Critical Functional Areas and Departments of a Business

Any business requires specific areas that regulate all its important processes for it to perform efficiently. Just like the human body requires various organs and parts to regulate each function, the business department has critical functional areas that are responsible for overseeing the assigned processes to ensure the business runs properly and smoothly. All these areas need to be in coordination with each and if one of them fails, the rest will follow inevitably so each one of them is important and required.

Although each area has its own significance, its exact values may vary on the type of business a company is running. For example, if it is a retail company then it would not require the Research and Development department as much as it would require the Operation Management one. There are generally five to six critical functional areas of business management, some businesses might have more or less depending on their specific needs, and you must understand them fully before implementing them in your business to get the required results. These critical functions include:

1. Strategy:

The first thing you need to do before starting up your business is making a strategy for it. This includes everything from how you will be operating, what market you will be targeting, your SWOT (strengths, weaknesses, opportunities, and threats) analysis, and competitor analysis. You need to analyze your key objectives, what you want your business to look like in the future, and make your vision and mission statements. After this, you have to start the process of strategic planning where you will decide how to get to the goals and objectives you have set. You will need to build an entire business plan.

Strategy is a long-term and continuous process; it does not stop after your business has been established. It is used consistently throughout all your operations such as expansion and it helps in business development. You also need to use it when starting a new service to plan its positioning, marketing, pricing, and promotions. All in all, strategy is the brain of your business and the most integral part of it.

2. Marketing and Advertising:

The first thing you need to do before making a product or providing a service is to conduct market research. By doing market research you will come to know about where the gap in the market and then you can design your product or service according to it to fill or target that gap. This is how you get customers and generate sales and revenue. You must understand the market and your customers and what medium you will use to reach maximum customers. The marketing and advertising department is responsible for all the creative work as well such as packaging, promotions, and advertising.

Your product can not sell if people do not know about its existence, this is where the marketing and advertising department comes in. They need to create brand awareness, brand identity, and image, handle your social media marketing, run promotional campaigns and do all that is required to ensure your business reaches the right customers at the right time.

3. Finance and Accounting:

Finance and accounting go hand in hand and one cannot function properly without the other. The financial department is crucial for performing all financial operations of the business such as identifying how much money the business requires, where to get that money, how to pay that money back, where to invest that money and what resources to buy with that money. The accounting department makes sure that managers and other executives receive this financial information in a summarized and manageable form according to relevancy and proper timings. A company cannot function if its financial operations are not handled properly, your business can face bankruptcy and all its growth.

4. Human Resources:

There’s a lot to Human Resources that meets the eye. A business cannot function at all if it does not have an efficient HR Department. It is responsible for more than just acquiring talent, it has to make sure the hired talents are suited for the job, train them and monitor their daily performance to make sure all the operations run smoothly. The employees are what makes any business successful, and HR is there to make sure the employees are performing the best they can. If a business does not have employees with the required skills and capabilities then it will fail. The HR department makes sure this does not happen by constantly keeping a check on them, they even forecast potential issues and resolve them before they escalate into something bigger.

5. Operations:

The duties of the Operation Department vary on the requirements and needs of the business but its purpose remains the same. It is responsible for making sure the resources like materials, money, informational data, and workers are being used correctly to make the required products or services. It oversees and monitors the daily procedures of every operation to ensure it is running smoothly and on time. It also overlooks the production and manufacturing and other supply chain procedures and can restructure any procedure entirely. Operations Departments also work for quality assurance so that the business can deliver the best quality products or services.

A business needs to have proper management and accountability and the operations department plays that part. A lot of businesses fail because their operations were not functioning properly even when they had the required resources so the operations department must constantly monitor every operation of the business.

Some other functional areas of the business might include IT, Supply Chain, and Customer Service. All of these functional departments must be coherent and work in coordination because they are internally linked, for example, the operations department cannot initialize a process if does not know how much money it needs to spend on resources and the financial department will be responsible for providing this information. It is necessary that all the departments work to their utmost potential for a business to grow and develop.

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