THE CONTROL PROCESS

The controlling activity is one of the fundamental management functions including planning, organising, leading and co-ordinating (some add staffing instead) that a manager is expected to carry out. But, just what is control?

Control is the process of ensuring that the organisation steadily pursues what it decided it should achieve, and not anything else. So, to control is to ensure that the performance of the institution stays within predefined bounds.

Controlling is only possible where plans prescribing what is to be done exist; and plans may be a waste of resources without any form of control. That is because the purpose of control is focusing performance in the direction of the desired outputs, not just any outcomes.

Control can be applied to all sorts of plans, and examples are those concerning inventory re-order quantity, revenue, profitability, quality, productivity and safety.  

About five major steps are taken in the control process.

1.     Determining Standards. Ordinarily, anything to be regulated requires standards. Standards are performance benchmarks, or grades that indicate acceptable levels of operation, without which the organisation may not be able to achieve its objectives.  

Standards often make use of comparative representations like sales-to- quotation ratio and profit margin; rates like units produced a day and breakdowns per month; and even absolute measures like degrees Celcius or degrees Fahrenheit.

The level of performance picked as standard can depend on many factors. We use three examples from the sales arena:

                                         i.          The amount of experience possessed by the person carrying out the task. For example, new sales people fresh from school are not normally expected to sell as much as older, seasoned ones.

                                  ii.           The time of year. Sweaters and other warm clothes, for instance, do    not sell as much in summer as in winter.

                               iii.       The level of competition, as in a new, growing market generating a lot more business than a crowded, mature one. 

     

Other strong elements affecting the decision to adopt a particular standard are type of industry or product and resources at the disposal of the institution.

For some variables, say, friendliness of customer service, establishing standards can be difficult.

2.     Monitoring. Monitoring simply means keeping an eye on what is happening. Today, it is not always a necessity, especially because of the emergence of high-intelligence, computer-driven technologies which can perform the monitoring task and give alarm signals when something goes wrong. Even then, however, monitoring by humans remains extremely important in some cases. Besides, machines are not infallible.

Some jobs just may not be performed as well by the latest technology as by the manager. For example, cutting-edge technology might be unable to read sadness in a worker.  The human supervisor, on the other hand, can quickly notice and address it before it begins to affect output. Even if no action is immediately taken, step 4 is likely to be quicker and less time-consuming if the manager has some mental recollection of how, in this example, an employee had looked.

And there are problems that have to be spotted and corrected instantaneously, thereby requiring second-by-second monitoring: like those occurring in a boxing or football contest, making it necessary for the manager to shout out instructions all the time.

  

3.     Measuring and comparing. Measuring results and comparing with set standards is done to find out if everything is going well. The actual could turn out to be below or above expectation. There is often an acceptable degree to which actual can exceed standard or fall below.

Caution: just because the standard has been outstripped does not mean celebration. Sometimes, higher is as bad as lower. A business, therefore, cannot produce any more than its storage facilities can hold or the market can readily buy.  That is to say, control is for deficiencies as well as excesses.

4.     Diagnosing problem.  When outputs are in accord with standard, there is normally no action taken (if it ain’t broke, don’t fix it, some say), even though some might recommend measures to further strengthen the chances of attaining the preferred outcome.

When results are outside of allowable limits, steps are taken to determine what caused the deviation. The problem area is expected to be either the standard itself or the way things are done.

5.     Taking remedial action. Like step 3, this is split into two possibilities. If the problem is wrong standard, a new standard is worked out. If it is wrong work formula, a new formula is devised.

More specifically, the answer usually falls in any one, or combination of, the following categories:

                                                  i.      Changing the manner or style in which things are done.

                                                ii.      Changing the conditions under which things are done.

                                              iii.      Changing the inputs or aids.

                                             iv.      Changing the actor (machine or human), or

                                               v.      Changing the standard.

Do note (Figure XY below) that if it is the standard that has to be reviewed, step 1 serves as step 5 as well. It also is step 1 in subsequent cycles. Step 5 is phase 1 in circulations following the first.

       Figure XY: The five-step control process.

        

                        Rupert Chimfwembe                                                                                          30 January 2017

THE MARKETING AUDIT

The marketing audit is a study of variables in the environment of an organisation that are relevant to marketing, for the purpose of making it easier to plot a meaningful business course.

