Effective management is the key to success for any business aiming to expand its customer base and profitability. It is by leveraging the power of different business functions that great teams are formed that steer brands clear of competition. Of essence is that different business functions must be geared towards coherent performance in order for there to be desirable results and a business strategy that guarantees success in the long run. This report will provide an in-depth analysis of how Tim can leverage different business functions and capacities to expand his furniture business in order to serve more customers. The report will highlight how he can use the accounting and finance function to ensure that he positions his business for future expansion through tapping into credit resources that will be at his disposal if he maintains appropriate financial reporting standards. Further, the report will explore the possibility of using innovative marketing approaches to penetrate new market segments and to maintain customer loyalty, among others. The report will then conclude by offering recommendations that Tim may apply as he transitions his business to serve a wider customer portfolio.
2.0 Introduction
It is crucial for any organization to have an appropriate organizational design that is aimed at enabling the success of the business both in the short- and in the long-term. Successful businesses normally utilize business functions to ensure that tasks are run and completed in a way that is profitable for the business while using minimal resources to produce the greatest output possible (Brown 2008, p.51). Tim’s business of restoring old furniture has in the last six months grown rapidly, exponentially, to a tune that entails him receiving orders from all over England and as a result, he has an intention of expanding, by relocating, to new and larger premises. He plans to hire more craftsmen to assist in service delivery for his business. His main mode of marketing has been through word of mouth, from client to client and in the current setting has his two employees inexperienced and they therefore require a lot of guidance and support. This report discusses a number of business functions that Tim needs to factor in as he seeks to expand his enterprise including operations management, marketing, accounting/finance and human resource management.
3.0 Business Functions
Business functions are departments into which different business processes and activities are split in order to see the completion of specific tasks or jobs.
3.1 Operations Management
In any business, operations management is the process through which the resources that are used in the creation and delivery of goods and services are managed. This is the common feature of all businesses since they are all involved in producing some product or service for a certain market segment and therefore there is an elaborate process of achieving such ends (Hill " Hill 2017).
Tim needs to put into account all the activities that are necessary for the business’s day to day activities that are geared towards the fulfillment of customer needs - both internal and external. This entails sourcing of necessary products from his suppliers and, through the input-transformation-output process, turning them into the end-products that his customers would readily exchange their money for. In so doing, the operations management involved different aspects of the business including the materials used, the information used in the production process, and the customers for who the end products – old restored furniture – is intended.
Tim therefore needs to consider the costs of ferrying his materials and other physical inputs such as equipment, the distance his clients shall have to travel to access his services, the viability of renting/ purchasing the new premises, the possible extra financial implications considering the inclusion of his intended additional craftsmen and the nature of the furniture after the restoration considering the skills of the new employees and the unskilled employees. This is critical because during the transformation process, several changes are expected including changes in the physical characteristics of the furniture, changes in the storage or accommodation of materials, information concerning the production process, changes in the location of materials, changes in the purpose or form of information and ideally, changes in the physiological or psychological state of his clients.
In addition, it is crucial that Tim puts into consideration the 4V’s of the typology of operations management (2017). These include the volume and variety of outputs, and their variation and visibility. Understanding these dynamics will help Tim in determining the optimal cost of production of the furniture and hence the best prices that will ensure maximum customer satisfaction.
3.2 Human Resource
Human Resource Management is the business that is tasked with ensuring different processes involving human capital are duly followed and adhered to including career training and development, payroll management, labor legal procedures, and so forth. Basically, human resource management processes may be classified into three different classes namely industrial relations, employee welfare, and personnel management. The HR managers ensure that a conducive environment is provided to the employees that guarantees their productivity (Guest, Paauwe " Wright 2012).
Tim therefore, having a small employee base, needs to consider how profitable the venture is bound to be and the effect it’s bound to bring along, should he relocate as he intends to. He needs to incorporate the monetary and time value in the training and development of his new and old employees is bound to cost his business in the long run. As part of incentives and morale building for his employees, he is needs to introduce rewards and recognitions for goals achieved or targets (KPIs) attained by his employees. He also needs to put into place some operational work ethics constitution that guides the employees on what is expected of them and through which grievances should be handled, should any arise.
3.3 Marketing
Marketing is the process by which businesses manage and maintain profitable customer relationships by providing customer value proposition for their clients. Through setting appropriate marketing strategies, businesses seek to satisfy their customers in order to realize the desired organizational profits (Goi 2009, p.2). There are different marketing concepts that Tim may apply in order to increase and maintain his business’s sales revenues. This is in view of the fact he is already experiencing increased demand for his furniture products from customers throughout the country.
By applying the most suitable marketing mix for his furniture business, Tim can successfully penetrate new market segments. The 7P’s of marketing (Harker et al. 2015) can be instrumental in this approach. Since the main product being offered by this business is restored old furniture, Tim can leverage on the rarity of some of the models that he offers which his competitors do not in order to have a customer base that values vintage furniture and unique designs of the past. Also, he needs to choose a physical location that is most strategic for his business. For example, choosing a location that has a big flow of traffic can help boost sales since most people would buy his products after seeing on display in his premises. In this place he will need to strategically place artefacts, signs and symbols in order to create an appealing environment for walk-in clients. In addition, Tim should ensure that the places and distribution channels that he chooses for selling his furniture is well-thought out in order to ensure that he gets return clients.
