Poor Sales Management At R Star Company.pdf

UNIVERSITY OF ECONOMIC HO CHI MINH CITY International School of Business Vy Lang Truong POOR SALES MANAGEMENT AT R STAR COMPANY MASTER OF BUSINESS ADMINISTRATION Ho Chi Minh City 2018 UNIVERSITY OF EC[.]

UNIVERSITY OF ECONOMIC HO CHI MINH CITY International School of Business - Vy Lang Truong POOR SALES MANAGEMENT AT R STAR COMPANY MASTER OF BUSINESS ADMINISTRATION Ho Chi Minh City - 2018 UNIVERSITY OF ECONOMIC HO CHI MINH CITY International School of Business - Vy Lang Truong POOR SALES MANAGEMENT AT R STAR COMPANY MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: Dr PHAM PHU QUOC Ho Chi Minh City - 2018 SUPERVISOR’S REPORT ON THE THESIS PROPOSAL SUBMITTED FOR DEGREE OF MASTER of BUSINESS ADMINISTRATION The thesis proposal title POOR SALES MANAGEMENT AT R STAR COMPANY Student Name: Vy Lang Truong Supervisor: Dr Pham Phu Quoc General comments:  Remarks on the student’s attitude: …………………………………………………………………………… ……………………………………………………………………………  Remarks on the assignment’s academic quality: …………………………………………………………………………… …………………………………………………………………………… Overall assessment:  Meet requirement for submitting  Not meet requirement for submitting Other remarks:  Did the student follow the report schedule?  Yes  No  The Turnitin plagiarism percentage: Supervisor’s signature  Other………………………… TABLE OF CONTENT EXECUTIVE SUMMARY PART I – INTRODUCTION Company background Company symptoms PART II – PROBLEM IDENTIFICATION Content of in-depth interviews Theoretical basic Verify the potential problem Cause validation PART III – SOLUTION AND ACTION PLAN Solution Action plan PART V – CONCLUSION APPENDIX REFERENCE Executive summary In any organization, the sales department plays a pivotal role in the success of the business At R Star company sales has decreased for consecutive years that lead to profit of company also decreased Compared to other companies in the same industry like Phuong Nga, Dinh Diem that their sales increased sharply So sales decrease is considered as a symptom that need to investigate to find out what are the main problems After conducting an in-depth-interviewed from some staffs at sales department, chief executive officer and base on literature review, the central problem is found that is poor sales management To find out what are the main causes of central problem, some interviews were conducted and the main cause of poor sales management are poor recruitment, poor training and poor coaching To solve that poor recruitment and poor training problems, company a properly recruitment procedure to hire right salespersons after that company well training to make sure salesperson have enough skills to job well For poor coaching, we will work with sellers one-on-one or in small groups to guide sellers' actions, keep them on track, develop skills, and help sellers achieve top performance Coaches meet regularly with team to help them create goal and action plans, build winning strategies, hone skills, and stay on task and on target The most difficult thing company need to solve that is sales force management because salespeople bridge the gap between customer needs and the product or service that fulfills that need So, to improve sales management company make a compensation procedure to compete with other companies and keep training and coaching sales force to help them improve their ability so that they can improve sales performance and could boost sales so that company can maintain business and expand company in the future PART I – INTRODUCTION Company background R Star Co., Ltd., formerly known as Ruby Star Co., Ltd, was established on September 27, 2011, which operates on the business of trading, importing, exporting and distributing baby toys, maternity & baby wear On November 11, 2016, the company was renamed to R Star Co., Ltd along with the continuous development not only in sales, but also in facilities, personnel Our company now supplies 100% made products in: Thailand, Malaysia, Korea, Turkey In addition to the KIDART brand of clay, Smile Kids made in Thailand, we are the exclusive distributor of famous toy brands in Turkey such as Let's Powder, Furkan and Ucar Toys And exclusive distributor of Malaysian Sunta Baby Foam EVA Foam Product All products are intellectual and highly educated for children: awakening creative thinking, logical thinking, stimulating imagination; improve teamwork skills, develop teamwork skills and community integration skills in the future Internal structure The internal structure of the company is a functional structure, is showed in the graphic as follow: 2 Company symptoms R Star company has been operating for more than years, so it is still very young company compare to other companies in this industry So It has to face so many difficult to survive and compete to the same companies to gain high market share At the moment, R Star has a problem that sales has decreased for consecutive years From the balance sheet of R Star company from 2015 to 2017, Sales has decreased slightly Specially in 2016 sales was 18.01 billion, down 7.4 % from 19.45 billion in 2015, and in 2017 sales was 16.8 billion, down 6.72% from 18.01 in 2016 Unit: Billion Chart 1: Sales