The Top 7 Types of Business Functions in Corporate World

The Business functions or tasks usually vary in different businesses but overall they are the same from production to qualify sales.

Published in
4 min readFeb 16, 2021


The Top 7 Types of Business Functions in Corporate World
The Top 7 Types of Business Functions in Corporate World

Depending on your industry and type of business, you may need to set up various departments within your company. Production, sales, marketing, accounting, and research are just a few examples. These business functions will keep your organization running smoothly and maximize their success. Each department will consist of experts who specialize in specific areas, such as accounting, sales, or digital marketing, rather than wearing multiple hats.

A typical company may consist of the following main departments or functions:

  • Production
  • Research and Development (often abbreviated to R&D)
  • Purchasing
  • Sales and Marketing
  • Human Resource Management
  • Accounting and Finance.
  • Distribution

Type #1: Production

Production function occupies the dominant position in any business activity and it is a continuous process. The production cycle mainly depends on the marketing function because production is justified when they have resulted in revenues through sales.

Production function involves heavy investment in fixed assets and working capital. A firm control by the finance manager on the investment in productive assets becomes necessary.

It must be seen that there is neither over-capitalization nor under-capitalization. Cost-benefit criteria should be the primary focus in allocating funds and therefore finance and production managers should work in unison.

Type #2: Research & Development (R&D)

The Research and Development (R&D) function is concerned with developing new products, innovations, or processes and improving existing products/processes. R&D activities must be closely coordinated with the organization’s marketing and sales activities to ensure that the organization is providing exactly what its customers want in the most efficient, effective, and economical way.

However, sometimes expenditure on R&D involves a heavier amount, disproportionate to the financial capacity of the firm and in such a case, it financially cripples the enterprise and the expenditure ultimately ends in a fiasco.

On the other hand, heavily cutting down the expenditure of R&D blocks the scope of improvement and diversification of the product. So, there must be a balance between the amount necessary for continuing the work and the funds available for such a purpose.

Type #3: Purchasing

The Purchasing function in the business is concerned with acquiring goods and services for use by the organization. It will include, e.g., raw materials and components for manufacturing and production equipment.

In buying goods and services, purchasing managers must take into account several factors, collectively known as ‘Purchasing Mix’, namely, Quantity, Quality, Price, and Delivery.

  • QuantityBuying in large quantities can attract price discounts and prevent inventory from running out. On the other hand, there are substantial costs involved in carrying a good inventory.
  • QualityThere will usually be a trade-off between price and quality in acquiring goods and services. Similarly, Production, R&D, and Marketing functions will need to be consulted to determine an acceptable level of quality.
  • Price — Other things being equal, the purchasing manager will look for the best price deal when procuring goods and services, although price must be considered in conjunction with quality and supplier reliability.
  • Delivery — The time between placing an order and receiving the goods or services, the lead time, can be critical for production planning and scheduling and also has implications for inventory control.

Type #4: Sales and Marketing

These two business functions are often carried out by the same department. The role of the sales and marketing departments is to promote the business and reach out to prospects, potential and existing partners, investors, and more. Its end goal is to generate sales and increase brand awareness.

Sales and marketing specialists are responsible for researching the market and your target audience, monitoring the company’s image on social media, creating advertising campaigns, and acquiring new customers. They may also design brochures and other promotional materials, write website content, and reach out to reporters and journalists.

In general, corporations and established organizations have separate departments for marketing and sales. The sales department, for example, maybe divided into B2C and B2B sales. The marketing department can have several divisions responsible for web design, digital advertising, search engine optimization, customer service, and PR.

Type #5: Human Resources

Human Resources(HR) management is one of the most important business departments for any company with a large number of employees. HR specialists are responsible for attracting talent, screening potential candidates, managing employee relations, and maintaining optimum working conditions.

The HR department also needs to ensure compliance with labor and employment laws, address employee inquiries, and solve conflicts.

In many organizations, these experts develop training programs for new employees to help them get acquainted with the company’s culture and values.

Type #6: Accounting and Finance

The Accounting and Finance function in business is concerned with the following:

  • The Financial record-keeping of all transactions involving monetary inflows or outflows.
  • Preparing financial statements (the income statement, balance sheet, and cash flow statement) for reporting to external parties such as shareholders. The financial statements are the starting point for calculating any tax due to the business profits.
  • Payroll administration, paying wages, salaries, and maintaining appropriate income tax and national insurance records.
  • Preparing management accounting information and analysis to help managers to plan, control, and make decisions.

Type #7: Distribution

As goods produced are meant for sale, the distribution function is an important business activity. It is more important because it provides a continuous inflow of cash to meet the outflow thereof.

So while choosing different distribution channels, media of advertisements, and sales promotion devices, the cost-benefit criteria should be the guiding factor.

If cost reduction in distribution function is effected without compromising efficiency, it will lead to an increased benefit to the enterprise in the form of higher profit and to the consumers in the form of lower cost.

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