Case Houston fearless 76 Inc
Management Control Homework 2
Azizi Nabil
Le 10/01/2014
Houston Fearless 76 Inc
1. Why are Houston Fearless 76, Inc. (HF76) managers unhappy with the company’s existing sales incentive plan? Are weaknesses in this plan a major cause of the company’s performance problems?
We see on the text that the CEO is unhappy about some problems in the company. We see in the text in the first page that the CEO isn’t happy about the sale , we see that the company need revenue growth and a constant profitability , this can be explain by the fact that commission are based on sale , and not on the gross margin of the product . So if the HF76 managers’ are unhappy it’s because the commission are not based on the product profitability.
But there are some other problem .Indeed if the revenue is not what we expected it’s because of the lack of development of the company on new market, the salespersons are not doing enough on it. Secondly they don’t do anything about expand their existing market, they don’t develop a synergie among our market. So the problem in its globality is the market objective and development market.
We see too that there is some different compensation structure for different product.
There is another problem which is the fact that the sales forecast is inconsistent.
Related to this problem there is an another problem which forecast accountability which is not strong enough since there is no downside for salespersons for overstating forecast , and so this make some problem about planning .
And to finish we can say that the incentive has not been introcuded properly.
So for these reasons manager are not happy in the Houston Fearless 76 INC .
We will see on this part if the weaknesees on this plan is a major cause of the companys’ performance plan .
So to begin we have to list all the weaknesses of the current plan
For me the first weaknesses is the Sales , we see on the text that the first main
Azizi Nabil
Le 10/01/2014
Houston Fearless 76 Inc
1. Why are Houston Fearless 76, Inc. (HF76) managers unhappy with the company’s existing sales incentive plan? Are weaknesses in this plan a major cause of the company’s performance problems?
We see on the text that the CEO is unhappy about some problems in the company. We see in the text in the first page that the CEO isn’t happy about the sale , we see that the company need revenue growth and a constant profitability , this can be explain by the fact that commission are based on sale , and not on the gross margin of the product . So if the HF76 managers’ are unhappy it’s because the commission are not based on the product profitability.
But there are some other problem .Indeed if the revenue is not what we expected it’s because of the lack of development of the company on new market, the salespersons are not doing enough on it. Secondly they don’t do anything about expand their existing market, they don’t develop a synergie among our market. So the problem in its globality is the market objective and development market.
We see too that there is some different compensation structure for different product.
There is another problem which is the fact that the sales forecast is inconsistent.
Related to this problem there is an another problem which forecast accountability which is not strong enough since there is no downside for salespersons for overstating forecast , and so this make some problem about planning .
And to finish we can say that the incentive has not been introcuded properly.
So for these reasons manager are not happy in the Houston Fearless 76 INC .
We will see on this part if the weaknesees on this plan is a major cause of the companys’ performance plan .
So to begin we have to list all the weaknesses of the current plan
For me the first weaknesses is the Sales , we see on the text that the first main