The marketing audit is a look at how the enterprise has fared over a given period of time and a forecast of what can be expected.  This makes the audit an important part of marketing planning.

    

Different organisations and individuals have given their own versions of the marketing audit. Partly, it is because there has not been any universally agreed upon format for conducting it. Nevertheless, one would probably expect all the most important aspects of the unique situation of each business to be covered. There are, however, some elements which would likely be considered natural constituents of the basic marketing audit. The framework suggested below is based largely on those components.  

A Basic Marketing Audit Framework

An elementary marketing audit could be typified as consisting of at least the following six main parts:

A.    Objectives and strategy audit.

B.     Macro-environment audit.  

C.     Industry environment audit. 

D.    Micro environment audit.

E.     Organisation audit.

F.     SWOT Analysis.

A.    Objectives and strategy audit.

-         What are our main objectives in the existing marketing plan? To what degree have we met them?

-         What is our strategy? How far has it been implementable?

-         Were there signs we over-looked other attractive objectives and strategies (based on what was experienced and seen in the marketplace itself?)

B.     Macro-environment audit.

This involves examining SLEPT variables, mainly the sociological, legal, economic, political and technological. SLEPT factors shape the mother environment in which businesses operate. Because enterprises basically cannot control these, the main discussion is how well they are adapted to. Key questions include:

-         What have the SLEPT factors been like and how have we responded to them?

-         How are they likely to change?

C.     Industry audit.

Michael Porter’s Five Forces model is most useful in studying the environment in the specific industry; how the organisation has positioned itself; and attempting to predict changes. While the variables examined here are part of the micro environment, the significance of the model in competitive analysis perhaps makes it deserving of separate treatment in audit.

D.    Micro-environment audit.

                                i.            Consumers (ultimate customer or user).

In addition to what is looked at in Porter’s model, the following questions are among the additional ones to be asked:

·        Where are they found?

·        What quantities do they buy?

·        What are their age groups?

·        How do they use our product?

·        What are their income patterns?

·        How much of this information have we been basing our decisions on?

·        Which direction do user characteristics appear to be going?

·        What percentage of the market are the customers (those who consume our product)?

                              ii.            Intermediaries and support organisations.

There must be a good profile of middlemen like wholesalers, retailers, agents and transporters; a determination of any areas of their requirements that have not been met; and of course, noting any emerging new trends among them that could affect business.

Essentially, understanding the middlemen is understanding the buyers looked at in Porter’s model.      In other words, this section is about shading more light on them. The assumption in this audit is that the buyers are not necessarily the users.

Details concerning suppliers and competitors also have to be available, as one would naturally expect.

   

Finally, it is necessary to be well-informed in respect of other critical business partners like banks and insurers.

                            iii.            Other micro-economic considerations.

They include the general public and special interest groups like those that campaign against obesity and global warming.

E.     Organisation audit.

                                i.            Structural and skills audit.

Both the overall and marketing structures, and available skills and experience, need evaluation in the light of the organisational objectives and strategy that were pursued.

                              ii.            Financial and physical resource audit.

What resources were deployed and how much has been achieved in areas like sales, profit or time savings? Where there resource shortfalls or over-supply?

Also to be looked at are issues like office or factory location, design, size and storage space, even though most of these are planned for long term suitability.

                            iii.            Marketing mix audit.

·  Product.

What needs or wants are the products meant to satisfy? Have there been any gaps in meeting customer expectations, or are there likely to be any?

·  Price.

This is an evaluation of how much price has been in line with the most relevant among key considerations like product life cycle pressures (such as competition), costs, required profit, and positioning.

·  Distribution.

A review is done of the range of suitable sales channels that have been accessible, including how they were employed and could evolve.

·  Promotion.

The promotion audit is a listing of the suitable marketing communications types that have been available, and assessment as regards how they have been utilised from such angles as expected sales, increase in product awareness, expense-budget comparison and combinations (mix) used. It is also an attempt to predict new ways of sending messages to the market and getting feedback.

  

F.     SWOT Analysis.

At this stage, some pattern of strengths, weaknesses, opportunities and threats will probably have surfaced. The more clearly identified they are, the more they can contribute to good marketing planning.  

