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Atchison Corporation is a case based on a large U.S.- based manufacturer of household products (Dial Corporation). They make soap, laundry detergent, household cleaning products.
In 1994, they were in a strange situation with three things happening:
Highest level of sales in the company history
Lowest after-tax profits in many decades
Retirement of long-standing president and CEO - Jerome Atchison
Products were manufactured in four regional factories located across different parts of United States, and sold by a company sales force in thousands of grocery stores. The company has always been focused on production and volume. In fact, people that worked at Atchison clearly understood the goal that "next year's sales will be greater than the previous year". For many decades, the company did not do much advertising because the Atchison brand was sufficient to sell the product.
Structurally, Atchison is organized into 8 major divisions:
7 regional sales divisions and 1 central manufacturing division.
Each sales division governed by corporate policies, with little flexibility to match local competitive prices or pay sales people beyond the corporate limit.
All sales people were on straight salary with no bonus available, resulting in salary below industry average.
The accounting office collected sales and expense information for each sales division. Each sales division received a quarterly statement without commentary that reported:
Number of cases sold
- Sales revenue per case - Local expenses per case.
The information provided to each sales division did not allow for comparison or benchmarking against other sales divisions in the company.
Once every quarter, the seven senior Sales Vice- Presidents met at headquarters to discuss progress. These discussions were focused on sales as compared to budget. All knew that sales targets had to be exceeded by any means necessary....
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