Business Functions and Process
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This report is aim to introduce how business functions and process need to be implemented across an organisation. The report will come with both academic theories and real examples. Some examples of Tesco PLC and other companies have been chosen here to provide some good example of a business running of a large international group. The report will be separated into there parts and trying to provide more detail of business functions and process through different aspects.
External Stakeholders and the Organisation
According to Johnson. G, Whittington, R. and Scholes, K. (2011), stakeholders play important rules in a organisation, especially a large organisation because there are different expectations, even confliction between those stakeholders in a organisation. Stakeholders can be divided into four types regarding to their relationships to the organisation and how can they affect the whole organisation. These four types of external stakeholders are: Economic stakeholders, Social/Political stakeholders, Technological stakeholders and Community stakeholders. Figure 1 shows clearly what the relationship between them and an organisation.
To identify these important stakeholders, stakeholder mapping is one of the best approach for an organisation to identify their own stakeholder. Figure 2 is an example of external stakeholders mapping of E.ON Energy, which identify the stakeholders of this organisation.
Stakeholders can play different roles in different areas within a organisation. They can also make influence on these areas, the following parts will specifically explain the influence of stakeholders.
External stakeholders can make influence on the sustainability of an organisation, when a organisation making a business decision. Nowadays sustainability is becoming more and more important in our life. Not only governments considering sustainability, but also large organisations and even local residence considering sustainability. Briedenhann, J. (2011) introduced that legacy and sustainability becoming more and more important for large sporting events such as the FIFA World Cup. and these decisions are influence by external stakeholders such as the government and local residence. In the case study of Tesco PLC, the organisation is performing well in the global market according to the sustainability. With the influence of different political groups (external stakeholders). Tesco PLC create a zero-carbon training academy in South Korea. The organisation is recognized by the Carbon Disclosure Project as a top retailer in the world. This is because the company has follow the influence of external stakegholders and made big contributions to the sustainability. Furthermore, the organisation also decide to progress towards on this objectives and traget themselves being a zero-carbon business by 2050. (Tesco PLC, 2011)
Economic stakeholders are the key players for a large retail company when the organisation is dealing globalisation issues. Globalisation is a worldwide movement on economic, finance, trading and communications (BusinessDictionary, 2013). This means globalisation is highly related to the financial activities, so it is no doubt that economic stakeholders will make big impacts on globalisation issues for a international trading company. As a retail company, Tesco PLC has their business across the whole world. During the business process in different countries, the company is actually doing different strategies to meet the needs of local economic stakeholders related to their culture and consuming habits. For example Tesco PLC opende a lot of 24 hours Tesco Express in the East China to meet the needs of consumers want to buy things 24 hours while in America they provide supermarkets with organic, fresh and high quality food. The strategy decision and business progress is highly affected by the economic stakeholders in globalisation is because the main objective for most international business companies is to general income.
Corporate Social Responsibility
According to Johnson. G, Whittington, R. and Scholes, K. (2011), “Corporate Social Responsibility (CSR) is the commitment by organisations to ‘behave ethically and contribute to economic development while improving the quality of life of the workforce and their families as well as the local community and society at large”. Although the main objective of an international business company should be general income and profit, but CSR is becoming a fundamental part for a large organisation. While dealing with CSR issues, Social/Political stakeholders such as local communities, consumers can make big impacts on the decision making. The important thing for CSR is to satisfy the the customers especially they are local communities. Tesco PLC made a good example in Asia on CSR. They company help the local community to deal with the flood in Thailand. Staffs work hard to deliver the basic life needs to the local communities and the company had donated nearly £500,000 to the local community which won high appraisal from the local community. To actually consider the external social stockholders and make benefit for them is one of the most important things is business process now for a large organisation.
Diversity comes from different parts and different levels in an organisation. Diversity on decision making can happens quite often when the organisation is big. When a organisation has junior management levels and senior management levels, sometimes diversity might happen (Johnson. G, Whittington, R. and Scholes, K., 2011). The diversity may cause by different experience and the experience may come from external stakeholders. For example technological stakeholders may create new technology or solution way for a large company, but it is the right of the company to decide if they are applying new technology to their company, normally, diversity come due to there reason when internal stakeholders making decisions. For example, diversity might happened when Tesco PLC was deciding using online shopping systems or smartphone application for the company to general more income or enhance customer experience. It is understandable and true that external stakeholders will have impact on decision making when diversity happened, but the best way to resolve this problem is to enhance the communication between internal stakeholders and try to have unite in the organisation.
