Business Function VS Business Process PDF

Course LM01-BABA Packet...

Course LM01-BABA Packet 02 0113 Lesson Proper Lesson 02: Business Function VS Business Process Topic Outline: Course Packet 02 1. Business Function 1.1 Functional areas of operation 2. Business Process 2.1 Sharing Data 2.2 Functional Areas and Business Processes of a Small Business 2.3 Functional Area Information Systems  Review. Levels of Management We have already seen how important management is to an organization. In management to there are levels depending on seniority and experience levels as well as ability. Let us look at the levels of management. Top Management The top managers are the masterminds of all organizational policies. They are responsible for heading and putting forth the plans and ideas to ensure the welfare of the whole organization. Further, they are responsible for all activities and their implications for the society. In fact, they are required to handle diverse elements and coordinate the activities of various departments to ensure that they always stay in line with the company’s objective. Generally top officials like the chief executive officer, chief operating officer, president etc. constitute the top managers. It involves a lot of workload and commitment towards the organization. Middle Management The main task of middle managers is to carry out plans which are a brainchild of top managers. Additionally, they are responsible for extracting work productivity out of first-line managers. This means that middle managers are subordinate to top managers and superior to first-line managers. Division heads, plant superintendents and operations managers qualify as middle managers. They are responsible for proper implementation of plans laid out by the top managers. Also, they are required to ensure proper functioning of their department by assigning duties, ensuring that their department has proper personnel, motivating their subordinates and cooperating with other departments for smooth functioning of the organization. Supervisory or Operational Management Operational managers are at the bottom of the hierarchy. However, they rightly are important for a firm root of the management system. This is because they directly interact with the workforce. Their job is to supervise the workforce and communicate the objectives. Through their efforts quality of output is maintained, wastage of materials is minimized, and safety standards are maintained. Further, the quality of the output Learning Module: Fundamentals of Business Analytics 33  Course LM01-BABA Packet 02 0113 depends on the loyalty, discipline and commitment by the workforce.  Activity. Course Packet 02 Let us start on how much you remembered: What are the functions of management?  Processing of the Activity. Application of their knowledge form their course.  Brief Lesson. 1. Business Function A major organizational unit of a business which has specific responsibilities and performs activities on a regular basis to enable the business to carry out its mission. The function refers to both the organizational unit and the types of activities it performs. 1.1 Functional areas of operation Human Resource It is the most important asset in the business. The heart of an organization lies on its people.HR Department is responsible for recruiting the right people with the required skills, qualifications and experience, is responsible for determining the salaries of different positions in the company and is also involved training the company’s employees for their development. Sales and Marketing Marketing/Promotion Promotional activities and advertising are the best ways to communicate with your target for them to be able to know the company products and services. Effective marketing and promotional activities will drive long-term success, profitability and growth in market shares. This department is responsible for promoting the business to generate sales and help the company grow. Its function involves creating various marketing strategy and planning promotional campaigns. They are also responsible for monitoring competitor’s activities Sales In every business, sales department play the biggest role in any Learning Module: Fundamentals of Business Analytics 34  Course LM01-BABA Packet 02 0113 organization’s success. The sales department is responsible for generating revenue. The sales department is tasked to ensure that the sale of products and services result to profit. The sales department Course Packet 02 coordinates with the marketing department in terms of brand- awareness, product-lunching and more. Sales need to develop ways on how to sell the product to their target users/customers. Distribution The distribution department is responsible for the receiving orders and delivering orders to the customer at the right place, at the right time. If goods are not suitable for the distribution channel, expenses involve in the distribution will be wasted. Customer Service Support The Customer Service department is responsible for interacting with customers regarding enquiries, complaints and orders. It also includes having a help desk/reception and contact centers. It is important for a business to maintain and create relationship with their customers. Customers service should be before, during and after the purchase. This department focuses on giving good service support, especially to potential, new and existing customers. Part of a business customers relationship management is having efficient customers service support. A good relationship with customers will create customers-loyalty. Supply Chain Management (SCM) Production The production department is concerned in manufacturing the products, where input(raw materials) are made into finished output through a series of production process. This department’s function is to ensure that the raw materials are made into finished product effectively and efficiently and in good quality. This department should also maintain the optimum inventory level. Operations The operations department is responsible for overseeing, designing, controlling the process of production and redesigning business operations in the production of good and/or services. In a manufacturing company, operations department design processes to produce product efficiently. This department also responsible for acquisition of materials ensuring a functional flow of entire business. Purchasing The purchasing department is responsible for the procurement of raw materials, machineries, equipment and supplies. This department ensures that the