Introduction to Business Functions

In this document, we will include Introduction to Business Functions. We discuss the numerous resources needed for a business to operate efficiently, the many economic sectors, and identify which sector your organisation belongs to. Also, we cover a firm that earns income through its key resources, which are the significant assets that serve as the foundation of a successful business strategy. The allocation of resources inside the company should be done to satisfy the goal of satisfying stakeholder expectations as well as market demands.

Introduction to Business Functions
Introduction to Business Functions
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Introduction to Business Functions
Contents
Task 1 Word Portfolio...........................................................................................................................2
1. Explain the various resources required by a business to function effectively............................2
2. Explain the different sectors of the economy, and state which sector your organisation falls
under..................................................................................................................................................4
3. Summarise the main types of legal structure, and explain which one is used by your chosen
organisation.......................................................................................................................................5
4. Copy the Business Objectives of the organisation and underline key business terms................6
5. Create a table identifying the main stakeholders, their expectations and accountabilities..........7
6. Create a mind map of the resources required by the organisation..............................................8
7. An explanation of the concept of “Assets = Liabilities + Equity” and explain what a budget. . .9
8. A table describing 3 ways to finance a business, including their advantages and disadvantages
10
Task 2 - Factors affecting Production and Workforce Planning..........................................................12
1. Draw a diagram showing the concept of economy and diseconomy of scales.........................12
2. Explain various factors that influence the selection of location for a business.........................12
3. Evaluate the efficiency and effectiveness of a production process in a business context.........14
4. Discuss how effective motivation and workforce planning helps businesses manage labour
turnover...........................................................................................................................................15
5. Evaluate different motivation theories.....................................................................................16
6. Evaluate contemporary approaches to motivation....................................................................17
Task 3 - Presentation...........................................................................................................................19
References...........................................................................................................................................20
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Task 1 Word Portfolio
Booz Allen Hamilton
Booz Allen was founded on the notion that we could help government agencies and companies
succeed by bringing them expert, candid advice and an outside perspective on their business. Finding
good talent, embedding it in clients, and unleashing a critical and skillful eye remains a Booz Allen
pillar more than 100 years after they were founded.
They bring bold thinking and a desire to be the best in their work in consulting, analytics, digital
solutions, engineering, and cyber, and with industries ranging from defense to health to energy to
international development.
And the analysis and perspective generated by that talent can be found in the case studies, white
papers and thought leadership produced by their people. In these reports can find market intelligence
on beating back the latest sophisticated cyber attack, how data science can wring new revenue streams
out of industries under siege, and why an agile approach is key to software development today.
1. Explain the various resources required by a business to function effectively
Key resources are the important assets that form the building blocks that will make a business model
work and it is ultimately through these that a company generates revenue. The configuration of
resources within the business should be aimed at meeting the needs of markets and fulfilling
stakeholder expectations. The most essential key resources a large business needs can be divided into
four categories.
Financial
Financial resources differ depending on the investment required, distribution channels, production
capacity and working capital. These resources need to be carefully managed and factors like
shareholders’ capital, cash balances, working capital and creditors need to be continually assessed.
The strength of the financial resources also depends on the ability to raise new funds, and this stems
from the strength and reputation of the management team, attractiveness of the market and other
aspects like how streamlined the admin workflows are. When it comes to effectively managing
finances, a virtual server provides with the most flexibility to run easy administrative processes and
programs on one safe and secure server.
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Human resources
The most valuable business resources after finances are human resources, the intellectual
contributions made by the staff, and how leverage them. This forms the skills base of the business.
How can manage the human resources has a direct effect on how productive the company is as a
whole. This entails the numbers of staff by function, location, qualification, etc, and what it as an
organisation introduces into strategy.
With so many digital tools available to businesses, a popular one used to effectively manage human
resources is using a virtual server. In other words, using Cloud computing. The appeal of this is that
businesses of any size can access the exact products, software, services and storage space they need.
These solutions are designed so company can integrate the necessary applications like HR programs
to manage companies human resources, as well as the work they deliver.
A remote server will enable to do things like support collaboration on all documents across various
geographical regions, allow employees to instantly access business data from any device, and easily
hold meetings or conferences with people in remote areas.
Physical
This category of business resources includes all physical assets, from building and manufacturing
facilities to vehicles, point of sale systems, even IT infrastructure. Most businesses rely heavily on
physical resources, and this can often lead to excessive resources that end up in costly wastage. A
general rule of thumb is to only use the necessary elements and try to keep costs as low as possible.
For example, not getting an elaborately large and modern office space.