Technology moving fast in modern society, new business model and technology comes out every year. External stakeholders are the best reference for a organisation to review on the company and to make decision on the business innovations. To make business innovations, marketing investigation must be done before lunching the service or new products. In this stage, external stakeholders are the ideal target to be investigated. For large stadiums, social stakeholders such as local residence can influence on the events could be taken on in the stadium. For international retail companies, the consumer habits can help the company to create new business tools and services. Internet plays essential part in people’s life, online grocery of Tesco PLC gives people more connivence and new types of shopping experience which now seems like a normal way. Social media for large retail shop helps the company to get feedback from their customers as soon as possible and to make reaction on it. External stakeholders help a company to gather information quickly and create business innovation quickly and also get reactions quickly by using suitable way.
Creativity involves in the production of anything useful Mumford, M. D. (2003), and also creativity can also be defined as original and worthwhile. For an organisation, creativity is not only refers to the build up on a new product or new service, it can also refer to a internal solution of a company. To have creativity, external stakeholders will make big contribution. As economic stakeholders, shareholders and capital suppliers will provide the essential capital or fund that are available for a creativity. With the support of capital, the team will have more chance to make new products or services. Political stakeholders such as the governance bodies also help on creativity. A new policy can help variety companies to create a macro-environment on creativity. With a macro-environment on creativity, more chance of creativity will happened regarding to the challenging in the same industry. Consumers as external stakeholders also stimulate creativity because large corporate make creativity to meet the consumers’ needs and to get the target of general income. Different external stakeholder plays different rules in creativity for a business process, but in all they all help.
Enterprise Development is a large construction for either a small company or a large international organisation. An enterprise development is based on variety aspect within the organisation such as products and service, human resource management, recruiting, welfare and so on. These development are internal developments, but they are refer to external activities. With the help of political stakeholders, new policy for enterprise which helps the running of the company can be made. This is a opportunities but is also a threat because the competitors as external stakeholders can also get benefits from the policy. The development on corporation culture will gave consumers as external stockholders positive impact if the culture is health and exciting. Recruiting and welfare of the company is rely on the profit of the company. The profit is coming form consumers, so actually the running of the company can affect the internal decision making. So to conclude, enterprise development is an internal activity and processed within the company, but this activity and process on decision making is very rely one the external stockholders.
Knowledge of Management
A health and sustainable running of a company can not live with out the knowledge of management of senior management levels of a company. Because the external environment is changing all the time, so the knowledge of management should be updated all the time too. For example, the attention on health and safety for consumers is upgrading all the time these years. These requires the management level to have latest knowledge on this to maintain the reputation of the company. To understand the market, can also help the management level to using latest knowledge to manage the staff and to provide better products or service to the public. And furthermore, the changing of policy will largely affect the knowledge of management because some big changes on policy especially in different countries will affect the fundamental concept of a company and the senior management level might use a totally different managing skills to manage the company. The knowledge of management needs to be up to date all the time and all the changes must refer to the external environment.
Risk management is an essential part for a company to avoid unnecessary cost and to cause unnecessary dangers. A full risk management will have different parts such as risk assessment, contingency plan and emergency action. These risk managements tools some are internal related and some are external related. But most of them are refer to external stakeholders. For example risk assessment needs to consider what action would happen for external stakeholders. Is the policy makers will change the policy? How the economy will affect the running of the company. When setting contingency plan, what changes will bring to the external stockholders and what reflection will the company get from the external stockholders back must be considered to decide if the contingency plan is useful or not. For large retail groups, when bankrupts happened, the emergency plan must consider the benefit or lost of the consumers. And also a fast-reaction a emergency situation will affect on the consumers, to leave positive feedback form these external stockholders will maintain the awareness of the company.
