International Marketing Control

International marketing displays an interesting paradox with respect to control situations. While control of multinational operations is far more formidable and poses additional challenges, not many business firms exercise control over international operations as thoroughly as they should. The additional difficulty in control of international activities emanates from a number of reasons. The speed and width of environmental change in a multinational company is a factor dependent on each of the markets in which the company operates.

As the rate of exchange and the characteristics undergoing change differ in each of these national markets, this dimension becomes complex. In addition, the far greater heterogeneity of environmental challenges’ makes the task of the marketing controller more difficult. In larger companies, the size of international operations necessitates formation of intermediate headquarter, creating an additional organisational level for the control mechanism.

Further, international operations present unique communication problems emanating from the distance between markets and corporate headquarters, and variations in languages, cultures and business practices across the national markets. Thus time lags, cultural lags, communication lags and varying objectives contribute to the problem of establishing and managing effective international marketing control systems. In order to perform at optimum profit levels consistently, all functional areas need systematic control and coordination. While the requirements of an international marketing control system are similar to those of the domestic system; the specific challenges posed by the former necessitate that consideration be given to the following:

• Since international control can seldom be as complete as that of domestic operations, the tools used need to be reasonable and realistic. A cumbersome or complex system is likely to become non-functional soon.

• The cost of control system must be commensurate with the benefits accruing from it.

• In order to be effective in meeting the challenges posed by the rapidly changing environments in heterogeneous market places, the control system must be sensitive and quick so that the organisation retains the flexibility to react to environmental opportunities and challenges.

• The control system may need variation according to the needs posed by different subsidiaries. Though this sounds a simple theoretical principle, most companies tend to adopt a standardised system regardless of the type of county and location in which the system is to be operationalised.

• The control system in the international markets needs to be streamlined enough so that the corporate headquarter is not inundated with masses of data, but only key variables are presented to alert the organisation to departures from the planned performance.

Control Sequence

The control operations in international operation follow similar logical sequence as that in domestic marketing though the implementation may vary depending on the relationships among the steps involved in the control process. Figure below shows the international marketing control systems.

• Companies may differ in the entry objectives they seek in international markets. For the purpose of designing adequate control systems, management needs to clearly outlines its specific long run and short run objectives in respect of specific international markets. Companies with distant foreign subsidiaries often fail to communication enough about the firm’s objectives and goals relating to specific operating units. Unless objectives are conveyed explicitly they cease to have relevance to the operating units.

• The methods chosen for international control may be direct or indirect. Direct control methods include contractual arrangements and equity sharing. Communication and competition are used as indirect control methods. Organisations vary in the extent find degree of control, regardless of the method of control used.

• While contractual arrangements represent a mechanism for direct control, their existence does not automatically generate control. Quota provision and licence requirements therefore are applied by international marketers in the contractual arrangements, to facilitate direct control. Most parent companies also augment these control provisions with other methods.

• When the parent company participates in the policy making and/or administration of its foreign subsidiaries, more effective control is ensured. Similarly, ownership participation enables the parent company to exercise closer control on international operation. Depending upon the objectives to be achieved, standards of performance are used to evaluate performance of the operating units.

• The standards can be in relation to profits, sales volume, channel performance, market share and other such measures deemed relevant. Revenue and expense budgets both form part of the standards set for international operations. There may be a tendency on the part of companies to understate expenses and overstate revenue. It is advisable that country specific research and analysis of budget estimates precedes formation of these standards. In order to provide for an overall comprehensive control system, standards should be set at all levels of operation. These should be reviewed to ensure realism and consistency with corporate goals.

• Location of ultimate responsibility for international operation is usually a difficult problem because of complexity of international organisation. Coordination between the respective functional area of the parent company and the foreign subsidiary becomes imperative. The need for coordination becomes more important when a multinational company organises its international operations on product basis. As far as possible, to facilitate centralised action and coordination, the primary responsibility for control should be located with one person.

• Formalised, defined communication systems become imperative in the context of international control procedures, in contrast to the domestic marketing, where informal communication is quite often utilised in addition to the formal ones.

• An important ingredient of the communication system comprises the tools used for information collection. The approaches used are examination of company records, routine reporting periodic enquiry and fold audits.


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