What are the functional areas of a business

By Max. D Gray. Updated: January 16, 2017
What are the functional areas of a business

It's a well known fact that when a company reaches a certain size, there's the need to split into different departments in which each of them is devoted to a particular task, adequately staffed with professionals and experts in the field. This results in each department working exclusively on what it does best, devoted to different functional areas of the company and in this article we'll explain how they work.

Administration and human resources

This department is responsible for managing everything considered "paperwork" and all bureaucratic and administrative processing. It's normally also linked to human resources since the management of this department also involves a lot of paperwork. They're responsible for the following tasks:

  • Recruitment, selection and hiring of personnel, including both the physical and bureaucratic steps.
  • Payment and management of salaries, wages and employee compensation policies.
  • Promoting good labour relations and adequate motivation of employees.
  • They manage all of the activities necessary to keep the company going.

Accounting and finance

This department oversees the management and regulation of all economic resources of the company, as well as keeping a record of all financial transactions in the books. Their tasks include the following:

  • All credit and loans related to the company.
  • Payment and collection with suppliers and customers.
  • Monitoring of interest rates on previous loans.
  • Tax returns.
  • Company investments in financial assets.


This department is responsible for transforming raw materials into finished products to sell to customers, or to produce and provide the services that the company offers. They must purchase and operate the necessary machinery and are responsible for managing and maintaining it in the most efficient way possible. Their responsibilities include:

  • Production of goods and services.
  • Design of products and services.
  • Maintenance of machinery and production site.
  • Storage of stock.
  • Quality control

Sales and marketing

Sales and marketing is responsible for performing all necessary tasks for the products to be transported from their place of production to the customers. This department meets all clients' needs and expectations. Their tasks include:

  • Logistics.
  • Management of retail locations.
  • Marketing mix: price, product promotion and distribution.
  • Communication with customers.
  • Market research.

Other functional areas of a business

Depending on the type and size of the company, there are also several more areas to take into account:

  • IT department: Nowadays this department is getting more and more important for companies. This department is in charge of the correct function of all computers and software equipment in the company and maintains the company's web site and/or social networks.
  • Customer service: Many companies will have to answer to their clients or potential clients. This is why they need a customer service department, to give support to those people who have aquired the business' queries.

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