The companys operational mechanism
The operations of a company consist of multiple interconnected processes. It can be a complicated system to manage, but understanding the basics of company operations is key to successful management. Companies have different processes for different activities, but the core elements remain the same.
The basic structure of a company includes the following main elements:
• A board of directors responsible for establishing policies, setting goals, and providing oversight.
• A CEO or other executive responsible for implementing day-to-day operations.
• Departments or divisions, such as finance, sales, marketing, and production, which perform specific tasks.
• An accounting and finance department, which creates and monitors company budgets.
• A human resources department, which manages hiring, payroll, and employee benefits.
• An IT department, which creates and maintains systems and software for use by the rest of the business.
The main activities of a company are classified into two broad categories: operational activities and support activities. Operational activities are those that directly generate revenue, while support activities are non-revenue generating activities that help the operational activities run efficiently and effectively.
Operational activities involve the production and sale of goods or services. For a manufacturing company, operational activities will include research and development (R&D), production planning and scheduling, production and quality control, inventory management, and distribution and sales. For a service-based company, these activities might include customer service, marketing, and public relations.
Support activities are divided into two general categories: primary activities and support activities. The primary activities are those that directly help the operational activities, such as accounting, finance, human resources, and IT. These activities need to be carefully managed and monitored to ensure that the operational activities are able to run as smoothly and efficiently as possible.
The support activities are those activities that do not directly help the operational activities, but are necessary for the business to operate effectively. Examples of these activities include legal, tax, and compliance. It is important to understand the different types of support activities and their interdependence, as any changes in one area can have an effect on the operations of the company.
Understanding the company’s operational mechanism can help managers better plan and coordinate activities, ensure that processes are done properly and efficiently, and ensure that the company is running as smoothly as possible. A company’s operational mechanism can be divided into four key components:
• Research and development (R&D): R&D is a key component of any successful business. It involves developing and testing new products, technologies, and processes.
• Production and quality control: This involves producing goods or services in a way that meets customer requirements, as well as ensuring that quality standards are met.
• Distribution and sales: This component involves selling the company’s products or services to customers. It includes marketing, pricing, and customer service.
• Support activities: This component includes activities such as accounting, finance, human resources, IT, and legal.
A company’s operational mechanism should be well understood by managers and employees alike. Knowing how processes work and how different departments interact can not only help to improve efficiency and effectiveness, but also increase overall profitability. Understanding the operational mechanisms of a company can help managers make informed decisions that result in better performance.
