Controlling International Marketing Operations

International Marketing displays an interesting paradox with respect to the marketing control situations. While control of multinational operations is far more formidable and poses additional challenges, few business firms exercise control on international operations as thoroughly as they should. The additional difficulty in control of international activities emanates from a number of reasons. The rate of environmental change in a multinational company is a factor dependent upon each of the markets in which the company operates. As the rate of change and the characteristics undergoing change differ for 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 headquarters, creating an additional organisational level for the control mechanisms. Further, international operations present unique communication problems emanating from the distance between markets and corporate headquarter, and variations, in language 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.

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 some consideration may be given to the following:

• International control can seldom be as complete as that of domestic operations, the tools used therefore need to be reasonable and realistic. A cumbersome or complex system is soon likely to become non functional.
• 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 rapidly changing, heterogeneous market places, the control system must be sensitive and fast 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 principal, most multinational companies tend to adopt a standardised system regardless of the type of country 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, rather only key variables are simply presented to-alert the organisation to variations from the planned performance.

The sequence of control process used to control overseas marketing operations is similar to that of domestic marketing. However, the implementation may vary depending upon the relationships among the steps involved in the control process. Following is the sequence of control process used to control overseas marketing operations:

• Establishing objectives
• Selecting control methods
• Setting standards
• Locating responsibility
• Establishing communication
• Reviewing results
• Taking corrective actions

Establishing Objectives:

Companies may differ in the entry objectives they seek in international markets. For the purpose of designing adequate control systems, management needs to clearly outline 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 firms objective and goals relating to specific operating units. Unless objectives are conveyed explicitly they cease to have relevance to the operating units.

Selecting Control Methods:

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. Organizations vary in the extent and 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 license 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.

Setting Standards:

Depending upon the objectives to be achieved, standards of performance are used to evaluate performance of the operating units. The performance standards can be in relation to profits, sales volume, channel performance, achieving and gaining 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 some companies to understate expenses and overstate revenue. It is advisable that country specific research and analysis of budget estimates proceeds formation of these standards.

In order to provide for an overall control system, standards should be set at all levels of operation. These standards should be continuously reviewed to ensure realism and consistency with the objectives.

Locating Responsibility:

Controlling of international operations is of no use unless ultimate responsibility is located. Due to complexity of international organizations, it is very difficult to locate responsibility. As far as possible, the primary responsibility for control should be located with one person. This will facilitate centralized action and coordination.

Establishing Communication:

International marketing requires a formalized and defined system of communication. There is no scope for informal communication to support formal communication. Communication system facilitates collection of information. Following tools are used for collecting information:

• Company records.
• Periodic inquiry.
• Field Audits.

Reviewing the Results:

The next step of control process is the review of operating results which involves comparison of actual performance with planned performance.

Taking Corrective Action:

Normally expected and actual results vary. This requires corrective action to be taken. Corrective action may be in following two forms:

• Modifying operations and procedures.
• Modifying the standards and objectives if they seem to be unrealistic, in the context of changed circumstances.