Essay About Business Functions And Factors Of Production

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Business Functions
All organizations require resources to carry out their business
functions. A way of judging the success of a business is to compare
the resources the business uses with the value of the product that
results. One way of considering the resources used by business is to
classify them into factors of production. The main factors of
production are capital, labor and land.
Capital refers to any manufactures product used by the business to
make other products. This category therefore includes all machinery,
vehicles and office equipment used in the business. It also includes
the companies building.
Labor is the human resource used by business organization during
production. It refers to the input of physical and mental activity of
the employee.
Land in the context of this classification is not only the site on
which the business is located, but also all the natural resources it
might use. So resources consumed by the business, such as coal, gas,
oil and water is classified as land.
Some economists would add enterprise to the list of factors of
production. Enterprise refers to the role of the people who risk their
money in establishing and operating the business. The other resources
would not be put to use without the catalyst of entrepreneurs wiling
to invest their money and take the risk.
All businesses combine factors of production as an essential part of
their production activities. To combine these factors, to engage in
production and to achieve their objectives organizations undertake a
number of functions. The major business functions include finance,
production, human resources, marketing, administration and research
and development. Not all organizations have separate departments to
deal with these functions. Small business might merge many of these
functions within their administration department, with responsibility
in the hands of one or two people. As a business grows the number of
workers increase, therefore the business id more likely to employ
specialists to carry out functions such as finance and marketing.
A separate department normally carries out the finance functions of
the business. The finance department carries out number important
activities such as the financial department records all the financial
records, listing the revenue earned by the business and the
expenditure necessary for production. They oversee customer accounts
to ensure that the business receives the money to which it is entitled
and therefore able to pay its own bills. Employees in the finance
department may interpret financial data for the senior and middle
mangers to ensure that decision making is based on the most up to date
information available. They also provide financial information about
the company to important external bodies. Accountants analyze the cost
incurred by the business and compute standard costs associated with
various aspects of the firms activity. The financial function is vital
to the wellbeing of all organizations. The consequences of failure of
the financial function to carry out its duties efficiently are
significant and potentially disastrous. Accurate financial information