Case Analysis on sales : Case 12

Read the case below attentively, then respond to the questions at the end:

A sales competition was suggested by Joseph Mahoney, general manager of Universal Automotive, Inc. in Chicago, to boost the company’s flagging sales performance. This was his answer to the first-quarter sales figures that were well below quota. A sales content, according to Mahoney, would, among other things, provide an incentive to increase sales to or over territorial quotas.

A whole range of vehicle components and accessories were produced and supplied by Universal. Its sixty-person sales staff was based out of nine district offices spread throughout the country.

The base wage and bonus were the only components of the sales force’s remuneration package. The territorial quota was established by the general sales manager in cooperation with the branch sales manager, and it served as the basis for the bonus.

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Mahoney suggested a sales competition that he thought would spur salespeople to meet their objectives. He believed that the contest should include the wives of the salespeople.

Each salesperson would be given a weekly sales volume quota, set by the general sales manager and the district manager, for the duration of the thirteen-week tournament. A district sales volume quota would also be set for each of the nine sales districts.

Mahoney had given considerable thought to utilising total sales volume instead of a percentage, but decided on a weekly $200 cash award for the salesperson who exceeded their quota by the biggest percentage. For the thirteen-week period, each salesperson who met quota received a $ 300 bond.

The salesperson who exceeded the thirteen-week quota by the largest percentage would be awarded an extra $ 400, with second, third, and fourth-place finishers receiving incentives of $ 250, $200, and $100, respectively.

Mahoney’s suggested sales competition would also include spouses as participants. A salesperson’s spouse would be given five chances to win a product reward for every $100 in bonus earnings over and above their weekly or quarterly bonus.

A three-day conference would be held in the Chicago headquarters for those salesmen who met their quotas and brought along their wives. The three days would be a combination of work and play, with the drawing for the product prize capping off a gala dinner dance.

The sales district that exceeded its quota by the highest percentage would win an award of $ 800, which would be split among its salespeople in the competition between the sales districts. The districts’ second, third, and fourth-place finishes would each be rewarded $600, $400, and $200, respectively.

Several objections were raised when Mahoney officially introduced his idea for a sales competition. Arguments focused on the sadness and annoyance of those who lost, the potential for overaggression from ambitious salesmen who are determined to win at all costs, the disruption of daily routines brought on by the convention, and the transient nature of the stimulation offered. A number of executives rejected the competition, contending that its drawbacks outweighed any potential advantages.

Mahoney spoke in opposition, arguing that a contest would boost morale among the whole sales force, appeal to the competitive nature of the sales force, and allow salespeople to get some recognition.

Despite the lack of consensus, Mahoney called a meeting of his eight-person team to debate whether it would be wise to have a sales competition:

QUESTIONS

Should Universal Automotive Inc. have organised a sales competition to spur on its salespeople to increase their performance? If not, why not?

Why are spouses allowed to participate in the competition? Would spouses who work and those who don’t respond differently?

QUESTIONS

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