of R Star company Source: Sales department of R Star company There are so many reasons lead to sales decrease Beside some internal factors, external factors like recession economy, political or some policies of the government also effect to sales decrease In the case of R Star, we are also consider sales of some companies in the same industry to find out if external factors also effect these company or not Chart below show sales of some companies Source: http://nhantokhai.tct.vn/ihtkk_cbt/tcuuTkhai.do?pagenumber=3 Compared to another companies in the same industry, like Thanh Nga sales increased sharply, in 2016 increased 124.5 % from 51.5 billion to 115.5 billion and in 2017 increased 8.7% from 115.5 billion to 125.6 billion And Dinh Diem sales increased quite sharply, in 2016 increased 37.7 % from 20.4 billion to 28.1 billion and in 2017 increased 16.7% from 28.1 billion to 32.8 billion From some figures show above, Sales of Phuong Nga and Dinh Diem are also increased sharply while sales of R star decreased slightly So some external factors like politic, government policy and recession economy did not affect those company in the Toys industry The results of sales decrease that made the profit also decreased, the chart below show data of profit from 2015 to 2017 of R Star company From 2015 to 2017, the profit decreased sharply, in 2016 the profit decreased 8% compared to 2015 and 2017 the profit decreased 21% compared to 2016.So sales decrease of R Star is consider a problem and need to investigate furthermore to find out why sales decrease I choose only this symptom to investigate futhermore because sales is extremely important for every company, it brings money in to help its maintain business of company If sales decrease, it leads to operating profit decrease or even loss With situation of R Star at the moment, sales decrease need to be solved to continue operating business In the next part, I will conduct some in-depth interviews and use some theories to find out the central problem of sales decreased PART II – PROBLEM IDENTIFICATION Content of in-depth interviews From the symptoms which mentioned above that are sales decreased for consecutive years, to find out what is the main problems so that I conduct the in-depth interviews with sales manager, Chief executive officer, marketing manager, marketing staff, salespersons These interviews help me to find down what are going wrong in the R Star company and what central problems are, after that I find some literature review to find some potential problems and collect some data to verify the central problems In the first interviews, the problems were found out that made sales decrease: Firstly, many competitors in the same industry that why company lose the market share, lose the current customers and it is very hard to find deal with customers because other companies are having a strong sales team than R Star and they have been doing this business for a long time such as Phuong Nga, Dinh Diem company Secondly, some salesperson said that the company has poor sales strategy because it is not clearly defined, not documented in writing Thirdly, R Star has a weak sales force as sales manager said that the number of salespeople decrease 25% compare to the period year so that the workload is very heavy Fourthly, company has a poor coaching because sales manager is so busy with his job and could not have time to coach salespeople properly Base on the data collected and interviews with members of R Star company, the initial cause and effect tree has been developed Initial cause effect map High competitive Lack of sales strategy Poor customer service Poor recruitment and training Poor sales management Losing of current customers Sales from general trade decrease Sales decrease High salespeople turnover Poor Coaching Lacking of sales force Potential of problems In this part, I will find literature reviews that affect to sales decrease which have not mentioned in the in-depth interview or some potential problems have mentioned but literature review have not been mentioned 2.1 Poor sales management There are many reasons that lead to sales decreased, according to (1) Sales management behavior based control strategy, sales territory design, and company strategic orientation are conceptualized as antecedents to salesperson performance and sales organization effectiveness Evaluating salespeople’s' performance is an important task for sales managers However, little is known about what bases are used by sales managers to evaluate the performance of their salespeople “A sales manager can have a narrow or a broad spectrum of responsibilities including the following: estimate demand and prepare sales forecasts; establish sales force objectives and quotas; prepare sales plans and budgets; establish the size and organization of the sales force; recruit, select, and train the sales force; compensate the sales force; control and evaluate sales performances.”