Unit-II: Financing and Managing Venture:

2.1 Introduction to Financing of Venture:

Every Venture that introduces a New Product or Service into the market requires
financial funding at different stages of its growth for giving a shape to the Idea that is assessed as
an opportunity. Fundamentally, the money the entrepreneur has or can arrange from different
sources makes a difference in their ability to give a shape to the business and keep it running.

All entrepreneurs learn about this aspect sooner or later, irrespective of their background-
technical, financial or general. This aspect is very crucial for the success of a venture, therefore,
sooner or later, the entrepreneur develops a knack of either dealing with these aspects or
introducing a professional to look after these aspects. There are varieties of financial
possibilities. What matters the most is appropriate finance in terms of quantum, timing and other
associated terms and conditions attached to getting funds for promoting ventures. The
entrepreneurs needs to assess well the requirement of funds and the purpose of for which theses
are required, so as towork on the possibility of sourcing the funds from the most appropriate
source from the point of view of its relevance and other associated terms and conditions.

Capital: The term Capital refers to “the minimum amount of money required for Promotion,
establishment and running of a Venture or Business”.

Capital plays a vital role in success of a venture. Hence entrepreneurs should be careful at
the time of assessing capital required for the venture. Capital is required to meet the following:

1. For Promoting a Venture or Business

2. For Establishment of Venture or Business
3. For meeting daily requirements or running of a Venture or business

2.1.1 Sources of Capital:

There are many different sources of capital—each with its own requirements and investment
goals. They fall into two main categories: debt financing, which essentially means you borrow
money and repay it with interest; and equity financing, where money is invested in your business
in exchange for part ownership.

Sources of Debt Financing:

1. Own Funds: When starting a business, your first investor should be yourself- either with
your own cash or with collateral on your assets. In other words it refers the amount of
money invested by Promoters/owners of the company.
2. Equity Share Capital: It is a popular source used in joint stock companies where the
company can issue the shares to raise money for promotion, establishment and running a
business venture.
3. Commercial Banks. Smaller companies are much more likely to obtain an attentive
audience with a commercial loan officer after the startup phase has been completed. In
determining whether to “extend debt financing” (essentially, make a loan), bankers may
look first at general credit rating, collateral and your ability to repay. Bankers also can
 closely examine the nature of your business, your management team, competition,
industry trends and the way you plan to use the proceeds. A well-drafted loan proposal
can go a long way in demonstrating your company’s creditworthiness to the prospective
lender and ability to service the loan.
4. Financial Institutions or Companies. Many companies that get turned down for a loan
from a bank turn to a commercial finance company. These companies usually charge
considerably higher rates than institutional lenders, but might provide lower rates if you
sign up for the other services they offer for fees, such as payroll and accounts-receivable
management. However, the commercial finance companies are just as likely to mitigate
their risk—with higher interest rates and more stringent collateral requirements for loans
to undeveloped companies.
5. Leasing: If you need money to purchase assets for your business, leasing offers an
alternative to traditional debt financing. Rather than borrow money to purchase
equipment, you rent the assets instead.
6. State and Local Government Lending Programs: Many state and local governments
provide direct capital or related assistance through support services or even loan
guarantees to small and growing companies in an effort to foster economic development.
The amount and terms of the financing will usually be regulated by the statutes
authorizing the creation of the state or local development agency.
7. Trade Credit: Many companies overlook an obvious source of capital or credit:
suppliers and customers. Suppliers have a vested interest in the long-term growth of their
customer base and may be willing to extend favorable trade-credit terms or even provide
direct financing to help fuel a good customer’s growth. The same principles apply to
customers who rely on the company as a key supplier of resources. You may also want to
explore one of the online P2P lending platforms, such as Lending Club or Lender’s
Circle.
8. Institutional Venture Capital Firms. Perhaps the best-known source of equity capital
for entrepreneurs in recent years is the traditional venture capital firm. Venture capitalists
takes an equity position in the company to help it carryout a promising but higher risk
project.
9. Overseas Investors. A wide variety of overseas investors, foreign stock exchanges,
banks and leasing companies seem quite interested in financing transactions with U.S.-
based companies, especially from rapid-growth economies such as China, India,
Germany and Saudi Arabia. Be sure to carefully consider cultural and management-style
differences as well as governance and contractual laws before you engage in any
international financing transaction.
10. Intermediaries. Many growing companies begin their search for capital with the
assistance of an intermediary, such as an investment banker, broker, merchant banker or
financial consultant. These companies and individuals aren’t direct suppliers of equity
capital but often will assist the growing company in arranging financing through
commercial lenders, insurance companies, personal funds or other institutional sources.
Investment bankers will also arrange for equity investment by private investors, usually
in anticipation of a public offering of the company’s securities.
11. Angels Investors: Angel Investors are generally wealth individuals or retired company
executives who invest directly in small firms owned by others. They are often leaders in
 their own fields who not only contribute money and also their experience and network of
contracts, technical and or management knowledge in running a venture.
12. Invoice Finance: Invoice Financing allows companies to borrow money against the
value of invoices due from customers. Invoice finance can be great option if you have
many corporate or SME customers who have long payment terms or tend to pay as late as
possible.
13. Business Overdraft: A Bank Overdraft is an ideal source of finance for the short-term.
An agreed overdraft lets business use their current account to make payments which
exceeds their available balance. In other words, the company owes the bank money when
the balance goes below zero.
14. Business Credit Cards: Another similar source of short-term business finance is a
business credit card, which is the most commonly used finance source for small business.
Companies can used credit card to pay for any business related expenses and won’t incur
any interest, provided outstanding balance is paid off by end of the credit-free-period,
usually 30-56 days later.
15. Merchant Cash Advance: It is a source to raise short-term funds under which company
can raise funds from customer in the form of advances.
16. Crowd Funding: Crowd funding has really grown as a source of Investment for business
overall and for specific products. It involves taking a small amount of Investment from a
lot of people to equal a much larger sum.

