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Poor sales management at r star company

UNIVERSITY OF ECONOMIC HO CHI MINH CITY
International School of Business
-------------------------------

Vy Lang Truong

POOR SALES MANAGEMENT AT R
STAR COMPANY

MASTER OF BUSINESS ADMINISTRATION

Ho Chi Minh City - 2018


UNIVERSITY OF ECONOMIC HO CHI MINH CITY
International School of Business
-------------------------------

Vy Lang Truong

POOR SALES MANAGEMENT AT R

STAR COMPANY

MASTER OF BUSINESS ADMINISTRATION

SUPERVISOR: Dr. PHAM PHU QUOC

Ho Chi Minh City - 2018


SUPERVISOR’S REPORT ON THE THESIS PROPOSAL SUBMITTED
FOR DEGREE OF MASTER of BUSINESS ADMINISTRATION

The thesis proposal title POOR SALES MANAGEMENT AT R STAR
COMPANY

Student Name: Vy Lang Truong
Supervisor: Dr. Pham Phu Quoc
1. General comments:
 Remarks on the student’s attitude:
……………………………………………………………………………
……………………………………………………………………………
 Remarks on the assignment’s academic quality:
……………………………………………………………………………
……………………………………………………………………………
2. Overall assessment:
 Meet requirement for submitting
 Not meet requirement for submitting
3. Other remarks:
 Did the student follow the report schedule?
 Yes

 No

 The Turnitin plagiarism percentage:
Supervisor’s signature

 Other………………………….


TABLE OF CONTENT


EXECUTIVE SUMMARY
PART I – INTRODUCTION
1. Company background
2. Company symptoms
PART II – PROBLEM IDENTIFICATION
1. Content of in-depth interviews
2. Theoretical basic
3. Verify the potential problem
4. Cause validation
PART III – SOLUTION AND ACTION PLAN
1. Solution
2. Action plan
PART V – CONCLUSION
APPENDIX
REFERENCE


Executive summary

In any organization, the sales department plays a pivotal role in the success of the
business. At R Star company sales has decreased for 3 consecutive years that lead to
profit of company also decreased. Compared to other companies in the same industry like
Phuong Nga, Dinh Diem that their sales increased sharply. So sales decrease is
considered as a symptom that need to investigate to find out what are the main problems.
After conducting an in-depth-interviewed from some staffs at sales department,
chief executive officer and base on literature review, the central problem is found that is
poor sales management. To find out what are the main causes of central problem, some
interviews were conducted and the main cause of poor sales management are poor
recruitment, poor training and poor coaching.
To solve that poor recruitment and poor training problems, company do a properly
recruitment procedure to hire right salespersons after that company do well training to
make sure salesperson have enough skills to do job well. For poor coaching, we will
work with sellers one-on-one or in small groups to guide sellers' actions, keep them on
track, develop skills, and help sellers achieve top performance. Coaches meet regularly
with team to help them create goal and action plans, build winning strategies, hone skills,
and stay on task and on target. The most difficult thing company need to solve that is
sales force management because salespeople bridge the gap between customer needs and
the product or service that fulfills that need. So, to improve sales management company
make a compensation procedure to compete with other companies and keep training and
coaching sales force to help them improve their ability so that they can improve sales
performance and could boost sales so that company can maintain business and expand
company in the future.

1


PART I – INTRODUCTION
1. Company background
R Star Co., Ltd., formerly known as Ruby Star Co., Ltd, was established on September
27, 2011, which operates on the business of trading, importing, exporting

and

distributing baby toys, maternity & baby wear .
On November 11, 2016, the company was renamed to R Star Co., Ltd along with the
continuous development not only in sales, but also in facilities, personnel
Our company now supplies 100% made products in: Thailand, Malaysia, Korea, Turkey.
In addition to the KIDART brand of clay, Smile Kids made in Thailand, we are the
exclusive distributor of famous toy brands in Turkey such as Let's Powder, Furkan and
Ucar Toys. And exclusive distributor of Malaysian Sunta Baby Foam EVA Foam
Product.
All products are intellectual and highly educated for children: awakening creative
thinking, logical thinking, stimulating imagination; improve teamwork skills, develop
teamwork skills and community integration skills in the future.
Internal structure
The internal structure of the company is a functional structure, is showed in the graphic
as follow:

