? Answer: A (Accounting) 4. What focuses on the management of the assets, liabilities, and cash flow of an organization, 1 financial analysis like ROI and ROE, and financial planning of future growth? Answer: B (Finance) 5. Which business function has its own eight functions including the 4Ps? 1 Answer: C (Marketing) 6. Which business function helps to ensure quality control during manufacturing and 1 distribution? Answer: D (Operations) 7. A specific procedure or action used to support strategy, in order to achieve goals and 1 objectives, is called: Answer: A (A tactic) 8. Which THREE business functions would work together to compile information in order to 1 understand how to better connect to a company’s target market? (Select three answers) Answers: A (Strategy), B (Information Management), C (Marketing) 1-2 Management 1-2 Lesson Text What is Management? At some point in your life you will either be a manager or you will be managed. ou can’t escape it. And for many people, their jobs require both being managed, and Y managing others. Richard Branson, founder of the Virgin Group said, “Train people well enough so they can leave, treat them well enough so they don’t want to.” usiness is about people. And companies that have great company cultures know the B value of treating people well, and providing people with the tools and support necessary to reach their desired levels of success. The truth is, we will spend most of our productive years working. And many or most of our waking hours, during workdays anyway, will be spent working. So it’s important to enjoy your work. But managers are often the determining factor as to whether someone likes their work, and/or chooses to stay or leave. o what is management?Managementrefers to planning, organizing, staffing, S controlling and leading people, processes, and assets in order to achieve a goal or task in the best way possible. ell that’s a lot. Let’s go through each element using an example of a company called W Tiara’s Candles. iara has an online store where she sells eco-friendly candles. Tiara tells her Manager T of Sales, Patrick, that she wants to try to grow candle sales by 30% this quarter. atrick uses planning to map out the course of action. He determines what people and P resources are needed and what actions need to be taken. He decides he needs to increase the digital marketing ads, add a new sales representative, and purchase more inventory so that they can be ready to ship the candles when the new sales orders come in. e also works onstaffing,which means to recruit,interview, hire, and orient the H appropriate people to fill organizational roles. So Patrick works with the Human Resources department to find the right person for the new sales rep position. atrick is also controlling the process, which means he is continuously checking the P work results against the goal of growing sales 30%. And he is counting and measuring other important metrics to ensure his plan stays on track. For example, he tracks how many visits they are getting to their website; and is tracking customer “impressions” and “reach” on his digital ads, meaning how often and how many people are seeing them; and “engagement” levels on the ads, meaning how many people are liking or commenting or asking for more information; and, he is also tracking productivity of his team. Based on this data, he will take corrective actions when necessary to ensure the team stays focused and stays on track to achieve their goal. ll the while, Patrick is leading, which for a manager includes everything from A communicating, to motivating, guiding, encouraging, giving directions, following up, coaching, assisting, and reviewing. What does chain of command mean? Everyone’s role or job fits into what is called the chain of command. Thechain of commandis an organizational structure that showswho each person reports to. There are three broad levels of management: officer/executive level, middle management, and supervisory. Supervisory level roles typically report to middle-managers and middle managers usually report to executives. Front-line or entry-level employees don’t normally have anyone reporting directly to them, and usually report to supervisory-level managers. or really large companies, there may exist many manager layers. For example, a F manager of sales for a sports apparel company might report to a senior manager of sales for the northeast U.S. region, who might report to a director of sales for the clothing line of products, who reports to a senior director of sales for North America. These all might be considered middle manager roles. What skills are needed to be an effective manager? o be an effective manager, it requires many skills, but some primary skills include: T problem-solving skills, people skills, and procedural skills. Problem-solving skillsmean an ability to make goodtrade-offs with limited resources, as well as to effectively handle difficult and/or complex business challenges People skillsmeans an ability to empathize with peopleand understand them and their current situation, while also effectively influencing, communicating, and interacting ith them.Procedural skillsmeans an ability to quickly learn and perform certain w methods, sequences, or procedures in order to accomplish a task. o the degree to which you use each one of these skills as a manager will depend on S what level of manager you are. For example, you might lean a little more on your procedural skills at the supervisory level where usually more repetitive tasks are performed. And as a middle manager, you will likely use a good blend of all three skills, and at the executive level, you might lean more on your problem-solving skills. It is worth noting that good managers also possess leadership skills.Leadershipis about inspiring, motivating, influencing and maximizing the efforts of people towards a common purpose. o what’s the difference between a leader and a manager? Some might say S “management is doing things right, and leadership is doing the right things.” Others might say “leaders initiate a plan and managers execute it.” But it isn’t always that cut and dried, because leaders also manage, and managers also lead. Perhaps the difference has to do with a focus on growth. s former U.S. Secretary of State Colin Powell said, “Leadership is the art of A accomplishing more than the science of management says is possible.” usiness is about people… people managing other people and managing business B functions. And managers are the ones ensuring all the work gets done. And managers face new challenges all the time. Forms of communication change. And technology rapidly changes. And many companies offer virtual and remote work environments that offer additional challenges for managers to see and interact with their teammates directly. ltimately it ishowmanagers treat others that revealstheir leadership, and the true U character of a company. And company values matter.Company valuesare what a company believes, its business practices around how teammates treat one another, and how the company treats its customers. And values put into practice help build the company culture, which means the shared beliefs, values,goals, attitudes, and behaviors of a company’s employees; a company culture combines employee feelings about their work with how it motivates them to serve the company’s mission. So it is “how” managers manage that shape and reveal a company’s culture, and ultimately makes or breaks a company anagers have a big impact, good and bad, on the work environment, and on work M enjoyment. Research has shown that when people leave jobs, they leave managers, not companies. In fact, a 2019 study showed 57% of employees have left a job because of manager or leader. So while it’s not often that you get to pick your boss, if you do get a picked or promoted to be a boss, be a good one. 😊 1-2 Glossary Glossary: 1. C hain of Command: An organizational structure that shows who each person reports to. 2. Company Culture: The shared beliefs, values, goals, attitudes, and behaviors of a company’s employees; a company culture combines employee feelings about their work with how it motivates them to serve the company’s mission. 3. Company Values: These are what a company believes, its business practices around how teammates treat one another, and how the company treats its customers. 