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Short Case - 3

General Electric Appliances

MBA-II
Section-C (WINTER - 2016)

Group - 3
Abdul Moeed Babar (15P00002)
Mian Hashim Ayaz (15P00031)
Saim Haseeb (15P00027)
Asad Ahmed Subhani (15P00033)

Course Title: Sales Force Management


Course Instructor: Prof. F. Fareedy
Dated Submission: 22 - 10 - 2016

Lahore School of Economics

Overview
Canadian Appliance Manufacturing Co. ltd (CAMCO) was created in 1995 under joint ownership
of Canadian General Electric Ltd and General Steel Wares Ltd. Facing a stiff competition in the
market, CAMCO still managed to capture 45 percent market share split between three main
categories as G.E, G.S.W, and Hotpoint. The company was producing high end product with
extended features and therefore was prized at the upper end of the price range. The product line of
General Electric includes refrigerators, ranges, washers, dryers, dishwasher and television sets.
Recently, Larry Barr has been promoted as a district sales manager for G.E appliances and on his
initial days Larry had came across various issues which are hampering the performance of his
district sales. His immediate challenge is to determine the equitable allocation of quotas. Since he is
hard-pressed for completing that task, several issues including resignation of experienced salesman,
declining sales portion in a territory and an expected labor strikes has deteriorated the situation.
Larry is now worried about these issues since his remuneration is highly based on the attainment of
quotas by his sales force.

Profiling

Larry Barr
Ken Philips
Garth Rizzuto
Dan Seguin
Ken Block
Fred Speck
Jim Wiste

District Sales Manager


Former Sales Manager
Greater Vancouver Salesman
Interior Salesman
Coastal Salesman
Independent and Northern Salesman
Contract Salesman

Qualitative Facts

Company operates under three major divisions


o G.E
o G.S.W
o Hotpoint
General Electric product line includes refrigerators, ranges, washers, dryers, dishwasher and

television sets.
Company operates in upper end of the price range
British Columbia district was divided into five districts
o Greater Vancouver
o Interior
o Coastal
o Independent and Northern
o Contract
CAMCO divisions operate independently with separate management staff but are

accountable to CAMCO management.


GE appliance division was considered as invest & grow division, which means that an

economic condition does not affect the sales growth.


Bonus were paid Quarterly on cumulative total quota
Larry remuneration depends on three factors
o Market share
o Total sales performance
o Sales representative balance
From the above mentioned factors, sales reps performance had major impact on Larry

remuneration.
Territories were determined on the basis of number of customers, sales volume of

customers, geographic size and experience.


Salesperson apart from selling was also supposed to provide services to the clients.
Long time was required for approval process of quotas from regional sales manager.
Company did not includes sales techniques in their training programs instead programs only

covers product knowledge


One national account was reviewing its purchase of G.E appliances which could give major

blow to the district sales.


One of the best and experienced salesperson was resigning by the end of the year.

Quantitative Facts

CAMCO was created in 1995


Company owns a collective market share of 45 percent
G.E appliance under departmental store brand accounted for 15 percent of the market.
Bonuses to salesman were paid on quarter basis
Barr performance was evaluated on 75 points such as,
o Market share accounted for 15 points

o Total sales performance accounted for 30 points


o Sales representative balance accounted for 30 points
Increase in quotas by 14 percent in 1996
Canadian dollar fell to 92 cents against USD during 1999.
Salesman gets 75 percent of its base salaries the other 25 percent depends on their monthly

sales records and was at risk.


Typical salesman was under 30 years of age
Unemployment was about 8 percent
Western region quota was $13.3 million after an increase of 14 percent.
Medium sized sales account ranged between $150,000 to 1 Million

Exhibit Analysis

Exhibit 1 shows the large and complicated hierarchy of the organization. The National Sales
Manager is at the highest level of the General Electric appliances marketing division. The NSM
heads the 3 Regional Sales Managers and the Marketing Manager. DSMs report to RSM for West
Canada, while 5 salesmen report to the DSMs.
Exhibit 3 shows the following:

In 9961 one of the national accounts was probably going to de-list G.Es products, but that
potential drop in sales could be matched by the arising opportunity of more sales volumes.
This is because Hudsons Bay was to open some new shops in the region. It could be

implied that there was a high chance that sales were going to increase as a result.
9962 was a territory that was expecting a poor economic outlook. Dan Seguin had been
relatively behind on achieving the quotas, but it also consisted of contract sales (50
customers). He had been falling behind quotas for the past 3 years, but he is still employed.