2.2 Record Keeping:

Recordkeeping is a primary stage in accounting which tells us how to keep a record of
monetary business transactions with the objective keep permanent track of all the transaction,
know the correct picture of assets-liabilities, profits and loss etc, keep control of the expenses
with a view to minimizing the expenditure and to have important information for legal and tax
purposes.

Advantages of Recordkeeping

1. Permanent and Reliable Record – It helps in maintaining the permanent record of all the
transactions, which will help in ensuring the reliability of data.
2. Arithmetical Accuracy of the Accounts – Continuous recording of transactions will help in
identifying any arithmetical inaccuracy that might have taken place. E.g., excess payment to
suppliers or double payment of any transactions.
3. Net Result of Business Operations – It will give the profit earned during the given period
based on ongoing business operations.
4. Ascertainment of Financial Positions – It helps in identifying the financial position of the
business.
5. Calculation of Dues – All the outstanding liabilities and dues on a given point of time can be
calculated based on the proper financial statements prepared.
6. Control Over Assets and Borrowings – Better control over assets and borrowings can be
undertaken; this will help in managing the funds and various positions of business.
7. Taxation – It is highly recommended and needed by tax authorities. To complete their
assessments, business persons have to appropriately maintain the records which will help in
determining the tax liability over them
8. Management Decision Making – Management is highly dependent on the financial records
to undertake the planning of the business operations. Moreover, they are also in need of
continuous reporting by the middle level about the progress made in finance terms. The
financials maintained by the organization governs all the strategic decisions
9. Legal Requirements – There is a massive requirement of statutes, Local GAAPs, IFRSs, etc.,
to maintain the proper books of account, to ensure the transparency of the business.
Disadvantages of Recordkeeping

1. Clerical – For large organizations, recordkeeping is a highly tedious and ongoing job. It
becomes tough for them to maintain the same
2. Manual and Monotonous – It is a highly manual job. The same work is needed to be carried
out as many times the transaction is undertaken. This makes it a highly monotonous job.
3. Subjective needs to Check before Analysed – Various accounting aspects like depreciation,
stock valuation, etc. requires assumptions that make the accounting highly subjective. The
viability of such assumptions needs to be verified before analyzing the financial statements

Records Maintained in Business:

In order to fulfill needs identified above, you will need different sets of records. Entrepreneur
should maintain records to meet his or her requirements. The following are examples of records to be
maintained.