(2) “Good sales management properly applied is the least expensive, most effective, way to increase dollars of revenue and margins, market share, cash flow, return on investment, and net present value, as well as to beat the competition and make yourself a hero It costs no more to properly hire, train, compensate, motivate, and evaluate salespeople Effective time and territory management, forecasting, planning, budgeting, and good communication and control are no more expensive than performing these same functions poorly.”(3) “Sales management: The attainment of sales force goals in an effective and efficient manner through planning, staffing, training, directing, and evaluating organizational resources.”(4) 2.2 Poor alignment between sales and marketing team Another cause is poor marketing strategy, according to (5) firms improve sales and market share in variety of way, successful marketing basically depends on the firm’s ability to identify the flows of customers into and out of its franchise and into and out of the market The marketing literature emphasizes strategies designed to obtain additional customers, encourage brand switching and increase customers frequency So if company has a success marketing strategy, it is easy to approach customers and easy to sell products As (6)The implementation of the marketing concept emphasizes the marketing role for salespeople Salespeople in this role consider both the needs of their customers and their firms in developing sales strategies 2.3 Lack of leadership As(7) In particular, managers’ servant leadership, a leadership style emphasizing genuine concern for subordinate welfare, is examined as a catalyst of parallel concern by salespeople for their customers Salesperson perceptions of managers’ servant leadership empirically relate to salesperson customer orientation, in turn driving adaptive selling behaviors, customer-directed extra-role behaviors, and sales performance outcomes 2.4 High competitive As (8) At the same time, the squeeze between revenue and profit targets and the cost to serve customers places great pressure on salespeople to produce under intense competition Many companies in the same industry makes high competitive, every company should have good strategy to take completive advantage to meet sales goal and company’s goal Verify the potential problem From the interviews and data were collected the potential problems are considered high competitive and poor sales management When company starts doing business in whatever firm, there are so many companies in the same industries and have to compete with each other to maintain and survive in the market Each company have their own factors to take competitive advantage so that they can sell their products Another cause is sales and marketing are not aligned, according to (5) firms improve sales and market share in variety of way, successful marketing basically depends on the firm’s ability to identify the flows of customers into and out of its franchise and into and out of the market The marketing literature emphasizes strategies designed to obtain additional customers, encourage brand switching and increase customers frequency Marketing support sales to find potential customers so if company has a success marketing strategy and get well with sales department, , it is easy to boost sales and gain the market share According to (1) Sales management behavior based control strategy, sales territory design, and company strategic orientation are conceptualized as antecedents to salesperson performance and sales organization effectiveness Evaluating salespeople’s' performance is an important task for sales managers However, little is known about what bases are used by sales managers to evaluate the performance of their salespeople So if company has a weak sales management, it would affect to sales performance and the result of business Poor sales management From the interview, the director said “they did not have a proper sales strategy, as a monthly report, the number of new customers was very low, and sales rep turnover is exceptionally high” Phu who is a salesperson said “ Actually our sales manager train for us about products and some ways to find customers and we start to work and learn from each other but I think our company need to train salesperson more because when I first started working here, I was not trained properly about sales skills so I have to learn from other salesperson.” and Phuong said “ I think it is ok for me because I get used to work as salesperson, but I think R star should training more for salespersons, from the time I work here, I have never join any training class for sales except the first time the sales manager introduced about products so I work until now” 10 And from the literature review, according to (2)“A sales manager can have a narrow or a broad spectrum of responsibilities including the following: estimate demand and prepare sales forecasts; establish sales force objectives and quotas; prepare sales plans and budgets; establish the size and organization of the sales force; recruit, select, and train the sales force; compensate the sales force; control and evaluate sales performances.” Others said “Good sales management properly applied is the least expensive, most effective, way to increase dollars of revenue and margins, market share, cash flow, return on investment, and net present value, as well as to beat the competition and make yourself a hero It costs no more to properly hire, train, compensate, motivate, and evaluate salespeople Effective time and territory management, forecasting, planning, budgeting, and good communication and control are no more expensive than performing these same functions poorly.”