Operation in Business Process
According to Russell, R. and Taylor, B (2006), operation management was defined should be systematic and make the process of the operation more efficient. basically, operation management is linked with all necessary activities during the design, develop and process of a product or a service that could be consume by the consumers. Operation management is everywhere in the business. Several aspects in the business starry can be considered here in operation management.
Operation Management and Objectives
First, form business objective points of view, operation management is important. Business objectives should be SMART and also can be separate to hard and soft objectives. Hard objectives are always measurable, quantitative and objective and soft objectives are always non measurable, qualitative and subjective. Operation management related objectives can be found in serval departments of a large business organisation. In finance, operation management should focus on the return on investment (ROI) because ROI should be one of the main objectives of a company on their future decision making. In terms of marketing, operation management should focus on their customers. The customers requirements decide the company’s objective. Operation management of customer will including daily business activities with customers also including the customer service. One of the essential part of operation management in marketing customers is too enhance or maintain the quality of the products or service of the company. For example Tesco PLC provide good 24 hours services in China and provide high quality and organic food in America. On the production of the products or services, operation management should focus on the efficiency and the effectiveness of the work.
As when the operation is efficient and effective, the company can save enough money on the producing of the service and products. Form internal stakeholders points of view such as staff and employees of the company, operation management should focus on the utilisation, training and development of the people in the organisation. Human resource management is part of the operation management in an organisation. The utilisation of the employees can create high production of the work while with proper training of the employee can also enhance the efficiency of an organisation. Development of human resource and bring new operation ideas or solution to the organisation which also will make the work more productive. Tesco PLC create academy in Korea to enhance the operation management is a good case study on how to educate the current staff and potential employees foe the company and to make them suit the organisation more and create productivity for the employers.
Environment is becoming more and more important for a company on their objective making especially for those large international companies as they provide services and products worldwide and doing business in there different countries. Operation in environmental issues should focus on the local policy or regulations to maximise the impact of the operation. Furthermore, the operation management of environment should not only focus on the external environmental issues such and sustainability of the society or the protection of the environment. The operation should also pay more attention on those intangible environmental issues inside the organisation. The internal environmental issues can be more complex. The internal operation on environment can be the working culture of the organisation such as training employee the organisation culture, it can also be the internal communication between department.
Operation Management and Strategy Process
Operation management also involved in the strategy process of the organisation. Organisation has their own strategy on business decision. Strategy can be divided into short-term strategy, medium-term strategy and long-term strategy. The operation management of strategy process needs to make sure the running of the organisation is on the track. The use of operation management is to made right direction for the company to achieve those strategies. The operation should be up to date because the external environment is changing according to the needs of external stakeholders. For example the policy changing may affect the long-term strategy of a company. One of the good apply of operation management in strategy process is to make tactic to meet the needs of short-term strategy. Also to create policy and follow policy and regulations is also important. Strategy comes form daily operational level to the corporate level. To apply and make right strategy decision is what the organisation needs in operation management.
Operation Management and Implementation
Operation management has variety processing stages. These stages including planning, and controlling, and most importantly, it is about implementing the operation management to the organisation. There are few things should be considered when implementing the operation management. First, the implementation of the operation management should be realistic. The objective and the running should not be too ambitious. It is easy to set up different objectives and operation ways for an organisation, but not all of them is easy to implement and suitable for a organisation. So be realistic is one thing when doing operation management. When operating a company, the leader or the decision maker should be hard-nosed. Because operation is the heart of an organisation, the management should be very straight on target. To be hard-nosed is to make sure the tasks are completed on time and will not affect the running of the organisation. But it can be debate that the human resource management can also be soft.
Because a hard-nosed type management is not suitable for all the employees in the organisation. So to make sure all the tasks are get done on time and in a good quality, using variety ways or management to different types of people is essential. Diversity in a organisation in the thing should be considered in the operation especially in large international companies. People who work in a international company may coming from different counties and in different education background. To make sure to allocate suitable tasks for people who can handle them can give the operation more flexibility and makes the operation more smooth and efficient. According to Muhlemann et al, (1994) there are 5 p’s should be focused in operational tasks which are: Product, Plant, Process, Programmes and People. And according to Brown et al (2001) there are 4P’s of operational tasks which are Policy, Practice, Performance and Process. They all mentioned the importance of process in operation management.
