How business functions depend on each other

Overview

How marketing, people, operations and finance depend on one another, why their objectives conflict, how external changes ripple through every function, and how to weigh evidence from several functions to reach a justified decision.

What you need to know

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Questions from this subtopic

Each one with the model answer underneath.

1. 1

   What is meant by the interdependent nature of business?

   Model answer

   The functions of a business, marketing, people, operations and finance, depend on each other. A decision in one area affects the others, so managers must consider the whole business when deciding.

2. 2

   How does a marketing decision to launch a new product affect the other functions?

   Model answer

   Operations must make the product to the right quality, finance must fund development and promotion, and human resources may need to recruit or train staff to make and sell it.

3. 3

   Why can the objectives of different functions conflict?

   Model answer

   Marketing may want to spend more on advertising to grow sales, while finance wants to control costs and protect cash flow. Operations may want to cut costs while marketing wants higher quality.

4. 4

   How can an external influence, such as a rise in interest rates, affect several functions at once?

   Model answer

   Finance faces higher repayments on loans, marketing may see falling demand as consumers spend less, and operations and HR may have to cut output or staff.

5. 5

   A café owner must choose between buying a coffee machine that serves customers faster and hiring an extra barista. What should she consider?

   Model answer

   Finance: the machine is a one-off cost, while a barista is an ongoing wage. Operations: the machine may be more consistent, but it may break down. People and marketing: a barista adds customer service and flexibility, which may matter more to regular customers.

6. 6

   A small manufacturer must decide whether to expand into a larger factory or stay where it is. Which functions provide evidence for the decision?

   Model answer

   Marketing provides sales forecasts and market research, finance provides cash flow forecasts and the cost of a loan, operations judges whether current capacity is a limit, and HR judges whether enough skilled staff can be recruited.

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