Purpose failed: Financial Control was not achieved, indicating a possible breakdown in communication regarding budget limits.
Step 1: Identify the Variance (Information)
- Budgeted Expenditure: $120,000
- Actual Expenditure: $145,000
- Variance: $145,000 - $120,000 = $25,000 (Adverse/Unfavourable)
Step 2: Communication for Investigation (Upward/Horizontal)
The Marketing Manager must communicate with their team to understand the cause of the overspend.
- Method: A team meeting or individual discussions.
- Purpose: To inform the manager of the specific campaigns or activities that caused the overspend. For example, the team might report that a key competitor's campaign forced an unplanned increase in social media ad spending.
Step 3: Communication for Reporting (Upward)
The manager must communicate the situation to the Finance Director.
- Method: A formal report or memo.
- Purpose: To inform senior management of the $25,000 variance, explain the reasons (e.g., 'reactive spending to counter competitor launch'), and justify the expenditure by showing the return on investment (e.g., 'This resulted in a 15% increase in market share, valued at $50,000 in projected revenue.').
Step 4: Communication for Control & Instruction (Downward)
To prevent a recurrence, the manager must communicate new procedures to the team.
- Method: An email followed by a team briefing, updating the departmental procedures manual.
- Purpose: To instruct the team on new rules, such as 'All advertising campaigns projected to cost over $10,000 must now receive prior written approval from the Marketing Director.' This re-establishes financial control.