Download Management Control for E-Marketing at the Changed Business

Management Control for E-Marketing at the Changed Business
Environment: An Exploratory Note
ZENG Kaisheng, LUO Xiaohui
Sun Yat-sen University, Guangzhou, P. R. China, 510275
[email protected]
Abstract: Management control is key processes spreading to all parts of business activities for assuring
the effective and efficient obtainment and use of resources in achieving organizational goals. However,
with little research on management control in marketing management and none in E-marketing
management, what we don’t know is that what kind of management control is needed to fit the changed
business environment at the E-marketing age for assuring the effective and efficient E-marketing in
achieving marketing goals. This paper represents the results of an effort to redress some of these gaps.
Our objective is to provide an exploratory study about what management control is effective for Emarketing at the changed business environment. We propose that E-marketing leads to a more dynamic,
complex and hostile business environment and that a combination of formal with some flexible and
open management controls is required for E-marketing in a more dynamic, complex and hostile business
environment.
Keywords: Management control, E-marketing, business environment
1. Introduction
An increasing number of researchers have directed their efforts toward the research E-marketing. Their
research has gained prominence for two reasons. First, it is important to the business community. With
the widespread adoption of Internet by firms as a tool for marketing, E-marketing has a potential
significant impact upon the practice of international business. When using E-marketing, the companies
are facing a new business environment which is different from the traditional one. To cope with the new
environment, one of the central tasks for most marketing managers is to understand the environment and
find out an effective management control strategy to achieve competitive advantages (Robbins, 1990;
Simons, 2000). Therefore, the question of what is the impact of E-marketing on the business
environment and how marketing managers choose more effective management control strategies to
adapt the E-marketing business environment is of considerable practical significance. Their research is
also important to the academic community. As indicated by Sheth and Sharma (2005), E-marketing has
changed our understanding of marketing, management, business environment, and the like and all these
components are needed to be re-identified and re-considered.
Although research interest on E-marketing is increasing, it remains relatively recent in that it dates
mainly from the last decade of the twentieth century, and may still be considered exploratory. Little
effort has been expended to explore the impact of E-marketing on business environment and
consequently the change of management control strategies in such environment. This may partly
because the focus of E-marketing research is more often on the adoption of the E-marketing and its
associated technical requirements. Accordingly, this paper represents the results of an effort to redress
some of these gaps. Our objective is to provide an exploratory study about what management control is
effective for E-marketing at the changed business environment.
2. Concept Development
2.1 E-marketing
The Internet and related technologies have impacted all parts of business, particularly the marketing, and
have fostered the emergence and development of E-marketing (Krishnamurthy & Singh, 2005). Gilmore,
Gallagher, and Henry (2007) defined E-marketing as using the Internet and its related features and
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technologies in conjunction with other marketing tools to reach marketing goals. The primary
advantages of E-marketing is reducing costs and enhancing the capability to reach huge potential
consumers. E-marketing also allows a seller to provide information as much as the seller wants to
consumers, and at the same time, the information can be in interaction forms. E-marketing uses the
Internet as platforms to allow transactions take place between consumers and sellers across geographic
barriers (Sheth and Sharma, 2005). E-marketing allows consumers to move from time and location
based behaviour toward non-temporal and non-location behaviour, reduces the need for channel
immediacy, and stimulates relationships between consumer and products, and relationship between
sellers and their consumers but with lower costs.
2.2 Management control in marketing
Management control is key processes spreading to all parts of business activities of any given firm.
Anthony (1965), who firstly introduced the concept of management control, defined management
control as a process by which managers assure the effective and efficient obtainment and use of
resources in achieving organizational goals. There is no exception for management control in marketing.
Through management control, marketing managers assure the effective and efficient obtainment and use
of resources in achieving marketing goals. Management control was once distinguished from both
strategic planning and operational control. However, this concept was enriched by other scholars. Otely
(1994), for example, suggest that management control should encompasses parts of both strategic
planning and operational control, and is no longer primarily located as a specific (i.e. middle)
managerial level, because contemporary organizations are subject to considerably greater uncertainties
and have relatively fewer middle management roles. In a similar vein, Chanhell (2003) proposed that
management control has evolved over the years from one focusing on the provision of more formal,
accounting-based information to assist managerial decision making to one that embraces a much broader
scope of information and informal personal and social controls. Following prior works, this paper
concludes that management control in marketing is a key process which provides the focus for all
marketing activities designed to help ensure that overall marketing coherence is maintained and that the
marketing manager retains the initiative in uncertain environment
2.3 Business environment and its characteristics
Daft (2004) has suggest that business environment can be all elements that exist outside the boundary of
the organization and have the potential to affect all or part of organization activities. Robbins (1990)
proposed that the differentiation between an organization’s general environment and its specific
environment is necessary. An organization’s general environment includes those elements that may have
an impact on the organization, but their relevance is not particularly clear. The specific environment
refers to such environment components as clients or consumers, supplier, competitors, and the like. The
specific environment is directly relevant to organization in achieving its goals. Miller and Friesen (1983)
proposed that the relationships among the environment components show the features of environment.
Environment features, or characteristics, usually go along with three dimensions: dynamism, hostility
and heterogeneity/complexity. In this paper, we follow Miller and Friesen (1983)’s taxonomy of
environmental characteristics: dynamism, hostility and complexity, for further analysis.