(3) and “Sales management: The attainment of sales force goals in an effective and efficient manner through planning, staffing, training, directing, and evaluating organizational resources.”(4) According to (1) Sales management behavior based control strategy, sales territory design, and company strategic orientation are conceptualized as antecedents to salesperson performance and sales organization effectiveness Evaluating salespeople’s' performance is an important task for sales managers However, little is known about what bases are used by sales managers to evaluate the performance of their salespeople So if company has a weak sales management, it would affect to sales performance and the result of business There are some data to show the performance of R Star form 2015 to 2017 R Star has two channels to bring products to consumers which are general trade (GT) and modern trade( MT) 11 Chart 3: Breakdown sales data Unit: billion Source: R Star company From 2015 to 2017 MT is increasing slightly, in 2016 up 3.6% compared to 2015 and in 2017 up1.2% compared to 2016 But GT is decreasing sharply, in 2016 down 13.6% compared to 2015 and 2017 down 12.2 % compared to 2016 Because of decreasing sales, so gross profit of R Star is reducing year by year, It dropped 28% compare 2017 to 2015 The chart below shows the profit of R Star company 12 Unit: billion Source: R Star company The decreasing sales for many years affect to company profit then directly effect to company return on investment From the in-depth interview, literature reviews and data collected so that poor sales management is considered a central problem of R Star company Poor alignment between sales and marketing team Another cause is sales and marketing are not aligned, according to (5) firms improve sales and market share in variety of way, successful marketing basically depends on the firm’s ability to identify the flows of customers into and out of its franchise and into and out of the market The marketing literature emphasizes strategies designed to obtain additional customers, encourage brand switching and increase customers frequency The misaligned conditions fared worse than if the goals were the same for both pricing and compensation Our participants were well aware that prices increase for legitimate reasons and might at times be out-of-sync with their own compensation goals So if marketing and sales are not aligned, it is very hard for company to meet their goals As (6)The implementation of the marketing concept emphasizes the marketing role for salespeople Salespeople in this role consider both the needs of their customers and their firms in developing sales strategies When sales and marketing are not aligned , they don’t appreciate all the different work that marketing can do, and marketing doesn’t understand all of the different situations that the sales team faces When I interviewed marketing manager, he said” one thing our company are always consider that is company budget because R Star is a small company and source of finance is not much for marketing so for every campaign we have to cut down the costs So it would affect the quality of our campaign” and marketing manager said “our budget for marketing is not high because our company is very small and weak finance so that we have to balance everything, we still the good things like advertise on face book, Google, zalo and join some fairs So it depends on budget, we will the best” , and sales 13 manager “marketing department support our department very well, They are concentrate on advertise on social website like zalo, Google, face book and established website Sometime our company take part in some trade fairs and some events to advertise our products As I know the budget for marketing is very low, so they have to consider which fairs or events they join to reduce the costs.” Three of them mention about the budget of R Star is too low so company just advertise on Zalo, Google, face book and website of R Star From the interview, it did not proof that sales and marketing team are not alinged So poor marketing is not consider a central problem of R Star company Lack of leadership As(7) In particular, managers’ servant leadership, a leadership style emphasizing genuine concern for subordinate welfare, is examined as a catalyst of parallel concern by salespeople for their customers Salesperson perceptions of managers’ servant leadership empirically relate to salesperson customer orientation, in turn driving adaptive selling behaviors, customer-directed extra-role behaviors, and sales performance outcomes So if manager of company have a good leadership skills, it could motivate salesperson to have a good performance Based on the theories of sales management, I conducted the in-depth interviews about why sales decreased sharply The interviews are conducted with CEO company and sales manager, and some sales persons