4. Emotional Intelligence: The ability to care, empathize and understand the needs of others. 5. Leadership: Inspiring, motivating, influencing, and maximizing the efforts of people towards a common purpose. 6. Management: Refers to planning, organizing, staffing, controlling and leading people, processes, and assets in order to achieve a goal or task in the best way possible. 7. People Skills: An ability to empathize with people and understand them and their current situation, while also effectively influencing, communicating, and interacting with them. 8. Problem-Solving Skills: An ability to make good trade-offs with limited resources, as well as to effectively handle difficult and/or complex business challenges. 9. Procedural Skills: An ability to quickly learn and perform certain methods, sequences, or procedures in order to accomplish a task. 10.Staffing: Recruit, interview, hire, and orient the appropriate people to fill organizational roles. 1-2 Glossary Quiz eadership L Inspiring, motivating, influencing, and maximizing the efforts of people towards a common purpose. Management Refers to planning, organizing, staffing, controlling, and leading people, processes, and assets in order to achieve a goal or task in the best way possible. Problem-Solving Skills An ability to make good trade-offs with limited resources, as well as to effectively handle difficult and/or complex business challenges. Chain of Command An organizational structure that shows who each person reports to. Company Culture The shared beliefs, values, goals, attitudes, and behaviors of a company’s employees; a company culture combines employee feelings about their work with how it motivates them to serve the company’s mission. Company Values These are what a company believes, its business practices around how teammates treat one another, and how the company treats its customers. Emotional Intelligence The ability to care, empathize, and understand the needs of others. Procedural Skills An ability to quickly learn and perform certain methods, sequences, or procedures in order to accomplish a task. Staffing Recruit, interview, hire, and orient the appropriate people to fill organizational roles. People Skills An ability to empathize with people and understand them and their current situation, while also effectively influencing, communicating, and interacting with them. 1-2 Lesson Quiz uestion 1 of 14 Q A furniture store manager has been tasked with increasing the sales of higher-priced items such as couches and mattresses by 25%. So, the manager determines the necessary resources and actions that will need to be taken to reach that goal by: Correct answer:B) planning uestion 2 of 14 Q Widgets Co. store managers have set a goal to increase their customer base by 10% over the next three months. The managers have determined that to meet their goal they will need to hire at least five new salespeople. Recruiting, interviewing, and hiring these new employees is: Correct answer:C) staffing uestion 3 of 14 Q An ice cream shop manager decides to create a new ice cream flavor to attract more customers. So, the manager orders the necessary flavor mixture, shares the plan with shop employees, and assigns one employee to teach other employees how to make the new flavor. Gathering resources, sharing the plan, and assigning tasks is: Correct answer:D) organizing uestion 4 of 14 Q A clothing store manager launched a new ad campaign online to increase consumer awareness of a new clothing line the store carries. To check if the ad campaign is producing the desired results, the manager tracks customer impressions and the reach of the online ads. Tracking data against the goal to increase customer awareness is an example of: Correct answer:A) controlling uestion 5 of 14 Q Complete the statement with the correct term. ______________ includes communicating, motivating, guiding, encouraging, giving directions, following up, coaching, assisting, and reviewing. Correct answer:B) Leading uestion 6 of 14 Q Which term refers to the hierarchy that shows who each person reports to? Correct answer:C) chain of command uestion 7 of 14 Q What primary skills do effective managers need to have? Select THREE options: Correct answers: ○ A) problem-solving skills ○ B) people skills ○ C) procedural skills uestion 8 of 14 Q A manager’s ability to make good trade-offs with limited resources, as well as to effectively handle difficult and/or complex business challenges is: Correct answer:D) problem-solving skills uestion 9 of 14 Q A manager’s ability to empathize with people and understand them and their current situation, while also effectively influencing, communicating, and interacting with them is: Correct answer:A) people skills uestion 10 of 14 Q A manager’s ability to quickly learn and perform certain methods, sequences, or processes in order to accomplish a task is: Correct answer:B) procedural skills uestion 11 of 14 Q Inspiring, motivating, influencing, and maximizing the efforts of people towards a common purpose is: Correct answer:C) leadership uestion 12 of 14 Q What a company believes, its business practices around how teammates treat one another, and how the company treats its customers is its: Correct answer:D) company values uestion 13 of 14 Q The shared beliefs, values, goals, attitudes, and behaviors of a company’s employees is the: Correct answer:A) company culture uestion 14 of 14 Q Complete the statement with the best pair of terms. A 2019 study showed 57% of employees have left a job because of a ______________ or _____________. Correct answer:B) manager; leader 1-3 Human Resources What does “business is about people” mean? “ First Who, Then What.” That’s what Jim Collins says in his best-selling book, Good to Great.Mr. Collins talks about how great companiesunderstand the value of people, and that all great ventures should begin with great people. Indeed,business is about people. InGood to Great,Mr. Collins says, “get the right people on the bus”. And not only that but make sure they are in the “right seats”, meaning put people in roles that align with their interests, skills and experience, and where they will be productive and fulfilled. He suggests doing all this even before you try to figure out where to drive the bus. So “First Who, Then What.” is theory is, with all the uncertainty and constant change in the world, the H best strategy is to have the right people on the bus, ready to adapt and solve the problems that they are faced with. Because great vision doesn’t really matter without great people to adapt and respond, should difficult circumstances arise. What is Human Resources (HR)? uman Resources is often called “HR”. AndHRis oneof the six business H functions.Human Resourcesrefers to the people whowork in an organization, and the group that staffs the organization, maintains personnel records, and administers benefits like medical insurance. Human Resources Responsibilities nd what does HR do? Well, lots of things. HR is involved in so many areas of A a company, but always focusing on the people “assets”. Here is a list, not in any particular order: 1. Recruiting, which is the active searching for theappropriate candidates to fill open positions within an organization. 2. Staffing, which means to recruit, interview, hire,and orient the appropriate people to fill organizational roles. For this role, the job titles vary based on the company, but include titles like Recruiter, Staffing pecialist, HR Manager, VP of HR, Chief People Officer, and even Head S of Talent Acquisition. uman talent is what companies are looking for. Great companies are looking H for rockstars to join their band! 3. Legal issues: HR and anyone involved in the hiring process needs to know the “dos and don’ts” when hiring people. For example, the Equal Employment Opportunity Act (EEOA) prohibits the interviewer from asking questions that might lead to even the appearance of discrimination, like asking about age, or country of origin, or marital status. 