2


2. Company symptoms
R Star company has been operating for more than 7 years, so it is still very young
company compare to other companies in this industry. So It has to face so many difficult
to survive and compete to the same companies to gain high market share. At the moment,
R Star has a problem that sales has decreased for 3 consecutive years.
From the balance sheet of R Star company from 2015 to 2017, Sales has decreased
slightly. Specially in 2016 sales was 18.01 billion, down 7.4 % from 19.45 billion in
2015, and in 2017 sales was 16.8 billion, down 6.72% from 18.01 in 2016.

Unit: Billion
Chart 1: Sales of R Star company.
Source: Sales department of R Star company.
There are so many reasons lead to sales decrease. Beside some internal factors, external
factors like recession economy, political or some policies of the government also effect to
sales decrease. In the case of R Star, we are also consider sales of some companies in the
same industry to find out if external factors also effect these company or not.

3


Chart 2 below show sales of some companies.

Source: http://nhantokhai.tct.vn/ihtkk_cbt/tcuuTkhai.do?pagenumber=3.

Compared to another companies in the same industry, like Thanh Nga sales
increased sharply, in 2016 increased 124.5 % from 51.5 billion to 115.5 billion and in
2017 increased 8.7% from 115.5 billion to 125.6 billion. And Dinh Diem sales increased
quite sharply, in 2016 increased 37.7 % from 20.4 billion to 28.1 billion and in 2017
increased 16.7% from 28.1 billion to 32.8 billion.
From some figures show above, Sales of Phuong Nga and Dinh Diem are also
increased sharply while sales of R star decreased slightly. So some external factors like
politic, government policy and recession economy did not affect those company in the
Toys industry.
The results of sales decrease that made the profit also decreased, the chart below show
data of profit from 2015 to 2017 of R Star company.

4


From 2015 to 2017, the profit decreased sharply, in 2016 the profit decreased 8%
compared to 2015 and 2017 the profit decreased 21% compared to 2016.So sales
decrease of R Star is consider a problem and need to investigate furthermore to find out
why sales decrease.
I choose only this symptom to investigate futhermore because sales is extremely
important for every company, it brings money in to help its maintain business of
company. If sales decrease, it leads to operating profit decrease or even loss. With
situation of R Star at the moment, sales decrease need to be solved to continue operating
business. In the next part, I will conduct some in-depth interviews and use some theories
to find out the central problem of sales decreased.
PART II – PROBLEM IDENTIFICATION
1. Content of in-depth interviews
From the symptoms which mentioned above that are sales decreased for 3 consecutive
years, to find out what is the main problems so that I conduct the in-depth interviews with
sales manager, Chief executive officer, marketing manager, marketing staff, salespersons.
These interviews help me to find down what are going wrong in the R Star company and
what central problems are, after that I find some literature review to find some potential
problems and collect some data to verify the central problems.
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In the first interviews, the problems were found out that made sales decrease: Firstly,
many competitors in the same industry that why company lose the market share, lose the
current customers and it is very hard to find deal with customers because other companies
are having a strong sales team than R Star and they have been doing this business for a
long time such as Phuong Nga, Dinh Diem company.
Secondly, some salesperson said that the company has poor sales strategy because it is
not clearly defined, not documented in writing. Thirdly, R Star has a weak sales force as
sales manager said that the number of salespeople decrease 25% compare to the period
year so that the workload is very heavy. Fourthly, company has a poor coaching because
sales manager is so busy with his job and could not have time to coach salespeople
properly.
Base on the data collected and interviews with members of R Star company, the
initial cause and effect tree has been developed.

