Pcl Electronics in China

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  • Topic: Sales, The Return, Team
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To: General Manager
From: Consultant
Date: January 30, 2012
Subject: PCL Control Sustainability
Introduction
PCL is a European consumer electronics and healthcare company that has recently entered China. They have a wide variety of televisions, DVD players, PC monitors, audio products and PC peripherals. PCL is able to compete within the consumer electronics market as they have low prices and a large network of distributors. PCL uses innovation to stay ahead of competitors and keep up with the latest technologies. PCL is currently in the growth stage and they need to maintain continuity. PCL organizational objective is to implement controls without having a detrimental effects on relationships with chain retailers and dealers. PCL also needs to ensure they do not loose prominent shelf space within the retail stores. PCL needs to minimize the amount of NFF returns. Key Problems

Issue one two three

Challenge 1: Sales Team
PCL’s sales team was under immense pressure from the Dealers to meet sales targets, which was set at 132% of previous year’s sales. This was concerning to the sales team in that the prescribed expectations outpaced actual market growth, causing a disconnect in communicating the organization’s goals and providing the correct incentives to reach those goals. While results controls aim to enhance performance by tying rewards directly to the accomplishment of the desired results, problems may arise when the targets are perceived to be unattainable. PCL’s sales team resorted to aggressive sales techniques at the expense of the company’s greater goal of minimizing unnecessary returns and exchanges of demo sets and slow-moving goods. Results Controls

The sales targets for the sales team act as results controls as well. However, these targets are not considered tight because they are not communicated and internalized effectively. The sales team feels as though the goals are not reasonable since the sales targets are increasing at a rate much greater than the market growth rate. Therefore, it can be concluded that the sales team has had little input in setting these targets, causing low levels of internalization and motivation. PCL should carefully analyze market growth and PCL sales over time as well as allow the Sales Team to participate in setting realistic sales targets so that the Sales Team does not feel pressured and in turn, does not relay this pressure to the dealers. Challenge 2: ASC

The third issue is the lack of motivation for the after sales service team to regularly monitor the third-party ASCs. As a result, the ASCs do not inspect returned sets carefully and even go as far as to fake inspection records. This fraudulent behaviour results in a large number of NFFs which are an unnecessary drain on PCL’s profits. Thus far, the after sales service team has not caught or punished the ASCs for incompliant behaviour. The after sales service team’s lack of motivation to actively monitor and punish the ASCs stems from the fact that they report to the general manager of PCL as opposed to the TV division manager. Because the after sales service team’s performance rewards or punishments are not directly tied to the success of the TV division, the team has no incentive to ensure ASC compliance. Results Controls

Implementing results controls at PCL is feasible because the organization can determine what results are desired, the employees have influence over the results, and the results can be measured. Results controls that PCL has implemented include the following goals: the NFF rate is to be reduced to 20%, the TV return and exchange rate to be reduced to 3.5%, and the total savings realized by PCL due to more efficient TV returns within six months to be at least US$1.13 million. These are understandable objectives and what employees must do to achieve these objectives must be conveyed to them clearly and repetitively. In order for these results controls to be effective, PCL must ensure that the...
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