Strategic Marketing: Planning and Control, Third Edition

Control 283

Examples

Debt to assets ratio

Total liabilities

Total



assets

Debt to credit ratio

Debtors

Credito



rrs

Activity ratios
These ratios determine how effective the organisation is at generating
activity, such as sales from assets. These activities often relate to business
cycles or processes, such as the time taken to turnover stock or collect
debts. For example, the greater the stock turnover the better for the organ-
isation. An additional example, common in retailing, is sales per unit of
floor space. This gives a measure of retail effectiveness.
Essentially, such ratios measure the relationship between inputs to outputs.

Examples

Inventory turnover

Sales

Inventory

Sales per



ssquare foot

Sales

Floor space

Productivity

U





nnits Produced

Number of Employers

Budgeting

The processes of strategic development and budgeting are intrinsically
linked. To be blunt; no budget equals no strategy! The budgeting process
translates marketing strategy into financial terms which, whether we like
it or not, are the way all plans are expressed, evaluated and controlled.
Budgeting is the single most common control mechanism. It serves not
only to quantify plans but also to co-ordination activities, highlight areas
of critical importance and assign responsibility.
Many industry practitioners would agree with Piercy (1997). He talks
about the ‘hassle factor’ – difficulty, time, negotiation, paperwork, etc. –
associated with budgeting.
This serves to highlight two points. Firstly, budgeting is about resource
allocation. Secondly, budgeting is a political process (negotiate, bargaining,
etc.) necessary to obtain required resources.