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Operational Risk Management
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Unit 3 - Role of Functional Departments

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Unit 3 - Role of Functional Departments

  1. 1. Describe the roles of the Functional Departments within an Organisation and Activities carried out by these Departments Administrative Services Outcome 3 © Inspiring Education 2006
  2. 2. Learning Outcomes <ul><li>What is an Organisation? </li></ul><ul><li>The Functional Areas of an Organisation. </li></ul><ul><li>The Sales Department. </li></ul><ul><li>The Purchases Department. </li></ul><ul><li>The Finance Department. </li></ul><ul><li>The Human Resources Department. </li></ul>© Inspiring Education 2006
  3. 3. What is an Organisation? <ul><li>An organisation is made up of many people. </li></ul><ul><li>The structure of the organisation is the way in which all employees are organised. </li></ul><ul><li>Each employee is allocated to a specific department within the organisation. </li></ul><ul><li>The departments of an organisation are also referred to as the FUNCTIONAL areas. </li></ul>© Inspiring Education 2006
  4. 4. The Functional Areas of an Organisation © Inspiring Education 2006 The Functional Areas Sales Department Purchases Department Finance Department Human Resources Department
  5. 5. The Sales Department <ul><li>The Sales Department is responsible for making sure that the customer is happy. </li></ul><ul><li>Employees in the Sales Department are responsible for building a positive relationship with the customer. </li></ul><ul><li>In order to understand the purpose of the Sales function, let’s look at the different tasks that are carried out by the Sales Department. </li></ul>© Inspiring Education 2006
  6. 6. The Role of the Sales Department <ul><li>Creating positive customer relations </li></ul><ul><ul><li>In order to create a good relationship with the customer the first step is to find out exactly what the customer wants. This is achieved by carrying out Market Research . For example, the Sales department could create a questionnaire and ask customers about their likes and dislikes before creating a new product. </li></ul></ul><ul><ul><li>The next step is to show the customers that you value them by LISTENING . This is achieved by improving existing products and developing new ones to meet their tastes. </li></ul></ul>© Inspiring Education 2006
  7. 7. The Role of the Sales Department <ul><li>Communicate with customers at all times </li></ul><ul><ul><li>To ensure that the relationship stays strong, it is important for the Sales department to communicate with the customer at all times. This can be done in the following ways: </li></ul></ul><ul><ul><ul><li>Write letters informing customers of new products/services. </li></ul></ul></ul><ul><ul><ul><li>Advertise the new products or services using a variety of methods eg. Newspaper, TV, billboard, magazine, radio etc. </li></ul></ul></ul><ul><ul><ul><li>E-mail customers on a regular basis informing them of forthcoming sales etc. </li></ul></ul></ul><ul><ul><ul><li>Create a professional website and ensure that it is kept up to date at all times. </li></ul></ul></ul><ul><ul><ul><li>Offer sales promotions to encourage the customers to buy the new products and services. Also, give discounts to promote customer loyalty. </li></ul></ul></ul>© Inspiring Education 2006
  8. 8. The Role of the Sales Department <ul><li>Process and monitor Customer Orders </li></ul><ul><ul><li>It is very important that customer orders are dealt with quickly and to a high standard to make sure that the customer is happy at all times. </li></ul></ul><ul><ul><li>Before an order is placed, often the customer will ask about the price and availability of the product. It is very important that the Sales team have price lists and catalogues available at all times and that they are up to date. </li></ul></ul><ul><ul><li>Once the customer places an order, the Sales team must ensure that it is processed i.e action is taken to ensure that the customer receives their product quickly and to a high standard. </li></ul></ul><ul><ul><li>In order to monitor that the customer’s order has been received, the Sales team can offer after-sales service. This means that if there are any problems or faults with the product the customer can return it immediately or have any questions answered. </li></ul></ul>© Inspiring Education 2006
