Business Functions Flashcards
Business Functions: Functional structure
Employees are grouped together by skill set.
Board of Directors
- Finance
- financial accounting
- management accounting
- treasury
- Production
- IT
- Human Resources
- R&D
- Marketing
- sales
- advertising
- market research
Advantages of a functional structure of a company:
- functional expertise enables planning and focus
- control: assigning clear responsibility to activities
- budgeting: department can control costs and review performance
Disadvantages of a functional structure in a business:
- poor communication, because functions don’t work together day to day
- lack of goal congruence: act for own functions benefits, not organisation’s
- no direct responsibility: for key products or key markets, may lose focus in key areas
Procurement =
The acquisition of inputs, or resources.
Deciding which suppliers and how many to use.
Responsibilities of a procurement dept.
- manage long-term supplier relationships
- put out invitations to tender for work
- review tenders submitted
4 stages of development of procurement:
Minor part of the organisation:
1. Passive: procurement happens when someone needs something in the business
2. Independent: aims to negotiate the best prices
3. Supportive: supporting the strategy of the business
4. Integrative: seen as key strategic function - key to business success
Critical to success of the business
Purchasing vs supply:
Purchasing: to acquire items as needed by the business (passive and independent stages)
Supply: focus on strategy and maintaining good relationships (supportive and integrative stages)
Supplier sourcing strategies:
- Single sourcing (from one supplier)
- multiple sourcing (use same type of suppliers at the same time)
- delegated sourcing (sourcing is delegated to one supplier)
- parallel sourcing (using a combination of the other strategies)
