National Mutual Funds: Retail Services Division

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I. Problem
National Mutual Funds (NMF), founded in the 1940s, is one of the most important mutual fund companies in the brokerage industry in the United States. The company has extended from a mutual fund company to a financial center offering mutual funds, brokerage products including stocks and bonds, insurance products, and a variety of planning tools to help customers save for major life needs. However, since the market downturn, which is hurting many brokerage and mutual fund houses, NMF’s profits and operations have been affected significantly. To respond to the market slowdown, Harry Smallwood, President of NMF Retail Services, has come up with a directive to reorganize the call centers in the Retail Services Division in an effort to grow its asset base.

The main issue is how Harry will reorganize the call centers successfully to have a smooth handoff of the selling process between traders and sales representatives without breaking the relationship between the two departments.

II. Alternatives
a)Create retail service teams consisting of traders and sales representatives in order to increase revenues. b)Train traders to involve themselves in the selling process in order to increase revenues. c)Lay off some employees in order to cut costs.

III. Analysis of Alternatives
a)Create retail service teams consisting of traders and sales representatives in order to increase revenues. Since the problem is that trading volume and profit margins are decreasing substantially, it makes sense for both sales representatives and traders to form teams and work together in order to bring more revenues. Each retail service team will consist of traders who are responsible for outbound calls to identify prospects and for helping customers place trades in a variety of investment vehicles, and sales representatives who take care of current and prospective customers in determining the best product mix. In terms of compensation, NMF will assign commission based on team performance. Pros:

-Working as a team will make the handoff of the selling process between traders and sales representatives smooth -Combining both traders and sales representatives into a team will not lead to the competition between the two departments -Traders and sales representatives will be willing to work together due to team-based commission Cons:

-High costs are needed to train staff in order to create the collaboration between the two departments -A team may be confused about to whom it needs to report because of a change in the chain of command

b)Train traders to involve themselves in the selling process in order to increase revenues.
The main goal the company should focus on right now is to bring in more revenue. Due to the fact that the company needs to redirect excess human capacity toward revenue generation efforts, traders are required to step up to take action. It means that traders need to be trained to take more responsibilities in terms of sales by making presentations of the company’s various product offerings, and to be able to handle customers. Traders will also have to make outbound calls to identify prospective customers.

Pros:
-The company will generate more revenue because traders are able to close sales -Customers do not have to be passed on to sales representatives when they decide to make transactions
Cons:
-It will take a lot of time and money to train traders to do sales representatives’ jobs -Turnover among traders tends to be higher since they have to do unfamiliar jobs -This alternative can cause conflicts between traders and sales representatives because traders need to be involved in the selling process

c)Lay off some employees in order to cut costs
Although the company would like to invest in the company’s future, which infers to its people, laying off employees who have bad performance can help the company survive through the market downturn. Owing to the fact that NMF is facing a decrease in...
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