6


Initial cause effect map
High competitive
Lack of sales
strategy

Poor customer
service
Poor recruitment
and training

Poor sales
management

Losing of current
customers

Sales from
general trade
decrease

Sales decrease

High salespeople
turnover

Poor Coaching
Lacking of sales force

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2. Potential of problems
In this part, I will find literature reviews that affect to sales decrease which have not
mentioned in the in-depth interview or some potential problems have mentioned but
literature review have not been mentioned.
2.1 Poor sales management.
There are many reasons that lead to sales decreased, according to (1) Sales
management behavior based control strategy, sales territory design, and company
strategic orientation are conceptualized as antecedents to salesperson performance and
sales organization effectiveness. Evaluating salespeople’s' performance is an important
task for sales managers. However, little is known about what bases are used by sales
managers to evaluate the performance of their salespeople.
“A sales manager can have a narrow or a broad spectrum of responsibilities
including the following: estimate demand and prepare sales forecasts; establish sales
force objectives and quotas; prepare sales plans and budgets; establish the size and
organization of the sales force; recruit, select, and train the sales force; compensate the
sales force; control and evaluate sales performances.”(2)
“Good sales management properly applied is the least expensive, most effective,
way to increase dollars of revenue and margins, market share, cash flow, return on
investment, and net present value, as well as to beat the competition and make yourself a
hero. . . . It costs no more to properly hire, train, compensate, motivate, and evaluate
salespeople. Effective time and territory management, forecasting, planning, budgeting,
and good communication and control are no more expensive than performing these same
functions poorly.”(3)
“Sales management: The attainment of sales force goals in an effective and
efficient manner through planning, staffing, training, directing, and evaluating
organizational resources.”(4)

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2.2 Poor alignment between sales and marketing team
Another cause is poor marketing strategy, according to (5) firms improve sales and
market share in variety of way, successful marketing basically depends on the firm’s
ability to identify the flows of customers into and out of its franchise and into and out of
the market. The marketing literature emphasizes strategies designed to obtain additional
customers, encourage brand switching and increase customers frequency. So if company
has a success marketing strategy, it is easy to approach customers and easy to sell
products.
As (6)The implementation of the marketing concept emphasizes the marketing
role for salespeople. Salespeople in this role consider both the needs of their customers
and their firms in developing sales strategies.
2.3

Lack of leadership

As(7) In particular, managers’ servant leadership, a leadership style emphasizing
genuine concern for subordinate welfare, is examined as a catalyst of parallel concern by
salespeople for their customers. Salesperson perceptions of managers’ servant leadership
empirically relate to salesperson customer orientation, in turn driving adaptive selling
behaviors, customer-directed extra-role behaviors, and sales performance outcomes.
2.4

High competitive

As (8) At the same time, the squeeze between revenue and profit targets and the cost
to serve customers places great pressure on salespeople to produce under intense
competition. Many companies in the same industry makes high competitive, every
company should have good strategy to take completive advantage to meet sales goal and
company’s goal.
3. Verify the potential problem
From the interviews and data were collected the potential problems are considered
high competitive and poor sales management. When company starts doing business in
whatever firm, there are so many companies in the same industries and have to compete

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with each other to maintain and survive in the market. Each company have their own
factors to take competitive advantage so that they can sell their products.
Another cause is sales and marketing are not aligned, according to (5) firms
improve sales and market share in variety of way, successful marketing basically depends
on the firm’s ability to identify the flows of customers into and out of its franchise and
into and out of the market. The marketing literature emphasizes strategies designed to
obtain additional customers, encourage brand switching and increase customers
frequency. Marketing support sales to find potential customers so if company has a
success marketing strategy and get well with sales department, , it is easy to boost sales
and gain the market share.
According to (1) Sales management behavior based control strategy, sales territory
design, and company strategic orientation are conceptualized as antecedents to
salesperson performance and sales organization effectiveness. Evaluating salespeople’s'
performance is an important task for sales managers. However, little is known about what
bases are used by sales managers to evaluate the performance of their salespeople. So if
company has a weak sales management, it would affect to sales performance and the
result of business.
Poor sales management
From the interview, the director said “they did not have a proper sales strategy, as
a monthly report, the number of new customers was very low, and sales rep turnover is
exceptionally high”. Phu who is a salesperson said “ Actually our sales manager do train
for us about products and some ways to find customers and we start to work and learn
from each other. but I think our company need to train salesperson more because when I
first started working here, I was not trained properly about sales skills so I have to learn
from other salesperson.” and Phuong said “ I think it is ok for me because I get used to
work as salesperson, but I think R star should do training more for salespersons, from the
time I work here, I have never join any training class for sales except the first time the
sales manager introduced about products so I work until now”.