The marketing audit is an important tool in marketing decision-making. It must, therefore, give a clear picture of where the organisation is and the future it is likely to face.

                 Rupert Chimfwembe   

                         3 February 2017

THE PRODUCT LIFE CYCLE

The product life cycle is a set of stages a product goes through between the first time it is manufactured and when it is no longer sold. The product life cycle is a set of stages a product goes through between the first time it is manufactured and when it is no longer sold. Because of differences in type among both goods and services, each has its own kind of product life cycle. However, most products pass through four common phases.

Understanding the characteristics of each part of the life cycle places a manager in a position to make preparations and responses that increase the chances of better product performance.

Fig. Plc: Basic representation of the normal product life cycle.

                 

                 

                                                 

Stage 1: The introduction period. The introduction chapter is the period a good or service is brought to the market as a never-before offered production. The marketing effort, naturally, leans heavily toward making potential consumers aware of the product and its merits. There is great expenditure on activities like advertising, sales promotion and distribution as the marketer entices the audience to try the product.

In the introductory phase, sales are low and no profit is to be realistically expected. It is a spending period. Pricing is likely to lie somewhere between recovery of some product development and marketing costs and allowing many to buy.

Stage 2: The growth period. The marketing strategies of the introductory stage begin to pay off with grown product knowledge and acceptance, and a steep rise in sales. Experience, economies of scale and the advantage of being the pioneering producer result in lower costs and good profits. Production has to cope with the increasing demand not only to avoid disappointing consumers but also to not give signals that there is room for more players. However, sensing healthy fortunes, competition does start creeping in at this stage, making it necessary to from-time-to-time revise strategy, including slightly lowering price.

In the growth segment of the life cycle, a big portion of the market still exists that is yet to buy the product for the first time ever, but it keeps shrinking.

Stage 3: The maturity period. The market is now saturated and each of the many competitors now in the market tries to grow mainly by grabbing customers from the others. There are basically no first-time consumers and the market is buying as much as its purchasing power can. Price wars and product differentiation become more common.

Overall profits markedly fall as prices now have even thinner margins. Some producers simply seek a stable market and a decent return.

Stage 4: The decline period. As radically better or cheaper competing products emerge, less and less of the existing is bought. If the current product can also be made more competitive, say, by significantly lowering production costs so that it has a more attractive price, this stage could be held at bay for some time or made more gradual. Whatever the case, eventually, further decreases in both profits and sales make operations uneconomic and the product has to be discontinued.         

Conclusion

There is no standard length for any of the four stages of the product life cycle. How long any of the segments is depends on such dynamics as the type of product, amount of competition and marketing strategies employed.

        Rupert Chimfwembe                              5 January 2017

PESTLE/PEST/SLEPT ANALYSIS

PESTLE (also called PEST or SLEPT) analysis is a framework used frequently in the strategic management of organisations to get an understanding of the external environment.  It helps make it easier for an institution to work out a way to achieve its objectives and goals.

PESTLE study is a scanning of factors in the macro surroundings. The elements examined are rarely influenced by organisations but can themselves significantly affect the operations and viability of both profit and non-profit entities. They comprise political, economic, social, technological, legal and environmental variables.

POLITICAL. Stability of government and governance atmosphere, world balance of power and main policies of leadership, are some of the key considerations.

ECONOMIC. Important factors include rate of economic growth, inflation and interest levels, and financing environment.

SOCIAL. The norms, values and beliefs of a society, and its attitude toward certain products, services or organisations cannot be ignored. Other major aspects are demographic features like age and income groupings.

TECHNOLOGICAL. What are the current scientific levels like? How are they an inhibition or enhancement of aspirations? What advancements in science and technology are on the horizon? How are they likely to affect operations, say, in terms of manufacturing processes, advertising or distribution?

LEGAL. It is mainly about the laws of the land and how they are applied. These can basically be supportive of or unfavourable to the mission and vision of an establishment.

ENVIRONMENTAL. Environmental issues are such as call for preservation of the relatively fragile constituents of the natural world, like plant and animal life, and the atmosphere of the earth, as an organisation carries out its programmes.

The PESTLE factors generally have ever-changing character. They also apply in different ways to different commercial and non-commercial concerns. It is, nonetheless, the relevant factors that need attention.

