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Roberto Vona » 6.Management control in the retail industry

Lesson Content

Learning outcomes

To introduce students to the tools, techniques and methods normally employed in the management of retail companies.

Lesson content

  • Management cycle and control methods.
  • Business plan.
  • Budget.
  • Customer satisfaction.
  • Efficiency measures: gross margin, operating margin, cash-flow (FCFO and FCFE), budget ratios (ROE, ROS, ROI, GMROI).
  • Liquidity analysis (liquidity index, acid test, immediate liquidity index).
  • Traditional models of economic analysis.
  • Stock management and control.
  • Parts of overall stock.

Types of management control


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).


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

Analysis for creating budget

Analysis for creating budget

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.
Determination of FCFO

Determination of FCFO

Determination of FCFE

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).
Analysis for creating budget

Analysis for creating budget

How to determine ROI and its breakdown

Measuring economic efficiency

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?


  • 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.

Average inventory

Average inventory

Inventory turnover

Inventory turnover

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