4. Job Descriptions: These are explanations and expectationsof the duties and responsibilities of a job. 5. Orientation and Onboarding:Employee orientationisa process in which new hires are introduced to a company, their fellow employees, and the work environment. Butemployee onboardingis a strategic plan and process for new employees to learn the company’s culture, ission, vision, systems, processes, goals and expectations, and m become contributing members of the team. So while orientation is about getting familiar with the company, onboarding is about being a contributor within it. Orientation is mostly a one-time event, often handled by HR, while onboarding can go on for many months and includes the involvement of the department the new employee is working in. 6. Training and Professional Development: HR is involved intraining, which is the process of teaching the necessary skills and knowledge needed to be successful in a certain job role.Professional Development, orPD, is on-going training and educationthat an individual takes to enhance or improve the skills or traits necessary to excel in their career/profession. 7. Performance Management: Speaking of excelling, HRensures proper performance management processes are in place and are complied with. For example, some companies give performance reviews and appraisals twice per year. Those are primarily handled by a direct supervisor, but also may include feedback from fellow employees. 8. Compensation: This means the total cash and benefitsthat an employee receives in exchange for their work performed for the organization. HR Departments conduct periodic research to ensure they know the going market rate of pay for each type and level of job so that they can compare their own rates of pay to what they are currently paying their own employees. 9. Company Culture: Culture means the shared beliefs,values, goals, attitudes, and behaviors of a company’s employees; a company culture ombines employee feelings about their work with how it motivates c them to serve the company’s mission Every employee affects the culture of a company. HR ensures the company “walks the talk” of the company values, in order to maintain good employee morale and relations. 10. Employee Terminations: HR also gets involved with employee terminations, which again requires proper legal knowledge and care as employees have many rights and protections. So it’s important for HR to keep good records and documentation on personnel performance so that any claims of wrongful terminations can be properly defended. 11.Exit Interviews: These are a conversation a companyhas with an employee who is leaving the company, to find out the reason for the decision, and to use this information for future improvement. 12. Employee Benefits: HR administers the employee medical benefits plan (if offered), any 401K plans, and other benefits and services that may be provided by the organization. Managers Need to Know What They Are Looking For… It is really expensive to recruit, interview, do background checks, hire, orient, and train a new employee only for it to not work out a few months later, for any reason. So to avoid spending all that money, it is a good practice to be methodical about hiring new employees. Be clear about the job description and expectations. Know exactly the type of person you are looking for, including education requirements, experience, and skills. It is also a good idea to include more than one interviewer in the process, and to share notes when evaluating the candidate. Various personality surveys and aptitude tests are helpful and are often used. If and when you make a bad hire, often the new employee “votesthemselves off the island”, to use an analogy from the TV show Survivor. Meaning, they know when it isn’t a good fit and they quit. But when a bad hire is made, or if any employee doesn’t seem to be fitting in or isn’t “getting it”, then it’s important for HR to ensure all training has been thoroughly given and understood, and that proper performance appraisals have occurred ut for some employees, it takes a little longer to “get it”, and that’s ok. It is B usually less expensive to train and retrain, than to go through the hiring process again. And often these employees that you spent extra time with become some of your more productive and loyal employees. R is a hard job, because it deals with people at all stages in their careers. H But it is a very important business function. Business is about people. HR is complex because HR deals with humans. We are complex creatures! HR and the other business functions ut when HR gets it right, it can make all the difference. HR works with all the B other five business functions, which are Strategy, Information Management, Operations, Marketing, and Finance/Accounting, to strategize and plan for their staffing needs. Finding, cultivating and keeping key people resources is the primary determinant of whether a business succeeds or fails. And when companies get it right, it is usually the leading indicator of future success. earch online for the best places to work and you’ll find a lot of people who S are really happy with their jobs. And I am not just talking about Google, who is often ranked in the top ten places to work. There are so many other great places to work. For example, check out the burger chain In-N-Out Burger. If you visit one of their restaurants, you will see excellent HR in action! 1-3 Glossary Glossary: 1. C ompany Culture: The shared beliefs, values, goals, attitudes, and behaviors of a company’s employees; a company culture combines employee feelings about their work with how it motivates them to serve the company’s mission. 2. Company Values: What a company believes, its business practices around how teammates treat one another, and how the company treats its customers. 3. Compensation: The total cash and benefits that an employee receives in exchange for their work performed for the organization. 4. E xit Interviews: A conversation a company has with an employee who is leaving the company, to find out the reason for the decision, and to use this information future improvement. 5. Human Resources: Refers to the people who work in an organization, and the group that staffs the organization, maintains personnel records, and administers benefits like medical insurance. 6. Job Description: Explanations and expectations of the duties and responsibilities of a job. 7. Onboarding: A strategic plan and process for new employees to learn the company’s culture, mission, vision, systems, processes, goals and expectations, and become contributing members of the team. 8. Orientation: A process in which new hires are introduced to a company, their fellow employees, and the work environment. 9. Professional Development (“PD”): Ongoing training and education that an individual takes to enhance or improve the skills or traits necessary to excel in their career/profession. 10.Recruiting: The active searching for the appropriate candidates to fill open positions within an organization. 11.Staffing: To recruit, interview, hire, and orient the appropriate people to fill organizational roles. 12.Training: The process of teaching the necessary skills and knowledge needed to be successful in a certain job role. 1-3 Glossary Quiz uman Resources H Refers to the people who work in an organization, and the group that staffs the organization, maintains personnel records, and administers benefits like medical insurance. Job Description Explanations and expectations of the duties and responsibilities of a job. Training The process of teaching the necessary skills and knowledge needed to be successful in a certain job role. Staffing To recruit, interview, hire, and orient the appropriate people to fill organizational roles. Company Culture The shared beliefs, values, goals, attitudes, and behaviors of a company’s employees; a company culture combines employee feelings about their work with how it motivates them to serve the company’s mission. rientation O A process in which new hires are introduced to a company, their fellow employees, and the work environment. Professional Development (“PD”) Ongoing training and education that an individual takes to enhance or improve the skills or traits necessary to excel in their career/profession. Recruiting The active searching for the appropriate candidates to fill open positions within an organization. Company Values What a company believes, its business practices around how teammates treat one another, and how the company treats its customers. Compensation The total cash and benefits that an employee receives in exchange for their work performed for the organization. Onboarding A strategic plan and process for new employees to learn the company’s culture, mission, vision, systems, processes, goals, and expectations, and become contributing members of the team. Exit Interviews A conversation a company has with an employee who is leaving the company, to find out the reason for the decision, and to use this information for future improvement. 