3. Global Retailers and Structural Components of Management Control
The structural components of management control stem from the organisational
structure and control system information.
The organisational control structure defines the responsibilities of the company’s
various organisational units, by defining the type and entity of the resources that each
unit may employ in the performance of its duties, in relation to the targets assigned to
it. This breaks the existing organisation down into responsibility centres, which are
attributed specific governance roles and expected to contribute functionally to
achieve the company’s strategic objectives.
The organisational control system of global retailers must first consider whether
there are any existing integrated relationships or cooperative alliances with other
companies. The more these relationships are based on shared corporate risk, the more
stable and durable they are, and they can significantly influence the attribution of
strategic and managerial responsibilities.
The time-based competition typical of global markets suggests that it is worth
taking advantage of organisational structures that effectively delegate power but are
also flexible, in other words, able to adapt rapidly and inexpensively to changes in the
appropriate context. This results in an emphasis on decentralised decision-making by
units dislocated around the territory
and a reassessment of matrix-based
organisational structures
. The latter seem to adapt most successfully to continuing changes in competitive boundaries, taking into consideration the fact that, alongside
permanent responsibility centres (for example, purchasing department, sales
department, etc.) temporary centres may also develop (for example logistics manager,
retail manager, etc.), with powers cutting across the organisation, and responsibility
for managing critical economic levers when specific situations arise.
□ ‘METRO GROUP aims to improve its process efficiency to be able
to tap existing and new markets even better. This is why Shape 2012
employs the maxim: as decentrally as possible, as centrally as
necessary. Shape 2010 will markedly reduce the Group’s complexity.
The new organization is characterized by progressive structures with
full operational responsibility at the level of the sales divisions. This
facilitates greater customer orientation, improved cost management
and gains in efficiency. The sales divisions are given the
entrepreneurial freedom they need to meet the centrally defined
strategic goals and return targets’(www.metrogroup.de, last update 19
October 2010).
Control system information has to support all decision-making processes by
collecting and processing the information used by corporate governance organs and
organisation. We can rightly claim that retail companies have based their
development – and their relations with customers/consumers and with industrial
companies – on their ability to govern information flows, creating a virtual channel of
information in parallel to the physical channel of goods. This concept is strengthened
on rapidly evolving markets where a company’s success depends on its ability to
govern this dynamism, at least in part.
Information technology, which is now widespread, cuts data collection costs
enormously, and has made a huge amount of information available, but it poses
problems related to its selection. For global companies, decision-making times and
subsequent actions must be extremely short: the bottom-up information flow usually
has to be managed in real time, by channelling the data arriving from the many
company units in a single organisation or network, into a single information platform.
□ ‘Information technology is a success factor for Autogrill and a
great opportunity for development in all the Company’s operating
activities. […] Over ten thousand check-outs across four continents,
around 1.5 million receipts issued everyday – this is just the basis of a
system that enables us to analyze and anticipate customers’ needs from
day to day – . […] In the meantime, projects are continually underway
to develop common applications platforms to upgrade management of
key Group processes. In particular, the European associates have
launched a plan to extend the common IT system for managing business
functions in branches and points of sale (administration, performance
management reporting, f&b and supply chain.[…]’
(www.autogrill.com, last update 21 July 2009).
Any opportunities for competitive advantage are therefore linked to the ability to
select relevant data and process them, on each occasion, according to prevailing
information priorities. In the past most problems regarded the ways data were
collected; today the systematic selection of the significant data and the activation of
a top-down feedback flow to support daily management processes (changes to the
prices of products being promoted, replacement of a shelf brand, design of
promotional leaflets, etc.) appears more critical. The effectiveness of the control
system information can therefore encourage the implementation of time-based
strategies, based on the ability to act before competitors, by constantly adapting
supply.
The result is that the correct planning of the information control system should
simultaneously consider the corporate complexity on one hand and the reference
timeframe on the other. The organisation of objectives and the
measurement/collection of the results that must reflect the breakdown of the
organisational structure into responsibility centres, and the division of the
company’s global activities into significant business areas, both derive from this
complexity. The timely structure of the information is linked primarily to
significant moments in the control process (forecast values and actual values) and
to the frequency with which information is prepared.
In low-complexity retail companies, decision-making processes are sufficiently
supported by the traditional accounting system, which is designed to record trade
with other economic entities. On the other hand, companies with a high degree of
complexity, like global retailers, which repeatedly reveal a need for information, also
need a better structured management accounting information system. On a recurrent
and systematic level (not only final results but also forecasts) this can provide both
global economic measurements for the entire company, and partial economic
measurements, referred to items of observation that are deemed significant.
The implementation of formal control systems should therefore guarantee the
programming and a level of detail of the information that is consistent with
governance requirements and the need to link the organisational units that make up
the company or the network.