10


And from the literature review, according to (2)“A sales manager can have a
narrow or a broad spectrum of responsibilities including the following: estimate demand
and prepare sales forecasts; establish sales force objectives and quotas; prepare sales
plans and budgets; establish the size and organization of the sales force; recruit, select,
and train the sales force; compensate the sales force; control and evaluate sales
performances.”
Others said “Good sales management properly applied is the least expensive, most
effective, way to increase dollars of revenue and margins, market share, cash flow, return
on investment, and net present value, as well as to beat the competition and make
yourself a hero. It costs no more to properly hire, train, compensate, motivate, and
evaluate salespeople. Effective time and territory management, forecasting, planning,
budgeting, and good communication and control are no more expensive than performing
these same functions poorly.”(3) and “Sales management: The attainment of sales force
goals in an effective and efficient manner through planning, staffing, training, directing,
and evaluating organizational resources.”(4)
According to (1) Sales management behavior based control strategy, sales territory
design, and company strategic orientation are conceptualized as antecedents to
salesperson performance and sales organization effectiveness. Evaluating salespeople’s'
performance is an important task for sales managers. However, little is known about what
bases are used by sales managers to evaluate the performance of their salespeople. So if
company has a weak sales management, it would affect to sales performance and the
result of business.
There are some data to show the performance of R Star form 2015 to 2017.
R Star has two channels to bring products to consumers which are general trade
(GT) and modern trade( MT)

11


Chart 3: Breakdown sales data

Unit: billion
Source: R Star company
From 2015 to 2017 MT is increasing slightly, in 2016 up 3.6% compared to 2015 and in
2017 up1.2% compared to 2016. But GT is decreasing sharply, in 2016 down 13.6%
compared to 2015 and 2017 down 12.2 % compared to 2016.
Because of decreasing sales, so gross profit of R Star is reducing year by year, It dropped
28% compare 2017 to 2015. The chart below shows the profit of R Star company.

12


Unit: billion
Source: R Star company
The decreasing sales for many years affect to company profit then directly effect
to company return on investment.
From the in-depth interview, literature reviews and data collected so that poor sales
management is considered a central problem of R Star company
Poor alignment between sales and marketing team
Another cause is sales and marketing are not aligned, according to (5) firms
improve sales and market share in variety of way, successful marketing basically depends
on the firm’s ability to identify the flows of customers into and out of its franchise and
into and out of the market. The marketing literature emphasizes strategies designed to
obtain additional customers, encourage brand switching and increase customers
frequency. The misaligned conditions fared worse than if the goals were the same for
both pricing and compensation. Our participants were well aware that prices increase for
legitimate reasons and might at times be out-of-sync with their own compensation goals.
So if marketing and sales are not aligned, it is very hard for company to meet their goals.
As (6)The implementation of the marketing concept emphasizes the marketing
role for salespeople. Salespeople in this role consider both the needs of their customers
and their firms in developing sales strategies. When sales and marketing are not aligned ,
they don’t appreciate all the different work that marketing can do, and marketing doesn’t
understand all of the different situations that the sales team faces.
When I interviewed marketing manager, he said” one thing our company are
always consider that is company budget because R Star is a small company and source of
finance is not much for marketing so for every campaign we have to cut down the costs.
So it would affect the quality of our campaign” and marketing manager said “our budget
for marketing is not high because our company is very small and weak finance so that we
have to balance everything, we still do the good things like advertise on face book,
Google, zalo and join some fairs. So it depends on budget, we will do the best” , and sales
13


