APPENDIXA Integrative Cs 543 CASE A-5 HANOVER-BATES CHEMICAL CORPORATION ting Di
ID: 419887 • Letter: A
Question
APPENDIXA Integrative Cs 543 CASE A-5 HANOVER-BATES CHEMICAL CORPORATION ting District Performance ames Sprague newly appointed northeast dis- sales manager for Hanover-Bates Chemi Corporation, leaned back in his chair as the to his office slammed shut. "Great begin he thought. Three days into my new job district's most experienced sales repre- Sprague, n pushing paper for the national sales manager at corporate headquarters tells me I'm not doing my job ...Maybe it's time for me to look for a new and since Trumbull Chemical (Hanover- Bates's major competitor) is hiring, maybe that's where I should start looking...and I'm not the the only one who feels this way tative is threatening to quit. On the previous night, James Sprague, er (the district's most experienced As Jim reflected on the scene that had just oc- curred, he wondered what he should do. It had Hank Carv been made clear to him when he had been pro- ohn Follett, another moted to manager of the northeast sales district member of the district sales staff, had that one of his top priorities should be improve- dinner at Jim's suggestion. During din- Jim had mentioned that one of his top pri- would be to conduct a sales and profit analysis of the district's business in order to tify opportunities to improve the distriet's rmance. Jim had stated that he was confi met for ment tional sales manager istrict's performance. As the na- had said, "The northeast sales district may rank third in dollar sales but it's our worst district in terms of profit perfor ori ties mance." Prior to assuming his new position, Jim nt that the analysis would indicate opportu- had assembled the data presented in Exhibits nities to reallocate district sales efforts in a 5-1 through 5-7 to assist him in his work. The manner that would increase profits. As Jim had data had been compiled from records main- indicated during the conversation, "My experi- tained in the national sales manager's office. Although he believed that the data would pro- vide a sound basis for a preliminary analysis of district performance, Jim had recognized that additional data would probably have to be col- lected when he arrived in the northeast dis- trict (District 3). To provide himself with a frame of reference, Jim had also requested (Dis- in analyzing district sales performance data for the national sales manager has con- ales vinced me that any district's allocation of is ort to products and customer categories can improved." Both Carver and Follett had nod- ded as Jim discussed his plans. ar. Carver was waiting when Jim data on the north-central sales district rived at the district sales office the next morn ing. It soon became apparent that Carver was trict 7). This district was generally considered to be one of the best, if not the best, in the com- pany. Furthermore, the north-central district highly regarded by the national very upset by what he perceived as Jim's criti- cism of how he and the other district sales representatives were doing their jobs-and sales manager, who was only three years older more particularly, how they were hore particularly, how they were allocating than Jim, was sales manager time in terms of customers and products. The Company and the Industry The Hanover-Bates Chemical Corporation was a leading producer of processing chemicals for As he concluded his heated comments, Carver e chemical plating industry. The company's s, in essence, a mixing company has made it darned clear that 34 years of experience don't count for anything and now someone with not much more than two of selling experience and two years of production process wa ag prepared by Professor Robert W. Witt of The University of Texas, Austin. Reproduced by permission.Explanation / Answer
Hanover-Bates Chemical Corporation was a leading producer of processing chemicals supplying to varied plating industries. However it’s performance in north compared to other sales districts was indeed 15% below the expectation among its all other departments which mainly was due to its incentive policy that only emphasized on sales volume but neglected the actual profit behind every sales transaction thus correlating commissions strictly to sales volume only.
Furthermore sales persons aimed basically to enhance sales volume at all costs which was endured even at the expense of sacrificing profitability as the sales commission was basically based on generating high sales volume. However northeast district did attained a high sales volume but still failed to meet its target by 6.68% which indeed was regarded as worst sales performance among all departments
Thus it was very crucial and significant for business to effectively conduct district’s sales and profit analysis which indeed could facilitate to efficiently recognize and acknowledge opportunities to improve the district’s performance. James Sprague newly appointed Northeast district sales manager for Hanover- Bates Chemical Corporation indeed stated that careful analysis would indeed facilitate to indicate opportunities to reallocate district sales efforts in a manner that could help to enhance revenues.
However James was very upset with district sales representatives on how they were performing their jobs and allocating their time in terms of consumers and products. Thus Hanover- Bates developed a sales program based on selling the full line of Hanover-Bates products and accordingly anticipated benefits comprising of an increase in sales volume and reduction of selling costs as a percentage of sales.