Page 161 - DMGT205_SALES_MANAGEMENT

Unit 10: Managing Sales Personnel

Notes
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Case Study Swatantra Company

watantra Company was established in 1940 to market office equipment in the entire
country. They carried the entire product line manufactured by its parent company in
SUK. After the partition of the country, the company's activities were confined to
India. In keeping with the government's policy, the company started manufacturing some
of the products in the country. However, it continued to market the products under the
brand name of the company. The company had a sales force of more than 100 sales
representatives who were responsible for promoting the sales in their respective territories.
With a view to keeping the sales force sufficiently motivated, the company compensated
the salesmen on the basis of salary-cum-commission. The salaries varied according to the
length of service, experience and performance of non-selling functions. The commission,
on the other hand, was calculated on the basis of the percentage of the quota achieved.
Thus, if a person achieved 130 per cent of the quota fixed, his commissions worked out to
30 per cent of his salaries for the year. But in case a person failed to accomplish his target,
he was not entitled to any commission.

The quota in case of a new territory was fixed at 10,00,000 per annum and in subsequent
years it was raised by 10 per cent of the quota achieved.
Mr Kapur had joined the company in 1970 immediately after his graduation. After an
initial training period of three months, he was allotted the newly created territory of
South Delhi. During the period 1970-80, Kapur was consistently successful in achieving
the sales quota fixed for the year. In 1980, Mr Arora, a young man of 21, joined the
company and after 3 months of training in Faridabad, was given the new territory of
Faridabad. During the year 1981, Mr Arora, who was employed on an initial salary of
500/- per month, received a pay packet of 1,000/- which consisted of his salary
( 500/-) and a commission of 500/- (since he achieved a sales target of 200 per cent). Mr
Kapur's emoluments for the same year, however, worked out to 950/- only, since he was
just able to achieve the target fixed for the year.
Mr Kapur (on entering the room): Sir, I am sorry to say that it is no longer possible for me
to continue with this company any further.

Branch Manager: (interrupting him) Hold on, Kapur, calm down. Have a seat.
Mr Kapur: (sitting on the chair) Sir, how can you expect me to keep calm, if I find that after
10 years of my service in this company I am no better than a youngster, who has joined
only a year ago?
Branch Manager: Oh, you are referring to Mr Arora's performance this year.
Mr Kapur: Sir, don't tell me that his performance was better than mine. Anyway, I don't
care since I have decided to quit the company. I am sure if you were in my position you
would not have accepted a pay packet of 950 - against Arora's pay packet of 1,000/-
Branch Manager: I fully appreciate your viewpoint but I am helpless. You know the
fixation of quotas is done at the head office and I have no say whatsoever.

Mr Kapur: Sir, I am sure you will agree that the present system of quotas fixation is absurd.
Just look at me. When I joined the company I was given a target of 10,00,000 but today I
am supposed to achieve a target of 60,00,0000 from the same territory despite the growing
competition in the industry.
Contd...

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