Business Functional Areas: What it is, Why Create, Functions and MORE

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The Functional Areas of the Companies They help the entity achieve better performance in its activities. It should be noted that, when this organizational model is used, its results can be successful, as long as the functions of each department are clearly defined.

If you want to expand this topic, we invite you to stay with us, so that you learn more about the definition of Functional Areas of the Companies, why they are created, what are these areas, their functions and their importance.

What are the Functional Areas of the Companies?

The Functional Areas of the Companies are the divisions by departments or areas that are carried out to facilitate compliance with your mission and vision. In this sense, each of these units will be in charge of a series of specific tasks and will have suitable personnel to achieve its objectives.

When making these divisions, it is necessary to delimit the tasks to avoid duplication of functions or create ambiguities in the designation of responsibilities. By virtue of the above, it is recommended to hire a professional in organization and methods, who due to their knowledge will be able to advise us in the appropriate way.

Also, it is important that these departments are established in a formal structure of the company, that is, in the Organization chart. Additionally, it is desirable that the functions, tasks and positions are defined in a manual. This will prevent each person from performing their functions in a discretionary manner.

Why are the Functional Areas of the Companies Created?

Before explaining why the Functional Areas of the Companies, we consider that it is important that you know its origin, which is attributed to Henry fayor, who was one of the forerunners of the Modern Administration and in his work he managed to identify six functions of the Administration. In this regard, if you want to expand this content, we suggest the following link.

These work areas are created primarily to facilitate tasks and ensure compliance with organizational goals and objectives. In addition, the number of departments will depend on the size of the company, the objectives it establishes and its relations with the environment.

When the company is positioned in the market or wants to expand to other regions, it is necessary to review its structure. This will allow you to restructure or create other departments, in order to adapt to the new demands and changes in your environment.

What are the Functional Areas of the Companies?

The Functional Areas may vary from one company to another, however there are departments common to all organizations. We will mention them below:

  • Presidency or Direction
  • Administration
  • Human Resources
  • Accounting and Finance.
  • Sales or Marketing
  • Production.
  • Technology

It should be noted that the names of these areas may vary from one company to another. What should be taken into consideration is that each entity must adapt its functional structure according to the nature of its operations, its size and its needs.

In addition to the above, it is necessary to align the objectives with the activities to be carried out. In addition, continuous monitoring of the tasks must be done, to know if they are being carried out properly. With this, it will be possible to create early alerts and carry out the appropriate corrections to the management.


As we mentioned before, the Functional Areas of the Companies may be similar in other entities, whether public or private. Below we describe some of the functions that they can fulfill to achieve the goals and objectives of the company.

Presidency or Direction (Administration)

In this area the strategic decisions of the company are concentrated, it is where the plans, objectives and goals are approved. It is also the one in charge of directing the organization and articulating the activities of all the areas that comprise it.

Additionally, the Directorate will approve the reports it receives from the other units and will be in charge of showing the management to the owners or shareholders of the entity. By virtue of the foregoing, every organization must have a President or General Manager to be in charge of these functions and establish the general guidelines.

Human Resources

It is entrusted for the administration and management of human talent. The foregoing comprises a series of steps that will allow you to have qualified and motivated personnel to carry out their duties:

  • Recruitment and selection. He is in charge of selecting and managing the entry of new workers to the company.
  • Coaching and training. It is related to the provision of new knowledge or the improvement of existing ones, so that the worker achieves a better performance.
  • Payroll and salary administration. It is the Human Resources function that assigns the salaries to the workers and manages the payment for the provision of their service to the company. It is also empowered to process contributions to social security institutions.
  • Social welfare. It is responsible for guaranteeing employees socio-economic benefits that extend to the family group of workers. These benefits refer to insurance policies, vacation plans, compensation against work accidents, scholarships for children or relatives, among others.
  • Job performance evaluation. It manages the continuous evaluation of the worker, on the occasion of their performance in the job and processes the corresponding work incentives.

This area is of vital importance for the company, as it manages its most precious resource: human talent. It is for this reason that it is advisable to hire the most suitable personnel for each work area and that job stability is guaranteed. With this, this factor will become a great strength to achieve business objectives.

Accounting and Finance.

It is the area in charge of managing the financial resources of the company. It also has the function of recording and / or monitoring economic transactions and preparing the financial statements of the entity. The following activities are also in charge:

  • Manage relationships with banks and other financial entities.
  • Monitor bank accounts.
  • Prepare the cash flow.
  • Prepare the company’s cash and investment budget.
  • Prepare and pay taxes.
  • Process supplier payments.
  • Manage loans, collections and other payments.

Sales or marketing

This department mainly carries out the design of strategies, so that the product and customer service be attractive to consumers. Additionally, it takes steps so that the product reaches the customers’ hands. Your responsibilities are:

  • Conduct market research.
  • Establish marketing strategies.
  • Carry out advertising and promotion campaigns for products and / or services.
  • Prepare the sales budget and sales expenses.
  • Contact and manage customer needs.


It is the one in charge of carrying out and monitoring the production process of the company, which goes from the acquisition of the raw material, its transformation until it becomes a finished product, that is, it is available for sale. Its powers are:

  • Control and management of inventories.
  • Provision and maintenance of machinery and work tools.
  • Carry out the production process.
  • Storage of merchandise.
  • Prepare the production budget.
  • Record and control production costs.
  • Carry out quality control.

It should be noted that, if the company does not carry out the manufacturing process, is only in charge of providing services and does not manage inventories, this area will not be necessary for the performance of its activities.


It is generally referred to as the IT department or computer science. In this area, control of the management of the data tools that is used throughout the organization. Their functions are:

  • Systems analysis.
  • Software and hardware management.
  • Technological feasibility studies.
  • Database control.
  • Maintenance and technical support of the technological equipment owned by the company.

Taking into account what we have presented previously, we want to make the following precision, depending on the nature or economic activity or the size of the company, the areas listed above may vary. Our intention is to provide a guide for the reader to get an overview.

The important thing is that each organization clearly delimits its functions and designs its own organizational structure that guarantees the fulfillment of its objectives and goals. In addition, supervisors must maintain adequate levels of communication and adequately delegate activities within the group of their collaborators.

Importance of Functional Areas

The Functional Areas of the Companies are of great importance, since as we mentioned earlier, it will allow you to reach the business goals and objectives. In addition to the above, here are some other benefits generated by internal divisions:

  • Organize work productively or commercially.
  • It allows incorporating qualified personnel.
  • Management is improved by carrying out activities in a productive, efficient and quality manner.
  • The work is articulated and the team works in a synchronized way.

However, it is necessary that the company has leaders capable of leading it to the organization so that it is sustainable and that it maintains a level of motivation among its collaborators. If you want to know more about leadership, we suggest the following link.

The functional areas of the company contribute to better business performance!

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