manager “marketing department support our department very well, They are concentrate
on advertise on social website like zalo, Google, face book and established website.
Sometime our company take part in some trade fairs and some events to advertise our
products. As I know the budget for marketing is very low, so they have to consider which
fairs or events they join to reduce the costs.” Three of them mention about the budget of
R Star is too low so company just do advertise on Zalo, Google, face book and website of
R Star. From the interview, it did not proof that sales and marketing team are not alinged.
So poor marketing is not consider a central problem of R Star company.
Lack of leadership
As(7) In particular, managers’ servant leadership, a leadership style emphasizing
genuine concern for subordinate welfare, is examined as a catalyst of parallel concern by
salespeople for their customers. Salesperson perceptions of managers’ servant leadership
empirically relate to salesperson customer orientation, in turn driving adaptive selling
behaviors, customer-directed extra-role behaviors, and sales performance outcomes. So if
manager of company have a good leadership skills, it could motivate salesperson to have
a good performance.
Based on the theories of sales management, I conducted the in-depth interviews
about why sales decreased sharply. The interviews are conducted with CEO company and
sales manager, and some sales persons. They don’t mention about lack of leadership, so
that it is not considered as a central problem of R Star Company.
High competitive
As (8) At the same time, the squeeze between revenue and profit targets and the
cost to serve customers places great pressure on salespeople to produce under intense
competition.
From the interview the director said that “ what is the main reason is competitors
like Phuong Nga, Dinh Diem who those are top companies in kid toys industry. They
have been in the market for more than 20 years, for our company, we just started for 7
years and we are a very small company, so it is very difficult for us to compete to them”.

14


But high competitive is an external factors that company could not change anything about
it so that it is not considered as a potential problem of R Star

To summary, there are many problems that can affect sales in an organization but
base on in-depth interviewed, literature review, data collected the central problem of R
Star is poor sales management that lead to sales decrease sharply form 2015 to 2017 and
affect to the profit of R Star. In the next part, I will validate the main causes of poor sales
management.
4. Cause validation
First, through theoretical, it’s should be defined what is sales management? Sales
management can involve any of the following activities: first, formulation of sales
strategy through development of account management policies, sales force compensation
policies, sales revenue forecasts, and sales plan, second, implementation of sales strategy
through selecting, training, motivating, and supporting the sales force, setting sales
revenue targets, and third, sales force management through development and
implementation of sales performance, monitoring, and evaluation methods, and analysis
of associated behavioral patterns and costs.(9)
On the other hand, as (10) found that multinational sales managers perceive that
sales training is an important contributing factor to sales force success. The multinational
sales manager’s responses also correspond to their claims of providing a significantly
longer and more sophisticated level of initial sales training and as(11) that salespersons
who appraised their compensation during sales promotion as very adequate performed
significantly better than those who rated their compensation as very inadequate or neither
adequate nor inadequate. Therefore, management must repackage compensation plans for
the salesperson in order to increase their performance without jeopardizing sales
promotion goals or profitability of the firm. Management must also be interested in how
salespersons feel about their compensation.

15


Base on the in-depth interviews, some main causes that lead to poor sales
management which are poor coaching, poor recruitment, poor sales strategy. But from
theoretical, some main causes of poor sales management are below:
 Poor sales strategy
 Poor recruitment and training
 Poor leadership skills
 Poor sales organization
 Poor sales force management
 Poor coaching
 Week sales force
 Poor motivation
To find out, I did a small survey in sales department to define what are the main causes
from a central

problem. Based on some possible causes that I got from in-depth

interviews and some literature review, I did a small survey in sales department to define
what are the main causes from a central problem. Following are the outstanding of survey
which I conducted.
-

Objectives of survey: To find out the main causes from the central problem which
resulted in “poor sales management” of the company.

-

Method of survey:

Number of participants: 10 salespeople
Method of data collection: Questionnaires
Method of data analysis: The questions are created under the interval scale, to simplify
the analysis, I statistic the result by manual method in an Excel file. Then, we calculated
the mean, standard deviation and Coefficient of Variation (CV) of each factors based on
the formulas which showed in Appendix 1
The mean and the standard deviation are the two important indexes in statistics and
analysis. The mean shows the average value of a set of numbers, in which the standard
deviation and Coefficient of Variation are a measure of how spread out numbers are.
16


- Survey limitations:
As in every study, this dissertation has the following limitations:


The size of the sample was quite small ( in sales department of R Star Company )