1-3 Lesson Quiz uestion 1 of 12 Q Which of the following best portrays a role that the Human Resources department of a company would take on? Answer:D. A manager is in charge of making sure employeeshave up-to-date information on their health insurance coverage. uestion 2 of 12 Q Which of the following areas of HR focuses on searching for appropriate candidates to fill a position? Answer:A. recruiting uestion 3 of 12 Q Business means a for-profit or non-profit organization involved in commercial, industrial, or professional commerce. In the definition of business, what is the meaning of professional? Answer:B. Customized services provided for a fee. uestion 4 of 12 Q Based on the Equal Employment Opportunity Act, an interviewer is prohibited from asking a potential employee which of the following questions? Answer:C. What country are you originally from? uestion 5 of 12 Q The explanations and expectations of duties and responsibilities are known as which of the following? Answer:D. job descriptions uestion 6 of 12 Q Which of the following is a process in which new hires are introduced to a company, their fellow employees, and the work environment? Answer:C. employee onboarding uestion 7 of 12 Q A new employee is in their first week at a new job and is currently learning how their new role contributes to the entire company. What function of the Human Resources Department is the new employee experiencing? Answer:C. employee orientation uestion 8 of 12 Q Which of the following is most often a one-time event held by HR for new employees? Answer:D. orientation uestion 9 of 12 Q Which function of an HR department deals with employee reviews and appraisals? Answer:A. performance management uestion 10 of 12 Q Which of the following combines employee feelings about their work with how it motivates them to serve the company’s mission? Answer:C. company culture uestion 11 of 12 Q HR Departments need legal knowledge in order to complete which two employee functions? Answer:B. interviews and terminations uestion 12 of 12 Q Including which of the following in the hiring process will help an HR Department hire a good employee? Answer:B. personality surveys 1-4 Strategy 1-4 Lesson Text What is Strategy? ablo Picasso said “Our goals can only be reached through the vehicle of a plan. There P is no other route to success.” Astrategyis a routeor plan of action designed to achieve certain goals and objectives. Recall the six business functions are . 1 uman Resources H 2. Strategy 3. Information Management 4. Operations 5. Marketing 6. Finance/Accounting. trategy affects, or should affect, every decision a company makes. But strategy isn’t S just a department by itself. Strategy is everywhere. Where is strategy found in business? et’s highlight some key areas where strategy is inseparable from the other aspects of L business: irst, 1) Purpose: Stephen Covey says, “begin with the end in mind.” Do you know F where you want to go – where you want to end up? Strategy needs to be tied to the company’s vision and mission.Missionis a company'spurpose; its reason for being; the problem it is solving. Andvisionis an aspirationalview of the future, that if the company is successful in accomplishing its mission, the company and/or world might look a certain way. So think of a mission as the “why” you exist and “what” you do, and vision as the “where” you will end up, if successful. n example is IKEA. Their mission is to “offer a wide range of well-designed, functional A home furnishing products at prices so low that as many people as possible will be able to afford them.” If they are successful, their vision will come true, which is: “to create a better everyday life for the many people.” outhwest Airlines’ mission describes its ‘dedication to warm, friendly, prideful, and S spirited high quality customer service,’ and its vision, if successful, is “to become the world’s most loved, most flown, and most profitable airline.” ike’s mission focuses on ‘expanding human potential by creating sustainable, N groundbreaking sports innovations, with a diverse team, while also positively impacting their communities.’ And Nike’s vision is to “Bring inspiration and innovation to every athlete in the world.” And according to Nike, if you have a body, you are an athlete. ow does vision/mission work for charitable H organizations? In theory, some organizations’ visions, particularly charitable organizations, could almost be to “put ourselves out of business one day.” or example, Habitat for Humanity’s mission is about ‘bringing people together to build F homes, communities and hope.’ So their mission is clear. What do they do? – they bring eople together to build homes for those in need. Why? – to build communities and to p build hope. But their vision is “a world where everyone has a decent place to live.” So this means, if they do such a good job, and everyone has a home, they won’t need to build houses anymore. Now we know that likely won’t end up that way. But their vision is very aspirational and inspirational. It describes a world “where” everyone has a home. And it motivates others to be a part of the journey. very action by an employee needs to somehow be connected to the company’s E mission (its purpose) and its vision. And it’s easy to feel connected, particularly when great organizations walk the walk and talk the talk. o let’s review. Mission iswhywe exist andwhatwe do. Vision iswherewe see S ourselves and/or the world in the future. But strategy is thehow. s Professor Lee Bolman said, “A vision without a strategy remains an illusion.” So that A brings us back to strategy. How is strategy tied to the other business functions? trategy is a route or plan of action designed to achieve certain goals and objectives. S Strategy is informed by the company’s vision and mission – they go hand in hand. And strategy answers questions about what a company should be doing, and perhaps more importantly, it helps a company say “no” to what it shouldn’t be doing. Strategy provides a map, a route, a direction, a plan. English writer Lewis Carroll said, “If you don't know where you are going, any road will get you there.” So the clearer the path is, and the clearer the plan is, then the clearer the expectations and actions for employees to perform. k so strategy and purpose are tied together. Strategy is also tied to 2) People, and the O business function focused on people is Human Resources. Strategy and HR work together to determine the company’s organizational chart, levels of executive, middle and supervisory management, and who reports to whom. HR also uses job descriptions to define role clarity, and uses performance management and appraisals to hold everyone accountable and to compensate and reward employees appropriately. trategy is also tied to 3) Action. And this is where tactics come into play. Atacticis a S specific procedure or action used to support strategy in order to achieve goals and objectives. As ancient Chinese Military strategist Sun Tsu said, “Strategy without tactics is the slowest route to victory, tactics without strategy is the noise before defeat.” So companies are inspired by their vision, called to their mission, and then they use strategy to help achieve their goals and objectives. goalis a stated, observable, and measurable endresult to be achieved within a A certain timeframe. It is longer term in nature, even 3-5 years. But how will you achieve those goals? That’s where objectives come into play. An objective is more specific than a goal; it is a specific result to be achieved within a time frame and with available resources. Usually the time frame for an objective is one year. Accomplishing your objectives helps you accomplish your goals. trategy is also tied to 4)Key Performance Indicators,or KPIs, which are key S metrics and measures that highlight the health of the business. It’s important to measure what you treasure, because usually what gets measured, gets