Business units typically have their own goals and objectives, which may be different from those of the company as a whole. The term business unit is often used in contrast with the term functional area. While business units are responsible for specific functions, functional areas are responsible for specific tasks or activities.

A business unit can perform many business functions. A business function represents a business process or an activity that can be performed by people working within a business unit and describes how to use a business unit. A business unit can process transactions on behalf of many legal entities.

A business function represents a business process, or an activity that can be performed by people working within a business unit and describes how a business unit is used.

At more detailed levels, closer to implementation, you use business functions to express the concrete activities you perform that contribute to these higher-level abilities. This way, different organizations (or e.g. business units) may also have their own distinct business function structure to support the same capabilities.

Whereas a Business Function is a major organizational unit of a business which has specific responsibilities and performs activities on a regular basis to enable the business to carry out its mission (the function refers to both the organizational unit and the types of activities it performs); a Business Process is a set of activities, which draw on one or more business functions to help carrying out the organization’s mission.