  9. 9. The Purpose of a Price List and Catalogue <ul><li>A PRICE LIST </li></ul><ul><ul><li>The price list clearly identifies the individual price of all products and services on offer. </li></ul></ul><ul><ul><li>It will also identify any special discounts. For example, if a product or service is going out of fashion, the Sales Team will often decide to reduce prices in an attempt to get rid of all the leftover stock. IF the organisation is left with lots of unwanted stock then it will lose an awful lot of money as it will have to go in the bin! </li></ul></ul><ul><li>A CATALOGUE </li></ul><ul><ul><li>The main purpose of the catalogue is to clearly show the customer what the product looks like. </li></ul></ul><ul><ul><li>The Next Directory is a very glossy, professional catalogue which clearly shows the wide variety of products on offer. </li></ul></ul><ul><ul><li>Many sales teams now use the Internet to showcase their catalogues as customers can access it 24 hours a day. Also, the customer is able to enlarge images and send an e-mail requesting more information or indeed place an order of the item(s) he/she likes! </li></ul></ul>© Inspiring Education 2006
  10. 10. The Purpose of an Order Form <ul><li>When customers wish to buy a product/service, they complete an order form. </li></ul><ul><li>The purpose of the form is to make it easy for the customers to request exactly what it is they wish to buy. </li></ul><ul><li>A customer can place an order over the telephone, the Internet or by letter. </li></ul><ul><li>Many organisations create their own ‘style’ of order form to make sure that all the required information is gathered and that it can be processed quickly. </li></ul><ul><li>It is important that both the customer and the Sales team have a copy of the order so that if any problems arose – for example, the wrong colour of product was delivered - then it would be easy to identify why the mistake happened. </li></ul>© Inspiring Education 2006
  11. 11. Example of Inspiring Education’s Order Form © Inspiring Education 2006 Please provide details for postage and your site licence : Establishment __________________________________________________________ Address __________________________________________________________ _________________________ Post Code ___________ Contact Name __________________________________________________________ Position __________________________________________________________ Phone ___________________ E-Mail ___________________________ £ INVOICE ME Total Amount Payable     Bundled Package (Both Higher & Int 2 Admin)     Int 2 Business Admin Package     Higher Business Admin Package Total Quantity Price  
  12. 12. The Purchases Department <ul><li>The Purchases Department is responsible for doing all the “shopping” for the business! </li></ul><ul><li>It is very important that the Purchases Department finds the best supplier to make sure that the raw materials for the products/services are of a high quality, and that the price is reasonable. </li></ul><ul><li>In order to understand the purpose of the Purchases function, let’s look at the different tasks that are carried out by the Purchases Department. </li></ul>© Inspiring Education 2006
  13. 13. The Role of the Purchases Department <ul><li>“ Shopping” </li></ul><ul><ul><li>The Purchases Department is responsible for buying a number of resources for the organisation: </li></ul></ul><ul><ul><ul><li>RAW MATERIALS </li></ul></ul></ul><ul><ul><ul><ul><li>These are bought from suppliers in order to make a product or a service. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>For example, imagine you own a bakery and you sell cakes. The raw materials you would require to make a cake are: flour, eggs and milk. </li></ul></ul></ul></ul><ul><ul><ul><li>GOODS </li></ul></ul></ul><ul><ul><ul><ul><li>These are products which the organisation will buy to then sell on to the customer. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>For example, imagine you are a newsagent. You sell a wide variety of sweets and drinks. You would buy these in bulk from the wholesaler (Makro) then sell them to your customers. </li></ul></ul></ul></ul><ul><ul><ul><li>EQUIPMENT </li></ul></ul></ul><ul><ul><ul><ul><li>In order to enable people to do their jobs correctly, the organisation needs to make sure that they have the appropriate equipment. </li></ul></ul></ul></ul><ul><ul><ul><ul><li>For example, in your Administration class you are provided with a computer so that you can learn how to use the different pieces of software. </li></ul></ul></ul></ul>© Inspiring Education 2006
