Functional areas of business and how they are integrated

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Briefly describe the main functional areas of a business and explaina) why they need to be integratedb) how organisations attempt to integrate themIn this essay I plan to show if general management does integrate other functional areas of an organisation. In a medium sized business, there are several different functional areas or departments that need to work together in order for a business to perform to its full potential. If this does not happen then a business will not achieve its maximum profit level. These main functional areas include production, marketing, research and development, sales, human resources, accounting and finance, and management. Some of these functional areas are directly linked to more than one other area, as will be discussed shortly.

Production, as defined in The Complete A-Z Economics and Business Studies Handbook 'is the process of organising resources in order to meet a customer requirement'. Not all businesses have a production department, it depends on whether they sell goods or services. That is to say the production team in businesses that have them, must make goods which will satisfy its existing and potential customers. The production department therefore needs to integrate with a number of other departments in order for this to happen. It must firstly liase with the marketing area, so as they can produce goods that the company has researched and found out that people want to buy. They must also integrate with the sales area so that they know what their optimum output levels should be. The business neither wants a surplus nor a shortage in their stock levels as this would damage their sales and ultimately their profit.The definition of marketing as given in The Complete A-Z Economics and Business Studies Handbook is 'the all embracing function that links the company with the customers tastes to get the right product to the right place at the right time'. The marketing area of a business could be thought of as the crossover point between production and sales. These three functional areas of a business need to integrate fully with each other for the business to thrive. If the marketing area does not let the production team know what the customers want, then they will have very little idea of what to produce. Likewise, if the marketing area does not promote the products that a business is trying to sell well enough, that is to say they are not reaching their target audience, the sales team will have great difficulty in trying to sell the business's stock.The sales area of a business is a high pressure environment. There are targets to meet, stock turnover to think about and they relaying of information back to other functional areas as to what the customer thinks of the service and products they are getting. The are able to do this because the sales department is usually the only part of a business that a customer will deal with directly. Therefore, again the marketing and production functional areas need to integrate fully for the business's benefit.The research and development functional area would not be apparent in every business, but it should be integrated closely with many of the other functional areas in businesses which have one. This department is concerned, as its title suggests, with developing both new and current products to suit customers needs. They would have to integrate fully with the marketing and sales areas to find out current trends. It would also have to integrate with the accounting and finance department because the company does not want to spend money developing a product that will not help the company's position in their market.The accounting and finance department is responsible for the monetary affairs of a business. In this area, other functional areas are given their budgets, and records kept of their accounts. The accounting area provides reports for the other areas of the business so that they can improve methods of practice in order to improve the profitability of the business. It would be fair to say that the accounting and finance department has to integrate with all the other functional areas of a business because they all need a financial input of some kind in order to work effectively. The other main area that the accounting and finance department is responsible for is the distribution of wages to the business's employees. If this is not done efficiently, there will be negative effects on the workforce and the company's performance will decline. Likewise if the company does not employ the correct people for the tasks that need to be done, this will also reduce the business's performance.This area of the company is the human resources area. It is defined in The A-Z of Economics and Business Studies Handbook as 'the responsibility of using and developing the organisations personnel in the most productive way'. This means that the human resources area of a business will have to integrate with all the other areas of a business in order to find out what criteria must be met in order for an employee to be suited for a particular job. This may mean recruiting from outside the business. This department will also keep records of all employees in order that they receive appropriate training for the relevant areas in which they are working. Again the human resources area will have to integrate with each department and find out what employees must know and use records already kept to see if the employee has done, or is yet to do such training.All of these areas are overlooked by management. As the quotation suggests, this functional area does differ slightly in that it must integrate with each and every other area for a business to run well. It is down to the general management to make sure that all the other areas are integrated properly. Usually in a business there will be departmental managers who report directly to the general management, and their role is to inform the general management of how well or how poorly their department is running and also how well they are integrating with other departments.Organisations can attempt to integrate the other departments by using various different leadership or management styles. The three styles most commonly used are autocratic, democratic and paternalistic. The autocratic or authoritarian style of leadership puts forward the idea that the general management of a business should make all of the decisions, that is to say the policies and procedures of a business are left with the head of the organisation. The employees would therefore have a strict set of guidelines on how to go about their tasks. This could be upset however, if some employees do not think that the management are making the right choices. It may prove more difficult to integrate areas of a business using this method because the employees may feel that they are having to take orders so that other areas will benefit, and this may lead to unwanted rivalry between functional areas. In a democratic management, the basis of decision making is done between management and the main functional areas of the business. That means that any ideas which are put forward by the management are either voted on or discussed, and a decision is reached after this process has taken place. The management may also choose to delegate a decision to a particular functional area, and leave the choice up to the people who are going to have to follow it. This my be wise when a management group does not have sufficient knowledge to make a decision confidently. This may be seen as the best way to integrate different functional areas because the decisions that are made involve the people who will action them, and it also suggests that more integration will take place between functional areas in order for these decisions to be reached.The other commonly used management style is paternalistic. This is quite similar to the autocratic style, in that the decision is made by the management, but they will then explain to staff why they have made such choices. In this type of leadership, delegation is not commonly used. Because the paternalistic style is very similar to the autocratic style, it could be argued that a comparable outcome might come from its use. Only the fact that the decisions are explained to the workforce may indicate some sort of smooth integration between functional areas.Another less commonly used style is matrix management. This involves taking one or more members from one functional area and teaming them up with members from other functional areas, so forming a separate area. The employees in this new functional area now, though, have two management departments to report to. This may cause conflicts but is obviously a good way of integrating different areas. It is suggested that Japanese businesses have made good use of this method.In conclusion, I would argue that, as the quote suggests, organisations can attempt to integrate their various functional areas, but only if the management style chosen by the company is used to its full advantage. As has been shown, there are various different styles of management, and the style adopted depends on the nature of the organisation and on its objectives as to whether the functional areas listed earlier will integrate well. All organisations look for a management style that will maximise integration and ultimately improve the organisations profits. 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