done. Strategy is also tied to the other business functions: ) Information Management, to ensure the proper data is mined and analyzed, 6) 5 Operations, to ensure all actions and tactics are aligned in pursuit of achieving objectives and goals, all in line with the strategy, and 7) Finance/Accounting, influencing strategic decisions like capital structure and debt. And often when we hear the word strategy, we think of marketing strategy. And indeed, strategy is unbreakably tied to the business function of 8) Marketing. Business Strategy vs Marketing Strategy So what’s the difference between business strategy and marketing strategy? ell,business strategysimply means a business’sroute or plan of action designed W to achieve certain goals and objectives. Whilemarketingstrategyis a company’s game plan for reaching its target market, converting it to customers, and meeting company goals and objectives. o a company’s strategy includes picking a business to be in, while the marketing S strategy is about finding and connecting the business to its target market. A company’s strategy might be built around how its product is unique, while the marketing strategy would work to accentuate or shine a light on its uniqueness. Marketing strategy ensures productsearn a profit, while business strategy ensuresthecompanyearns a profit. arketing strategy is about connecting a business to its target market, and positioning M and messaging the brand via the marketing mix, e.g. the 4Ps (the 4Ps are for another lesson, but for now the 4Ps are product, price, place, and promotion). 1-4 Glossary Glossary: 1. B usiness Strategy: A business’s route or plan of action designed to achieve certain goals and objectives. 2. Goal: A stated, observable, and measurable end result to be achieved within a certain timeframe. 3. Marketing Strategy: A company’s game plan for reaching its target market, converting it to customers, and meeting company goals and objectives. 4. Mission: A company's purpose; its reason for being; the problem it is solving. 5. Objective: More specific than a goal, an objective is a specific result to be achieved within a time frame and with available resources. 6. Strategy: A route or plan of action designed to achieve certain goals and objectives. 7. Tactic: A specific procedure or action used to support strategy in order to achieve goals and objectives. 8. V ision: An aspirational view of the future, that if the company is successful in accomplishing its mission, the company and/or world might look a certain way. 1-4 Glossary Quiz business’s route or plan of action designed to achieve certain goals and objectives. A Answer:Business Strategy A stated, observable, and measurable end result to be achieved within a certain timeframe. Answer:Goal An aspirational view of the future, that if the company is successful in accomplishing its mission, the company and/or world might look a certain way. Answer:Vision A specific procedure or action used to support strategy in order to achieve goals and objectives. Answer:Tactic A company’s game plan for reaching its target market, converting it to customers, and meeting company goals and objectives. Answer:Marketing Strategy A route or plan of action designed to achieve certain goals and objectives. Answer:Strategy More specific than a goal, an objective is a specific result to be achieved within a time frame and with available resources. Answer:Objective A company's purpose; its reason for being; the problem it is solving. Answer:Mission 1-4 Lesson Quiz route or plan of action designed to achieve certain goals and objectives is known as A which of the following? A- strategy he reason why a company exists - its purpose - is best known as which of the T following? C- the company’s mission ow does the strategy business function affect each of the other five business H functions? C- by providing a plan of action for each function omplete the following sentence with the best term. Mission is a company’s purpose, C and strategy is the _____. D- how abitat for Humanity’s mission is to “bring people together to build homes, communities, H and hope.” Based on their mission, what is most likely their company vision? A- a world where everyone has a home hich of the following best demonstrates how a company successfully uses strategy to W live out its mission and vision? B - A company that wants to make affordable home furnitureknows to say no to expensive materials. omplete the following sentence with the best term. ________ is informed by the C company’s vision and mission. C- Strategy hich of the following statements best demonstrates how strategy and Human W Resources work together? A- Strategy helps determine who to hire and firein a company. specific procedure or action used to support strategy in order to achieve goals and A objectives is known as which of the following? A- tactic stated, observable, and measurable end result to be achieved within a certain A timeframe is known as which of the following? B- goal ore specific than a goal, this is shorter term in nature and hopes to achieve something M within a time frame and with available resources: C- an objective elect the THREE correct options. Strategy is carried out through a company’s actions S by use of which three elements? B, C, D- tactics, goals, objectives How does an objective differ from a goal? A- An objective usually happens within a shortertimeframe than a goal. he key metrics and measures that highlight the health of a business are known as T which of the following? B- KPIs hich of the following best describes how strategy is tied to the business function of W Information Management? B- by ensuring all actions and tactics are alignedto goals hich of the following best describes how strategy is tied to the business function of W Operations? D- Strategy ensures all actions and tactics are alignedto company goals. hich of the following best describes how strategy is tied to the business function of W Finance? B- Strategy influences decisions around capital structureand debt. business’s route or plan of action designed to achieve certain goals and objectives is A known as which of the following? C- business strategy company’s game plan for reaching its target market is known as which of the A following? D- marketing strategy elect the TWO correct options. What are two things a business strategy can help a S company with that marketing strategy doesn’t focus on? B, D- picking a business to be in, ensuring the companyearns a profit 1-5 Information Management 1-5 Lesson Text How important is information to business? he late great British prime minister Winston Churchill said, “Information rules the world.” And T our own Thomas Jefferson said, “Information is the currency of democracy.” ccess to information is critical and necessary for business success. Former U.S. President A Ronald Reagan said, “Information is the oxygen of the modern age.” Information indeed is the magic elixir – it is the key ingredient used for making decisions. But managing information can be a challenge. What is Information Management (IM)? Information Management(or “IM”) is a business functionthat involves people, processes, nd systems that collect, organize, store, and secure relevant data and information, and makes a it accessible and useful for making informed decisions. Wow, that’s a lot. Let’s unpack each part of it. First, notice that IM involves people. Information is only useful if people make good use of it. IM also involves processes that regularly and automatically collect information. The information collected ranges from pricing information to customer feedback, from surveys to sales transaction data, from publicly available statistical data to very private trade secrets. What is a Management Information System (MIS) nd systems are also used in IM, like aManagementInformation System(or MIS) which is A a computerized system that supports and enables the Information Management business function. IM also organizes and stores information. It organizes information to make searching, retrieving, and archiving easier. And it stores information in a database, and the database exists on servers, hard drives, and in the cloud. It is also important to keep information protected and secure so that those who aren’t authorized to view it can’t. ote the relevant and data part of the