Page 70 - DMGT205_SALES_MANAGEMENT

Sales Management

Notes 5.5 Centralisation vs Decentralization in Sales Organisation

In centralised system, recruitment, training, compensation and evaluation are all managed
from the central head quarter while in decentralised system the field sales managers take up
most of these functions. It also depends on size of operation, cost effectiveness and competitive
necessities. When firms are small and have only a few sales people, corporate office may be
more efficient and effective. When size of operation increases, branch offices gradually emerge.
Decentralisation in this case provides more freedom to sales manager to allow him to display
greater initiative and managerial skills.
Most medium and large size firms combine the advantages of both centralised and decentralised
operations. Decentralised sales offices are utilised to ensure better customer service while training
and recruitment may be centralised.

With growth, advantages of decentralised sales force management increasingly outweigh the
higher costs. Among these advantages are:
1. The sales volume increases to cover the fixed costs.

2. There is intensive cultivation of the market.
3. Due to effective control of sales personnel there is a comparatively better provision for
improvement of customer services.

4. Travelling expenses and allowances given get reduced considerably.
5. A well managed channel structure offers a good training ground as the shortcomings are
well known to the executives.

6. The motivation and morale of the sales force increases.
7. It provides effective control, improves supervision and increases sales productivity.
Managerial philosophy towards delegation and control also affects the extent of centralisation
and decentralisation. Increased use of computers has also influenced this philosophy. It has led
to more centralised decision making as data can be processed much faster.



Caselet Arthur Andersen Finally Dies at 89

A public companies.
fter 89 years in business, Arthur Andersen LLP has ended its role as auditor of

The Chicago-based company was convicted in June of obstruction of justice for shredding
and doctoring documents related to Enron audits. Afterward, Andersen told the Securities
and Exchange Commission that it would cease auditing public companies. It already had
given up its license to practice in several states.
"As of this day, Arthur Andersen LLP has voluntarily relinquished, or consented to
revocation of its firm's permits in all states where it was licensed to practice public
accountancy with state regulators," the company announced in a statement.

The company now has fewer than 3,000 of the roughly 28,000 employees it had before the
Enron scandal. Of its more than 1,200 public-company audit clients, none will remain.
The firm's startling decline has come in less than nine months.
Contd...

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