The tasks of operation management is related to both internal stakeholders and external stakeholder. For example. The products needs to meet the needs of consumers, the plant of the task is depends on the internal stakeholder such as employees. The task made upon policy is under the affect of government policy and regulation or internal policy. The performance indicate the level of the market which is also a good indicator when the organisation is doing competitor analysis. There are also 5E’s in the operation management which are: Economy, Efficiency, Effectiveness, Equity and Ethics. The equity of operation is more about the human resource management in the organisation while the the ethics are more about the output of the the operation. The ethics of an organisation can be a big judgement when external stakeholders evaluating the organisation.
Consumers will influence by the ethics of the organisation when consuming the products or service while the shareholders will decide if the investment is worth or not judge by the ethics performance of the organisation. For example nowadays more and more organisation are willing to fulfill the Corporate Social Responsibility. A large international retailer company such as Tesco shows that they are helping the local community and protect the environment will have high appraisal on the CSR. When consumers consuming, they find out the company is actually give back what they earn form the consumers to them, they might willing to consume at Tesco more. When more consumers consume more, the investors will find the company has more potential on growth so they are willing to invest more. This refers that the one operation movement has butterfly effect on the following movement and the outcome of the operation management. To conclude all, it shows that each link between the operation management are all linked together and all the task can have impact to the external stakeholders and all of them a essential and important.
Operation Management as a Transformation Process
Operation as the most important part of the organisation, the fundamental part of the operation management is to transform inputs into outputs of greater value. In the transformation process, several key points should be considered:
Adding Value in the Transformational Process
The transformational process is more like a conversion process, it is making something into another form of type of things. For example, the input can bu materials, and the output can be actual products or the input can be human and the output can be the service. The characteristic of this conversion prices is to add value into the input and produce products or services with more value on it. It can be also described as to maximise the value of something. When doing this conversion process. Several points need to be considered. First is the efficiency of the process. When adding value into something, the job must be efficiency. The value of the outputs should be equal or more than the the sum of the inputs. This means the process is actually working and add more value into the input. Secondly, the value adding should be effectiveness.
The output should be impressive to the public and receive positive feedback from the public. For example new technology can convert simple materials into high technology products and lead high consuming on this products. This transformational proces is successful because the effectiveness. Thirdly, the value adding should utilise the organisation resources. To make the value adding, the process needs capacity such as machinery, money as capital, people who work on it and materials. When the organisation has utilisation of the resource, the chance to add value in the process is bigger because this is a fundamental part of the process and there no 100% chance to make sure that the process will add value, but these are essential. Finally, the transformational process should minimise the cost. To provide more value of the output, the process should save as much costs as possible. With possible saving in the process, the whole operation management cane be more sustainable.
Different forms of Transformational Process
As there are variety types of business, the transformational process can have different forms. Physical transformation are always seen in the manufacturing operations which is converting materials into products. Locational transformation are always seen in the transportation or warehouse operations. This is an activity always seen in logistic operation. Exchange transformation are always seen in retail operation. Furthermore, in health care service, physiological transformation are always seen and psychological transformation are always seen in the entertainment. Informational transformation can be found in communication. Both psychological transformation and informational transformation are intangible transformation process.
Operation Management and Operation Activities
The operation management including variety activities, several activities can be listed here. Organizing work, this needs the operation manager to well organise the tasks can make sure they are on the track. Selecting process needs the operation managers to understand the priority of the task and selecting suitable things to do on the right time. Arranging layouts always seen in some event organizing, the operation managers need to design and arrange the layout of the venue to maximise the output. Locating facilities can been seen in some logistic work, or a large organisation with different facilities. Designing jobs should let the operation managers to using their understanding on the staff and try to allocate the best job for them. Measuring performance is a evaluating activities on the output. Controlling quality is a fundamental activity in all business sectors. Scheduling work is always alongside with the job designing which also need the understanding or work for operation managers. There are a lot of more activities can be found in operation, to conclue, operation is about everything and doing everything everywhere.
Other Important Business Functions
Business functions are not only operation management, there are other things can be considered in business function which can add value to the external stakeholders. In these part, few more business functions will be discussed here to provide more explanations.