Companies’ onsite server not only takes up a lot of space, but it also requires a high capital investment
and dedicated IT team. Using a virtual server will allow to not only outsource the server space and
software, but also have the IT support they provide. This cost-saving benefit has positive ripple effects
on other valuable resources as well.
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2. Explain the different sectors of the economy, and state which sector your organisation falls
under.
A nation’s economy can be divided into sectors to define the proportion of a population engaged in
different activities. This categorization represents a continuum of distance from the natural
environment.
Primary Sector
The primary sector of the economy extracts or harvests products from the earth such as raw materials
and basic foods. Activities associated with primary economic activity include agriculture (both
subsistence and commercial), mining, forestry, grazing, hunting and gathering, fishing, and quarrying.
The packaging and processing of raw materials are also considered to be part of this sector.
In developed and developing countries, a decreasing proportion of workers is involved in the primary
sector.
Secondary Sector
The secondary sector of the economy produces finished goods from the raw materials extracted by the
primary economy. All manufacturing, processing, and construction jobs lie within this sector.
Activities associated with the secondary sector include metalworking and smelting, automobile
production, textile production, the chemical and engineering industries, aerospace manufacturing,
energy utilities, breweries and bottlers, construction, and shipbuilding.
Tertiary Sector
The tertiary sector of the economy is also known as the service industry. This sector sells the goods
produced by the secondary sector and provides commercial services to both the general population
and to businesses in all five economic sectors. Activities associated with this sector include retail and
wholesale sales, transportation and distribution, restaurants, clerical services, media, tourism,
insurance, banking, health care, and law. In most developed and developing countries, a growing
proportion of workers are devoted to the tertiary sector.
Quaternary Sector
Although many economic models divide the economy into only three sectors, others divide it into four
or even five. These two sectors are closely linked with the services of the tertiary sector, which is why
they can also be grouped into this branch. The fourth sector of the economy, the quaternary sector,
consists of intellectual activities often associated with technological innovation. It is sometimes called
the knowledge economy. Activities associated with this sector include government, culture, libraries,
scientific research, education, and information technology. These intellectual services and activities
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are what drive technological advancement, which can have a huge impact on short- and long-term
economic growth.
Quinary Sector
Some economists further narrow the quaternary sector into the quinary sector, which includes the
highest levels of decision-making in a society or economy. This sector includes top executives or
officials in such fields as government, science, universities, nonprofits, health care, culture, and the
media. It may also include police and fire departments, which are public services as opposed to for-
profit enterprises. Economists sometimes also include domestic activities (duties performed in the
home by a family member or dependent) in the quinary sector. These activities, such as child care or
housekeeping, are typically not measured by monetary amounts but contribute to the economy by
providing services for free that would otherwise be paid for.
Booz Allen Hamilton falls into tertiary sector, where territory sector of the economy is also known as
the service industry. Booz Allen Hamilton are a global firm of approximately 26,300 diverse,
passionate, and exceptional people driven to excel, do right, and realize positive change in everything
they do. They bring bold thinking and a desire to be the best in their work in consulting, analytics,
digital solutions, engineering, and cyber, and with industries ranging from defense to health to energy
to international development. They celebrate and value diversity in all its forms; it’s something they
truly value as a multicultural community of problem solvers. They believe in corporate and individual
citizenship that makes their communities better places for all.
3. Summarise the main types of legal structure, and explain which one is used by your chosen
organisation
Throughout most parts of world, three predominant main types of legal business forms are used to run
small business organisations. These business forms are as follows:
1. Sole proprietorship - where generally only one person funds the business activities
2. Partnerships - where two or more people band together to finance or run a venture
3. Corporations/limited companies - where it is possible for a few friends/family members or
up to many thousands to subscribe for a share in business ownership
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Booz Allen Hamilton falls into Sole proprietorship legal structure. The vast majority of new
businesses are set up as sole proprietors. The form is normally formality-free; there are no rules about
the records you have to keep. Nor is there a requirement for your accounts to be audited or for
financial information on your business to be filed at the registrar of companies. Company still has to
pay tax from the profit. The biggest disadvantage of being a sole trader is that companies are totally
responsible for any debts their business incurs. If they go bankrupt, their creditors are entitled to size
and sell their possessions - personal as well as business.
4. Copy the Business Objectives of the organisation and underline key business terms
Boost Allen Hamilton has set business objectives for all key areas of their organization. These include
social responsibility, efficiency and marketing. Objectives that determine the company’s desired
income levels and financial resources are also essential. They also have set the quality of their
services and the importance of outstanding customer service in their organization. The divisions and
people that define objectives will naturally align with objectives in their targeted results areas.
