How business functions’ interdependency underpins decision making
How well the functional areas of a business work together can have a significant impact on the decisions that a business makes. Working through a business decision, and what it might require from each functional area, highlights this interdependence.
An example business decision
A significant decision, such as launching a new product, requires all four functional areas to work with each other, as shown in the table below:
| How it would work on a new product launch with: | How it would work on a new product launch with: | How it would work on a new product launch with: | How it would work on a new product launch with: | |
| Functional area | Marketing | Human resources | Operations | Finance |
| Marketing | Will liaise with human resources if additional staff are required for market research or marketing activity for the new product. | Will work closely with operations to provide market research that tells operations what features the product needs to have. | Will request budgets from finance so as to be able to plan a marketing campaign for the new product that stays within budget. | |
| Human resources | Will recruit new staff if needed, or provide training for marketing staff about the new product. | Will organise training for any new production equipment, and ensure that the production process adheres to employment regulations (eg health and safety laws). | Will seek a budget for the training and development of staff involved in the production of the new product, or the costs of any redundancies. | |
| Operations | Will liaise with marketing on the expected sales of the new product, to ensure that enough can be produced for the launch. | Will ask for new staff to be hired. Or, if new technology will be used and staff must be made redundant, will ask human resources to ensure that relevant employment laws are complied with. | Will set production targets based on break-even information and provide supplier payment information. | |
| Finance | Will monitor marketing budgets and set sales targets to ensure that break-even levels are achievable. | Will monitor training and development budgets, and advise on redundancy payments if required. | Will identify suitable sources of finance for any new equipment that is required, and control payments to suppliers as part of cash flow. |
| Marketing | |
| How it would work on a new product launch with: | |
| How it would work on a new product launch with: | Will liaise with human resources if additional staff are required for market research or marketing activity for the new product. |
| How it would work on a new product launch with: | Will work closely with operations to provide market research that tells operations what features the product needs to have. |
| How it would work on a new product launch with: | Will request budgets from finance so as to be able to plan a marketing campaign for the new product that stays within budget. |
| Human resources | |
| How it would work on a new product launch with: | Will recruit new staff if needed, or provide training for marketing staff about the new product. |
| How it would work on a new product launch with: | |
| How it would work on a new product launch with: | Will organise training for any new production equipment, and ensure that the production process adheres to employment regulations (eg health and safety laws). |
| How it would work on a new product launch with: | Will seek a budget for the training and development of staff involved in the production of the new product, or the costs of any redundancies. |
| Operations | |
| How it would work on a new product launch with: | Will liaise with marketing on the expected sales of the new product, to ensure that enough can be produced for the launch. |
| How it would work on a new product launch with: | Will ask for new staff to be hired. Or, if new technology will be used and staff must be made redundant, will ask human resources to ensure that relevant employment laws are complied with. |
| How it would work on a new product launch with: | |
| How it would work on a new product launch with: | Will set production targets based on break-even information and provide supplier payment information. |
| Finance | |
| How it would work on a new product launch with: | Will monitor marketing budgets and set sales targets to ensure that break-even levels are achievable. |
| How it would work on a new product launch with: | Will monitor training and development budgets, and advise on redundancy payments if required. |
| How it would work on a new product launch with: | Will identify suitable sources of finance for any new equipment that is required, and control payments to suppliers as part of cash flow. |
| How it would work on a new product launch with: |
If any of the four areas fail to work effectively with another area, there is a risk that the launch of the new product will be affected.
More guides on this topic
- Production processes - OCR
- Quality of goods and services - OCR
- The sales process and customer service - OCR
- Business location - OCR
- Working with suppliers - OCR
- The role of the finance function - OCR
- Sources of finance - OCR
- Sources of finance - OCR
- Break-even - OCR
- Cash and cash flow - OCR
- Ethical and environmental considerations - OCR