They don’t mention about lack of leadership, so that it is not considered as a central problem of R Star Company High competitive As (8) At the same time, the squeeze between revenue and profit targets and the cost to serve customers places great pressure on salespeople to produce under intense competition From the interview the director said that “ what is the main reason is competitors like Phuong Nga, Dinh Diem who those are top companies in kid toys industry They have been in the market for more than 20 years, for our company, we just started for years and we are a very small company, so it is very difficult for us to compete to them” 14 But high competitive is an external factors that company could not change anything about it so that it is not considered as a potential problem of R Star To summary, there are many problems that can affect sales in an organization but base on in-depth interviewed, literature review, data collected the central problem of R Star is poor sales management that lead to sales decrease sharply form 2015 to 2017 and affect to the profit of R Star In the next part, I will validate the main causes of poor sales management Cause validation First, through theoretical, it’s should be defined what is sales management? Sales management can involve any of the following activities: first, formulation of sales strategy through development of account management policies, sales force compensation policies, sales revenue forecasts, and sales plan, second, implementation of sales strategy through selecting, training, motivating, and supporting the sales force, setting sales revenue targets, and third, sales force management through development and implementation of sales performance, monitoring, and evaluation methods, and analysis of associated behavioral patterns and costs.(9) On the other hand, as (10) found that multinational sales managers perceive that sales training is an important contributing factor to sales force success The multinational sales manager’s responses also correspond to their claims of providing a significantly longer and more sophisticated level of initial sales training and as(11) that salespersons who appraised their compensation during sales promotion as very adequate performed significantly better than those who rated their compensation as very inadequate or neither adequate nor inadequate Therefore, management must repackage compensation plans for the salesperson in order to increase their performance without jeopardizing sales promotion goals or profitability of the firm Management must also be interested in how salespersons feel about their compensation 15 Base on the in-depth interviews, some main causes that lead to poor sales management which are poor coaching, poor recruitment, poor sales strategy But from theoretical, some main causes of poor sales management are below:  Poor sales strategy  Poor recruitment and training  Poor leadership skills  Poor sales organization  Poor sales force management  Poor coaching  Week sales force  Poor motivation To find out, I did a small survey in sales department to define what are the main causes from a central problem Based on some possible causes that I got from in-depth interviews and some literature review, I did a small survey in sales department to define what are the main causes from a central problem Following are the outstanding of survey which I conducted - Objectives of survey: To find out the main causes from the central problem which resulted in “poor sales management” of the company - Method of survey: Number of participants: 10 salespeople Method of data collection: Questionnaires Method of data analysis: The questions are created under the interval scale, to simplify the analysis, I statistic the result by manual method in an Excel file Then, we calculated the mean, standard deviation and Coefficient of Variation (CV) of each factors based on the formulas which showed in Appendix The mean and the standard deviation are the two important indexes in statistics and analysis The mean shows the average value of a set of numbers, in which the standard deviation and Coefficient of Variation are a measure of how spread out numbers are 16 - Survey limitations: As in every study, this dissertation has the following limitations: • The size of the sample was quite small ( in sales department of R Star Company ) • The interviewees has limited knowledge about research topic; • Some participants completed the questionnaire without carefully reading, It could affect to the result of research - Content of survey: The questionnaires are created whose contents are showed as appendix From the table shown in appendix the mean and standard deviation of each possible cause are calculated 1,2,,4,5,6,7 and The table showed that the top highest mean values 4.3 and 4.2 belonging to the cause poor coaching and poor recruitment, the standard deviation are 0.64, 0.75 Most people in sales department think that the main causes of poor sales management are factors: above After finding out the potential causes of potential problem, the final cause – effect map is present bellow 17 Final cause effect map Poor sales strategy High competitive Poor customer