Objectives, therefore, will be more or less specific depending on the hierarchical level that sets them.
SMART
For objectives to be useful they must have certain qualities. A business strategy outlining specific,
measurable, achievable and time-bound goals is helpful to remember these qualities. Using the
SMART process, Boost Allen Hamilton see that objectives must focus on specific activities and these
activities must be measurable. Their objectives are realistic, which means that they don’t set goals that
are impossible to reach. They also set a time to reach these goals. There are goal examples for every
department. Here are just a few department-level goals for example in Boost Allen Hamilton:
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 Marketing goals:
 Create more marketing qualified leads
 Optimize customer acquisition
 Sales goals examples:
 Generate new bookings pipeline
 Recruit high-performing A-players for their sales team
SMART company-level business goals are,
 Delight our customers
 Key Result: Raise customer retention
 Key Result: Get feedback from at least 15 customers per month through interviews
 Key Result: Get a net promoter with their customers
5. Create a table identifying the main stakeholders, their expectations and accountabilities
Stakeholders are individuals or groups who have an interest in an organization’s ability to deliver
intended results and maintain the viability of its products and services.
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6. Create a mind map of the resources required by the organisation
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7. An explanation of the concept of “Assets = Liabilities + Equity” and explain what a budget
When reviewing the financial statements of a company, and in the balance sheet, it divided into three
main sections: Assets, Liabilities, and Shareholders' Equity.
 Assets: Broadly speaking, assets are anything that has value. For a company, assets on the
balance sheet will consist of large items such as land, buildings, and manufacturing equipment.
Assets also include other tangible items such as desks, lamps, computers, and signage. Assets can
also be intangible, such as patents or goodwill. Some businesses require far more assets to operate
than others, which influences their return on capital calculations.
 Liabilities: Broadly speaking, liabilities are debts and obligations owed by the company;
the opposite of assets. Liabilities include items like monthly lease payments on real estate, bills
owed to keep the lights turned on and the water running, corporate credit card debt, bonds issued
to investors, and other outflows.
 Shareholders' Equity: The equivalent of accounting net worth, shareholders' equity is what
remains when you subtract all of the liabilities from all of the assets. It is also referred to as the
company's book value. For some businesses, book value is highly informative of the economic
condition of the firm. For others, book value on the balance sheet carries much less
meaning. Learning to distinguish between the two involves understanding how profitability and
business models differ between firms, industries, and sectors.
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8. A table describing 3 ways to finance a business, including their advantages and
disadvantages
Ways to finance a
business
Advantages Disadvantages
Internal sources
 Ability to maintain autonomy
and control
 Can build whatever business
want, as long as it's legal and
feasible
 Forcing to plan more carefully
and make more judicious
decisions
 When using internal sources of
finance such as cash from
operations and from the sale of
business assets, can reap the
advantage of not having to make
expensive interest payments
 when taking money from
operating budget or capital, it
leaves with less money to manage
daily expenses
 When a company evaluates
whether to use internal financing
for something, it has to be able to
estimate with reasonable accuracy
the true costs of the project and
provide an accurate forecast for
recoupment of the investment.
 No tax benefits

Equity Financing
 The investor assumes all the risk.
If the business fails, don't have
to pay the money back.
 Without loans to pay back,
company have more cash
available to reinvest in the
company. Company could grow
faster than it would if it were
saddled with debt.
 A deal with a well-connected
venture capitalist or angel
investor often comes with other
benefits, such as access to key
business contacts.
 Must share ownership and control
of the company with the investors.
Company has to share the
company's profits with the
investors. It won't have the
freedom to make decisions
regarding the business without the
investors' approval. Company may
not agree with the way they want
to run the company.
 The only way to regain full
control of the company is to buy
out the investors, which will
probably require paying them
more than they originally gave.
 It takes a lot of time and effort to
find the right investors for the
company. Ideally, should choose
investors who share the business
vision and goals and with whom
get along.
 Raising equity capital is more
complex than getting a loan. It
requires compliance with
numerous federal and state
securities laws and regulations.
Debt Financing
 Retain full ownership and
control of the business, since the
lender does not claim equity in
 Since debts must be repaid within
a certain timeframe, could be in a
difficult position if the company
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the company.
 Once repay the amount
borrowed plus interest, company
have no further obligations to the
lender, who has no claim on the
future profits of the business.
Therefore, if the company is
highly profitable, keep a larger
portion of the earnings for owner
than it would if company had to
share it with investors who have
equity in the business.
