Global Marketing Management A European Perspective GLOBAL MARKETING

Global Marketing Management A European Perspective GLOBAL MARKETING MANAGEMENT AUDIT AND CONTROL Warren J. Keegan Bodo B. Schlegelmilch

Overview z Types of Controls z Variables Affecting Control z Establishing a Control System z The Global Marketing Audit z The Balanced Scorecard z Summary Keegan/Schlegelmilch Global Marketing Management: A European Perspective Chapter 16 / 2

Learning Objectives z Recognise the differences between various types of control z Identify the factors supporting or inhibiting a global control system z Know the key elements of a global marketing audit z Know the four dimensions of the Balanced Scorecard Keegan/Schlegelmilch Global Marketing Management: A European Perspective Chapter 16 / 3

Nature of Control z Control yis defined as the process by which managers ensure that resources are used effectively and efficiently in the accomplishment of organisational objectives ydata measures and evaluations generated by the control process in the form of a global audit are a major input to the planning process Keegan/Schlegelmilch Global Marketing Management: A European Perspective Chapter 16 / 4

Types of Controls I z Two types of control may be used in regulating subsidiaries ybureaucratic control (Western organisations) ycultural control (Japanese organisations) z Distinction between yformal control xperformance standards, evaluation of actual performance, corrective action to remedy shortfalls yinformal control xself-control, group control, cultural control through value system Keegan/Schlegelmilch Global Marketing Management: A European Perspective Chapter 16 / 5

Types of Controls II z The marketing control process makes a clear distinction between ystrategic control xrefers to an organisation’s implicit and explicit goals, objectives, strategies, and capacity to perform xensures that they are performed well - “doing the right things” xaims at defining the fit between capabilities and objectives of an organisation and its environmental threats and opportunities yoperations control xis concerned with the task of how well the organisation performs - “doing the things right” Keegan/Schlegelmilch Global Marketing Management: A European Perspective Chapter 16 / 6

Types of Controls III z Comparison between bureaucratic and cultural control mechanisms: Source: Czinkota, Michael R. and Ilkka A. Ronkainen. Global Marketing. Fort Worth: The Dryden Press, p. 285. Keegan/Schlegelmilch Global Marketing Management: A European Perspective Chapter 16 / 7

Variables affecting Control z Communication System ydistance between head office and overseas divisions ylocation z Data yeconomic, industrial, and consumer information z Diversity of Environment ycurrency values, legal structures, political systems, advertising options, and cultural factors Keegan/Schlegelmilch Global Marketing Management: A European Perspective Chapter 16 / 8

Control System z A good control system consists of ythe establishments of standards ythe measurement of performance ythe analysis of deviations z The use of these elements creates tensions and problems z Corporate strategy can be harmed by ineffective or defective control systems Keegan/Schlegelmilch Global Marketing Management: A European Perspective Chapter 16 / 9

The Global Marketing Audit z 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. Keegan/Schlegelmilch Global Marketing Management: A European Perspective Chapter 16 / 10

Types of Marketing Audit z Two types of audit yindependent marketing audit xconducted by someone free from influence of the organisation being audited xlack of understanding of the industry by the auditor yinternal or self-audit xconducted by marketers who understand the industry xit may lack the objectivity of an independent audit z conducting both periodically for the same scope and time period and comparing results Keegan/Schlegelmilch Global Marketing Management: A European Perspective Chapter 16 / 11

The Process of Marketing Audit z Meeting between company executives and the auditor to agree on yobjectives, coverage, depth, data sources, report format, time period for the audit z Gathering data ydetailed plan of interviews, secondary research, review of internal documents z Preparing and presenting the report yreport restates the objectives and scope of the audit, presents the main findings and major recommendations Keegan/Schlegelmilch Chapter 16 / 12 Global Marketing Management: A European Perspective

Components of the Marketing Audit Source: Kotler, Philip. Marketing Management. Analysis, Planning, Implementation, and Control. London: Prentice-Hall, 1991. Keegan/Schlegelmilch Global Marketing Management: A European Perspective Chapter 16 / 13

Problems of the Marketing Audit I z Setting Objectives z New Data Sources z Report Presentation yexecutive who commissions the audit may have higher expectations about what the audit will do for the company than the actual results seem to offer yimportant to recognise that improvement at the margin is the winner’s game in global marketing Keegan/Schlegelmilch Global Marketing Management: A European Perspective Chapter 16 / 14

Problems of the Marketing Audit II z Control of subsidiary operations yshift of balance of power in the organisation ystrong resistance to change ythree types of mechanisms are available to help headquarters maintain control xdata management mechanism xmanagers’ management mechanisms that shift the perception of self-interest xconflict resolution mechanisms Keegan/Schlegelmilch Global Marketing Management: A European Perspective Chapter 16 / 15

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 Measure Actual Operating Results Review Standards Do results match standards? No Yes Keegan/Schlegelmilch Global Marketing Management: A European Perspective Chapter 16 / 16

The Balanced Scorecard I z The term ”balanced scorecard” was coined in 1992 by Robert S. Kaplan and David Norton z Assumption that for every action, there is an equal and opposite reaction z Helps companies to determine what impact a potential change will have on the rest of the organisation Keegan/Schlegelmilch Global Marketing Management: A European Perspective Chapter 16 / 17

The Balanced Scorecard II z Turns a business’ strategic objectives into specific measures in four key dimensions yfinance ycustomer yinternal processes and innovation ylearning for employees Keegan/Schlegelmilch Global Marketing Management: A European Perspective Chapter 16 / 18

The Balanced Scorecard III Keegan/Schlegelmilch Global Marketing Management: A European Perspective Chapter 16 / 19

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 Keegan/Schlegelmilch Global Marketing Management: A European Perspective Chapter 16 / 20

Summary z By establishing control procedures, a firm can exploit global opportunities z The marketing audit serves as a tool for evaluating and improving a company’s global marketing operations z The traditional command-control budgeting systems do not fit into a changing environment z The balanced scorecard represents a methodology which turns a business’ strategic objectives into Keegan/Schlegelmilch Chapter 16 / 21 specific. Global measures four areas Marketing in Management: A European Perspective