SECTION 2: INTERNAL BUSINESS ENVIRONMENT
REFERENCE:
OBJECTIVES
1. Describe the functional areas of a business. 10. Establish guidelines for the conduct of good
management and staff relations in the workplace.
2. Describe the functions of management.
11. Identify strategies for motivating employees in a
3. Outline the responsibilities of management. business.
4. Construct simple organizational charts. 12. Evaluate the role of teamwork in the success of
5. Interpret simple organizational charts. an organization.
6. Outline the essential characteristics of a good 13. Outline strategies for effective communication
leader within an organization.
7. Discuss the different styles of leadership
8. Identify potential sources of conflict within an
organization.
9. Outline strategies used by employers and
employees to gain an upper hand during
periods of conflict.
FUNCTIONAL AREAS IN A BUSINESS
1. PRODUCTION DEPARTMENT
2. MARKETING DEPARTMENT
3. FINANCE DEPARTMENT
4. HUMAN RESOURCE / PERSONNEL DEPARTMENT
5. RESEARCH AND DEVELOPMENT DEPARTMENT
(I) PRODUCTION DEPARTMENT
Some functions of the production department
Production refers to the are as follows:
process by which raw 1. Purchasing the raw materials
materials are transformed into 2. Scheduling the production process
goods and services. 3. Making of the product
4. Controlling the production process
5. Maintaining an adequate inventory system
6. Establishing quality control procedures
7. Warehousing of finished goods
(2) MARKETING DEPARTMENT
Some functions of the marketing department
The purpose of the marketing are as follows:
department is to identify, 1. Market research
anticipate and satisfy 2. Designing the product
customers’ wants profitably. 3. Pricing
4. Publicity
5. Sales promotion
6. Distribution of the product
7. After sales service, repairs and refunds
(3) FINANCIAL DEPARTMENT
The financial department is responsible 3. Advising management on all
for: financial matters, for example, the
availability of capital to purchase a
1. Producing the final accounts of the new motor vehicle or advising
business, that is, the preparation of management about the company’s
Trading, Profit and Loss statement as
well as the Balance sheet. ability to pay higher wages or about
investment opportunities.
2. Making all payments on behalf of
the company and receiving all 4. Establishing hire purchase and credit
monies due to the company.
control.
(4) HUMAN RESOURCE /PERSONNEL
DEPARTMENT
The human resource department is Some functions of the human resource department are as
follows:
concerned mainly with employees’ 1. Recruitment of staff
welfare.
2. Training of staff
3. Promotion of workers
4. Maintaining a good industrial climate
5. The welfare of workers such as sick and holiday leave ,
workers’ wages and pension schemes.
6. Disciplining of workers
7. Maintaining of staff employment records
8. Carrying out a social role, for example, providing
canteen facilities, maintaining a healthy and clean
environment, forming of other support services such as
credit unions, cultural groups.
(5) RESEARCH AND DEVELOPMENT
DEPARTMENT
The research and development department is concerned
mainly with the following functions:
1. Consumer research
2. Financial research
3. Conduction feasibility studies
4. Piloting projects
ACTIVITY 1: Complete the table
QUESTION ANSWERS
1. Human Resource
2. Research and Development Department
3. Human Resource /Personnel Department
[Link] Department
5. Financial Department
[Link] Department
[Link] Department
8. Marketing Department
9. Human Resource / Personnel Department
10. Financial Department
[Link] Department
[Link] Department
13. Research and Development Department
14. Financial Department
15. Marketing Department
FUNCTIONS OF MANAGEMENT
1. Planning
2. Organizing
3. Directing
4. Motivating
5. Controlling
6. Coordinating
7. Delegating
1. Planning
Planning is the management function concerned with defining goals for future organizational
performance and deciding on tasks and resources needed to attain them.
A plan is a blueprint that states what resources, human and non-human are needed, how these
resources will be allocated and when they will be used.
Top managers begin the planning process by developing a mission statement which outlines the
philosophy of the organization and explains the reasons for the organization’s existence.
