Business to meet its objectives
Information is the know-how (all the accumulated experience of members of an organisation) that provides a driving force behind the enterprise. For example, there would be an accumulated wisdom of recipes and marketing ideas. It is helpful to view a business as a system or, more specifically, as an overall system that can be viewed as a series of subsystems. A system processes inputs to produce output. For example, at McDonalds the ingredients and other inputs are processed by the production system to produce crisps. The production process takes place within defined boundaries, which are usually fairly obvious.
The inputs flow into this system. Some of the resources used will be current resources. for example, potatoes (or potato substitute), additives, salt, energy, etc. What actually goes into the production process will be ‘filtered’ to ensure only desirable inputs are accepted. For example, quality control ensures no fragments of glass enter the production system. Current resources then ‘combine’ with elements (or fixed assets), such as machinery and buildings, and flow from one element to another element across links between the elements.
For example, the potatoes for chips flow from the ingredient mixing element, through rollers and into heating ovens. While a traditional manufacturing company will place a great deal of emphasis on production’ a modern service organisation will place more emphasis on ‘consumer service’ or ‘marketing’. An organisation such as the civil service will have its major functions focusing on administration, whereas an accountancy firm will focus on finance as well as administration. The financial accounting function is responsible for keeping records of financial events as they occur.
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Accounts need to be kept of all moneys paid to or by a company, and records must be kept of all debtor and creditor transactions. The payment of wages will also require calculations involving deductions for national insurance, pensions and other factors. As well as keeping day-to-day records, the financial accounting function will also be responsible for producing periodic records such as the annual accounts and figures for discussion at meetings of directors. The management accounting function has the responsibility for nudging the company in certain directions, based on analysis of figures for the present and predictions for the future.
Management accounts will break down figures, to extract information about a company’s present performance and about what sorts of improvements can be made in the future. Using systems of budgetary control, it will set targets for achievement and limits for spending for the various parts of the business. Within the finance and accounts department, other subfunctions (i. e. functions within functions) might include a cashier’s department and a wages department. The cashier’s department will be concerned with handling all cash transactions, as well as cheque and other payments through bank accounts.
These records will be kept in a cash book or computerised system. The wages department will be responsible for supervising the payroll (calculating and paying wages). The data for these calculations might be generated by a works department or other department responsible for recording the amount of work carried out by employees. In a manufacturing company, the production function may be split into five main subfunctions: The production and planning department will set standards and targets for each section of the production process. The quantity and quality of products coming off a production line will be closely monitored.
All large organisations depend on an administrative spine. Dealing with enquiries, communicating messages and producing documents for the workforce are all examples of administrative tasks. Administrators are very important because they service the work of the organisation. Problems arise when the administrators clog up the arteries of an organisation with administrative work that moves the organisation away from its central objectives. The term used to describe such a situation is ‘red tape’ or bureaucracy. Many large firms have a central office that is responsible for controlling key aspects of the firm’s paperwork.
This department might handle the filing of materials, the company’s mail, word processing and data handling facilities (such as the creation and maintenance of databases). The modern office focuses on the management of work through information technology and communications systems. In many companies, each department will have its own clerical and support staff. However, it is common practice to have an office services manager with the responsibility for co-ordinating office services and for offering expert advice to departmental managers.