definition. Relevant here means only important and useful N data is collected and stored, so that the information is helpful in making decisions. And data means the raw form of information before it actually becomes useful information. As author Seth Godin said “Data is not useful until it becomes information.” nd then we get to accessible and useful. Accessible means granting access to information, A usually via a password, only to those who should have access to the information, and with different levels of access. By granting access, the information becomes retrievable, in many cases, on demand. So accessible means giving the right access to the right people at the right time. hen data is collected, it is then evaluated, analyzed, and presented in a way that is useful. For W example, one type of data collected might be raw sales transactions. But until the data is organized, categorized, and compiled in a manner that is useful, it just remains data. So for example, sales transaction data might be categorized into geographical regions where sales are occurring. hen the data is compiled and analyzed, it might show that 60% of the sales are occurring in W the northeast United States, and the remainder of the sales are occurring in the rest of the states. This becomes useful information as now you know where the majority of your sales are occurring, and it might point to opportunities where sales are low. Then, new resources can be applied to increase sales in those markets, or perhaps pull out of certain unprofitable markets altogether. he final part of the definition is making informed decisions. Information isn’t useful unless it is T used to inform and make decisions. What is Data Integrity? usinesses can’t run without information and data.Data integrityis needed to keep company B and customer information searchable, traceable, and connected. Data integrity refers to the accuracy and validity of data over its lifecycle. Maintaining data integrity helps companies keep true and accurate, real-time information to assist them with their decision-making. s Walmart Founder Sam Walton said, “Information is power, and the gain you get from A empowering your associates more than offsets the risk of informing your competitor.” To be sure, without information, you are making decisions in the dark. As American nurse and r esearcher Martha Rogers said, “When your headlights aren’t on, the best rearview mirror available isn’t likely to improve your driving.” ow is IM interrelated with the other five business H functions? ecall that the six business functions are Human Resources, Strategy, Operations, Marketing, R Finance/Accounting, and Information Management. And Information Management is interrelated with the other five functions. For example, for the Finance/Accounting function, IM handles important and confidential information including accounts receivable and accounts payable, accounting records, tax matters, and financial statements. And IM stores information for HR including personnel records and job descriptions. For Marketing, IM keeps information about customers and sales transactions and much more. Trade Secrets, Intangible Assets & Intellectual Property IM also stores the most critical information for a business to keep secret, namely trade secrets. Atrade secretis a practice or process not generallyknown outside of the company that owns it, and that has economic value. It is a form ofIntangible Asset, which is anythingof value that is not physical in nature, like trade secrets and other types of intellectual property.Intellectual Property, also called “IP”, is anything that is created from the mind or intellect, like inventions, ideas, or methods. hese assets are critical to a business’s success and therefore it is critical that they be kept T confidential and secure. What is Risk Management? o as you can imagine, there exists a lot of risk in handling and securing this information. So S that brings us to risk management.Risk managementis about identifying, understanding, and predicting circumstances or events that might have negative consequences, and taking proactive measures to avoid these risks and effectively combat them if/when they occur. Part of avoiding risks includes regular audits. AnAuditisan independent and unbiased inspection and review to evaluate the safety, integrity and accuracy of information, systems, processes, procedures and protocols. s Winston Churchill said, “Information rules the world.” So certain information in the wrong A hands can give power to those who might seek to do harm. Some say that the wars of the future will be fought not on the ground, nor in space, but in cyberspace. Cyber security is more important now than ever before. What is Cyber Security? Cyber Securityis the protection of networks, devices, and data from unauthorized access or riminal use, and the practice of ensuring the confidentiality, integrity, and availability of c information. Globally, cyber-attacks have continued to climb over the years. Without proper cyber security, companies are at the risk of being attacked. Cyber criminals can break into computer systems and damage and steal files, initiate financial transactions, steal personal and financial information, and potentially erase an entire system. They can even hold companies hostage and require them to pay money in order to get their information and systems restored. o companies use risk management to proactively protect themselves against Malware, S Phishing, Ransomware, Identity Theft, and any third parties who may find access to confidential information and/or any other criminal acts that might occur. s you can see, Information Management is critical to a business’s success. And many lucrative A careers exist within IM, from Data Analysts, Systems Analysts, and Database Managers, to Cyber Security and Information Technology Executives. 1-5 Glossary Glossary: 1. A udit: An independent and unbiased inspection and review to evaluate the safety, integrity and accuracy of information, systems, processes, procedures and protocols. 2. Cyber Security: The protection of networks, devices, and data from unauthorized access or criminal use, and the practice of ensuring the confidentiality, integrity, and availability of information. 3. Data Integrity: The accuracy and validity of data over its lifecycle 4. Information Management (“IM”): A business function that involves people, processes, and systems that collect, organize, store and secure relevant data and information, and makes it accessible and useful for making informed decisions. 5. Intangible Asset: Anything of value that is not physical in nature. 6. Intellectual Property (“IP”): Anything that is created from the mind or intellect, like inventions, ideas, or methods. 7. Management Information System (“MIS”): A computerized system that supports and enables the Information Management business function. 8. Risk Management: Identifying, understanding and predicting circumstances or events that might have negative consequences, and taking proactive measures to avoid these risks and effectively combat them if/when they occur. 9. Trade Secret: A practice or process not generally known outside of the company that owns it, and that has economic value. 1-5 Glossary Quiz udit A An independent and unbiased inspection and review to evaluate the safety, integrity and accuracy of information, systems, processes, procedures and protocols. Cyber Security The protection of networks, devices, and data from unauthorized access or criminal use, and the practice of ensuring the confidentiality, integrity, and availability of information. Information Management (“IM”) A business function that involves people, processes, and systems that collect, organize, store and secure relevant data and information, and makes it accessible and useful for making informed decisions. isk Management R Identifying, understanding and predicting circumstances or events that might have negative consequences, and taking proactive measures to avoid these risks and effectively combat them if/when they occur. Intellectual Property (“IP”) Anything that is created from the mind or intellect, like inventions, ideas, or methods. Trade Secret A practice or process not generally known outside of the company that owns it, and that has economic value. Intangible Asset Anything of value that is not physical in nature. Management Information System (“MIS”) A computerized system that supports and enables the Information Management business function. 