Various Departments in an Organization

A typical company with a significant number of employees most likely has at a minimum the following main departments or functions:

• Production/Operation
• Research and Development
• Marketing
• Human Resource Management
• Accounting and Finance
• Purchase and Supply

a) Production Department

The Production function undertakes the activities necessary to provide the organisation’s products or services. Its main responsibilities are:

• production planning and scheduling
• control and supervision of the production workforce
• managing product quality (including process control and monitoring
• maintenance of plant and equipment
• control of inventory
• Deciding the best production methods and factory layout.

b) Research and Development Department

The Research and Development (R&D) function is concerned with developing new products or processes and improving existing products/processes. R&D activities must be closely coordinated with the organisation’s marketing activities to ensure that the organisation is providing exactly what its customers want in the most efficient, effective and economical way.

c) The Purchase and Supply Department

The Purchasing function is concerned with acquiring goods and services for use by the organisation. These will include, for example, raw materials and components for manufacturing and also production equipment. The responsibilities of this function usually extend to buying goods and services for the entire organisation (not just the Production function), including, for example, office equipment, furniture, computer equipment and stationery. In buying goods and services, purchasing managers must take into account a number of factors – collectively referred to as ‘the Purchasing Mix’, namely, Quantity, Quality, Price and Delivery.

Quantity. Buying in large quantities can attract price discounts and prevent inventory running out. On the other hand, there are substantial costs involved in carrying a high level of inventory.

Quality. There will usually be a trade-off between price and quality in acquiring goods and services. Consequently, Production, R&D and Marketing Functions will need to be consulted to determine an acceptable level of quality which will depend on how important quality is as an attribute of the final product or service of the organisation.

Price. Other things being equal, the purchasing manager will look for the best price deal when procuring goods and services, although price must be considered in conjunction with quality and supplier reliability, in order to achieve best value, rather than lowest price only.

Delivery. The time between placing an order and receiving the goods or services, the lead time, can be critical for production planning and scheduling and also has implications for inventory control. Suppliers must therefore be evaluated in terms of their reliability and capability for on time delivery.

In short, the ‘purchasing mix’ can be considered as making sure that the organisation has the right amount, of the right quality, at the right price, in the right place at the right time!

d) Marketing Department

Marketing is concerned with identifying and satisfying customers needs at the right price. Marketing involves researching what customers want and analysing how the organisation can satisfy these wants. Marketing activities range from the ‘strategic’, concerned with the choice of product markets (and how to compete in them, for example, on price or product differentiation) to the operational, arranging sales promotions (e.g., offering a 25 per cent discount), producing literature such as product catalogues and brochures, placing advertisements in the appropriate media and so on. A fundamental activity in marketing is managing the Marketing Mix consisting of the ‘4Ps’: Product, Price, Promotion and Place.

Product. Having the right product in terms of benefits that customers value.

Price. Setting the right price which is consistent with potential customers’ perception of the value offered by the product.

Promotion. Promoting the product in a way which creates maximum customer awareness and persuades potential customers to make the decision to purchase the product.

Place. Making the product available in the right place at the right time – including choosing appropriate distribution channels.

In order to be successful, a business enterprise must either have a lower price than its competitors, or a product that is in some way superior – or both! A competitive strategy based on low price is known as a cost leadership strategy. A competitive strategy based on developing a superior product is known as a differentiation strategy.

e) The Human Resource Department

The human resource department is concerned with the process of hiring, training, and developing employees to perform specific tasks and implement the company’s strategy. Organisations are dependent on their employees. Consequently, their recruitment and selection require careful management.

In recent years, the Human Resources function has attained a more important status as there has developed an increasing need (especially in service organisations) to ‘get the most’ from employees, in terms of customer service, for the benefit of the organization

f) The Finance and Accounting Department

The accounting department has the role of carrying out financial reporting and accounting functions. Such functions includes keeping financial records, preparing financial statements, payroll administration, and financial reports at the end of the year. The accounting department plays a significant role in developing budgets and allocating financial resources to all other departments to support their day-to-day operations and projects.