11.4 Interdependence with other key business functions

The main functions that a business performs are operations, human resources, marketing and finance. Middle management develops short-term plans known as tactical plans, which are based on information provided by each of the business’s functions. These plans enable the business to achieve the goals set out in its strategic plan. All the functions of the business must work together and rely on each other for the business to be successful; that is, they are interdependent.

As the business grows and undergoes changes, the coordination of the separate functions becomes more complicated and the skills of management become increasingly important. It is essential that all internal stakeholders understand how the business works and know what the business hopes to achieve.

Communication between departments must be effective, clear and complete. In order to be successful, management needs to be able to see the business as a whole unit with many individual parts operating together (much like the organs in the human body).

Finance and operations

The financial manager must allocate adequate funds to the operations department to be able to supply their product successfully. The financial manager will also need to develop budgets and cost controls for operations, encouraging them to minimise expenses and work efficiently. Operations should use its resources to achieve maximum output and minimise waste; thus ensuring high productivity, efficiency, profitability and, through marketing, increased sales revenue.

Finance and marketing

A business has only a set amount of funding. If marketing is provided with large amounts of funding, so that operations – which provides the core product – does not have enough money to keep up supply, then the money spent on marketing will be wasted. Finance needs to determine the best allocation of its funds to allow all functions to operate successfully. If marketing has enough funds allocated in its budget to develop a highly successful marketing campaign, then sales, market share and profitability will increase, which will push up the business’s share price. This in turn will make it easier for the business to borrow funds in the future.

Finance and human resources

Human resources needs to make sure that it employs the best people to work for the business. Finance allocates funds in its budget to human resources to acquire, train, maintain and, if necessary, separate employees from the business. Human resources works with finance to determine the remuneration provided to staff members.