Business Functions

Business Functions

All organizations require resources to carry out their business

functions. A way of judging the success of a business is to compare

the resources the business uses with the value of the product that

results. One way of considering the resources used by business is to

classify them into factors of production. The main factors of

production are capital, labor and land.

Capital refers to any manufactures product used by the business to

make other products. This category therefore includes all machinery,

vehicles and office equipment used in the business. It also includes

the companies building.

Labor is the human resource used by business organization during

production. It refers to the input of physical and mental activity of

the employee.

Land in the context of this classification is not only the site on

which the business is located, but also all the natural resources it

might use. So resources consumed by the business, such as coal, gas,

oil and water is classified as land.

Some economists would add enterprise to the list of factors of

production. Enterprise refers to the role of the people who risk their

money in establishing and operating the business. The other resources

would not be put to use without the catalyst of entrepreneurs wiling

to invest their money and take the risk.

All businesses combine factors of production as an essential part of

their production activities. To combine these factors, to engage in

production and to achieve their objectives organizations undertake a

number of functions. The major business functions include finance,

production, human resources, marketing, administration and research

and development. Not all organizations have separate departments to

deal with these functions. Small business might merge many of these

functions within their administration department, with responsibility

in the hands of one or two people. As a business grows the number of

workers increase, therefore the business id more likely to employ

specialists to carry out functions such as finance and marketing.

A separate department normally carries out the finance functions of

the business. The finance department carries out number important

activities such as the financial department records all the financial

records, listing the revenue earned by the business and the

expenditure necessary for production. They oversee customer accounts

to ensure that the business receives the money to which it is entitled

and therefore able to pay its own bills. Employees in the finance

department may interpret financial data for the senior and middle

mangers to ensure that decision making is based on the most up to date

information available. They also provide financial information about

the company to important external bodies. Accountants analyze the cost

incurred by the business and compute standard costs associated with

various aspects of the firm’s activity. The financial function is vital

to the wellbeing of all organizations. The consequences of failure of

the financial function to carry out its duties efficiently