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Business functions

What is a business function?

While a business (also known as enterprise or firm) is an organization engaged in the trade of goods, services, or both to consumers (Sheffrin, 2003), a business function is a description of work which is carried out routinely in order to achieve the aims and objectives of a business unit. There are a number of business functions an organisation carries out e.g. Human Resource Management, Marketing, IT, Research and Development, Operations, Finance and Accounting etc. This article focuses on some of the typical business functions in a business.


Human Resource Management

Human resource management, also known as HRM in short, is a very important function of a business. It deals with a number of issues e.g. recruitment and selection, staff motivation and retention, training and development, redundancy, dismissal, liaison with trade unions etc. HRM is about managing human resources of an organisation.



The American Marketing Association (2013) defines marketing as the activity, set of institutions, and processes for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large. Marketing department of an organisation deals with a number of issues e.g. market research, product development, promotional strategies, pricing policies, sales management etc.


Companies around the world spend billions of dollars on marketing activities. Advertising, public relations, sales promotion, personal selling, and word of mouth are some of the promotional techniques companies use to promote their products and services.


Research and development

Research and development (R&D) is another important function of a business. Marketing department in many organisations often deals with research and development activities. Organisations carry out research in many areas e.g. new product development, product improvement, gaining competitive advantage, adding value, cost savings etc. R&D department is separate from marketing department in some big organisations.



Organisations need to transform inputs into outputs to meet the needs of customers. This transformation is the result of operations. According to Adam and Ebert (1989) operations management consists of the managerial activities and techniques used to transform resources such as raw materials and labour, into end products and services. Operations management applies to all organisations.


Finance and accounting

Finance is a business function that provides and manages the funds needed to produce goods and services, and run other functions of a business. On the other hand, accounting provides the necessary financial information about a business so that the management can make effective decisions.


Administration and IT

Administration function includes but not limited to reporting, record keeping, communication, and quality control in an organisation. IT is the short form of Information Technology. A company’s IT department plans and supports the organisation’s IT systems to help employees perform their responsibilities efficiently. It is very difficult for organisations to run business without a secure IT infrastructure.



The discussion above highlights some important business functions which companies need to perform regularly. It is important to note is that these functions are interrelated. Weakness in one function may impact on the others really badly.

Last update: 09 August 2023

Further reading

Johnson, G, Scholes, k, & Whittington, R. (2006) Exploring Corporate Strategy, 7th edition, Prentice Hall

Lynch, R. (2012) Strategic Management, 6th edition, UK: Pearson Education Ltd

Author: Joe David

Joe David has years of teaching experience both in the UK and abroad. He writes regularly online on a variety of topics. He has a keen interest in business, hospitality, and tourism management. He holds a Postgraduate Diploma in Management Studies and a Post Graduate Diploma in Marketing Management.

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