Roberto Vona » 6.Management control in the retail industry

Types of management control

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Focuses on feasibility and simulation tools (Business Plan, BEP analysis, Investiment assessment, techniques for analysing Catchment Area, Marketing Research etc.).

Concurrent control

Budgetary control (standard objectives, results, deviation).

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Evaluation of efficiency and effectiveness (ratios, performance indicators, customer satisfaction, quality control).

Measuring global efficiency

Financial economic indicators

• Operating income;
• gross margin;
• operating margin;
• product contribution margin (DPP);
• cash-flow.

Key Performance Indicator

• Quantitative as well as qualitative.
• Behaviour based too.
• Customer satisfaction.
• Determination of FCFO.
• Determination of FCFE.

Operating margin

Depends on levels of efficiency in the different operational areas:

• Sales and marketing (assortment, merchandising, promotion, prices, etc.);
• Logistics and supplies (buying, warehousing costs, transport);
• Financial (financial commitments, liquidity management, sources of coverage).

Measuring economic efficiency and distribution costs

• Functional analysis, monitoring working operations (promotion, warehousing, sales, transport, etc.).
• Objective analysis, focusing on the specifics of monitoring costs (costs relating to personnel, financial expenses, etc.).
• Subjective analysis, regarding specific “segments” of the company that need to be controlled (individual products, categories, sales points, departments, etc.).

Role of costs for purchasing product

Service production cost?

Productivity

• revenue per employee;
• operating margins per employee;
• revenue per meter of display space or per sq. mt. of surface area;
• gross or operational margins compared to the surface area.

External efficiency

Market share.