Page 66 - DMGT205_SALES_MANAGEMENT

Sales Management

Notes 7. ...................... division of line of authority is suitable when almost similar products are sold
in the market and are marketed to different types of customers.

5.3 Purpose

5.3.1 Defines Lines of Authority

A sound sales organisation defines people in the organisation in terms of authority, responsibility
and accountability and identifies flow of authority. It enables the sales person to identify whether
their authority is line, staff, or functional.

Line authority carries the power to require execution of orders by those lower in the
organisational hierarchy and make decisions on the need, place and time of action over a wide
range of matters.
Staff authority is the power to suggest to those holding line authority the method for
implementation of an order. They advise line executives about methods but have no formal
power to require or enforce the execution of their recommendations.
Functional authority enables specialists in particular areas such as in technical product service to
enforce their directives within a specific and limited field. They assist executives holding general
line authority.
All executives should understand the nature of their authority with respect to each aspect of the
operation, otherwise, friction develops. When, for instance, staff executives attempt to exercise
line authority, they are heading for trouble with the line executives whose authority is usurped.

5.3.2 Ensures that all Necessary Activities are Assigned and Performed

The process of organising presupposes the identification of all necessary activities which have
to be performed for the achievement of objectives. As organisation grows, tasks also multiply.
It must be ensured that all necessary activities are specifically assigned.

The sales executives are in close contact with the users in small companies but as the company
grows, the top executives get farther and farther removed from the customers. At this point of
time an individual should be assigned responsibility for maintaining such relationships.

5.3.3 Establishes Basis of Communication

Earlier because of simplicity of organisations, lines of communication were synonymous with
lines of authority. Today, business has become a very complex phenomenon due to information
overload. The flow of information is both horizontal and vertical. The organisation structure
identifies the sources of information, recipient of data and may also tell us who is responsible
for generation of information.

5.3.4 Provides for Coordination and Balance

Good organisation achieves coordination and balance. Individuals vary in competence, potential
and effectiveness. By coordination we achieve Synergistic effect (when the sum of a combination
effort exceeds the efforts of the same individuals working alone). Motivation also plays an
important part and is achieved by training programmes, indoctrination (teaching), group
meetings and two-way communications.

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