Further, Tim needs to ensure that he offers his customers competitive prices that keep ahead of the competition while keeping the business profitable. This is because customers prefer to buy goods if they feel that they are getting value in exchange for the money. According to Levitt (2008), businesses should center their product offering on the needs of their customers. Tim can also include great promotional efforts as part of his marketing mix. This can be achieved by leveraging the widespread use of social media in England in order to promote his furniture products more vigorously. It is also essential that he includes a logo in all his products in order to create a lasting impression on his customers. If well implemented, a social media marketing strategy in conjunction with other digital marketing activities and word of mouth, Tim can expand his market share and hence profits. Lastly, Tim needs to ensure that his business has appropriate business process. He may hire a marketing officer or can outsource marketing services. Having a dedicated marketing resource will ensure that marketing details and customer service needs are taken of in a timely and professional manner.
Moreover, Tim needs to use appropriate marketing process in order to create the best strategy for his business. In doing so, he may apply the Ansoff Matrix, Porter’s Generic Strategies, SWOT analysis, and the STP process so as to obtain a deeper understanding of the furniture market and how can best position his products for success. Additionally, he must have a good understanding of the customer and marketplace concepts and how to apply them for success. These include consumer wants, needs, and customer value proposition, exchanges and relationships. If these are well implemented, Tim’s business is most likely to succeed and remain ahead of the competition by a huge margin.
3.4 Accounting/Finance
Accounting and finance business functions play a central role in the running of any business. In order for Tim’s business to be successful, he needs to ensure that he follows the appropriate accounting procedures since he might require the credit services of a bank as he seeks to expand his business. By applying management, he will be able to manage emerging business opportunities more effectively in addition to following business models that adequately his strategies. Therefore, accounting function may be classified into two categories: management accounting and financial accounting. Financial accounting concerns itself with the external needs of the business, compliance to accounting and regulatory standards, and financial reporting. On the other hand, as aforementioned, management accounting concerns itself with internal management needs of a business such as KPIs and business strategies. Therefore, management accounting is a forward-looking approach that has no legal requirements unlike financial accounting (Black 2009).
By applying financial accounting principles, Tim needs to have regular preparation of the three key financial reports namely the income statement, balance sheets, and cash-flow statements. These reports are crucial since they will help Tim’s business to stay compliant with the established tax regulations and financial reporting standards. In addition, in case Tim wants to access credit from a financial institution to expand his business, he needs to have these documents since they are essential in highlighting the financial health of his business. Further, since Tim intends to expand his business and hire more staff, he might need overdrafts from time to time to remunerate his employees when the business does not have enough working capital to meet such needs.
In addition, Tim needs to adopt different business finance approaches in order to make better the prospects of his investment decisions within the furniture industry. Key among these approaches is cash budgeting and business planning in order to have a clear picture of the movement of money into and out of the bank account. Therefore, it is mandatory that Tim maintains these financial reporting procedures since these documents will be crucial in supporting loan applications or overdrafts from banking institutions in the foreseeable future. In addition, this will help him in ensuring the business has effective control frameworks and working capital management. In following the appropriate finance and accounting procedures, Tim’s business will remain solvent given that there will be a desirable working capital cycle. In view of this, proper management of the working capital cycle would involve furniture stock levels, credit period allowed for his customers, amount of credit that should be obtained from the suppliers and the amount of cash that should kept in the bank (2009). Therefore, finance and accounting function will be one of the most important factors for the success of his business.
4.0 Conclusion
This report has discussed the business functions whose use Tim’s business is likely to succeed and overcome many competitors in the furniture industry. Different business functions address different business needs and therefore it is important that Tim pays keen attention to the value added by each to his business. As he plans to expand his business in order to serve a rising demand throughout England for his furniture products, he needs to apply operations management to ensure there is coherence in the entire production process in his business. He needs to use accounting and finance capacities to create proper financial reporting standards that will aid him in securing banking facilities when either requesting for loans or overdrafts to address different working capital demands.
In addition, he will need to use the human resource business function to ensure that he hires talented and productive employees that add value to the business in addition to creating plans for developing the existing talent. Further, as has been highlighted by this report, marketing is the key to success in the markets and winning customer loyalty. In view of this Tim needs to apply different marketing techniques such as digital marketing since this is most likely to help improve revenues since most customers prefer to shop for things online nowadays given the increased popularity of the internet and Smartphones. In sum, it is predictable that Tim’s business will succeed given that he applies the above business theories appropriately.
5.0 References
Black, G., 2009. Introduction to Accounting and Finance 2nd Ed. Harlow, FT Prentice Hall.
Brown, S.P., 2008. Business Processes and Business Functions: a new way of looking at employment. Monthly Lab. Rev., 131, p.51.
Goi, C.L., 2009. A review of marketing mix: 4Ps or more?. International journal of marketing studies, 1(1), p.2.
Guest, D.E., Paauwe, J. and Wright, P. eds., 2012. HRM and performance: Achievements and challenges. John Wiley " Sons.
Harker, M., Brennan, R., Kotler, P. and Armstrong, G., 2015. Marketing: An Introduction. Pearson Prentice-Hall, London.
Levitt, T., 2008. Marketing myopia. Harvard Business Press.