3. E-marketing and Business Environment Change
E-marketing makes business environment change. In the agricultural era, producers initiated their
production after receiving the customer order, specialized at local, and bought products to their physical
location and had them adapted to consumers’ needs. This structure changed after industrial era by the
introduction of mass manufacturing and mass transportation dramatically lower the costs. Marketing in
the industrial era became more organization initiated as products were first manufactured in massive
way and then marketed. In the Internet era, E-marketing creates a fundamental shift in business
environment. E-marketing uses the Internet and its related technologies such as Website, email, and
real-time communication, allows producers to adapt to consumers’ needs, reduces transaction costs, and
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allows consumers to move from time-and location-based behaviours toward non-temporal and nonlocation behaviours (Watson et al., 2002). Some scholars claimed that E-marketing is similar to
agricultural-age marketing in terms of direct interaction between producer and consumer with lower
costs (Sheth and Sharma, 2005). E-marketing has made business environment change at least at three
dimensions.
1. Consumer behaviour change. Watson, et.al (2002) proposed that E-marketing allows consumers to
move from time-and-location based behaviours toward non-temporal and non-location behaviour. Emarketing reduces consumers’ location dependence because nowadays many companies use Internet
to sell products and to provide product information to consumers with no geographical restriction. Emarketing also allows consumers to conduct 24-hour-base interactions and allows consumers visit
online stores, and complete transaction at flexible time. All of a sudden, an online seller faces
consumers from all over the world who can get access to the product information and have direct
order from the Internet. E-marketing has made business environment more diverse, dynamic and
complexity.
2. Competitive condition change. Porter (2001) claimed that E-marketing has intensified rivalry among
competitors. Traditionally, firms can maintain competitive advantages when they have geographic
locations close to the customer because this makes them obtain more information from and for the
local consumers, more easily to communicate with consumers, more quickly to deliver goods and
service. But E-marketing dramatically extends the geographic reach of firms. Firms can extend their
business globally without having to set up subsidiaries in different locations. More, Internet entry
costs are low for small companies. E-marketing widens the geographic scope of competitors and
increases the number of competitors. E-marketing has made business environment more hostile in
terms of competitiveness.
3. Marketing practices change. Traditional marketing has time and location limitation. E-marketing
overcomes all these barriers. Companies use marketing tools both online and offline, 24-hours a day,
365-day a year, to strengthen the power of marketing tools. More, companies use the Internet and its
related communication technologies to stimulate consumers’ desire, need, want and demand through
visual attractiveness, interactive interface, entertainment, richness information, and convenience of
information obtainment and transaction. E-marketing has made business environment more dynamic
and complex.
Thus, we propose the following proposition:
Proposition 1: E-marketing leads to a more dynamic, complex and hostile business environment.
4. Management Control for E-marketing
Contingency theory approach stresses the importance of congruence between specific contingencies and
the various management control practice. In other words, there is a need for co-alignment of
management control and external environment for assuring the effective and efficient obtainment and
use of resources in achieving marketing (or any of organizational) goals. Scholars have demonstrated
that environmental characteristics determine management control strategies, because companies need to
have the right “fit” between their management control and their business environment.
Since late 1970s, some researchers have started to incorporate environmental factors into management
control. For example, Govindarajan (1984) suggest a stronger fit between environment and management
control would be associated with higher functional performance. He found that as superiors of business
units perceive a dynamic and complex in the actions of the customers, competitors and the changing
situations of external environment, they tended to use a more subjective performance evaluation and
reward system. Gordon and Narayanan (1984) found that the environmental dynamism and hostility is
associated with organization structure and management control practice. They found that there is a
positive relationship between a dynamic environment and a need for external, non-financial and ex ante
information which will move the organization toward an organic form structure. However, prior
research stopped at management, few studies, if there is any, be expanded into marketing management,
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and none in E-marketing. What we already know is that management control within an organization
must fit with external environmental characteristics for assuring the effective and efficient obtainment
and use of resources in achieving organizational goals. What we don’t know is that what kind of
management control is needed to fit the changed business environment at the E-marketing age for
assuring the effective and efficient obtainment and use of resources in achieving marketing goals.
As discussed in the previous section, E-marketing has led to a more dynamic, complex and hostile
business environment. Evidence from previous study has confirmed that environmental dynamism and
complexity have been associated with a need for more organic and flexible management control
strategies. However, hostile conditions appear, in the main, to be best served by a reliance on more
mechanistic and formal controls. The question may be posed, what is the appropriate management
control strategy for E-marketing in the more dynamic, complex and hostile business environment? It
may be useful to examine how marketing managers establish a blend of formal controls with some
organic controls. Some scholars indicated that the combination of formal controls with more open and
flexible controls can improve effectiveness in a dynamic, complex and hostile business environment
(Chapman, 1998; Chenhall & Morris, 1995; Simons, 1987).
Thus we propose the following proposition.
Proposition 2: A combination of formal with some flexible and open management controls is required
for E-marketing in a more dynamic, complex and hostile business environment.
5. Conclusion
E-marketing has created a fundamental shift in business environment in terms of customer behaviour,
competitive conditions and marketing practices. This paper attempts to contribute to marketing literature
in several ways. First, it postulates that E-marketing leads to a more dynamic, complex and hostile
business environment. Secondly, it shed some light on management control for E-marketing in business
environment change. From a contingency theory’s perspective, management control for E-marketing
must “fit” business environment change in order to achieve effective E-marketing and its performance
goals. Evidence from previous study has indicated that the combination of formal controls with more
open and flexible controls can make the organization more effective in a dynamic, complex and hostile
business environment. Thus, we propose that a combination of formal with some flexible and open
management controls is required for E-marketing in a more dynamic, complex and hostile business
environment.
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