BTEC National in ICT: Unit 3 - Functional Areas in more detail - Tesco

1. Information Systems
Functional Areas within a Business - Example

2. Levels of Organisation
• 1. Operational Information is a record of all events and
transactions within an organisation. A record must be kept of
all payments and orders. This includes payroll records and
stock management
• 2. Tactical Information is information commonly used by
middle management. They need to know how fast particular
products are selling, how quickly stock levels can be refreshed
and at what times of the week a store is most busy
• 3. Strategic Information is needed by senior management. The
leaders of an organisation need to plan for the future and they
need accurate information about economic and environmental
factors, social trends and so on to decide what direction the
business should take. Information can be used to build
computer models to forecast the effects of certain changes.

5. Internal and External Information Flow
• How do different departments communicate with one
another?
– Information also flows vertically – managers set targets,
employees will carry out the task
– Unidirectional external flow - one way only
– Bidirectional external flow –both ways
• What are the common agencies that
companiesorganisations communicate with?

6. Organisational Areas
What different functional areas exist within
businesses?
What activities does each functional area perform?
How do functional areas rely on each other?
How are businesses structured and how can this be
represented?

7. Delivering Key Functions
Businesses must be run efficiently to
achieve their aims and objectives.
To be able to sell products, specific
functions must be performed by the
staff regularly.
In small businesses, individual
people complete the functions.
In medium or large businesses, such as Tesco, the functions
are performed by individuals working as members of
functional areas, or departments.
How many departments do you think a Tesco
store might have? What are they?

8. Case study: Thorpe Park and Tesco
Company: Thorpe Park Company: Tesco
Mission: achieve aims and Mission: achieve aims and
objectives objectives
Which departments would help these companies complete
their missions?
Human Resources Marketing
Finance & Accounts Sales
Administration Customer Services
IT Support Research & Development.
Do you know what jobs each functional
area performs?

9. Human Resources (HR)
Human Resources (HR), also known as
Personnel, is the functional area in a business
that performs tasks relating directly to the
employees:

10. Case study: Tesco
Tesco is the UK’s biggest private
sector employer with over 260,000
employees. Its core purpose is: to
create value for customers to earn
their lifetime loyalty.
Tesco manages its staff through its HR
department. It offers them benefits,
such as childcare vouchers, share
schemes and pensions, to initially
attract them to the company and also
to stop them from leaving.
How do you think the Human Resources
department affects the other departments?

11. Finance and Accounts
Finance and Accounts record and manage the
revenue and costs of the business to calculate how
much profit or loss it has made.
How do you think the Finance and Accounts
department affects the other areas?

12. Administration and IT Support
The Administration and IT Support functions are responsible
for a range of tasks which help the business to run smoothly.
If the following duties are not performed properly, the other
functional areas will not be able to complete their tasks and
the business might fail its customers:
clerical tasks
manning the reception desk
cleaning and maintenance
health and safety assessments
security
hardware/software support
network management.
How do the Administration and IT Support
functions affect the other departments?

13. Operations and Production
The Operations function is central to any business, no
matter what its size. Its chief purposes are to:
obtain resources necessary for
the business to produce goods
or provide services
organize the resources in the
most efficient and effective
way possible.
The Production function is responsible for providing
customers with whatever the business offers. This usually
takes the form of either producing goods or offering services,
e.g. Ford manufacture cars, a firm of solicitors offers legal
advice to clients.

14. Marketing
The role of the Marketing function is to promote the goods or
services that the business offers by making customers aware
of them. Tasks that the marketing team undertakes include:
conducting market research to
find out what customers want
developing products in line with
customers’ needs and wants
carrying out promotional
activities in order to make
customers aware of the
business’s services, e.g.
advertising, publicity.

15. Sales
Some products are personally sold to customers by specially
trained sales staff from the Sales department.
Customers often like to ask for
advice when buying expensive
products. A salesperson can
offer this advice and encourage
the customers to spend more.
The Sales department is often split into further subdivisions:
Sales staff sell within the store.
Sales representatives travel to the customers.
Telesales staff sell over the telephone.
Merchandisers display the products strategically.

16. Customer Services
Customers are the most important part of any business.
The Customer Services department is responsible for
looking after customers’ needs to make them feel valued.
The Customer Services team has a number of tasks:
offering information, advice and
credit facilities
arranging deliveries
providing after-sales service
managing complaints.
How does the Customer Services team
affect the other departments?