  14. 14. The Role of the Purchases Department <ul><li>Process Requisitions </li></ul><ul><ul><li>A requisition is simply a REQUEST. </li></ul></ul><ul><ul><li>The Purchases department is responsible for buying all the other departments’ resources. </li></ul></ul><ul><ul><li>Whenever a department requires new stationary or a new piece of equipment, they will REQUEST the Purchases team to go and buy it. They must provide the Purchases team with the following information: </li></ul></ul><ul><ul><ul><li>The quantity of good required (how much of one item they need). </li></ul></ul></ul><ul><ul><ul><li>A description of the product. For example, the name of the product and its colour and size (5 packs of green A4 paper). </li></ul></ul></ul><ul><ul><ul><li>The date it was ordered. </li></ul></ul></ul><ul><ul><ul><li>The person’s name and job title who placed the order so that the Purchases team know who to contact when the order arrives or if there are any problems. </li></ul></ul></ul>© Inspiring Education 2006
  15. 15. The Role of the Purchases Department <ul><li>Manage Stock </li></ul><ul><ul><li>Stock is the collection of goods that an organisation stores in order to use for a specific purpose. Examples of stock are equipment and products which will be sold on to customers. </li></ul></ul><ul><ul><li>In order to ensure that an accurate record of the stock in the organisation, it is important that the Purchases department keeps a stock record. This means that the Purchases team logs all the stock coming in to the stock room and going out. This will ensure that there is always enough stock to meet demand and that there is not too much stock being held as this would be very expensive. </li></ul></ul><ul><ul><li>An important feature of stock management is ensuring that all stocks are of a high quality. </li></ul></ul><ul><ul><li>Finally, another feature of stock management is making sure that all stocks are safe. If any of the stock gets damaged or stolen then measures must be taken to make sure it does not happen again. </li></ul></ul>© Inspiring Education 2006
  16. 16. The Role of the Purchases Department <ul><li>Establish and Maintain an excellent Supplier relationship </li></ul><ul><ul><li>The supplier relationship is very important. The relationship between the supplier and the Purchases team must be based on trust and loyalty . </li></ul></ul><ul><ul><li>The Purchases team must find the best supplier for the organisation. </li></ul></ul><ul><ul><li>Features of a good supplier are: </li></ul></ul><ul><ul><ul><li>Provides high quality goods. </li></ul></ul></ul><ul><ul><ul><li>Delivers goods on time. </li></ul></ul></ul><ul><ul><ul><li>Sets a very fair and reasonable price. </li></ul></ul></ul><ul><ul><ul><li>Offers trade credit – this means that the organisation can buy goods from the supplier and pay for them at a later date. </li></ul></ul></ul><ul><ul><ul><li>Is near and easily accessible. </li></ul></ul></ul>© Inspiring Education 2006
  17. 17. Documents used within the Purchases Department © Inspiring Education 2006 Quotation If the organisation has a special request for a product or service, the supplier will provide a quotation which states the price of the order. Delivery Note The Purchases team will receive a delivery note along with the ordered goods. This note details exactly what was ordered and what was delivered. This means that if there are any mistakes, they can be reported immediately to the supplier. Credit Note The supplier will issue a credit note if faulty goods have been returned. This means that the Purchases team can use the credit note for a future order. Invoice The supplier will send the customer an invoice stating the delivery of goods and when payment is due.