1. Creditors Record
2. Debtors Record
3. Production Records
4. Cash Book
5. Purchase Records
6. Sales Records
7. Stock Records
8. Assets Records
2.3 RECRUITMENT:

Meaning:
Recruitment is a positive process of searching for prospective employees and stimulating
them to apply for the jobs in the organization. When more persons apply for jobs then there will
be a scope for recruiting better persons.

Recruitment is concerned with reaching out, attracting, and ensuring a supply of qualified
personnel and making out selection of requisite manpower both in their quantitative and
qualitative aspect. It is the development and maintenance of adequate man- power resources.
This is the first stage of the process of selection and is completed with placement.

Definition:

According to Edwin B. Flippo, “It is a process of searching for prospective employees

and stimulating and encouraging them to apply for jobs in an organisation.” He further elaborates
it, terming it both negative and positive.

He says, “It is often termed positive in that it stimulates people to apply for jobs, to
increase the hiring ratio, i.e. the number of applicants for a job. Selection, on the other hand,
tends to be negative because it rejects a good number of those who apply, leaving only the best
to be hired. ”

Kempner writes, “Recruitment forms the first stage in the process which continues with
selection and ceases with the placement of the candidates.”

In personnel recruitment, management tries to do far more than merely fill job openings.
As a routine the formula for personnel recruitment would be simple i.e., just fill the job with any
applicant who comes along.

Joseph J. Famularo has said, “However, the act of hiring a man carries with it the presumption
that he will stay with the company-that sooner or later his ability to perform his work, his
capacity for job growth, and his ability to get along in the group in which he works will become
matters of first importance.” Because of this, a critical examination of recruitment methods in
use should be made, and that is the purpose of this chapter.

Process of Recruitment:
Recruitment Process Passes through the Following Stages:
(i) Searching out the sources from where required persons will be available for recruitment. If
young managers are to be recruited then institutions imparting instructions in business
administration will be the best source.

(ii) Developing the techniques to attract the suitable candidates. The goodwill and reputation of
an organisation in the market may be one method. The publicity about the company being a
professional employer may also assist in stimulating candidates to apply.
(iii) Using of good techniques to attract prospective candidates. There may be offers of attractive
salaries, proper facilities for development, etc.

(iv) The next stage in this process is to stimulate as many candidates as possible to apply for
jobs. In order to select a best person, there is a need to attract more candidates.

Factors Influencing Recruitment:

All enterprises, big or small, have to engage themselves in recruitment of persons. A number of
factors influence this process.

Some Of The Main Factors Are Being Discussed Below:

