Although every business has functional departments, the way these departments interact differs by type of business. Comparing two different businesses helps us understand these links more clearly.
A manufacturing business
In a manufacturing factory (for example a furniture factory, Sdn. Bhd.), interaction between Production and Purchasing is very important because raw materials such as wood are needed daily. Marketing passes on customer orders; Production makes the goods; Finance funds the purchase of machines and materials.
A service business
In a service company (for example a hair salon or a tuition centre), no physical goods are made. The most prominent departments are Human Resource (because the service depends on worker skill) and Marketing. The Purchasing Department is less prominent because few materials are needed.
Example
In a bakery, Production and Purchasing interact closely to keep flour in stock. In a tuition centre, Human Resource and Marketing are closer because skilled teachers and attractive promotion are the keys to sales.
Similarities and differences
Both types of business still need Finance and Human Resource. The main difference is emphasis: manufacturing stresses Production and Purchasing, while services stress human skill and customer relationships.
A third example: a retail business
Take a supermarket. Here there is no Production because goods are bought to be resold, so Purchasing and Marketing become most important — buying the right stock and promoting attractive offers. This shows that to understand a business we must ask what its main activity is: making goods, selling a service, or reselling goods. The answer decides which departments interact most actively and why. By comparing three different businesses, this pattern becomes clearer.
Key idea
All businesses share the same departments, but the priority of interaction differs. Manufacturing: Production–Purchasing; services: Human Resource–Marketing.
Remember
When comparing two businesses, ask: which department matters most, and why? The answer depends on whether the business sells goods or services.