  18. 18. The Finance Department <ul><li>The Finance Department is responsible for managing all the finances of the organisation. </li></ul><ul><li>The Finance team are responsible for dealing with all money coming into and going out of the organisation. </li></ul><ul><li>In order to understand the purpose of the Finance function, let’s look at the different tasks that are carried out by the Finances Department. </li></ul>© Inspiring Education 2006
  19. 19. The Role of the Finance Department <ul><li>Preparing and Presenting Final Accounts </li></ul><ul><ul><li>The Finance team are responsible at the end of each financial year, to record how well the organisation has performed financially. </li></ul></ul><ul><ul><li>In order to show how well the organisation has performed the Trading, Profit and Loss Account and the Balance Sheet are prepared. </li></ul></ul><ul><ul><li>The above documents will then be presented to Senior Management who will be informed of how much money the organisation has made or lost over the year. </li></ul></ul><ul><ul><li>This helps management in making decisions for the future. For example, if they need to cut costs they may decide to make some staff redundant. Or, alternatively, if they have made large profits, they may decide to open up a new store so that they can grow. </li></ul></ul>© Inspiring Education 2006
  20. 20. The Role of the Finance Department <ul><li>Paying Bills on behalf of the Organisation/Departments </li></ul><ul><ul><li>The Finance team are responsible for paying for all purchases made within the organisation. You have recently learnt that a Department will submit a REQUISITION form to the Purchases department for new resources. This information is then passed on to the Finance team who actually PAY for the goods ordered. </li></ul></ul><ul><ul><li>When the supplier sends an INVOICE, the Finance team will check that it is correct. For example, check the quantity ordered; the price of each item etc. </li></ul></ul><ul><ul><li>It is essential that all invoices received are paid promptly to the supplier. This will help establish the supplier relationship which could lead to discounts and trade credit being offered in the future. </li></ul></ul><ul><ul><li>The most common method of payment the Finance team use is a CHEQUE. </li></ul></ul><ul><ul><li>The Finance team will ensure that an accurate record of all cheques paid is kept to make sure that cash is being transferred appropriately. </li></ul></ul>© Inspiring Education 2006
  21. 21. Processing a Cheque <ul><li>If the Finance team are paying the supplier using a cheque the supplier is known as the PAYEE. </li></ul><ul><li>The amount to be paid is written in text in full as well as in figures in the box at the side. </li></ul><ul><li>The person who signs the cheque will be an authorised employee of the Finance team. There will be a limited amount of employees who are allowed to sign cheques to make sure that nobody is misusing the organisation’s cash. </li></ul><ul><li>Each cheque has a STUB. This means that when a cheque has been written and removed from the chequebook, the stub is left. To keep an accurate record, the stub will display the amount of money paid, to whom and on which date. </li></ul><ul><li>The cheque has not been signed. </li></ul><ul><li>The signature is false. </li></ul><ul><li>The cheque has been dated in advance of when it is received. </li></ul><ul><li>The text showing the total amount is different from the numbers showing the total amount. </li></ul><ul><li>The cheque appears to have been falsified eg. The account number has been changed or the date has been changed. </li></ul>© Inspiring Education 2006 A Cheque will be refused if the following occurs:
  22. 22. The Role of the Finance Department <ul><li>Paying Employees’ Wages </li></ul><ul><ul><li>It is very important that the Finance Department works closely with the Human Resources Department in ensuring that all employees are paid the correct amount and on time. </li></ul></ul><ul><ul><li>The Human Resources Department informs the Finance Department exactly how much each individual employee should receive at the end of each month/week. </li></ul></ul><ul><ul><li>Once the Finance team have processed this information in their records, the wages are automatically paid into each individual’s bank account. </li></ul></ul><ul><ul><li>For smaller organisations, the Finance team may decide to make up ‘pay packets’ by handing over cash at the end of each month/week. </li></ul></ul>© Inspiring Education 2006
