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EEEEEEP

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Interdependence of business functions
« on: June 04, 2018, 08:13:57 pm »
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This question basically comes up in the exam paper every few years (or is asked in the MC).
What this means is basically, how the departments relate and affect each other?


This diagram basically summarises everything and links it all up.  The underlined shows the interdependence.
Departments affect others, and others affect them. No single department’s actions only involve themselves.
Basically, a change in one department is not ever isolated to itself and that’s the concept of interdependence between the departments.


Operations
Operations is all based about production. Producing things. Now:
-   How do we know what to produce? Marketing
-   Where do we get finance and where does revenue figures go to? Finance
-   Where do we get talent? HR (Common theme from all departments)

Finance
Finance is about budgeting, company survival and the financial health of the company. Now:
-   Where does talent and staff come from? HR
-   Where does costs and growth figures come from (for future projection and producing financial reports)? Operations and Marketing (overheads, marketing costs)
-   Where does revenue come from? Operations (sales of services and products)

Marketing
Marketing is about how you sell and distribute products ..e.g. what pricing, distribution etc.. Now:
-   Where does talent and staff come from? HR
-   Where does the budget come from? Finance, the budget is usually set by finance (and then the marketing department has to make it work)
-   Where does the sales figures come from (for developing and changing marketing plans)? Operations

HR
Human resources is about hiring, keeping and firing people.  .. Now:
-   HR – provides talent to all areas of company
-   Where does the budget for HR come from? Finance
-   What staff is needed and how do we find out? Finance, Marketing and Operations (there may be changes in those departments)

Some Q’s from the HSC
2012 HSC, Q22
(d) Explain the interdependence of finance and operations in a business. Support your answer with relevant examples.

answer
Operation’s main strategic role is to produce a cost leadership and to have a good/service differentiation. This is done via strategies such as new product development, supply chain management and inventory management.

Finance’s main strategic role is to focus on indicators of performance such as profitability, growth, efficiency, liquidity, solvency. This is managed via monitoring and controlling, cash flow management and working capital management.

When operation’s processes are not efficient and products quality are not good, then expenses soar and profits are reduced. This involves finance as all the metrics will reflect this, profit margins are lower, growth is lower, liquidity is lower etc. One example of this Zara! Zara made it's operations more efficient, via the use of robots (in 2012) and managed to increase its profits by 10%.

Q23c
XYZ Ltd produces sports shoes which are worn by elite athletes and the general public in North America. XYZ Ltd is keen to expand into Europe and Asia.

The management team of XYZ Ltd is deciding whether to use customisation or standardisation as its marketing strategy for the expansion.

Analyse how marketing and finance would be linked in XYZ Ltd’s decision to customise or standardise.
answer
Marketing involves coming up with a product that is worthy to sell and then correctly pricing, distributing and promoting it.  Finance’s main strategic role is to focus on indicators of performance such as profitability, growth, efficiency, liquidity, solvency.

A standardised approach would assume a lot of characteristics and the marketing campaign would not need to be changed much. It follows the “one size fits all” approach. A customised approach considers that there’s diversity in people and campaigns need to be changed a lot.

For finance, it would be cheaper and more cost effective to have a standardised approach.They do not need to produce different marketing compaigns for different target markets and just roll out the one compaign.  The customised approach can be expensive, but there’s the possibility of higher sales in the future.



2014, q23b
(b) Maintenance is a process of human resource management. By referring to a specific example, explain how maintenance could be used to improve business performance.

answer
Maintenance is the process by where employee’s information is kept and the employees are committed and loyal. This can be done through monetary and non-monetary benefits.  Monetary benefits are wages and salaries, where as non-monetary benefits are intrinsic.  If employees are not maintained properly, they will leave and the company will lose lots of talent and experience that can affect the operations of the firm.

A specific example of this is Uber. Uber lost nine executives due to bad culture (despite having high salaries).  Now the company is suffering with lower profits and some losses due to a loss of good talent. If Uber had a better work culture, then the executives would have stayed and profits would continue to increase.


HSC 2016, Q8
A business plans to increase its stock to be ready for the grand opening of five new stores. This shows the interdependence between which business functions?
(A) Operations and finance
(B) Operations and marketing
(C) Finance and human resources
(D) Human resources and marketing

Answer
B, Stocking up is the responsibility of the operations department and marketing is responsible for future plans.


« Last Edit: June 04, 2018, 08:16:32 pm by EEEEEEP »

Mada438

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Re: Interdependence of business functions
« Reply #1 on: June 04, 2018, 08:23:12 pm »
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Love your work E6P!  ;D
This is definitely one of the more underrated parts of the syllabus and i myself am guilty of neglecting it and suffering the consequences (*cough* Half yearly exam *cough*)
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