The interviewees has limited knowledge about research topic;



Some participants completed the questionnaire without carefully reading, It could

affect to the result of research.
- Content of survey: The questionnaires are created whose contents are showed as
appendix 1
From the table shown in appendix 2 the mean and standard deviation of each possible
cause are calculated 1,2,,4,5,6,7 and 8. The table showed that the top 2 highest mean
values 4.3 and 4.2 belonging to the cause poor coaching and poor recruitment, the
standard deviation are 0.64, 0.75. Most people in sales department think that the main
causes of poor sales management are 2 factors: above
After finding out the potential causes of potential problem, the final cause – effect map is
present bellow.

17


Final cause effect map
Poor sales strategy

High competitive
Poor customer
service
Poor recruitment
and training

Poor sales
management

Losing of current
customers

High salespeople
turnover

Sales from
general trade
decrease

Sales decrease

Lack of leadership

Poor coaching
Weak sales force
Poor alignment sales
and marketing team

18


Part 3 Potential of solutions
From the in-depth interviewed, literature reviews, data collected, the central
problem of R Star is poor sales management. Base on theories and a little survey, there
are two main causes of it which are poor recruitment and training and poor coaching. To
help R Star to solve that problems, some solutions are suggested below.
3.1 Solutions for poor recruitment and training
As poor recruitment and training are the main causes of poor sales management.
To solve these problems, some literature reviews are considered how to have effective
recruitment and training effectively so that R star can have a strong sales force, and
recruiting right salesperson have a good sales skills to meet sales target and company
goals. According to (12) said “the salesperson is central to the success of many
organizations, yet job turnover in this role is reported as being excessive. Recruitment of
these key individuals must be given a high priority, and practice should be as effective as
is practical”.
Base on the interviews, R Star company does not have a clear recruitment and
selection process, some set of solution are suggested below
 Build a clearer recruitment and selection process
 Build a clearer training program for new salesperson
 Set key performance indications for sales
3.1.1 Build a clearer recruitment and selection process
When a salesperson fails, either the wrong person was hired, or if the right person
was hired, he or she was improperly managed(13) .To succeed in a competitive global
marketplace, businesses are looking for the best and brightest employees, regardless of
their geographical setting(14).By demonstrating high investment in employees,
commitment-based HR practices increase employees’ motivations to contribute the
behaviors and acquire the firm specific knowledge required to support their company’s
strategy (14). When company has a good recruitment process, it will help company

18


reduce the rate of hiring wrong people and help company save many costs and time from
that.
Recruitment the right individual for a sales position remains one of the most
crucial aspects of a sales manager’s job, The average cost of recruitment and training
anew sales recruit has risen dramatically in recent year, providing a strong impetus for
selecting the correct individual for a sales career. The cost of recruiting and training
represents only part of the problem, however, turnover rates are highest among new
employees. Successful recruiting is a complex process by which the needs of the
organization are matched with the skills of specific individual. Clearly, one of the most
important elements in successful recruiting is the organization’s ability to identify the
necessary qualification sales environment(15)
As (16) there are a number of stages in the recruitment and selection process:

Preparation of the job description and specification
The production of an accurate job description should prove of little difficulty for
the sales manager. They have intimate knowledge of what is required, having been a
19


salesperson and out on the road with salespeople during training and evaluation
exercises.(16)
According to (16) generally a job description will cover the following factors:
 The title of the job.
 Duties and responsibilities – the tasks which will be expected of new
recruits, e.g. selling, after-sales service, information feedback, range of
products/markets/type of customer with which they will be associated.


To whom they will report.

 Technical requirements, e.g. the degree to which the technical aspects of the
products they are selling need to be understood.


Location and geographical area to be covered.



Degree of autonomy – the degree to which salespeople will be able to
control their own work programmers.(16)

Identification of the sources of recruitment and method of communication
As (16) there are six main sources of recruitment:
• from inside – the company’s own staff;
• recruitment agencies;
• educational establishments;
• competitors;
• other industries;
• unemployed.
Designing an effective application form and preparing a short list.
According to (16)Four categories of information are usual on application forms:

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