Marketing as Business Function
To operate a business, it is essencial to understand the current market of the organisation and understand the external stakeholders needs. Marketing as a fundamental business function will help the organisation to understand the current situation of the products and service to enhance the quality of what they provide or provide new products or values to the customers. To understand what kind of added value should be provide, first he organisation needs to understand what they needs. According to the 5p’s theory of Marketing, Product, Price, Place, Promotion and People are the fundamental parts of the marketing. A well product launch should include a reasonable price for the target market, presented and prompted in suitable places to suitable people. When the targeting a marketing, one thing can be missed. According to Johnson. G, Whittington, R. and Scholes, K. (2011), market sagement should be considered in a marketing campaign.
Market sagement as external stakeholders, which is a group of consumers who have similar needs as other consumers but also have different needs in other markets is also need to be considered. As the marketing should focus on all thing potential buyers of the company’s products or services. To deal with market, both general wants form the customers and specific wants from the customers should be considered. A marketing plan refers the external stakeholder analysis. The added value delivered form the marketing can be more intangible such the idea of the products or a life style that could be adopted by the consumers. For example Tesco provides and marketing recycle shopping bags for the consumers. This kind of actions are actually providing life styles for the people. Or the special Red Edition of Apple ipod is trying to bring the idea or people who have HIV. This is also some intangible added value that the organisation can provided to the external stakeholders.
HRM as Business Function
Human Resource Management (HRM) as a business function is always considered as a function or business tool to deal with internal stakeholders within the company. It is not doubt that HRM is more about managing people in the organisation, but when a company can manage the employee well and can solve conflict inside the company, the company can be more productive and efficient. As it was discuss in the operation management part, the internal operation management on people should be efficient and effectiveness. Different people in the organisation should be treated differently to estimate their maximum power and made them to make more contribution to the organisation. When the company save money on unnecessary costs on other things, the company can spend more on providing best product with added value to the customers.
A good managing way of an organisation can also bring added value to other organisation as external stakeholders. Other organisations in other business or even same business can follow a successful model of a company can apply on their own employees. Furthermore, a successful HRM can bring high efficiency on the internal communications. This will let the employees more understand the concept and products or service of the company. When employees especially staff who working in retailing company dealing with customers, they can provide more information about the products or services to the customers which will enhance the chance of buying products or using services. Although HRM is more focus on the internal management, but it do bring added values to the external stakeholders.
Finance as Business Function
Fiance report is a key indicator of an organisation. There are several external stakeholders of an organisation, each of them will have added value brought by the organisation. For example investors and their advisers can review how much benefits they have gor form the company by simply review the annual finance report of the company. The employees and their representation groups bring added value direct to their company which means indirectly they bring added values to the shareholders of the company. Lenders can get added values from the company if the company operate well and keep healthy running every year. Suppliers and other trade payables provide products or service to the organisation will get profit from an organisation, with good link with a company, they might get added values such as commitment or long-term contracts from the organisation which definitely are added value to them.
Customers are one of the majority income of an organisation. The organisation relies on the customer to bring income to the company. Customers can get added value through finance such as review the finance report for the organisation. These added value can be intangible such as the the trust on the organisation or brand loyalty to the organisation as the company showing healthy running on finance. A good finance report makes customer feel the company is reliable and feel safe from them. Governments and their agencies can review the implementation of their policy through review the finance report. The company make finance contribution to the local economy and also bring added values such as job opportunity and business opportunity to other business in the regional areas through financial activities.
Stakeholders and business activities are always linked together. Business function help the organisation in good operation and bring benefits to the organisation. Different business function and process need to be integrated and implemented across the whole organisation. To understand the running of business functions, what added value can business function and process bring to the organisation and stakeholders is important. Furthermore, to understand how organisations can influence stakeholders and how external stakeholders can influence the business process of the organisation is also very important. A well management needs strategic decision making on each sections in the organisation, also the organisation needs strategic monitoring and controlling of the organisation. Difficulties will happen in the operation management of a organisation, to undertand and apply resolution and theory into the work will help the organisation to resolve problem and make the process of the business on a healthy way.
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