  23. 23. The Human Resources Department <ul><li>The Human Resources Department is responsible for managing human resources of an organisation – the employees. </li></ul><ul><li>The Human Resources Department focuses on meeting the needs of all employees and ensuring that the work environment is a healthy and safe one at all times. </li></ul><ul><li>In order to understand the purpose of the Human Resources function, let’s look at the different tasks that are carried out by the Human Resources Department. </li></ul>© Inspiring Education 2006
  24. 24. The Role of the Human Resources Department <ul><li>Recruitment </li></ul><ul><ul><li>The Human Resources Department is responsible for recruiting potential candidates for the job. </li></ul></ul><ul><ul><li>In order to do this effectively, there are a number of steps involved in the recruitment process: </li></ul></ul><ul><ul><ul><li>Preparing a JOB DESCRIPTION – this clearly describes the nature of the job and what it involves. </li></ul></ul></ul><ul><ul><ul><li>Preparing a PERSON SPECIFICATION – this clearly describes the type of person the organisation believes will best suit the job. </li></ul></ul></ul><ul><ul><ul><li>Advertising the vacancy – it is important that the Human Resources team identifies the most suitable place to advertise eg. Local newspaper; Internet; radio etc. </li></ul></ul></ul><ul><ul><ul><li>Determining if the job should be advertised INTERNALLY or EXTERNALLY. Internal recruitment means that an existing employee is given the job (promoted) whereas external recruitment means that the successful candidate comes from outwith the organisation. </li></ul></ul></ul>© Inspiring Education 2006
  25. 25. The Role of the Human Resources Department <ul><li>Selection </li></ul><ul><ul><li>The Human Resources Department is responsible for selecting the best candidate for the job. </li></ul></ul><ul><ul><li>In order to do this effectively, there are a number of steps involved in the selection process: </li></ul></ul><ul><ul><ul><li>Gather all the applications forms received and identify the most suitable candidates. </li></ul></ul></ul><ul><ul><ul><li>Arrange interviews for the selected candidates. Normally, there are at least 2 rounds of interviews: the first one is referred to as the LONG LEAT usually consisting of 6 – 8 candidates. The most successful 2 or 3 candidates would then be invited back for a second interview referred to as the SHORT LEAT. </li></ul></ul></ul><ul><ul><ul><li>Once references have been consulted, the successful candidate will be informed of their success and be offered the job. </li></ul></ul></ul><ul><ul><ul><li>It is then important for all the unsuccessful candidates to be thanked for their interest in the organisation and provided with feedback as to why they didn’t get the job. </li></ul></ul></ul>© Inspiring Education 2006
  26. 26. The Role of the Human Resources Department <ul><li>Calculating Wages </li></ul><ul><ul><li>The Human Resources Department is responsible for ensuring that each employee receives the correct amount of pay. </li></ul></ul><ul><ul><li>The rate of pay depends upon the amount of hours the employee has worked: </li></ul></ul><ul><ul><ul><li>FLAT RATES </li></ul></ul></ul><ul><ul><ul><ul><li>The employee is paid by an hourly rate. For example, £4.50 an hour. </li></ul></ul></ul></ul><ul><ul><ul><li>TIME RATES </li></ul></ul></ul><ul><ul><ul><ul><li>The employee is paid depending upon the length of time he/she takes to complete the job. </li></ul></ul></ul></ul><ul><ul><ul><li>OVERTIME RATES </li></ul></ul></ul><ul><ul><ul><ul><li>For every extra hour of overtime the employee works, he/she receives a higher hourly rate. </li></ul></ul></ul></ul><ul><ul><ul><li>PIECE RATES </li></ul></ul></ul><ul><ul><ul><ul><li>Depending upon how much the employee produces, will determine how much he/she gets paid. </li></ul></ul></ul></ul>© Inspiring Education 2006
  27. 27. The Role of the Human Resources Department <ul><li>Training </li></ul><ul><ul><li>The Human Resources Department is responsible for ensuring that each employee receives appropriate training to ensure that they know how to do their job and that their skills are developed regularly. </li></ul></ul><ul><ul><li>Training courses are provided either in-house or at external venues whereby more specialist staff can train the employees. </li></ul></ul><ul><ul><li>If the Human Resources team ensure that the workforce is receiving up-to-date training opportunities this will mean that the employees will be motivated and keen to develop. This will result in a happier and more productive workforce. </li></ul></ul>© Inspiring Education 2006
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