An activity that is vital in maintaining or improving the state of the business.
Functional Activity Details
The sole aim of businesses is to make profits. To achieve this goal, all businesses, whether small or big, must take specific and often regular actions geared towards achieving this goal. If you own a business today, you will have to attend to customers, pay bills, make products or offer services. If your business is in a regulated sector, you will also have to ensure that you meet all regulatory requirements. If you miss or neglect any of these key areas in your business, your whole business will suffer, and the goal of making profits will most likely suffer.
Functional activity is a well-thought-of and planned activity that a company has realized is critical to its growth. Separating a business into functional activities gives room for efficiency and specialization. For a small business, one person may handle finance, production, marketing, and customer relationship – and yes, they will have to work hard! However, as the business grows, it becomes grossly inefficient for one person to do all that. This is why businesses generally separate themselves into functional areas or activities, mostly in departments.
Although the business is separated into functional areas, the business still functions as one organization, and there is a solid relationship between all the areas. For example, if you have a business where the finance department has no relationship with the production department, there will be no products to market and no business income. A business can hire experts in those functional areas based on functional areas to ensure that the activity is completed efficiently and effectively. Functional activities are the series of inter-related activities that businesses do to enable them to grow.
Example of Functional Activities
For typical businesses to make profits, the following are the main and most widely used functional areas:
Marketing is one of the key functional areas that a business requires. No matter the services or products offered, people have to hear about your products or services before they can patronize you. The marketing department is in charge of letting people know about the company. The department is also in charge of determining what product will be most appealing to customers, prices to charge for the products, and distributing the products. Some businesses are entirely marketing-driven, and every staff is trained to think like a marketer. This kind of policy makes sense because marketing brings in the money, without which you cannot sustain a business.
Production/Operations is the functional area responsible for producing the product or service that your company offers. If your company offers physical products, then the production department will be responsible for manufacturing the products to meet customer needs. Also, depending on the industry, precision is key. For example, an error of 1cm in a textile company is not a big deal, but in an electronics manufacturing company, such an error is disastrous. The production department has to ensure that the company resources used for production are efficiently used and that the products are produced to meet the marketing department's needs.
Finance is a functional activity that is concerned with managing cash flow. It is responsible for predicting cash flow and creates budgets based on potential revenue. Businesses must pay special attention to the financial department, hiring those with expertise in financial management. Good financial management will position your business to gain access to loans and investments. Also, the finance function provides top management with real and accurate information about the business's financial status and enables the management to make informed decisions rapidly.
Human Resources is responsible for hiring and determining the remuneration of staff. Human resources handle staff welfare, training, and development. HR ensures that staff is in their best morale, which will result in higher productivity and goodwill for the company. It is an error to think that HR can easily replace staff. In industries that require advanced skills, skillful workers' scarcity has made companies treat their staff like customers.
ICT (Information and Communication Technology) is responsible for providing communication and data gathering for the company. As the company grows, the need for an efficient means of communication becomes apparent. It is challenging for a company to succeed without a proper channel of communication. ICT is responsible for getting the tools necessary for communication and data gathering. They are also responsible for maintaining those tools. For example, the ICT department will be responsible for deploying and maintaining telephones within the company, a functional internet, and other software as may be needed by the business.