17. Case study: Tesco
Tesco tries to achieve its core purpose by offering excellent
customer service and following this value:
No-one tries harder for customers.
In 1999, Tesco launched
www.tesco.com. It is an online
shop where customers can buy
their groceries and have them
delivered to their homes at
convenient times. Currently, it is
the world’s most successful
online grocery shopping service.
Find out the other ways in which Tesco tries to
offer its customers great service.

18. Research and Development (R&D)
Unless a business is continually expanding and developing
its range of products, it is unlikely to succeed.
Sales for a new product should
Product life cycle
gradually increase – provided that
the marketing mix fits the market
requirements. However, sales will
begin to level and then decline.
This sequence is called the
product life cycle.
Declining sales reduce the business’s income, so large
businesses often have a Research and Development team to
improve their existing products and to invent new ones.
How does the Research and Development
function affect the other departments?

19. Case study: Thorpe Park
In March 2006, after 11 months of building, Thorpe Park
opened the ride Stealth. It is Europe’s fastest and tallest
launch coaster, but at £12 million, it was a very expensive
project to undertake. The R&D department designed
Stealth, but the Marketing department were also involved in
considering:
cost
price to charge customers
practicality: where, when,
how
profit.

20. Independence of Functional Areas
Departmental links are essential in order to meet the aims
and objectives of the business. This is known as
interdependence, as departments depend on each other.
In a small business, links between different functional areas
are often informal and regular.
In larger businesses, people
may work in separate areas
and rarely meet each other
but they still need
information and support from
each other in order for the
business to run efficiently.

21. Interdependence Situations
To highlight the interdependence of different functional areas,
think about these scenarios.
Explain the likely effect on the achievement of targets if the
following situations occurred at Cadbury’s:
1.Marketing do not advise their Production department that
they have launched a £1 million advertising campaign for
Giant Buttons.
2.Finance do not tell Production that there is a 5% budget cut.
3.Customer Services do not inform Research and
Development that there have been a record number of
complaints about a recently launched chocolate bar.
4.Finance do not advise IT Support that they have purchased
new financial management software.

22. Organisational Structure
An organization chart is a diagram which shows the internal
organizational structure of a business, and how the
different jobs within it fit together.
Different businesses are organized in different ways, to
best achieve their objectives. However, an organization
chart for any business will clearly show:
the different functional areas of the business and the job
roles within each functional area
how many people work in each functional area
the different levels of responsibility/authority in the
business – who is in charge, and who reports to whom.

23. What is an Organization Chart?
This is an organization chart showing Head teacher
how the subject departments
(functional areas) of Science, English
and Maths are organized in one school. Deputy Head
Head of Maths Head of English Head of Science
Maths Teacher English Teacher Science Teacher
What do the horizontal and vertical lines indicate?
Draw an organization chart for your school.

24. Chain of Command and Span of Control
In an organization chart, the people near the
top have responsibility for those below them.
The chain of command refers to the
number of layers through which
messages (commands) have to pass in
order to get from the person at the top
level of authority to staff at the bottom
level. The larger the business, the longer
the chain of command is likely to be.
The span of control is the number of people under the
supervision of any given manager (i.e. the people below them
in the chart).

25. Case Study: Thorpe Park
Thorpe Park is a large business with many different
functional areas. This organization chart shows the structure
of the Marketing department at Thorpe Park.
General Manager
Marketing Manager
Brand Manager Marketing Analyst PR Manager
Marketing Executive

26. Hierarchical and Flat Structures
Large businesses and organizations such as Thorpe Park and
your school will usually have a hierarchical structure.
This is a form of organization with many different
levels of responsibility. The more levels in a
business, the more opportunities there are for
promotion up the hierarchy.
Smaller businesses or organizations will
tend to have flat structures – where
there are only two or three levels. These
types of business are more informal,
with close contact between managers
and the rest of the staff.
What advantages and disadvantages of flat and
hierarchical structures can you think of?

27. Centralised and decentralised
organizations
Organizations can either be centralized or decentralized.
A centralized organization keeps the control in the hands
of a few senior managers or directors. In a decentralized
organization, authority and control is delegated to the
individual managers.
Virgin is well-known as a decentralized
organization: the Virgin group consists of
separate, semi-independent companies.
While Richard Branson is chairman of
the Virgin group, he allows his
managers to take control of the running
of each business.

28. Question time
1.Why do businesses allocate tasks between
functional areas?
2.Why is the Operations function at the heart of
any business?
3.If a product is in the decline stage of the
product life cycle, how can a business boost its
sales?
4.What three things will an organization chart
show?