1. Size of the Enterprise:
The number of persons to be recruited will depend upon the size of an enterprise. A big
enterprise requires more persons at regular intervals while a small undertaking employs only a
few employees. A big business house will always be in touch with sources of supply and shall try
to attract more and more persons for making a proper selection. It can afford to spend more
amounts in locating prospective candidates. So the size of an enterprise will affect the process of
recruitment.
2. Employment Conditions:
The employment conditions in an economy greatly affect recruitment process. In under-
developed economies, employment opportunities are limited and there is no dearth of
prospective candidates. At the same time suitable candidates may not be available because of
lack of educational and technical facilities. If the availability of persons is more, then selection
from large number becomes easy. On the other hand, if there is a shortage of qualified technical
persons, then it will be difficult to locate suitable persons.
3. Salary Structure and Working Conditions:
The wages offered and working conditions prevailing in an enterprise greatly influence the
availability of personnel. If higher wages are paid as compared to similar concerns, the enterprise
will not face any difficulty in making recruitments. An organisation offering low wages can face
the problem of labour turnover.
The working conditions in an enterprise will determine job satisfaction of employees. An
enterprise offering good working conditions like proper sanitation, lighting, ventilation, etc.
would give more job satisfaction to employees and they may not leave their present job. On the
other hand, if employees leave the jobs due to unsatisfactory working conditions, it will lead to
fresh recruitment of new persons.
4. Rate of Growth:
The growth rate of an enterprise also affects recruitment process. An expanding concern will
require regular employment of new employees. There will also be promotions of existing
employees necessitating the filling up of those vacancies. A stagnant enterprise can recruit
persons only when present incumbent vacates his position on retirement, etc.

Sources of Recruitment:
The candidates may be available inside or outside the organisation. Basically, there are two
sources of recruitment i.e., internal and external sources.
2.4 Motivating and Leading Teams:
The biggest challenge faced by the organizations is to get the work done by their
employees. This entirely depends on the motivation levels of the employees and Leading skills
of Manager or Leader. Motivation is a result of their needs and organizational expectations. If
the employees are adequately motivated, the organization will be able to meet its objectives.

2.4.1 Motivation
The term ‘motivation’ is derived from a latin word movere which means to move. A
motive is an inner state that encourages, activates or moves and that directs behaviour towards
goals. Thus, motivation is psychological force within an individual that sets him in motion for
the achievement of certain goals or satisfaction of certain needs.

Definition of Motivation:

Several authors have defined motivation in different ways.

According to Robert Dublin, “Motivation is the complex set of forces starting and
keeping a person at work in an organization.”

According to Stanley Vance, “Motivation represents an unsatisfied need which creates a

state of tension or disequilibrium, causing the individual to march in a goal-directed pattern,
towards restoring a state of equilibrium by satisfying the need.”

Characteristics of Motivation:
On the basis of the definitions of motivation discussed above, following characteristics of
motivation can be inferred:

1. 1. Psychological process: Motivation is a psychological process. It is the process to achieve a

desired result by stimulating and influencing the behaviour of subordinates. A manager should
carefully make an attempt to understand the needs, motives and desires of every employee in the
organization. The reason for this is that each person is different and a same kind of motivational
technique does not apply to all kinds of individuals.

2. Continuous process: Motivation is a continuous process. When one need is satisfies, another
need emerges. Therefore, motivation is an incessant process until the completion of objectives.
Therefore, it is the responsibility of the management to develop innovative techniques, systems
and methods to satisfy the changing needs of workers.

3. Complex and unpredictable: Motivation is a complex and unpredictable task. Human wants
are not definite and they change according to consequences. A worker may be satisfied in present
situation but due to his changed needs he may not be satisfied in future. Similarly, even two
persons may not be motivated with similar behaviour and facilities. Therefore, a manager must
be more conscious to motivate subordinates and to achieve objectives.
4. Pervasive function: Motivation is the pervasive function of all levels of management. Every
manager from top to the lowest level in the management hierarchy is responsible for motivation.
A manager is largely responsible for motivating his subordinates and secondly other subordinates
in management hierarchy.

5. Influences the behaviour: The most important objective of motivation is to influence the
employees’ behaviour and thus bringing about the behavioural changes. The managers influence
the behaviour of workers and encourage them to concentrate more on their goals.

6. Positive or negative: Motivation may be positive or negative. A positive motivation promises

incentives and rewards to workers. Incentives are both financial and non financial. Negative
motivation is based on punishment for poor performance like reducing wages, demotion, job
termination etc. On the basis of requirements, manager can use both positive and negative
motivation for better performance.

