Marketing manager course chapter 16

Learning ObjectivesAfter reading this chapter, you should be able to: zUnderstand the importance of control systems.. zDistinguish between system- and person-based control systems.. zDi

Chapter

Management Control

Learning Objectives

After reading this chapter, you should be able to:

zUnderstand the importance of control systems.

zDistinguish between system- and person-based

control systems.

zDistinguish between process- and outcome-based

control systems.

zEvaluate various control approaches.

zUnderstand why measurement is necessary for

control.

zDevelop measures that support effective control

The Importance of Control

zControl is the process of comparing performance to

standards and taking corrective action.

zIt ensures that:

¾standards are met

¾errors are limited

¾quality is acceptable

¾products are safe

¾the company is performing at the highest possible level

zControl is closely associated with planning.

Categorization of Control Approaches

Control approaches can be categorized

according to two factors - type and focus:

zType - divided into formal and informal approaches

¾Formal control systems consist of written rules

¾Informal control systems rely on unwritten expectations

zFocus – directed at the outcome or the process

¾ Outcome approach focuses on the results of a business process

Control Approaches Model

Subjective Control

Clan Control

Marketing Control Financial Controls

Operations Management Bureaucratic Control Balanced Scorecard

Formal Informal

Type

Informal and Outcome-Focused Control

zCharacterized by subjective control - an informal

approach based on global assessment of outcomes

zSubjective control:

¾does not typically utilize explicit standards

¾does not specify how deviations from an acceptable level

should be handled

¾is common in smaller businesses and service settings

¾is the “no news is good news” approach

Formal and Process-Focused Control:

Bureaucratic Control

zBureaucratic control is a formal control approach

that operates in a cycle and is characterized by

written guidelines and controls.

zInvolves:

¾the application of standards to assess performance

¾the application of corrective actions to regulate performance

and bring it back to the level of the standards

The Bureaucratic Control Process

1 Establishing

Standards

2 Performance

Measurement

3 Identifying

Gaps

4 Corrective

Action

The Bureaucratic Control Process

(continued)

zEstablishing Standards

¾Standards should be participative rather than simply

implemented from the top down so that employees understand and are committed to them

¾Standards come from:

9 goals

9 statistical analysis

9 benchmarking

zPerformance Measurement

¾Use of objective data, which is free from error or bias

¾Use of subjective data, which involves human judgement