BUSINESS FUNCTIONS AND THEIR INTERACTIONS
Modern businesses in any type of industry vary in their size and scale of operations. When it comes to the analysis of the core business activities, respectively of whether the business has a global, international or national scale, the key responsibilities and functions can be divided into four critical areas: operations, marketing, accounting and finance and the Human Resource Management (HRM). The reality shows that even further break down and segmentation of tasks within these elements does not change the overall layout responsibilities in these areas. The purpose of this assignment is to look at some specific areas of responsibilities of each of the four functions.
Operations
Operations are one of the critical elements of an organizational structure. Sadler (2003) outlines several functions of operations. First of all, manufacturing and assembling constitute the major part of the operational work in production companies. Depending on the size of the organization, manufacturing and assembling can be done fully in-house or outsourced partially or completely to the third party providers. In both cases, operational departments in organizations are responsible for control over quality, safety and logistic side of these processes. Another important role of operations is a provision of services. This function has a wider spread of interpretations. One of the most common responsibilities in this area can be described through retail sector businesses, where operations are responsible for all the upstream and downstream logistics, transportation, and planning for the goods, which reach the final customer. Additionally, service companies are even further reliant on operational functions, which in these situations includes call centers, documentation and other functions where the raw material is the information and the final good is the service, provided to the client.
With the above in mind, an operational function is responsible for the effective transformation of raw materials into finished goods and services (Keller and Horn, 2003).
Marketing
Marketing is a strategic organizational department, which is responsible for building the organizational vision, mission, and strategy aimed at an effective and profitable process of "delivery" of goods and services from a manufacturer to the client. In other words, marketing is responsible for the formulation of answers to the following three questions: "What is the company selling?" "Who is the target customer, or to whom is the company selling its product?" and "Where is the product sold?”. Kotler et al (2011) developed one of the most used and recognized model of evaluating organizational marketing strategy, which is based on 7P's and further enhances the above-mentioned questions, by looking at price, product, promotion, place, physical evidence, people, and process. This allows demonstrating the wide range of roles , which fall under the responsibility of a marketing function. Aaker (2012) notes that organizational success is dependent on the marketing ability to create and foster unique and attractive brand. The author outlines the key role of marketing in creating the brand strategy and product and customer experience design. The above demonstrates how marketing functions go beyond simple sales and advertisement strategies and how it becomes more complex, based on the size and scale of the company's operations.
Accounting and Finance
The core long-term goal of any company and in any industry is built the sustainable and profitable business,which creates shareholders value. The function, which is responsible for evaluating this element and administrating the flow of financial capital is the accounting and finance departments. The key daily functions of this department include administration and compliance practices, financial management, financial planning and management and change. Based on the critical contribution of financial assets to the activities of another department, the daily activities of finance are strongly linked to other functions in the organizations. In other words, marketing, commercial and operational strategies are reliant and dependent on the accounting and finance department for the budget, return on investment and profitability management. Finance and accounting are the heart of the organization, which creates the bond between all other departments and ensures healthy business model.
Moreover,while the responsibilities of finance and accounting within the organizations are clear and aim at building healthy strategies in other organizational areas, it is important to remember that accounting and finance are also the first point of contact for the organization with the external environment. That said, financial management and compliance team are responsible for effective and legally accurate operations of the company, which are aligned with the national ad local regulations at the locations, where this company operates.
Human Resource Management (HRM)
HRM is one of the most controversial functions in the companies. This controversy comes from the evolution of the business environment and more complex external arena, in which companies have to operate. It is evident that over the past several decades, HRMstarted to be seen less as a business support function and more as a strategic organizational asset.Modern HRM organization involves several major strategic and operational objectives. First of all, HRM is responsible for recruitment and selection process in the companies, dismissal, and redundancy, where the professionals in the area develop the job description, specification, and design. Secondly, HRM creates and implements training and development programs, aimed at building on profitability and operational efficiency as well as individual motivation.With that in mind, retention rates improvement constitutes an important element of the HRM job (Swanson and Elwood, 2009).
The above does not limit the range of HRM functions, as the professionals in this department look at employee relationships strategies, compliance and compensation and benefits schemes. The complexity and the roles of HRM vary depending on the size of the company and its governance structure, as much as on its overall business strategy.
Main Areas of Conflict
While organization should be seen as a mechanism, which operates effectively and efficiently, the reality shows that the internal functions and departments are not always working in cooperation. These conflicts and misalignment of the goals of the departments are one of the biggest challenges for HRM and business strategy in a modern organization. The lack of focus on solving these silo thinking issues and competition between each of the four functions can lead to significant financial implications and even to the failure of the organizations in a long run. With that in mind, understanding of the impact of cross-departmental conflicts is critical for organizational leadership (Sims 2007).
Operations and Marketing
One of the first touch points in a company are the operational and marketing departments. The relationships and conflicts between these two functions take academic and business professionals long way back. As both functions are often seen as the backbone of any business, these functions are the elements of the structure, which create on the first-hand knowledge of market needs, expectations, and desires. The reality shows that there is a significant difference in objectives between these two functions, which creates the conflict of interests and silo thinking. Some of the major areas of conflict include the understanding of the stock and logistics strategies.That said, while the objective of operations is to reduce safety stock and increase product turnaround, marketing department tends to increase stock to ensure that the product is available at all times to the clients. Another important difference in views is the dialog about the operational capacity and order acceptance. Marketing and operational departments often find themselves in a conflict with regards to what kind of orders and when to accept them. While the objective of a marketing department is to increase sales and ensure that the client is served at all costs, operations are concerned with the efficiency and quality of the service, including the ability to meet clients expectations in terms of quality, characteristics, and timely delivery.