Importance of Motivation:

Motivating the subordinates is the fundamental duty of the manager as it ultimately helps in
fulfilling the goals of the organisation. The significance of motivation is discussed below and has
been summarized:

1. Cooperation and Goals: Motivated employees cooperate willingly with the management and
thus contribute maximum towards the goals of the company.

2. Productivity: Motivated employees attempt to enhance their knowledge and skills. This
enables increase in the productivity.

3. High Efficiency: It has been observed that when motivated employees work sincerely towards
their given tasks; they develop a sense of belongingness which results in conserving the
organisational resources. This results in improvement in efficiency.

4. Job Satisfaction: Higher motivation paves the way for a higher job satisfaction of the
employees. A motivated employee yearning for opportunities for satisfying needs becomes loyal
and committed towards his work and eventually the organisation.

5. Better Relations: The number of complaints and grievances reduce when the employees are
motivated.

6. Good Image: If the employees of the organisational are motivated and satisfied with the work
environment, the image of the company as a good employer boosts in the industry.
2.5.1. Financial Control:
Any financial performance process becomes meaningless if a strategy to control it is not
defined and implemented based on objectives consistent with the current state of the company and
its upcoming projects.

Financial control has now become an essential part of any company's

finances. Hence, it is very important to understand the meaning of financial control, its
objectives and benefits, and the steps that must be taken if it is to be implement correctly.

Definition of financial control

Financial control may be construed as the analysis of a company's actual results,
approached from different perspectives at different times, compared to its short, medium
and long-term objectives and business plans.

These analyses require control and adjustment processes to ensure that business plans are
being followed and that they can be amended in the event of anomalies , irregularities or
unforeseen changes.

Objectives and benefits

1.CHECKING THAT EVERYTHING IS RUNNING ON THE RIGHT LINES
Sometimes, financial control just checks that everything is running well and that the
levels set and objectives proposed at the financial level regarding sales, earn ings,
surpluses, etc., are being met without any significant alterations. The company thus
becomes more secure and confident, its operating standards and decision-making
processes being stronger.

2. DETECTING ERRORS OR AREAS FOR IMPROVEMENT

An irregularity in the company finances may jeopardize the achievement of an
organization's general goals, causing it to lose ground to its competitors and in some
cases compromising its very survival. Therefore, it is important to detect irregularities
quickly.

Various areas and circuits may also be identified which while not afflicted by serious
flaws or anomalies could be improved for the general good of the company.

3. OTHER USES
Financial control may also serve to:
Implement preventive measures. Occasionally, early diagnosis of specific problems
detected by financial control makes corrective actions unnecessary, as they are replaced by
solely preventive actions.
Communicate with and motivate employees. Precise knowledge of the state of the
company, including its problems, mistakes and those aspects which are being handled
correctly, encourages better communication with employees and motivates them to ensure
that they follow the correct line or improve the necessary aspects.

Take action where required. Detecting the situation is of little use without concrete
actions to get a negative situation back on track thanks to specific and detailed
information provided by finance control.

Implementation strategies
Financial control must be designed on the basis of very well defined strategies if the
directors of the companies are to be able to:

• Detect anomalies in budgets, balance sheets and other financial aspects.

• Establish different operational scenarios putting profitability, sales volume and
other parameters to the test.
Although there are many different types and methodologies, a very common set of
steps can be distinguished in the vast majority of financial control implementation
strategies.

STEP 1. ANALYSIS OF THE INITIAL SITUATION

The first step is to conduct an exhaustive, reliable and detailed analysis of the
company’s situation across various areas: Expenses, Incomes, cash, profitability, sales,
etc.

STEP 2. PREPARATION OF FORECASTS AND SIMULATIONS

On the basis of the initial situation analyzed above and the establishment of a set of
parameters or indicators, a set of forecasts and simulations of different contexts and
scenarios can be prepared.

These simulations are immeasurably helpful in making appropriate decisions on

such crucial aspects as investments, profitability, changes in production systems, etc.