1-5 Lesson Quiz uestion 1 Q Complete the statement with the best term. Access to _________________ is critical and necessary for business success. Answer:A.information uestion 2 Q A business function that involves people, processes, and systems that collect, organize, store and secure relevant data and information, and makes it accessible and useful for making informed decisions is called: Answer:B.information management uestion 3 Q The raw form of information before it actually becomes useful information is: Answer:C.data uestion 4 Q Relevant, or important and useful, data is helpful for making: Answer:D.decisions uestion 5 Q Complete the list by selecting the TWO correct terms. The Six Business Functions i. Human Resources ii. ________________ iii. ________________ iv. Marketing v. Finance/Accounting vi. Information Management Answer:B.Operations Answer:A.Strategy uestion 6 Q A practice or process not generally known outside of the company that owns it, and that has economic value is a/an: Answer:A.trade secret uestion 7 Q Anything of value that is not physical in nature is a/an: Answer:B.intangible asset uestion 8 Q Anything that is created from the mind or intellect, like inventions, ideas, or methods, is: Answer:C.intellectual property uestion 9 Q Identifying, understanding and predicting circumstances or events that might have negative consequences, and taking proactive measures to avoid these issues and effectively combat them if/when they occur is: Answer:D.risk management uestion 10 Q An independent and unbiased inspection and review to evaluate the safety, integrity and ccuracy of information, systems, processes, procedures and protocols is a/an: a Answer:A.audit uestion 11 Q The protection of networks, devices, and data from unauthorized access or criminal use, and the practice of ensuring the confidentiality, integrity, and availability of information is: Answer:B.cyber security uestion 12 Q Data analysts, systems analysts, and database managers work within the field of: Answer:C.information management uestion 13 Q What are examples of intellectual property? Select THREE options. Answer:A.inventions Answer:B.methods Answer:D.ideas 1-6 Operations 1-6 Lesson Text What is Operations? merican film actor Will Rogers said, “even if you’re on the right track, you’ll get run A over if you just sit there.” And author Stephen Covey said, “… better off having an average strategy with superb execution than a superb strategy with poor execution.” Operationsis defined as the daily functioning ofan organization, managing the inputs nd outputs, and includes manufacturing, purchasing, and logistics. Operations is where a the execution of strategy happens. Operations means the “day-to-day”; it’s all the moving pieces and parts. It’s constant motion; no time to ‘just sit there.’ Some say that strategy is responsible for 10% of a business’s success, while execution accounts for the other 90%. Recall the six business functions are: . 1 uman Resources H 2. Strategy 3. Information Management 4. Marketing 5. Finance/Accounting 6. Operations. What activities are part of Operations? Operations has its own activities and functions, including . 1 anufacturing M 2. Transportation 3. Purchasing 4. Distribution 5. Logistics 6. Inventory management 7. Quality control 8. Supply chain management. Manufacturingis the making of products from raw materialsand other inputs like labor, machinery, and tools. Let’s take Ford for example. Ford makes vehicles using raw materials like steel, aluminum, rubber and glass. And they use human labor and assembly lines to mass produce their vehicles peaking of assembly lines,mass productionmeansusing technology and assembly S lines to make large quantities of the same product. Companies do all this while constantly monitoring quality control. Note,qualitycontrolis the process of measuring and testing a product or service against the intended quality benchmarks, to ensure consistent quality. o manufacturers make products using inputs, to create outputs. Anoutputis the end S result of the process that uses inputs to make goods and services. For Ford, the output, or the finished vehicles, become their Cost of Goods Sold, or COGS. Then they sell these cars to and through car dealerships. urchasing is another Operations activity.Purchasingis the organized acquisition of P goods and services on behalf of a business. or a company that manufactures goods (like Ford), the purchasing department F procures (buys) raw materials (like steel and aluminum), machinery, and other supplies needed to make those goods. For a company that provides a software product, the purchasing department might buy or lease certain software development tools, technology platform tools, and servers. And a streaming service like Netflix needs to create, purchase and/or license a whole lot of content. So content is part of Netflix’s cost of goods sold. Purchasing manages all the suppliers in thesupply chain, which is a company’s network of people, suppliers, activities, and resources that create and move a product from suppliers to the end consumer. It may seem like that in business, it’s all about making sales. But your sales revenue is just one-half of the gross margin equation. The other half is the cost of goods sold. So your success doesn’t just depend on how well yousellyour goods and services; it also depends on how well youbuy. It’s important to make smart purchasing decisions, meaning to always keep an eye on your costs and to negotiate the most favorable pricing. By keeping your cost of raw materials and production low, in relation to your sales price, and maintaining a higher gross profit, you can remain competitive with the pricing of your goods and services, flexible when the cost of raw materials fluctuates, and you will have more money, per dollar spent, to reinvest into your business and its employees. or example, let’s say you own Jimmy’s Candle Store, and your best selling candle sells F for $20. And you purchase those candles from your supplier Aliyah’s Candles, for $8. So $8 is your COGS per candle. The difference between $20 and $8, or $12, is your gross profit.Gross Profitmeans sales revenue minuscost of goods sold (COGS). Gross profit expressed as a percentage is calledgrossmargin. To calculate the gross margin of Aliyah’s Candles, divide the $12 difference into the sales price of $20, which equals 60%. If your COGS increase from $8/candle to $10/candle, but your selling price of $20/candle stays the same, then your gross margin drops from 60% to 50%, because your COGS increased by $2/candle. Hopefully, this helps you understand why it is so important to make smart purchasing decisions. Logistics k, so far we have talked about manufacturing and purchasing. And as you can tell, O there are a lot of moving pieces and parts to keep track of. This is where logistics helps. Logisticsis about optimizing the flow of inputs andoutputs until goods reach their final destination. This includes purchasing raw materials like aluminum or candle wax, properly handling, and managing inventory, warehouse management, and ensuring goods are distributed and transported to their proper destinations. Distributionis a subset of logistics, and it meansto categorize, sort, and transport oods to all their final destinations as efficiently, inexpensively, and carefully as g possible. And sotransportationis a subset of distribution,and simply means to move goods or assets from one place to another. nd if you own your transportation vehicles, that’s wherefleet managementcomes A into play, which means managing vehicles over their useful life to ensure efficient operations, durability, and reliability, as well as monitoring driver performance and tracking each vehicle’s location at all times. o think about what goes into Ford’s and Aliyah’s Candles’ operations. They both need S raw materials, e.g. aluminum for Ford and wax for Aliyah. Purchasing takes care of that. They also need buildings, machinery, tools, other raw materials, and of course human resources for labor. Logistics ensures all the inputs get where they need to be in the right quantity and at the right time. Manufacturing mass produces the