 Interest on debt can be deducted
from the business' taxes,
lowering the cost of the loan to
the company.
experiences cash flow problems or
does not generate as much
revenue as anticipated. If the
company can't repay its debts on
time, it may be forced to liquidate
assets or shut down the business
altogether.
 Company could be held personally
responsible for repayment of the
loan, even if the formation of an
entity such as an LLC creates a
legal separation between owner
and the company.
 Debt could make it difficult for
the business to grow, since it'll
have to use part of the revenue to
repay debt instead of reinvesting it
in the company.
 If company carries too much debt,
the company will be viewed as
high-risk, making it hard to attract
equity investors.
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Task 2 - Factors affecting Production and Workforce Planning
1. Draw a diagram showing the concept of economy and diseconomy of scales
2. Explain various factors that influence the selection of location for a business
There are many things to consider when choosing a location for the business venture, whether setting
up an office or a shop for the first time, or looking to expand into new areas.
Accessibility
If the business rely on frequent deliveries, it’s important to consider local transport links, particularly
main roads and motorways. Property rental and purchase prices are often steeper in higher density,
more commercialised areas, so there are certainly cost benefits to seeking a more out of town location,
providing daily business operations won’t be hampered by poor transport links.
Security
The location can increase odds of being affected by crime, which in turn can influence the insurance
premiums, as well as the additional security measures made need to take to keep the premises safe.
Knowing the risks of potential criminal activity can help better prepare and take adequate precautions.
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Business Rates
Cash flow is critical as it determines the viable ability for a business to survive and pay its bills.
Therefore, it is important to research the average Business Rates including rent, utility bills and taxes
in the area to ensure can afford the premises. Simple hidden costs such as deposits and whether need
to pay to park need to be snuffed out before committing to a location.
Potential for growth
Will the premises be able to accommodate business growth or a spike in demand? Moving premises is
a big upheaval and can be time consuming and costly. A decision needs to be made as to whether the
premise are choosing is a short-term location or if it would like to stay there for the long haul.
Consequently, a location’s flexibility could be a very important factor regarding the premises’
suitability for the business needs.
Demographics
Demographics as a factor can have a big influence on choice of business location. The type of product
or service business offers and the status of the customers will play a vital in choice of business
location.
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3. Evaluate the efficiency and effectiveness of a production process in a business context
Process effectiveness and efficiency are business terms often used interchangeably or in a general
combination. Effectiveness refers to the ability to optimize business strengths in the way of operate.
Efficiency refers to the ability to optimize the resources and business activities to generate revenue
and profits. Organisations simply cannot ignore the terms ‘efficiency’ and ‘effectiveness’ For
increasing productivity as well as improving customer service, both of these are essential. Efficiency
is doing the things right; effectiveness is doing the right things.
Top management at each site must review process effectiveness and efficiency. This may include:
 Achievement of continual improvement objectives for identified product realization and support
processes
 Optimization of the interaction of these processes
 Verification that these processes operate as an effective and efficient network
 Monitoring cost trends and benchmarking of key processes
The starting point involves detailed process mapping and creating the block diagram for the said
process after discussing in detail with the operations teams and floor walk through. The block diagram
is then fine tuned to mark the boundaries thus freezing the beginning point and the ending point of the
chosen process. Further planning involves marking the source of inputs that go into the said process,
identifying the input source as well as the output customers at intermediate and final stages of the
process. Detailed examination of the data that is received as input, the data or deliverable that is
required to be sent as output from the process would have to be done to ensure every possible detail is
captured. At this point it becomes necessary to examine the input and output data accuracy, errors,
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frequency and standardization of the data as well as to record the customer expectations from the
process. Once entire process mapping and overview has been completed and defined, the next logical
step would be to tabulate the measurements and targets for the overall process.
4. Discuss how effective motivation and workforce planning helps businesses manage labour
turnover
Employees leave companies for a number of reasons, including lack of trust in leadership, limited
opportunity for advancement and career development, and because the job wasn't what the employee
thought it would be, according to Leigh Branham, author of "The Seven Hidden Reasons Employees
Leave." Employees usually don't leave for more money, he concluded -- they leave because they're no
longer motivated to work for the organization. The relationship between turnover and motivation is
relatively unexplored.
Competitive salary and benefits, flexible schedule options, the ability to work from home when
necessary, workplace environment and employee treatment, and tuition assistance are five basics in
employee retention. Especially for millennial employees, these are the way of motivation for
recruitment and reducing employee turnover.
These recommendations about reducing employee turnover are also common-sense, basic and
incredibly hard to find in organizations today. It's because many organizations have not figured out
that valuing employees is a win-win for employers and employees. Valuing employees is also a win
for reducing key employee turnover.
