Functional areas of business operation
This paper studies four distinct functions of business and how they interrelate. The chosen areas are human resources, distribution, marketing and customer services.
The function of human resources is to provide a focus and strategy for the efficient management of business employees. Employee management is a primary task of modern corporations. If not dealt with appropriately, employees can have an adverse effect upon the success of the business (Alan Price 2003). Employee satisfaction affects all areas of the business. For example, if an employee is happy at work it will show in the customer service they provide. It also helps promote the business, justify the marketing and promotion message and ensure the smooth running of the distribution function.
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Distribution is the function by which the product or service is moved from the manufacturer to the end user (P. Kolter 1991), ultimately the consumer. This can be represented by physical methods, such as transportation and storage or, in a service industry, the method by which that service is packaged and delivered. A breakdown in the distribution process affects customer services, as the business may not be able to deliver the product or service required. The marketing function would be undermined, as promises made cannot be kept. Ultimately, this situation would de-motivate employees, as they are the ones receiving consumer complaints.
Effective marketing and promotion is essential as a method of ensuring the message regarding products or services attracts the attention of the consumer. (George Belch 2004). The marketing function is to deliver a message that is seen, believed and remembered. A successful marketing campaign is heavily reliant upon the efficiency of other business functions. If the business cannot deliver the goods, customers will stop listening to the promotional message. Similarly, if the employees have not received training in customer care, a marketing campaign suggesting consumer care is paramount will not be believed.
Delivery of customer services is probably the most crucial function. The consumer adds value to the success of the business by purchasing their product or service (Sean Kelly 2005). Therefore, every business has to build and maintain a close relationship with consumers. They have to deliver what the customer needs at a quality and price that meets their requirements. In a competitive marketplace, the correct level of customer service is essential if a business is to achieve a growth in market share.
Two organisations, Asda Plc., and Kwik-Fit Insurance Services have been chosen to demonstrate how these functions work in practice.
The Asda supermarket chain is a subsidiary of the American Wal-Mart retailer, one of the UK’s leading supermarket chains, with over 150,000 employees.
Asda’s HR strategy is built on the basis that every employee (All about Asda, 2006) “plays a part in making the business a success.”
To achieve employee satisfaction, retention and succession, Asda runs a programme that provides training covering every area of the business, including in-store and external processes, as well as company policy and customer care. The business is committed to achieving in house succession and to promote this aim, it includes management training as part of its HR programme (See Asda Website Training page).
Understanding the need for employees to feel an affinity with the business, Asda encourages staff to take an active part in work meetings, which take place in-store, regionally and nationally, where views can be expressed and discussed. The core of its HR function is to gain the best from employees by encouraging involvement with the business at all levels.
Asda works closely with suppliers to maintain efficient distribution services. This ensures levels of goods required are fed through warehousing centres and to individual stores in a manner that maintains consistent product availability for customers. To allow for regional variances, the business delegates an element of the distribution decision-making process to local store management.
Faced with changing consumer demands (Sean Kelly 2005), Asda now focuses its marketing and promotion on the dual aspect of quality at the right price. This has enabled the business to achieve second position within the grocery industry.
Asda has consistently sought to improve its customer services. In addition to staff customer care training Asda has expanded the product range throughout its stores. Internet shopping and expansion of till services, including self-service options, are other areas of the business where customer service improvements have been introduced.
Kwik-Fit Insurance Services
KFIS is an insurance call centre based in Glasgow. Although it was founded with the view to concentrating on the motor industry insurance, the business has expanded into more general areas of insurance.
To compete with other local call-centre operations, KFIS had to completely revise its HR strategy. This was partially achieved through improving the working environment. Like Asda it introduced training programmes to improve employee standards and encourage involvement. In addition, KFIS operates a “guardian angel” scheme (Jill Boulton, 2004), where existing staff act as mentors to new recruits. It also appointed a “minister of fun,” to organise staff social activities. The success of these measures has been reflected in business results.
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Unlike Asda, KFIS does not have a need for a physical distribution function. The distribution element here is to ensure the insurance products offered are designed to match consumer requirements. As the service KFIS offers is distributed through call centre operators, the importance of staff and producer knowledge levels is essential in distributing the correct range of products to the end user.
Whilst much of its marketing is directed through Kwik-Fit auto centres, and dependent upon the quality of their service, a significant proportion of promotion is undertaken through advertising and the call centre operators. For example, when engaging with a customer an operator may attract them to other insurance products. In this business the interaction between employee and customer is an integral part of the marketing process (George Belch 2004).
The customer service aspect of KFIS is more directly linked to the reaction of the employee than with Asda. In a call centre situation consumers instantly judge the services they are receiving by their perception of the operator. The operator’s reaction, explanation and provision of the most appropriate product, and efficiency of service, will determine whether the customer is satisfied and will remain loyal to the business. HR director (Keren Edwards 2006) believes that the strategy in place in the business is contributing to the success in terms of customer retention.
From the information within this paper it is clear that every function described is dependent upon, and influenced either positively or adversely by the others. If one function, for instance, customer services, does not perform at its most efficient, the result will affect the other functions. Customers will stop believing the marketing, resulting in fewer products sold, parts of the distribution function becoming redundant and a reduction in employee moral and efficiency.
All about Asda (2006). Asda People. Asda Plc. Retreived 19 January from http://asdacares.gpalm.co.uk/people/people_load.html
Armstrong, Michael (2006). A Handbook of Human Resource Management Practice. Kogan Page. UK.
Price, Alan (2003). Human Resource Management in a Business Context. Thomson Learning, UK.
Kotler, P. (1991). Marketing Management. FT Prentice Hall, 7th Ed. UK
Belch, George. E (2004) Advertising and Promotion: An Integrated Marketing Communications Perspective. McGraw-Hill Inc. U.S.
Kelly, Sean. (2005) Customer intelligence From Data to Dialogue. John Wiley & Sons Ltd., UK
Boulton, Jill (2004). Kwik-Fit hires fun guy to keep staff smiling. The Scotsman, Friday 21 May 2004.
Edwards, Keren (2006). Keep Fit Scheme. People Management Scheme. UK. 6th April 2006.
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