material are in right quantity, at the right price, made available in the right from the right supplier. It is also their task to inform the top management of the changes of the price or Learning Module: Fundamentals of Business Analytics 35  Course LM01-BABA Packet 02 0113 material development that could affect the company sales. Accounting and Finance Course Packet 02 Responsible for accounting, auditing, planning and organizing the company’s finances. They are also responsible in producing the company’s financial statements. Cash flow is the lifeblood of any business. It is Important to manage business cash outflows and inflows. The company can’t operaqte without money. Administrative/Management The administrative and management is the backbone of the business. The administrative and management department’s function is to handle business planning, decision-making and financial review. This department links with other department to ensure the smooth flow of information and operations. Business Functional Area Learning Module: Fundamentals of Business Analytics 36  Course LM01-BABA Packet 02 0113 Functional areas are interdependent ◦ Each requires data from the others Course Packet 02 Better integration of functional areas leads to improvements in communication, workflow, and success of company Information system (IS): Computers, people, procedures, and software that store, organize, and deliver information Example in Supply Chain Management Supply chain management is the management of the flow of goods and services and includes all processes that transform raw materials into final products. 2. Business Process A set of activities, which draw on one or more business functions to help carrying out the organization’s mission. The business process often cuts across organization and functional lines. It may involve multiple organizations and business functions. Collection of activities that takes one or more kinds of input and creates an output that is of value to customer Functional Areas and Business Process of a small business Learning Module: Fundamentals of Business Analytics 37  Course LM01-BABA Packet 02 0113 Course Packet 02 2.1 Sharing data An effectively and efficiently between and within functional areas leads to more efficient business processes Integrated information systems Systems in which functional areas share data in an organized way. Gives the organization competitive advantages and helps in achieving strategic goals, based on a special management ideology and using the latest technologies, including a number of functional subsystems that cover all areas of the company activities. (more discussion in our course packet #03) Business Process Example Activities to the sale of personal smartphone 2.2 Functional Areas and Business Processes of a Small Business Example: A fictitious KAPE coffee shop Examine business processes of the coffee shop See why coordination of functional areas helps achieve efficient and effective business processes Look at how integration of the information system improves the business Functions of Marketing and Sales in KAPE coffee shop Developing products, Determining pricing Promoting products to customers Taking customers’ orders Helping create a sales forecast to ensure the successful operation of the coffee shop. Marketing and Sales tasks for the KAPE coffee shop Formal recordkeeping not required Need to keep track of customers Learning Module: Fundamentals of Business Analytics 38  Course LM01-BABA Packet 02 0113 Product development can be done informally you gather information about who buys which kind of coffee and note what customers say about each product. You also analyze historical sales records to spot Course Packet 02 trends that are not obvious. Deciding whether to sell a product also depends on how much it costs to produce the product. Good repeat customers allowed to charge purchases—up to a point Records must show how much each customer owes and his or her available credit Supply Chain Management for the KAPE coffee shop The functions within Supply Chain Management (SCM)include developing production plans, ordering raw materials from suppliers, receiving the raw material into the facility, manufacturing products, maintaining facilities, and shipping products to customers. In our coffee shop example, Supply Chain Management functions involve making the coffee (manufacturing/production) and buying raw materials (purchasing). Production planning requires sales forecasts from M/S functional area. Sales forecasts: Analyses that attempt to predict the future sales of a product Production plans used to develop requirements for raw materials and packaging Raw materials: Bottled spring water, fresh lemons, artificial sweetener, raw sugar Packaging: Cups, straws, napkins SCM and M/S must choose a recipe for each coffee product sold Accounting and Finance for the KAPE coffee shop Performs financial accounting to provide summaries of operational data in managerial reports, and it is also responsible for tasks such as controlling accounts, planning and budgeting, and cash-flow management. Accounting and Finance functions include recording raw data about sales transactions, raw material purchases, payroll, and receipt of cash from customers. Raw data: Numbers collected from sales, manufacturing and other operations, without any manipulation, calculation, or arrangement for presentation Data from Accounting and Finance used by Marketing and Sales and Supply Chain Management Sales records are important component of sales forecast Sales forecast is used in making staffing decisions and in production planning Records from accounts receivable used to monitor the overall credit-granting policy of the coffee shop Learning Module: Fundamentals of Business Analytics 39  Course LM01-BABA Packet 02 0113 Human Resources Even a simple business needs employee to support the Marketing and Sales and Supply Chain Management functional areas, which means Course Packet 02 the business must recruit, train, evaluate, and compensate employees. These are the functions of Human Resources (HR). HR uses sales forecasts developed by the individual departments to plan personnel needs 2.3 Functional Area Information Systems  Potential inputs and outputs for each functional area described next  Note the kinds of data needed by each area and how people use the data  Information systems maintain relationships between all functional areas and processes. Information system is the combination of people, information technology, and business processes to accomplish a business