INDIAN BUSINESS MANAGEMENT SCHOOL
SALES & DISTRIBUTION MANAGEMENT MARKS : 100
All the questions are compulsory. First Question shall be 40 Marks and other question shall be of 20marks each 1) “ Sir, I think, we need to have an incentive scheme for our field salespeople, so as to motivate them to put more than normal effort. This will help us to increase our market share and also make it possible for us to become number one player from number three position that we are currently at. We have declared in our last annual marketing conference that we would become the leader in the immediately. Do you agree, Sir,?” asked Krishna Kumar, the newly appointed head of sales and marketing, to the executive director of STL Ltd, B.G. Gururaja Rao. “I agree to the extent that we have to work on our long-term goal. That does not mean that we have to work without considering the long-term impact on the company’s profitability. So far, in last 15 years of our company’s operations, sales and other functional employees have been paid a fixed salary, fringe benefits, and once a year bonus (as per government regulations on bonus). Why should we pay incentives to only support functions like accounts, administration, and human resource? We need extra efforts from all employees, not only salespeople. If we try to motivate salespeople by paying commission on achieving their sales quotas, other employees and particularly shop-floor workers and supervisors will demand extra money by some kind of incentive scheme. If we deny an incentive payments to other employees, they will not only get de-motivated, but may even go on a strike. Besides, the profit contribution per unit of our product sold is very low and any increase in cost due to incentive payment without substantial increase in sales volume will wipe out the thin profitability of our company. We have to consider the various factors we