2. ORGANIZING
► This involves the bringing together of the factors of production, namely,
land, labour , capital and entrepreneur.
► Organizing involves designing a structure, assigning duties and
responsibilties to departments , determining the workflow, establishing
schedules, providing raw materials , technology and related skills to
accomplish the goals of the organization.
3. DIRECTING
This function involves getting people to perform
assigned tasks willingly and in an efficient and
effective manner. The manager’s job is to direct
the employees’ actions towards goal attainment.
4. MOTIVATING
This is the process by which workers are influenced to
take the right action to get the task done. It inspires
workers to give their best.
5. CONTROLLING
This involves monitoring employees’ activities,
determining whether the organization is on target in
achieving its goals and making corrections as
necessary. Standards are set and actual output is
compared with the standards. Any variation would
result in corrective action being taken.
6. COORDINATING
This function involves making all the resources in the
business work together efficiently. This avoids confusion
and duplication of activities between departments.
7. DELEGATING
Delegating involves assigning work activities to subordinates.
Subordinates are employees who take orders from a manager
/ supervisor.
ACTIVITY 2: CLASSIFY THE FOLLOWING INTO THE FUNCTIONS OF MANAGEMENT.
QUESTION ANSWERS
1. Planning
2. Controlling
3. Organizing
4. Coordinating
5. Organizing
6. Coordinating
7. Planning
8. Organizing
9. Directing
10. Planning
11. Controlling
12. Delegating
13. Motivating
14. Controlling
15. Motivating
RESPONSIBILITY OF MANAGEMENT
Management of businesses have responsibilities to all persons who work to secure the success of
the business such as :
1. Owners / shareholders
2. Employees
3. Customers
4. Society
5. Government
RESPONSIBILITY OF MANAGEMENT TO OWNERS
[Link] ensure that the company is operating efficiently and maximizing
profits for shareholders.
2. To ensure that the firm meets the strategic goals in an efficient and
effective manner.
3. To advise shareholders on any changes that may be necessary to
ensure growth of the firm.
RESPONSIBILITY OF MANAGEMENT TO EMPLOYEES
1. To provide adequate working conditions and training and maintain
good communications and human relations with staff.
2. To provide adequate remuneration and incentives to employees.
RESPONSIBILITY OF MANAGEMENT TO CUSTOMERS
1. To produce goods and services of marketable quality and at
reasonable prices.
2. To provide adequate customer information on goods and services that
the business provides.
3. To provide after-sales service on products to customers and redress if
customers is dissatisfied with the product.
4. To honour all guarantees and warranties.
5. To provide adequate and fair arbitration in dealing with customers’
complaints.
RESPONSIBILITY OF MANAGEMENT TO SOCIETY
1. To carry out fair trading practices and ensuring the environment is not
damaged by the business’ operation.
2. To enhance its social standing in the community by supporting
charitable organizations and other voluntary groups within the
community.
RESPONSIBILITY OF MANAGEMENT TO GOVERNMENT
1. To abide by the laws of the land by paying corporation taxes and
making deductions from employees’ salaries such as National
Insurance and income taxes.
2. To contribute to the welfare of society by reducing unemployment and
contributing to economic growth by adding to Gross National product.
ACTIVITY 3: Complete the table. Identify to whom the management of the
organization has the following responsibilities.
QUESTION ANSWERS
1. Owners
2. Government
3. Employees
4. Customers
5. Government
6. Owners
7. Customers
8. Society
[Link]
[Link]
11. Employees
12. Customers
SUMMARY
FUNCTIONS OF RESPONSIBILITY OF MANAGEMENT TO:
FUNCTIONAL AREAS OF A BUSINESS
MANAGEMENT
1. Planning 1. Production 1. Owners / Shareholders
2. Organizing 2. Marketing 2. Employees
3. Directing 3. Finance 3. Employers
4. Human Resources /
4. Motivating Personnel 4. Customers
5. Controlling 5. Research & Development 5. Society
6. Coordinating 6. Government
7. Delegating