products. Logistics takes back over, using distribution to categorize and sort through the products, and set up transportation to deliver the items to every destination, unbroken, and on time. Fleet Management ensures the vehicles carrying the goods do so dependably and efficiently. hen once cars get to the dealerships, or once candles get to Jimmy’s Candle Store, T the Ford dealers and Jimmy both have their own operations involving work schedules, labor, inventory management, and shipping items to their customers, and many other operational activities. perations interacts with all the other business functions. For example, it works with O Information Management to get real-time information to make decisions. And it works with Human Resources to ensure that enough people are trained and on the job. perations is really aboutexecution. There are somany details to cover and to get O right. s the late Apple founder Steve Jobs said: “…ideas are worth nothing unless A executed…” nd as Thomas Edison said, “Having a vision for what you want is not enough. Vision A without execution is hallucination.” And Belarusian-American entrepreneur and social media giant Gary Vaynerchuk (also known as Gary V) said, “Execution is the game.” Career Opportunities in Operations here are so many career opportunities available to reliable operations people, from T entry level positions to senior executive jobs: anufacturing M Transportation Purchasing Distribution Logistics Inventory Management Quality Control Supply Chain Management Project Management 1-6 Glossary Glossary: 1. D istribution: To categorize, sort, and transport goods to all their final destinations as efficiently, inexpensively, and carefully as possible. 2. Fleet Management: Managing vehicles over their useful life to ensure efficient operations, durability, and reliability, as well as monitoring driver performance and tracking each vehicle’s location at all times. 3. Gross Profit: Sales revenue minus cost of goods sold (COGS); it is the margin before any other expenses are subtracted. 4. Inputs: Resources used to make goods and services, like raw materials, labor, machinery and tools. 5. Logistics: Optimizing the flow of inputs and outputs until goods reach their final destination. 6. Manufacturing: The making of products from raw materials and other inputs like labor, machinery, and tools. 7. Mass Production: Using technology and assembly lines to make large quantities of the same product. 8. Operations: The daily functioning of an organization, managing the inputs and outputs, and includes manufacturing, purchasing, and logistics. 9. Output: The end result of the process that uses inputs to make goods and services. 10.Production: The creation of usable goods. 11.Purchasing: The organized acquisition of goods and services on behalf of a business. 12.Quality Control: The process of measuring and testing a product or service against the intended quality benchmarks, to ensure consistent quality. 13.Supply Chain: A company’s network of people, suppliers, activities, and resources that create and move a product from suppliers to the end consumer. 14.Transportation: To move goods or assets from one place to another. 1-6 Glossary Quiz he making of products from raw materials and other inputs like labor, machinery, and T tools. Answer:Manufacturing Resources used to make goods and services, like raw materials, labor, machinery, and tools. Answer:Inputs To categorize, sort, and transport goods to all their final destinations as efficiently, inexpensively, and carefully as possible. Answer:Distribution The organized acquisition of goods and services on behalf of a business. Answer:Purchasing The creation of usable goods. Answer:Production Managing vehicles over their useful life to ensure efficient operations, durability, and reliability, as well as monitoring driver performance and tracking each vehicle’s location at all times. Answer:Fleet Management Optimizing the flow of inputs and outputs until goods reach their final destination. Answer:Logistics The daily functioning of an organization, managing the inputs and outputs, and includes manufacturing, purchasing, and logistics. Answer:Operations Sales revenue minus cost of goods sold (COGS); it is the margin before any other expenses are subtracted. Answer:Gross Profit The end result of the process that uses inputs to make goods and services. Answer:Output Using technology and assembly lines to make large quantities of the same product. Answer:Mass Production To move goods or assets from one place to another. Answer:Transportation The process of measuring and testing a product or service against the intended quality benchmarks, to ensure consistent quality. Answer:Quality Control 1-6 Lesson Quiz he daily functioning of an organization, managing the inputs and outputs, which also T includes manufacturing, purchasing, and logistics is: Answer:A) Operations It is said that strategy is responsible for 10% of a business’s success, while ___________ accounts for the other 90%. Answer:B) execution The making of products from raw materials and other inputs like labor, machinery, and tools is: Answer:C) manufacturing Using technology and assembly lines to make large quantities of the same product is: Answer:D) mass production Which of the following is an example of an output? Answer:A) house The organized acquisition of goods and services on behalf of a business is: Answer:B) purchasing What does purchasing manage? Answer:A) suppliers in the supply chain Sales revenue minus Cost of Goods Sold (COGS) is: Answer:B) gross profit A candy store owner purchases chocolates for $6 per box then sells the chocolates for $10 per box. What is the store owner’s gross profit for the chocolates? Answer:B) $4 or 40% What is optimizing the flow of inputs and outputs until goods reach their final destination? Answer:C) logistics To categorize, sort, and transport goods to all their final destinations as efficiently, inexpensively, and carefully as possible is: Answer:A) distribution Vanilla for ice cream is obtained through: Answer:B) purchasing 1-7 Types of Business Models 1-7 Lesson Text Business Model vs Business Plan otable business author Michael Lewis said that a business model is “a term of art.” N Like art for some, most people know it when they see it, but cannot accurately describe it. He was also making a point that sometimes businesses can make something simple seem complicated. business model is different from a business plan. Abusiness modelis simply, how A a company sells its products to customers and its plan for making a profit, while a business planis a roadmap of the business’s goalsand objectives, and the strategy and details of how those goals and objectives will be achieved. The business plan is the full story, of which the business model is one part. A business plan is often described by using a Pitch Deck. here are many types of business models, and some blend together or are a T combination of more than one. And some companies change their business models over time, in order to adapt to technology and to changing consumer preferences. For example, traditional bricks-and-mortar retailers have added an online presence; this combination is often called bricks-and-clicks. Types of Business Models Let’s go over the many different types of business models: 1. F irst is a Manufacturer: A manufacturer makes stuff. Examples of manufacturers include: GE, Proctor and Gamble, Pfizer, and Boeing. More specifically, amanufacturermakes finished productsfrom raw materials steel mill, for example Nucor or U.S. Steel, forms steel products that a car A manufacturer might purchase. Then car companies like Ford, Honda and Tesla, take steel, aluminum, plastic, glass, and other materials and make cars. Then Ford might sell their cars to a middleman, like a car dealer, who then sells them to consumers, while Tesla may sell their cars directly to the consumer. 2. T heDirect to Consumer (D2C)model means selling yourproduct directly to your customers, the end user, without third-party retailers, wholesalers, or other middlemen. So Ford and Tesla both make cars, so they are both manufacturers, but they go about selling their cars differently. 3. Another business model type is a Distributor. Adistributorbuys products from manufacturers and resells them either to wholesalers, retailers, or