Finally, there is a life-long conflict between the two functions, where operations are aiming to build lean and fast-responding structure, where the company can improve its profitability and reduce costs by eliminating "waste" from production and supply chain in general, marketing is concerned with "customizability" and "personalization of the products as well as their variety. Moreover, the quality control builds on another conflict of interest, where operations are often seen by marketing professionals as those, responsible for slowing down the process and building on bureaucracy, rather than facilitating the sales. This, in turn, builds on the conflict over the authority and creates confusion with regards to the delegation of responsibilities (Sadler 2003).
The above are just some of the challenges for organizations when it comes to the management of conflict between marketing and operations functions. It is evident that each company is different and, thus, the type of conflicts and the degree to which these conflicts affect the company are different. At the same time, the examples above give a good helicopter view on the situation.
Accounting and Operations
Similarly to the conflicts, outlined between the marketing and operations, accounting professionals often have differentiated understanding and goals, which builds on the confusion over strategic goals and silo thinking within the financial and accounting departments. It is evident the core goal of the financial department is to ensure that the company is led and managed in a way, which builds on profitability and shareholder value. This means that the accounting and finance are mostly concerned with the reduction of costs and boosting the profit margins of the products and services sold to the final client. At the same time, operations are responsible for quality and safety of the production, assembling and logistics operations in the company. This means that the line management is often concerned with attracting higher costs to their process to ensure that the longer-term outcome is more consistent and quality standards are met. One of the major conflicts in this area, therefore, is the approval of an operational budget for day-to-day operations and new projects, especially, in the situations, where the impact of the project r activity does not demonstrate immediate and medium term return on the investment. This conflict is further complicated by the line management silo thinking with regards to other functions. As such, operations often assume that the major financial inflow should go to product development and innovation while marketing and sales budget should receive secondary attention.
Another important conflict area to consider between the two departments is the cost of labor and fixed assets. It is always an objective of an operational department to build more solid and modern structure and production line,which enables long-term return in terms of production quality and such strategies as kaizen, continuous improvement and other strategic philosophies, aimed at operational excellence. Accounting function often does not recognize these strategies as value adding to the company as they cannot bring the visible financial return, which can be accounted in the balance sheet and the cash flow statement of the organization. Many companies start becoming more forward-thinking, where shareholders are prepared for longer-term return at the cost of re-investing the capital to strategically important operational programs, but this process will always see resistance and will build on the complexity of the decision-making process due to the difference of opinions and objectives even among the shareholders.
Operations and HRM
As it was previously mentioned, globalization and internationalization of the businesses, growing diversification of the labor and markets, demands organizations start seeing HRM as a strategic element rather than a supportive function in an organization. Operations are critical for the companies and the day-to-day running of the business as well as delivery of the goods and services to the client in one or another form depend on the professionals in this area. With that in mind, there are a lot of differences in the HRM and operational management see the strategy and responsibilities of the departments. One of the major conflict areas is the understanding of the responsibilities and the division of authority between the departments. Many companies choose to provide line management with the greater level of autonomy over the operations, while others concentrate the workforce planning and staffing in the hands of HRM. In any situation, such questions as job design, staffing and decisions with regards o dismissals and promotion can become central to the conflict between the two departments.
Another important area of concern are the workplace policies. One of the simplest examples in this area is the management and leadership style, where transformational approach to people management from operational supervisors and line managements allows a higher degree of decision-making authority to lower level employees, more authoritarian managers will often ignore the personal interests of individuals and can be forceful in aligning the work of all employees, based on the best performer. This leads to conflict over the attitude and compliance with regards to work conditions, tiredness, accidents at a workplace and other issues, central to HRM (Swanson and Elwood 2009).
The above also leads to significant conflict related to the performance appraisal and management in the companies. While HRM role is to develop a coherent and lean approach to the management of individual performance and ensure that all the employees are treated with respect and equally, line managers often take the individual approach to the performance management of their staff. The scale of conflict varies from failures to use the performance management systems and provide accurate and timely feedback to the lack of understanding and training on a creation of Key Performance Indicators (KPIs) for the department.
Resolving the conflict between operations and HRM is the difficult task, which demands on-going control and training of professionals from both sides. Training is often not enough to ensure that these two functions work in a cooperative and mutually beneficial environment. With that in mind, the solutions for the issues can be seen in the development of the business model and performance appraisal system, which ensures shared goals and responsibilities between the departments and fosters cooperation.
References
Aaker, A. David, 2012. Building Strong Brands. New York: Simon and Schuster.
Keller, M. & Horn P., 2003. Strategic Management. 2nd Edition. Journal of Literature, 12(5), pp.66-89.
Sadler Ph, 2003. Strategic Management. 2nd Edition. London: Kogan Page Limited
Kotler, P., Shalowitz, J., & Stevens, R. J. (2011). Strategic marketing for health care organizations: building a customer-driven health system. John Wiley & Sons
Swanson R.Arnold. and Elwood F.Howard.. 2009. Foundation of Human Resource Development. 2nd Edition. San Francisco: Barret-Koehler.
Ronald R. Sims. 2007. Human Resource Management. Contemporary Issues, Challenges, and Opportunities. Charlotte: Information Age Publishing.
