The functions which are associated with production, finance, marketing, personnel and accounting are termed as commercial function. The above functions are designated as commercial functions because these are commercial activities.
Image source; thinkingforwardevents.co.uk/wp-content/uploads/2014/12/thoughts-of-an-entrepreneur-2593.jpg
1. Production:
Production function is a key function of an entrepreneur. The activities of production are independent of the size of the undertaking.
In a small concern one person may be undertaking this function wher5eas in large organization this activity may be undertaken by various individuals or separate teams.
ADVERTISEMENTS:
Production is the creation of goods and services. In relation to goods, production is the fabrication of a physical object through the use of men, materials and equipment; whereas, with reference to services, production is the discharge of a function which has some utility.
This interpretation of production activity is very broad one and it does not coincide with the commonly used practice of associating it with manufacturing process only.
Production function consists of manufacturing, ancillary and advisory activities. Manufacturing activity is concerned with the production of goods or making of products.
It includes decisions such as selection of factory site, its location, design and layout, type of products to be produced; research, development and design of the product. Anbci9llary activity includes all those activities which support or smoothen production function.
ADVERTISEMENTS:
It is related to production planning and control, maintenance, purchasing, store-keeping and materials handling. The advisory aspect helps in improving production function.
It includes work study method study, operational research and quality control. Production management covers the following major activities;
i) Designing the products and packages
ii) Production administration
ADVERTISEMENTS:
iii) Execution of plans, policies and decisions
iv) Dependent services.
The success of production function is linked with proper forecasting production planning and control. Scientific planning of production function will result in the enhanced productivity. Increase in productivity will benefit all parties concerned with business.
2. Finance:
Finance function is the most important of all enterprises. It remains a focus of all business activities. It is not possible to substitute or eliminate this function because the enterprise fails in the absence of finance.
The need for money is continuous. It starts with the setting up of an enterprise and remains at all times. The development and expansion of enterprise rather needs more commitment for funds. The funds will have to be raised from various sources.
The sources will be selected in relation to the implications attached with them. The success of finance function will depend upon its planning. The receiving of money is not enough, its utilization is more important.
Finance function has a wide scope. It deals with (i) estimating financial requirements (ii) deciding capital structure (iii) selecting a source of finance (iv) selecting a pattern of investment (v) proper cash management (vi) implementing financial controls (vii) proper use of surpluses.
3. Marketing:
Marketing is primarily concerned with the movement of goods and services from the producer to the ultimate consumer. It creates place, time and possession utilities.
Marketing is a concept, a point of view and a way of thinking. It is directed towards the satisfaction of consumer wants. It beings and ends with customers.
Marketing plays a significant role in promoting the well being of all business enterprise. In fact the success of any organization depends upon its successful marketing.
Marketing is necessary not only to a producer of goods and services, but also for a customer, to a government and society at large.
Marketing is not confined to selling of goods and services. It includes functions like product planning and development, standardization, market financing, risk bearing, etc marketing research has also become an important segment of this function.
An enterprise has to improve its product and devise different marketing technique4s to survive in the business. The use of an appropriate marketing mix is also necessary to improve marketing function. The price fixation, channels of distribution and pro9motional effect to form important marketing strategies.
4. Personnel:
This function is concerned with people at work and with their relationship with in an organization. It aims to bring together and develop into an effective organization of men and women who make up enterprise.
This function is concerned with employment, development and compensation of the personnel and the provision of working conditions and welfare measures to maintain a good working for in the organization.
The enterprise should endeavor to make proper utilization of human resources. This will require an attractive wage policy, incentive plans and motivational approach. The success of a business is directly related to the effects of its man power.
5. Accounting:
Accounting is defined as a systematic recording of entrepreneurial transactions in order to get a true and fair view of the results of the operations of an enterprise and the financial position of an enterprise. It includes:
i) Keeping up to date
ii) Developing an efficient system of communication
iii) Keeping and maintaining records
iv) Developing time and labor saving devices in accounting.