This means that the company might believe that he has the potential to go forward because

GE would be aware of the reasons he had been underperforming.


9963 is the territory which was designated to the well reputed salesman Ken Block. This
territory was considered to be the most difficult one, and the problem of Ken leaving soon
had Barr thinking. This is why there is an uncertainty regarding Kens replacement. The
territory consists of Eatons and Woodwards, who had fluctuations, but were also opening

new stores.
9967 comprised of the remaining contract sales (50-60 customers). Jim Wiste had been
performing well readily, though the only thing to consider were the low margins on the
contracts.

Exhibit 4 and 5
Using 3-year moving average:
Territory 9967

Territory 9961

Territory 9962

Territory 9963

1996

$ 2267

1997

2845

1998

3002

1999

$ 2705

1996

$ 1824

1997

2165

1998

2545

1999

$ 2178

1996

$ 1433

1997

1450

1998

1623

1999

$ 1502

1996

$ 2364

1997

2358

Territory 9967

1998

2625

1999

$ 2449

1996

$ 1176

1997

1494

1998

1720

1999

$ 1463

Minor Problems:
There were several problems in the case listed as under:
1. Mr. Barr was promoted to District Manager position, though he had no formal training to
handle such a position. He was not confident of his abilities of quota allocation, territory design
and sales force management.
2. Sales force was only provided the product knowledge trainings not the formal sales trainings.
3. One of the companys top sales man Mr. Ken Block (territory 9963, Costal Region) had
resigned and was leaving the company at the end of the year. His territory had difficult and
important customer. Mr. Barr was worried about the situation, as he couldnt replace him with a
new employee nor he could shift someone else from a different territory.
4. Barr was also concerned about losing sales and a few key accounts in territory 9961 Greater
Vancouver as they had no control on the sales of those key accounts. He was also concerned
about the sales performance of Mr. Rizzuto.
5. Also in Vancouver some of the large accounts like Eatons, Hudsons Bay and Woowards were
expanding and though they were having new sales potential in this region, he was unable to
forecast sales for these new customer. Also he was not confident how to handle these new
accounts.
6. In territory 9964 Independent and Northern areas, the economic outlook was poor especially in
Okanagan and Vancouver Island; which would affect the sales.
7. Contract segment was expected to face depression as a result of labor unrest and strikes in
1999, a situation similar to what happened in 1997as a result of which sales were drastically
effected. Also this segment had the greatest sales quotas and despite of low margins they have
the highest sales volumes and number of customers. Thus Mr. Barr was concerned about the
upcoming situations.
All these factors had significant importance and impact on the regional sales, and Mr. Barr was
concerned as he was given the challenge to lead the region. Also his sales teams and his bonuses
and incentive was dependent on achieving the allocated sales quotas.

Major Problem:
As Mr. Barr was new to the position and the situation he had no experience in designing,
developing, forecasting and allocating sales quotas and territory designs. His immediate task was to
determine equitable sales quotas because of his and his teams bonus implications. He was having
difficulties handling the overall situation.

Solutions
Equitable allocation of quotas were not possible if the territorial difficulties are not considered.
Larry Barr must consider the differing territorial situations and difficulties.
Even though Barr could not afford a loss, Ken Blocks void in a months time has to be filled with
someone who has practical experience. Either G.E can hire someone with experience equivalent to
Blocks or Block should mentor him and train him in his territory. This would save them the time a
new hire will take to learn about the job and to adjust in a tough sales territory. Or replace Ken by
an existing sales person from a less important territory. This is because 9963 was well known for its
difficult customers, but losing this territory by placing a novice is the most undesirable outcome in
this scenario.
Also company should address the employees sales training problem. Employees were given
product related training but they lacked sales trainings. They should be trained in sales forecasting,
quota allocation, territory design and overall sales force management, in order to address this
problem in the long run.
Though GE Appliances is growth oriented company, they should consider the economic factors
while making the sales forecast and allocating quotas to territories instead of applying 14% yoy
annual growth increment.

Recommendations
If an existing salesman should replace Ken, it could be Dan Seguin (Interior 9962). This is because
the performance in this territory has been low and the company knows the risks associated with
contracts. GE can afford a loss from 9962, but not a loss from 9963. The person is experienced, and
perhaps this change in territory will bring out the best of his capabilities.
Barr must allocate quotas to 9962 while keeping the poor economic outlook, so quotas can be more
equitable.

The company should start training new employees in sales training along with the product
knowledge.

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