Functional Areas of a Business

Functional Area Some Functional Responsibilities

(Department)
Production 1.Procuring raw materials
2.Converting raw materials into finished goods
3.Warehousing finished goods
Marketing 1.Conducting market research to find out about consumer needs and
wants
2.Determining a price for the product
3.Promoting the product
Finance and Accounts 1.Preparing the financial statements of the business (balance sheet,
income statement and statement of cash flows)
2.Accounting for all revenues received by the business
3.Developing budgets for the business
Human Resources 1.Recruiting and training employees
2.Disciplining employees if needed
3.Terminating/firing employees
Research and 1.Conducting research on new products
Development (R&D) 2.Developing new products
Information Technology 1.Developing IT systems to suit the needs of business
(IT) 2. Ensuring security of the firm’s data.

Stakeholders of a business
Definition
A stakeholder is any individual or organization which has an interest in the business.
There are two categories of stakeholders: (1) Internal Stakeholders (2) External Stakeholders

1. Internal Stakeholders
 Owners/Shareholders-They provide financial capital for establishing the business and
seek a return on their investment in the business.
 Managers- They seek to maximize profits for the business and ensure the fair treatment
of employees
 Employees-They perform duties to ensure that the business is able to maximize profit
and also seek job security.

2. External Stakeholders
  Government-They seek to ensure that the business obeys all laws and regulations of the
country and also that the business pays taxes.
 Customers-They seek products of good quality at a reasonable price.
 Suppliers-They supply the business with the raw materials to produce goods and services
 Lending Institutions- These include banks and credit unions. They provide loans to the
business and also seek to ensure that the business can repay its loans.
 Competitors-They compete with the business for sales and market share.
 The community-They seek to ensure that the business obeys the law in the community
and that the business contributes towards the development of the community.

Ethical and legal Issues in Establishing and Operating a Business

Legal- This relates to the laws of the country e.g. it is illegal to assault someone.
Ethical-This relates to the idea of right vs. wrong e.g. is it right to use animal skin for
clothing?
The table below shows consequences for some illegal and unethical practices in business.

Legal and Ethical Issue Consequences for illegal and unethical

practice
1.Misleading advertising Loss of customer loyalty; lawsuits
2.Improper disposal of waste Fines from the government; closure of the
business
3.Tax Evasion Fines from the government; closure of the
business; imprisonment of the business
owner(s)
4.Money Laundering The assets of the business e.g. buildings, can be
seized by the government
5.Not paying National Insurance Scheme Fines from the government; closure of the
(NIS) to the government on behalf of business
employees

END