objective. Marketing and Sales As shown in Figure 1-4, the Marketing and Sales (M/S) area needs information from all other functional areas to effectively complete the business activities for which it is responsible. The Marketing and Sales functional area exchanges data with customers and with the Human Resources, Accounting and Finance, and Supply Chain Management functional areas. Customers communicate their orders to sales staff in person or by telephone, email, fax, the Web, and so on. In the case of Web-based systems, customer and order data are stored automatically in the information system; otherwise, data must be entered manually, by typing data into a computer Learning Module: Fundamentals of Business Analytics 40  Course LM01-BABA Packet 02 0113 keyboard or point-of sale system, or by using a bar-code reader or similar device. M/S has a role in determining product prices  Pricing might be determined based on a product’s unit cost, plus Course Packet 02 some percentage markup  Requires information from Accounting and Finance, and Supply Chain Management data  M/S needs to interact with Human Resources to exchange information on hiring needs, legal requirements, etc. To summarize Inputs for Marketing and Sales could include the following: Customer data Order data Sales trend data Per-unit cost Company travel expense policy Outputs for Marketing and Sales could include the following: Sales strategies Product pricing Employment needs Supply Chain Management Supply Chain Management (SCM) also needs information from the various functional areas, as shown in Figure 1-5. The Supply Chain Management functional area exchanges data with suppliers and with the Human Resources, Marketing and Sales, and Accounting and Finance functional areas Production plans are based on information about product sales (actual and projected), which comes from Marketing and Sales. The purchasing function bases its orders of raw materials on production plans, expected shipments, delivery lead times, and existing inventory levels. With accurate data about required production levels, raw material and packaging can be ordered as needed, and inventory levels Learning Module: Fundamentals of Business Analytics 41  Course LM01-BABA Packet 02 0113 can be kept low, saving money. Supply Chain Management records can provide the data needed by Accounting and Finance to determine how much of each resource (materials, Course Packet 02 labor, supplies, and overhead) was used to make completed products in inventory. Supply Chain Management data can support the Marketing and Sales function by providing information about what has been produced and shipped. Supply Chain Management also interacts with Human Resources. For instance, Supply Chain Management passes hiring information to Human Resources, and Human Resources informs Supply Chain Management of the company’s layoff and recall policy, which might pertain to workers in the plant. To summarize inputs for Supply Chain Management could include the following: Product sales data Production plans Inventory levels Layoff and recall company policy Outputs for Supply Chain Management could include the following: Raw material orders Packaging orders Resource expenditure data Production and inventory reports Hiring information Accounting and Finance Accounting and Finance (A/F) needs information from all the other functional areas to complete its tasks accurately A/F personnel:  Record company’s transactions in the books of account  Record accounts payable when raw materials are purchased and cash outflows when they pay for materials  Summarize transaction data to prepare reports about company’s financial position and profitability People in other functional areas provide data to A/F M/S provides sales data  SCM provides production and inventory data  HR provides payroll and benefit expense data  M/S personnel require data from A/F to evaluate customer credit Figure 1-6 The Accounting and Finance functional area exchanges data with customers and with the Human Resources, Marketing and Sales, and Supply Chain Management functional areas Learning Module: Fundamentals of Business Analytics 42  Course LM01-BABA Packet 02 0113 Course Packet 02 To summarize, inputs for Accounting and Finance could include the following: Payments from customers Accounts receivable data Accounts payable data Sales data Production and inventory data Payroll and expense data Outputs for Accounting and Finance could include the following: Payments to suppliers Financial reports Customer credit data Human Resources Like the other functional areas, Human Resources (HR) needs information from the other departments to efficiently complete its business activities.  Tasks related to employee hiring, benefits, training, and government compliance are all responsibilities of HR  HR needs accurate forecasts of personnel needs from all functional units  HR needs to know what skills are needed to perform a particular job and how much the company can afford to pay employees. Observing governmental regulations in recruiting, training, compensating, promoting, and terminating employees. Human Resources must create accurate and timely data and reports for management use. For example, Human Resources should maintain a database of skills required to do particular jobs as well as the prevailing pay rate for each position. Learning Module: Fundamentals of Business Analytics 43  Course LM01-BABA Packet 02 0113 Figure 1-7 The Human Resources functional area exchanges data with the Accounting and Finance, Marketing and Sales, and Supply Chain Management functional areas Course Packet 02 To summarize, inputs for Human Resources could include the following: Personnel forecasts Skills data Outputs for Human Resources could include the following: Regulation compliance Employee training and certification Skills database Employee evaluation and compensation Enhancement Activity. Refer to Activity Sheet No. 02. Application. Refer to your Assessment Sheet 02 Course Packet Discussion Forum To be provided in Google class or during scheduled online class. Post-Assessment To evaluate your level of mastery in achieving the learning outcomes, validate the concepts learned and provide more opportunities to deepen your learning. You have to take an assessment test/quiz for the topic which will be in Google form and shall be available only for a considerable period of time. The link shall be posted in the LMS/Google classroom. You have to get 60% out of the total number of items to pass. Good luck! Learning Module: Fundamentals of Business Analytics 44