University Kuala Lumpur (Business School)
Bachelors in Business Management and Entrepreneurship
Case Study: The Valley Winery
FARA ASHIKIN BT GHAZALI
DR. MOHD FARID SHAMSUDIN
1) What are the problem facing Pat Waller?
Pat Waller is the one who recently hired as sales manager of the San Francisco region’s chain division. The major problems facing by him are high turnover and continue with sales increase.
According to the case, on average a sales representative had been with the San Francisco division of Valley Winery only for 7 months which contribute to the approximately 100 per cent turnover rate in sale force on the division and also 50 new sales representative are hired each year. Besides that, the turnover problem led to a series of conclusions where the costs of recruiting and training approached $30,000 per year representative. The $30,000 figure does not include opportunity costs associated with lost sales resulting from not having accounts called on and these cost also do not include the time it would take for a new representative to adequately develop rapport with the account. Therefore, training cost issue is in nature the side-effect of the high turnover rate of the sale persons in the division and without the high turnover rate, this problem could be much mitigated though it still concerns the management at the same time.
Waller faces the future problems of declining sales and sagging profits that are likely to occur unless the turnover problem can be resolved. There are other problems that will concern Waller. The case hints at a potential sex discrimination problem. The San Francisco division, like other Valley divisions, has three distinct sales groups. The second group, which calls on hotels, restaurants, resorts, and motels, is predominantly female. Their salary is in the $39,532 to $36,233 range and opportunities for advancement into management are pretty much nonexistent. The sales group calling on the chains is predominantly male and earns salaries in the $45,563 to $52,263 range. Promotions to sales management typically come from this group.
2) What are the causes of the problems facing Waller?
From the case, we can see that the sales representative work under high pressure. One of the major competitiveness behind Valley Wineries success is its aggressive sale which takes the form of push strategy by setting quota for the sale reps. As a matter of fact, in many industries in particular retail industry, quota setting is normal and in usual compensations could be linked to performance measured based on the quota realization. But the reason which it could become a problem is when the quotes become too far away from the sales reps’ reach such as the goals are in general considered as very difficult or even impossible to achieve. From the above chart showing the realization of the quotes by 8 sale reps in three product lines which are Cool Valley, Santo Rey and Valley Wines, termination became usual when the sale reps could not achieve the quota for a certain number of months, usually 3 months, and also from the reflections collected from the sale staffs, the quota are truly difficult even when the sale seemed to be good enough. When efforts are paid but quota is not fulfilled, it is normal and understandable that the sale staff would become discouraged and would choose to quit the job even though they are not terminated. In this case also, there are lacks of Professional Behaviour from sales representatives. The aggressive displayed by sales reps in the wine and liquor industry, especially Valley sales reps, who have been accused of relocating competitive displays and products to obtain the best space for Valley wines. Sales representatives from other wineries dislike the competitive spirit that shown by Valley reps, who have also been accused of such tactics as spraying hair spray on...
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