Transcript Chapter 16 - MBA Program Resources

Global Marketing
Management
A European Perspective
GLOBAL MARKETING
MANAGEMENT AUDIT AND
CONTROL
Warren J. Keegan
Bodo B. Schlegelmilch
Overview
Types of Controls
Variables Affecting Control
Establishing a Control System
The Global Marketing Audit
The Balanced Scorecard
Summary
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Learning Objectives
Recognise the differences between various types of
control
Identify the factors supporting or inhibiting a global
control system
Know the key elements of a global marketing audit
Know the four dimensions of the Balanced Scorecard
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Nature of Control
Control
is defined as the process by which managers
ensure that resources are used effectively and
efficiently in the accomplishment of organisational
objectives
data measures and evaluations generated by the
control process in the form of a global audit are a
major input to the planning process
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Types of Controls I
Two types of control may be used in regulating
subsidiaries
bureaucratic control (Western organisations)
cultural control (Japanese organisations)
Distinction between
formal control
performance standards, evaluation of actual performance,
corrective action to remedy shortfalls
informal control
self-control, group control, cultural control through value system
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Types of Controls II
The marketing control process makes a clear
distinction between
strategic control
refers to an organisation’s implicit and explicit goals, objectives,
strategies, and capacity to perform
ensures that they are performed well - “doing the right things”
aims at defining the fit between capabilities and objectives of an
organisation and its environmental threats and opportunities
operations control
is concerned with the task of how well the organisation performs
- “doing the things right”
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Types of Controls III
Comparison between bureaucratic and cultural
control mechanisms:
Type of Control
Object of
Control
Pure Bureaucratic/Formalised
Control
Output
Formal performance reports
Behaviour
Company policies, manuals
Pure Cultural Control
Shared norms of performance
Shared philosophy of
management
Source: Czinkota, Michael R. and Ilkka A. Ronkainen. Global Marketing. Fort Worth: The Dryden Press, p. 285.
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Variables affecting Control
Communication System
distance between head office and overseas divisions
location
Data
economic, industrial, and consumer information
Diversity of Environment
currency values, legal structures, political systems,
advertising options, and cultural factors
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Control System
A good control system consists of
the establishments of standards
the measurement of performance
the analysis of deviations
The use of these elements creates tensions
and problems
Corporate strategy can be harmed by
ineffective or defective control systems
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The Global Marketing Audit
 A global marketing audit can be defined as:
A comprehensive, systematic, and periodic
examination of a company’s or business unit’s
marketing environment, objectives, strategies
and activities, which is conducted with the
objective of identifying existing and potential
problems and opportunities and recommending
a plan of action to improve a company’s
marketing performance.
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Types of Marketing Audit
Two types of audit
independent marketing audit
conducted by someone free from influence of the
organisation being audited
lack of understanding of the industry by the auditor
internal or self-audit
conducted by marketers who understand the industry
it may lack the objectivity of an independent audit
 conducting both periodically for the same
scope and time period and comparing results
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The Process of Marketing Audit
Meeting between company executives and
the auditor to agree on
objectives, coverage, depth, data sources, report
format, time period for the audit
Gathering data
detailed plan of interviews, secondary research,
review of internal documents
Preparing and presenting the report
report restates the objectives and scope of the
audit, presents the main findings and major
recommendations
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Global Marketing Management: A European Perspective
Components of the Marketing Audit
Components
1. Marketing environment audit
-
Macro-environment
-
Task Environment
2. Marketing strategy audit
3. Marketing organisation audit
4. Marketing systems audit
5. Marketing productivity audit
6. Marketing function audit
Source: Kotler, Philip. Marketing Management. Analysis, Planning, Implementation, and Control. London: Prentice-Hall, 1991.
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Problems of the Marketing Audit I
Setting Objectives
New Data Sources
Report Presentation
executive who commissions the audit may have higher
expectations about what the audit will do for the
company than the actual results seem to offer
important to recognise that improvement at the margin
is the winner’s game in global marketing
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Problems of the Marketing Audit II
Control of subsidiary operations
shift of balance of power in the organisation
strong resistance to change
three types of mechanisms are available to help
headquarters maintain control
data management mechanism
managers’ management mechanisms that shift the perception
of self-interest
conflict resolution mechanisms
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Relationship between Strategic
Control and Planning
Formulate Organisational
Strategy
Yes
Does strategy
require change?
No
Formulate Organisational
Plans
Yes
Do plans require
change?
No
Set Standards of Operating
Performance
-Marketing
-Production
-R&D
-Finance
-Personnel
Review Standards
Do results match
standards?
Measure Actual Operating
Results
No
Yes
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The Balanced Scorecard I
The term ”balanced scorecard” was coined in
1992 by Robert S. Kaplan and David Norton
Assumption that for every action, there is an
equal and opposite reaction
Helps companies to determine what impact a
potential change will have on the rest of the
organisation
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The Balanced Scorecard II
Turns a business’ strategic objectives into
specific measures in four key dimensions
finance
customer
internal processes and innovation
learning for employees
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The Balanced Scorecard III
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The Generic Value Chain Model
Innovation process
Operations process
Post-sale service
process
Manage risk
Customer
need
identified
Make the
market
Create the
product
Determine
channels
Market
and sell
Distribute
and service
Leverage
relationship
Customer
need
satisfied
Manage the business
Strategic themes
Target profitable
segments
Match customer with
channel
Service quality
Cross-sell
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Summary
By establishing control procedures, a firm can
exploit global opportunities
The marketing audit serves as a tool for evaluating
and improving a company’s global marketing
operations
The traditional command-and-control
budgeting systems do not fit into a changing
environment
The balanced scorecard represents a methodology
which turns a business’ strategic objectives into
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specificGlobal
measures
four areas
Marketing in
Management:
A European Perspective