HOW DO SMALL BUSINESSES OPERATE HOW DO BUSINESSES ORGANISE THEIR ACTIVITIES N4 BUSINESS IN ACTION/N5 UNDERSTANDING BUSINESS LEARNING INTENTIONS AND SUCCESS CRITERIA LEARNING INTENTIONS: I understand how businesses satisfy customers, control costs, manage resources and react to the market. SUCCESS CRITERIA: I can describe how businesses organise their activities. I can outline how the Marketing, Operations, Human Resources and Finance departments contribute to the success of a business. I can describe how the activities of the functional departments link together. FUNCTIONAL ACTIVITIES To be successful and prevent failure, a business will have to try to do the following: SATISFY CUSTOMERS CONTROL COSTS MANAGE RESOURCES REACT TO THE MARKET The main way that a business tries to do this is to organise the day-to-day work of staff into different activities that will each help complete the above tasks. These different activities which all contribute to the success of the business are known as FUNCTIONAL ACTIVITIES. We will look at these in more detail in later units of work, but for the moment we will have a quick overview of what each functional department does. Marketing Operations (Satisfies customers and reacts to the market) (Satisfies customers manages resources and controls costs) Functional Activities Human Resources (Satisfies customers and manages resources) Finance (Manages resources and Controls Costs) MARKETING Marketing activities involve finding out what customers want and then designing goods and services that will meet their needs and wants. These activities help a business satisfy Customers and react to the market. MARKETING ACTIVITIES The activities undertaken in the Marketing Department include: Market Research Product Design and Development Determining the Marketing Mix (Product, Price, Place, Promotion) Determining the Target Market Promoting the final product or service OPERATIONS Operations activities in a small business focus on making sure that it produces goods and services to the standards that customers expect. These activities help a business satisfy customers, manage resources and control costs. OPERATION ACTIVITIES The activities undertaken in the Operations Department include: Choosing efficient and cost-effective suppliers Managing stocks of materials to avoid wastage and stock shortages Organising production in the most efficient manner for the business size and type of product Maintaining quality of product or service Storing and distributing finished products to customers HUMAN RESOURCES Human resource activities involve making sure that there are enough workers in the business, that they are treated correctly and that they provide a good standard of service for customers when they are buying from the business. These activities help a business manage resources and satisfy customers. HUMAN RESOURCE ACTIVITIES The activities undertaken in the Human Resource Department include: Recruitment and Selection of Staff Training Staff to provide good quality and good service Motivating staff to perform well for the business Monitoring staff performance to identify areas of strength and weakness FINANCE Finance activities involve managing the money of the business so that it can afford to pay its bills and so survive. These activities help a business control costs and manage resources. FINANCE ACTIVITIES The activities undertaken in the Finance Department include: Raising the finance needed by the business Receiving and banking money from customers Paying the bills received from suppliers Paying the wages and salaries of staff Keeping financial records to determine profit or loss and the net worth of the business Analysing finances to monitor performance and predict future trends Match it Task Some of the class will be given an activity description. The others will be given a functional area name. Calmly move around your classmates and find someone where the activity description matches the functional area. SIT DOWN together with your match and raise your hands WORKING TOGETHER Although these 4 functional areas have very different activities, there are many links between the departments. Can you think of any links? Complete Worksheet 10 to see some more links. Complete Worksheet 11 to see the consequences of bad work in the departments.