service Poor recruitment and training Poor sales management Losing of current customers High salespeople turnover Sales from general trade decrease Sales decrease Lack of leadership Poor coaching Weak sales force Poor alignment sales and marketing team 18 Part Potential of solutions From the in-depth interviewed, literature reviews, data collected, the central problem of R Star is poor sales management Base on theories and a little survey, there are two main causes of it which are poor recruitment and training and poor coaching To help R Star to solve that problems, some solutions are suggested below 3.1 Solutions for poor recruitment and training As poor recruitment and training are the main causes of poor sales management To solve these problems, some literature reviews are considered how to have effective recruitment and training effectively so that R star can have a strong sales force, and recruiting right salesperson have a good sales skills to meet sales target and company goals According to (12) said “the salesperson is central to the success of many organizations, yet job turnover in this role is reported as being excessive Recruitment of these key individuals must be given a high priority, and practice should be as effective as is practical” Tải FULL (56 trang): https://bit.ly/3AR7e22 Dự phòng: fb.com/TaiHo123doc.net Base on the interviews, R Star company does not have a clear recruitment and selection process, some set of solution are suggested below  Build a clearer recruitment and selection process  Build a clearer training program for new salesperson  Set key performance indications for sales 3.1.1 Build a clearer recruitment and selection process When a salesperson fails, either the wrong person was hired, or if the right person was hired, he or she was improperly managed(13) To succeed in a competitive global marketplace, businesses are looking for the best and brightest employees, regardless of their geographical setting(14).By demonstrating high investment in employees, commitment-based HR practices increase employees’ motivations to contribute the behaviors and acquire the firm specific knowledge required to support their company’s strategy (14) When company has a good recruitment process, it will help company 18 reduce the rate of hiring wrong people and help company save many costs and time from that Recruitment the right individual for a sales position remains one of the most crucial aspects of a sales manager’s job, The average cost of recruitment and training anew sales recruit has risen dramatically in recent year, providing a strong impetus for selecting the correct individual for a sales career The cost of recruiting and training represents only part of the problem, however, turnover rates are highest among new employees Successful recruiting is a complex process by which the needs of the organization are matched with the skills of specific individual Clearly, one of the most important elements in successful recruiting is the organization’s ability to identify the necessary qualification sales environment(15) As (16) there are a number of stages in the recruitment and selection process: Tải FULL (56 trang): https://bit.ly/3AR7e22 Dự phòng: fb.com/TaiHo123doc.net Preparation of the job description and specification The production of an accurate job description should prove of little difficulty for the sales manager They have intimate knowledge of what is required, having been a 19 salesperson and out on the road with salespeople during training and evaluation exercises.(16) According to (16) generally a job description will cover the following factors:  The title of the job  Duties and responsibilities – the tasks which will be expected of new recruits, e.g selling, after-sales service, information feedback, range of products/markets/type of customer with which they will be associated  To whom they will report  Technical requirements, e.g the degree to which the technical aspects of the products they are selling need to be understood  Location and geographical area to be covered  Degree of autonomy – the degree to which salespeople will be able to control their own work programmers.(16) Identification of the sources of recruitment and method of communication As (16) there are six main sources of recruitment: • from inside – the company’s own staff; • recruitment agencies; • educational establishments; • competitors; • other industries; • unemployed Designing an effective application form and preparing a short list According to (16)Four categories of information are usual on application forms: 20 6672080 ... to poor sales management which are poor coaching, poor recruitment, poor sales strategy But from theoretical, some main causes of poor sales management are below:  Poor sales strategy  Poor recruitment... sales strategy Poor customer service Poor recruitment and training Poor sales management Losing of current customers Sales from general trade decrease Sales decrease High salespeople turnover... interviewed, literature reviews, data collected, the central problem of R Star is poor sales management Base on theories and a little survey, there are two main causes of it which are poor recruitment