In order to provide goods and services, businesses carry out a number of functions. In large organizations, there is scope for these functions to be split into departments (or functional areas):

• human resources
• finance and accounts
• marketing, and
• operations management.

However, a sole trader is likely to have to carry out these functions by themselves.

Human resources (HR) is the function that handles all aspects relate to the workforce. It involves all aspects of business operations related to staff (personnel) within an organization. Examples include the: recruitment, induction, training, development, appraisal, promotion, remunerating (rewarding) and dismissal of staff.

The HR Department must also comply with legal aspects of the external business environment business environment. In particular, it must observe different labour laws in all the countries it operates in. Examples include laws about: minimum wages, working hours, gender equality, equal opportunities, and anti-discrimination.

Human resource functions include:

The finance and accounts function of an organization refers to the responsibility for ensuring that the business has sufficient funds in order to conduct its daily operations. Essentially, the finance and accounts department is responsible for managing the organization’s money and maintaining accurate accounts (financial records) of the firm’s funds.

Roles and activities related to this core function include the following:

• Paying suppliers and creditors on time
• Paying staff the right amount, and on time
• Forecasting financing requirements of the organization (cash flow forecasting)
• Assisting the marketing department to determine suitable pricing strategies
• Evaluating the potential profits of different investment projects
• Preparing the firm’s final accounts (the balance sheet, and the profit and loss account); although this function is often outsourced to accounting firms
• Preparing and overseeing the various budgets of the business to ensure better financial control of the organization.

Aspects of finance and accounts covered in the IB Business Management syllabus include:

• Sources of finance
• Costs and revenues
• Break-even analysis
• Final accounts, i.e. balance sheets and profit & loss accounts (income statements)
• Profitability and liquidity ratio analysis
• Efficiency ratio analysis (HL only)
• Cash flow forecasting
• Investment appraisal
• Budgets (HL only)

Marketing is about identifying the needs and wants of customers so that the business can provide goods and services to meet these requirements and desires, usually in a profitable way.

Marketing activities include:

• Market research to discover the products that customers want, in an ever-changing business environment

• Determining appropriate pricing strategies to sell the products

• Promotion to inform and persuade customers about buying the products

• Distributing the products to customers efficiently.

Aspects of marketing covered in the IB Business Management syllabus include:

Operations (also known as operations management or production) is the process of making goods and providing services from the available resources of a business to meet the needs and wants of its customers. It involves ensuring that goods and services meet production targets, deadlines and certain quality standards.

Operations management include:

• Production methods

• Lean production (HL Only)

• Quality management (HL Only)

• Location decisions

• Production planning (HL Only), such as stock control management, and

• Research and development (HL Only)

• Crisis management & contingency planning (HL Only) 

All four of these functions are interdependent, i.e. depend and are reliant upon one another. For example, the marketing department cannot determine an appropriate marketing campaign without necessary discussions and approval from the finance and accounts department. Production of a certain good may need to change if recent market research shows changes in consumer habits, fashions and tastes. All business decisions have implications on the human resources department as people are needed to carry out the other three functions.