THE ESTABLISHMENT OF PARAMETERS OR INDICATORS IS

ESSENTIAL TO DELIMITING EXACTLY WHAT WE WANT TO CONTROL.
THEY INCLUDE BASIC FUNCTIONS AND KEY AREAS OF THE MARKET, THE
MOST COMMON OF WHICH ARE: RETURN ON EARNINGS, TAX SITUATION,
STATE OF INVESTMENTS, ASSETS, LIABILITIES, EQUITY, PROFIT AND LOSS

STEP 3. DETECTION OF DEVIATIONS IN THE BASIC FINANCIAL STATEMENTS

The basic financial statements are the documents which must be created by the company
in preparing the annual accounts. The three most important documents are the general
balance sheet, the profit and loss account and the cash flow statement.
These analyses and tests in different environments are a fundamental part of financial
control, since they permit problems, errors and deviations from the ideal situation or initial
objectives to be detected early.

STEP 4. CORRECTION OF DEVIATIONS

Financial control would have very little practical use if the proper decisions relating to
corrective actions were not taken to get the company accounts on the right track as
previously established in the organization’s general objectives

2.5.2 MARKETING AND SALES CONTROL:

Definition: Marketing control refers to the measurement of the company’s marketing

performance in terms of the sales revenue generated, market share captured, and profit earned.
Here, the actual result is compared with the standard set, to find out the deviation and make
rectifications accordingly.

Marketing is one of the crucial functions of any organization. Therefore, the management
must exercise proper control over the marketing operations to ensure error-free results, optimum
utilization of the resources and achievement of the planned objectives

Types of Marketing Control

When we say control, it is not about overpowering the personnel, but it means
enhancement of efficiency, by reducing the chances of errors and meeting the standards set by
the management.

Let us now discuss the four major types of control, implemented in an organization:

1. Annual Plan Control

As the name suggests, the plans which are determined for one year for the control of operational
activities through the successful implementation of management by objectives is termed as
annual plan control. Such programs are usually framed and controlled by the top management of
the organization.

Following are the five vital tools used under the annual plan control mechanism:
i. Sales Analysis

The first one is the sales analysis, where the manager determines whether the sales target of the
organization have been achieved or not. For this purpose, the actual sales are compared with the
desired sales and deviation is computed.

This method is also used for finding out the efficiency of sales personnel by comparing the
individual sales with the target set for each salesperson.
ii. Market Share Analysis

To evaluate the competitiveness, the management needs to find out the market share acquired by
the organization.

However, it is quite challenging to determine the market share of other organizations which
constitute of unorganized firms, due to lack of sufficient data.

iii. Marketing Expense to Sales Analysis

Sometimes the firms spend much on the marketing of products, which diminishes their profit
margin or increases the product price.

Therefore, a marketing expense to sales ratio is calculated to know the percentage of sales value
paid off as a marketing expense.

Let us now go through the other ratios computed to determine the share of each marketing
expense in sales value:

SalesForce Cost to Sales Ratio estimates the percentage of sales value used to pay the
salespeople.

• Sales Administration to Sales Ratio determines the share of sales amount utilized for
meeting the selling and administration expenses.
• Sales Promotion to Sales Ratio is the value of sales invested in the sales promotion
activities.
• Advertising to Sales Ratio is the percentage of sales value, which is contributed to the
advertising expenses of the products.
• Distribution Expenses to Sales Ratio is the value of sales, which is utilized for paying off
distribution expenses.

iv. Financial Analysis

The management needs to handle its finances well. It should examine the reasons and factors
which influence the rate of return and financial leverage and return on assets in the organization
through financial analysis tools.

It also helps to enhance the financial leverage position of the company.

v. Customer Attitude Tracking

Consumer satisfaction has been considered as an essential parameter to analyze the

organization’s performance. It is a qualitative analysis tool which can be of the following three
types:
 a. Customer Surveys: The companies get the questionnaires filled or make calls to the past
customers for finding out the level of consumer satisfaction. It provides a direction to the
sales team and the management.
b. Customer Panels: The organizations form consumer panels where the customers are hired
to review the products, advertisements and other marketing activities. It helps the
management to know about the consumer’s perception and attitude.
c. Feedback and Suggestion Systems: Market performance of the products can be analyzed
with the help of genuine feedback from the customers, and the same can be improved
through their suggestions and input.