                                                                                                           Rupert Chimfwembe 

                                                                                                            29 December 2016

THE PLANNING PROCESS

A plan is an expression of a future situation and how to get there. Here, we share a version of the planning process.

1.    Understanding challenge. No planning is without reason. It is often a reaction to new circumstances or preparation for a situation seen as possible in the future. Whatever the case, a good appreciation of the challenges gives a firm start to planning. 

      

     Challenges in business include how to take full advantage of an opportunity, overcome a problem or avoid it, and simply plot a course of operation.

2.     Setting objectives. Understanding well the situation calling for planning is followed by setting clearly-defined objectives which act as the specific targets to aim at.

3.   Weighing objectives relative to environment. A situation analysis is done to decide how different factors, internal and external, favour or do not favour achievement of the objectives.

4.     Making alternative plans. Different plans are formulated as possible routes. A key ingredient of this stage is providing for acquisition of resources that are likely to make attaining the goals possible, as suggested by step 3.

5.      Choosing best plan. The best of the alternative plans is now selected.

6.   Reviewing stages 1 to 5. A scrutiny of steps 1 to 5 is done to minimise chances of major errors or omissions.

7.      Applying plan.The adopted plan is now carried out.

                                                           

                                                                                                                               Rupert Chimfwembe
                                                                                                                                  1 December, 2016

THE DECISION-MAKING PROCESS: A Proposal

A decision is a choice of action from among at least two possibilities.

A decision is a choice of action from among at least two possibilities. When you have a decision to make, and the task is proving not so straightforward – so many things to consider, and the possibility that a wrong decision could be costly, for example – you may have to adopt a formal, structured approach like what is suggested here. It is a seven-step, yet relatively simple, decision-making framework.

1.     Define the required decision. What decision do you really want to make? If the resolution is not clearly stated, the answer at the end of the process may not sufficiently match the problem you had at the start. That is, there is a difference between making a decision as to how to increase sales over a period of six months and as regards how to increase sales by ten percent over a period of six months.

It could further help to state the task with a focus on deciding rather than on the problem. In other words, the sentence how do we increase sales by ten percent over a six-month period? might be better than one that says sales are ten percent less than they are supposed to be over a six-month period.

The former (sentence) urges you on in the direction of finding a solution. It could help you keep your sights on what is to be done, as it not only identifies the problem but also calls you to action in a specific direction. The latter, while indeed also pointing out the problem, tends to blur the all-important need for a deed. 

2.  Gather pertinent facts and figures. Good decisions normally come from a good body of information. It is important to have a healthy understanding of the issues related to the challenge faced. Without relevant knowledge, it might be difficult doing what is required in step 3.

3.   Propose possible solutions. This step involves making a good list of interchangeable decisions that solve the problem in their own way.

4.     Select the best suggestion. The question here is, how effectively and efficiently does each of the alternative decisions listed in (3) address the challenge?

A useful approach is rating the suggested solutions from strongest to weakest. To do this, you need to identify the most important aspects of the solution. That means recognising the specific needs the solution must especially satisfy. To make this clearer, let us go back to our example of increasing sales by ten percent over a time span of six months.

Some key need areas would likely be:

-         What costs does each alternative solution entail?

-         How much effort on the part of the sales team is required in each case?

-         Can the ten percent targeted increase actually be surpassed?

The significance of each of such considerations should always be in sight, for a fuller perspective.

5.   Revisit steps 1 to 4. Just in case a key issue was somehow not factored in, or the required decision was not well-framed, it is necessary to review the first four stages. This can prevent unnecessary, expensive mistakes.

6.    Implement the chosen decision. The selected option can now be put in motion. It becomes necessary, sometimes, to adopt combinations of two or more decisions.

7.     Evaluate the effect. How well does the decision you have picked solve the problem? If not so well, could implementation be the reason? If the implementation looks flawless, you may have to check the first four steps once again.

By the way

Indeed, we said decision-making could be a simple, seven-step process. The reality, it must be said, is that human judgment is not always sober and based on information on the table. Decision-making can be influenced by such powerful internal and external forces as intuition, emotion and amount of time available.

                                     Rupert Chimfwembe

                                      21 November, 2016