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.