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Introduction
The case analyzed in this written analysis is on Barro Stickney Inc., an
organization developed by John Barro and Bill Stickney as a small
manufacturers
sales
representative
agency.
These
two
men
left
Contribution
1.75 million dollars
1.5 million dollars
Stickney
Todd Smith
Elizabeth
2 million dollars
Hired to keep track of orders and
Lee
i)
ii)
iii)
fluid
situations
requiring
important
strategic
decision.
The
Franklin
BSI Portfolio
Current
45354
302360
Share of Portfolio
Commission
0.15)
15%
5%
Expected
845354
(45354 / 1102360
800, 000)
27.4%
(302360 +
- Its largest principal, R.D. Ocean has got a new sales manager and he simply
wants BSI to hire a new salesperson for their territory because he thinks that
since the members are buying new cars, they can afford a new salesperson.
He has not stated any quantitative requirements and BSI itself does not think
that in order to achieve the new sales projections, an additional resource is
required. The case facts present that R.D. Ocean deliberately makes sales
difficult for all its representatives.
- Swansons market share is expected to decline because of a threat from a
new entrant and a substitute product which the organization did not focus
on. This means a loss of companys sales.
2. Critical Analysis
In deciding for the decisions to be taken regarding Franklin and R.D. Ocean
BSI has to take into consideration a number of qualitative and quantitative
facts.
customer effectively. The question however is whether BSI should let Ocean
backseat drive its internal policy or not? If the existing members do not
think it is time to bring a new member to the family, will they be able to
accommodate and effectively work with the new member?
The second element that needs to be considered is whether a new
representative is required to cover Franklins sales. Because the area has
more military accounts, it would mean larger sales for the representatives
thus larger sales for whoever takes the accounts. Because of the distance a
new office will have to be opened which is then likely to raise the cost and
decrease the interaction of the main office with its branch. On the other hand
however 800,000 is a large sales growth for BSI which would give BSI a
significant boost.
Ocean
25000
(+ 0% Commission of sales up to
500,000, 20% Commission of first 0.5
million
over
500,000,
25%
Benefits
Expected from Ocean
Expected from Franklin
800,000
Fixed Costs
3. Conclusion
Looking at the quantitative and qualitative analysis, it is concluded that BSI
should open a new branch for the Franklin account and be there to support
its customers in its time for need. Not taking the account will force Franklin
to look for a rep agency which can put BSI in a difficult situation as the
current portfolio of Franklin might decline. The difficulty benefit chart shows
that Franklin pays more for lesser effort and therefore this account needs to
be maintained. Plus, this is a growth opportunity for BSI and it needs to start
considering its organization more as a business and less as a family.
With the new rep hiring for Ocean, BSI should negotiate with the principal to
give it exclusive territory rights for Virginia area also if it is to hire a new
sales person. This pitch is likely to be a win win for both the manufacturing
organization and the agency. Through this the new Virginia office can benefit
from both the Franklin sales and Oceans expected sales.