For management, knowing which core and support business functions are important to prioritize decision making and resource allocation. For stakeholders, such as stock investors, it also helps sharpen their insight in analyzing company performance.
Small companies might divide their business functions into four departments: operations, marketing, human resources, and finance; where operations are core business functions.
In some companies, their organizational structure may be more complex and consists not only of these four departments, but is further broken down into several. Indeed, operations remain their core function, but they may categorize some departments into core functions because they are strategic, even if they do not generate revenue.
Examples of core business functions
A core business function refers to a company’s revenue-generating activities. It usually refers to an operating function, related to producing goods or providing services. It is the main activity of the company.
In some other companies, core functions may also include secondary, but strategic activities in support of core functions. For example, a company with a highly customized product might consider production and customer service functions as core functions. Finance, human resources and marketing functions can also be considered as core business functions because without them the company …