 Select the right people in the first place through behavior-based testing and competency
screening.
 At the same time, don't neglect to hire people with the innate talent, ability, and smarts to work in
almost any position even if don't currently have the best match available. Hire the smartest people
can find to reduce employee turnover.
 Offer an attractive, competitive, comprehensive benefits package with components such as life
insurance, disability insurance and flexible hours.
 Provide opportunities for people to share their knowledge on-the-job via training sessions,
presentations, mentoring others and team assignments.
 Offer performance feedback and praise good efforts and results to reduce employee turnover.
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5. Evaluate different motivation theories.
The Motivation thoughts were mainly developed around 1950’s. The main theories were made during
the period. These three classical theories are.
 Maslow Hierarchy of needs theory
 Herzberg’s Two factor theory
 Theory X and Theory Y
Maslow’s Hierarchy of Needs
According to Smith & Cronje (1992), the way Maslow’s theory is explained relies on the fact that
people want to increase what they want to achieve in life and their needs are prioritized according to
their importance. Deriving from the hierarchy of needs by Maslow, content theories of job satisfaction
revolve around employees’ needs and the factors that bring them a reasonable degree of satisfaction
(Saif et al., 2012). Based on the basic physical, biological, social and psychological needs of human
beings, Maslow came up with a five-stage theory that places the needs of the individual in different
categories and prioritizes their attainment. These categories, in order of decreasing priority, are:
 Physiological needs (food, shelter, clothing);
 Safety and security needs (physical protection);
 Social needs (association with others);
 Esteem needs (receiving acknowledgement from others); and
 Self-actualisation needs (the desire for accomplishment or to leave behind a legacy).
Maslow’s hierarchy of needs forms the basis of theories that try to explain job satisfaction.
Herzberg’s Two-Factor Theory/Motivator-Hygiene
Herzberg’s Two-factor theory, also known as Motivator-Hygiene, emanated from a study conducted
among accounts and engineers to determine what makes an individual feel good or bad about their job
(Saif et al., 2012). Regarding ‘satisfiers’, Herzberg noted that there were five features of work that
bring about satisfaction, namely achievement, recognition, the job itself, responsibility and
advancement. At the other end of the spectrum, Herzberg identified institutional politics, the
management approach, supervision, pay, relationships at work and working conditions as factors that
may demoralize employees.
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McGregor’s X and Y Theories
McGregor’s (1960) Theory X and Y models categorize employees as belonging to one of two groups
based on two sets of assumptions. Theory X assumptions take a negative perspective of people:
People can have “an inherent dislike for work and avoid it if possible; because of this, they must be
coerced, controlled, directed and threatened with punishment to make them work. They prefer to be
directed, avoid responsibility, have little ambition, and want security” (Saif et al. 2012, p.138). Theory
Y assumptions take the opposite view: the mental and physical inputs expended at the workplace are
equated and par with those rest or play. External factors or any threats from outside may not be the
sole influence for exerting effort. Workers or people can exercise caution and discipline to have
objectives achieved, but the hunger in their desire to commit to objectives is dependent on how big
are the rewards as assigned to that kind of achievement.
6. Evaluate contemporary approaches to motivation
Early motivation theories were based on the assumptions and sometime these theories were not
supported by strong evidence. Maslow’s hierarchy of needs is a good example of this approach.
Therefore, alternative theories of motivation have been put forward over time.
Self-determination theory
Self-determination theory of motivation and argues that people often seek control of their actions.
Goal setting theory
Goal setting theory is based on the view that challenging objectives should aid and improve
workplace performance. In this theory, it is assumed that an employee is committed to the firm’s
goals and desires to make a positive contribution. It is important that the set goals are also perceived
as achievable.
Self-efficacy theory
Self-efficacy theory is based upon an employee’s view about their ability to perform the tasks of their
job role. This theory is also known as social learning theory or social cognitive theory. If an employee
has a high self-efficacy, then they will be more confident and have a greater chance of success. In
more challenging situations, employees with a low self-efficacy will often have a reduction in their
job performance levels.
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Equity theory
Equity theory is where employees compare their job inputs and outputs with others in the organisation
primarily in an attempt to reduce the perceived inequities. If the employees find inequities they seek
resolve them by:
 Changing the inputs
 Changing the outcomes
 Distorting perceptions of themselves
 Distorting perceptions of others
 Quitting their job
Reinforcement theory
Reinforcement theory refers that to behavior or an attitude is a function of its outcomes or
consequences. That is, the theory suggests that the outcomes of behaviour (positive or negative) will
either reinforce (or modify if a negative outcome) ongoing behavior.
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References
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