2. Profitability Control

Maximizing the profit margin has become a difficult task in today’s highly competitive market.
This has enforced pressure on the marketing team of the organizations too.

They now need to frame strategies for profit assessment and control in the different product line,
trade channels and territories.

Following is the process of profitability control in an organization:

• The first step is to understand the functional expenses, i.e., selling, distribution,
administrative and advertising expenses incurred while carrying out the marketing
function of a territory or marketing channel.

• The second step is to segregate the non-marketing expenses from the marketing
overheads and then to associate these pure marketing expenses to the marketing entities
(like apportioning the building rent into marketing function).

• Lastly, to compile everything systematically and to ascertain the profit or loss incurred
on carrying out the particular marketing activity, an individual profit and loss account is
prepared for each operation.

3. Efficiency Control:

The management and the marketers are regularly involved in finding out ways to improve the
task performance in the organization. These improvements bring in efficiency and perfection in
marketing operations.

The three essential mechanisms used under efficiency control are as follows:

i. SalesForce Efficiency Indicators

The competence of the sales team can be determined by evaluating the various factors. It
includes acquisition of new customers, customer turnover, average cost incurred on each sales
call, return on time invested on the prospective customers, market share lost to the competitors,
average sales made by each person per day, etc.
 ii. Advertising Efficiency Indicators

To know the effectiveness of the advertising activities, the marketers analyze the various
advertising functions on different grounds. For this purpose, it finds out the brand awareness,
cost incurred on each enquiry, media cost to reach per thousand customers, advertising campaign
reach, etc.

iii. Distribution Efficiency

The performance of the distribution channels in comparison to the cost incurred on channel
partners and distribution of products can be analyzed through the distribution efficiency control.

It includes the measurement of the channel member’s market reach, cost incurred on operating a
particular channel and the contribution of each channel member in selling the brand’s products.

4. Strategic Control

The external environment creates a significant impact on the organization’s marketing

strategies. To understand and align the plans with the prevailing external environment, the
organization can adopt any of the following control functions:

i. Customer Relationship Barometer:

To determine the customer’s loyalty towards the brand and its products, the organization uses the
relationship barometer.

Here, the company studies the customer’s perception based on the criteria like organization’s
core values, system, policies, structure, customer orientation strategy, technology, personnel
attitude, knowledge, skills and behaviour.

ii. Marketing Audit

Like accounting audits, marketers carry out marketing audit to get a clear picture of the
company’s performance while executing the various marketing operations.

It is a systematic record which periodically examines the problem areas and provides for the
means of rectification, to overcome the weakness by utilizing the organizational strength and
grab the current opportunities.
Marketing Control Process
Marketing control is a systematic and integrated process. A marketer follows the following steps
while exercising control over the marketing operation in an organization:

1. Determining Marketing Objectives: The initial step in marketing control is the setting up
of the marketing goals, which are in alignment with the organizational objectives.
2. Establishing Performance Standards: To streamline the marketing
process, benchmarking is essential. Therefore, performance standards are set for carrying
out marketing operations.
3. Comparing Results with Standard Performance: The actual marketing performance is
compared and matched with the set standards and variation is measured.
4. Analyzing the Deviations: This difference is then examined to find out the areas which
require correction, and if the deviation exceeds the decided range, it should be informed to
the top management.
5. Rectification and Improvement: After studying the problem area responsible for low
performance, necessary steps should be taken to fill in the gap between the actual and
expected returns.

Thus, marketing can be seen as a complete function, which needs to be performed successfully
through proper control over the related activities, to ascertain the achievement of the set goals
and objectives.