Posibles diagnósticos y diagnóstico definitivo

In the sales/channels area, the firm can use either independent sales agents or company sales- people. An extensive study of industrial and consumer goods companies reported that 72 per- cent of global firms outside the United States employ independent sales representatives.1

Typically, companies use agents when they enter developing markets with low sales volume. This makes sense, because agents are often paid higher, incentive-oriented commission, but when sales are not forthcoming, agents receive no remuneration for their efforts.2_{Sales agents}

are also expected to possess a competent knowledge of the respective market’s supply/ demand situation and customer base. This means that global firms engage agents when:

■ Markets are geographically dispersed.

■ There are few customers in the marketplace.

■ The firm is inexperienced in global marketing.

C A S E V I G N E T T EAGENT OR SALESPERSON AT TRW

Jamie Cooper is a sales manager for TRW, and manages a sales force that sells electronic components to OEMs, or original equipment manufacturers. Several territories currently utilize sales agents to service customers, but sales growth raises the issue of converting to a company sales force. Ian Fujimora, the firm’s national sales manager, has asked Cooper to determine whether it is economically advantageous to change from sales agents to a company sales force within the territories. If the decision is to switch to a company sales force, Cooper must also determine the appropriate number of company sales personnel to hire for the territories.

■ The product is new and demand is uncertain.

■ The firm wants to simplify business activities.3

While agents are cost-effective, there may be problems ensuring company loyalty, espe- cially when the agent also represents local firms.

There are several options available should the sales manager determine that a company sales force is more advantageous. First, sales managers must determine who should be hired for the positions. As discussed in some detail in Chapter 6 global salespeople can be expa- triates, local or host-country nationals, or third-country nationals. A managerial summary of the advantages and disadvantages of each salesperson category is presented in Table 9.1. Firms often choose a company sales force when there is a need to control their activi- ties. This need translates into the company sales force exclusively selling the firm’s products and services. With a company sales force, sales managers can both direct and expect the company salesperson to work toward achieving the goals set by the firm’s management team. Agents, on the other hand, almost always represent a number of non-competing firms, which means that any one manufacturer can receive only a limited portion of the sales agent’s attention during customer sales calls. So, from a firm’s perspective, having a company sales force provides control and increased focus on finding and servicing customers. When a firm has large numbers of established customers located in close proximity, it is almost certain a company sales force will be maintained.

Firms engage sales agents to act on their behalf in markets that are not economically sufficient to hire and staff a company sales force. That is, company salespersons must receive a salary and benefits even if sales do not justify these expenses. Conversely, sales agents receive commission only after a sale is made. In global markets, sales agents are also hired because of their knowledge of the local marketplace and as a result of their established 1111 2 3 4 5 6 7 8 9 10 1 2 3 411 5 6 7 8 9 20111 1 2 3 4 5 6 7 8 9 30 1 2 3 4 5 6 7 8 9 40 1 2 3 4111

Table 9.1 Advantages and disadvantages of salesperson types

Category Advantages Disadvantages Expatriate Product knowledge Highest costs

High service levels High turnover Train for promotion High training costs Greater home control

Host-country Economical Needs product training High market knowledge Held in low esteem Language skills Language skills importance Cultural knowledge declining

Implement actions sooner Loyalty assurance Third-country Cultural sensitivity Identity problems Language skills Blocked promotions Economical Income gaps

Allows regional sales Needs product/company training coverage Loyalty assurance

contacts with decision makers or business leaders. Both of these reasons explain why global firms partner with local businesses to represent their product line in unfamiliar markets rather than establishing their own sales force.

Firms wonder whether they should hire their own sales force or contract with another organization to serve as their agent or representative in the marketplace. In the global marketplace there are no simple answers to this conundrum. In fact, a wide array of issues must be explored before making the decision.

Breakeven analysis

From an economic perspective, a sales manager can compute when it is advantageous to hire an agent over a company salesperson. To complete this computation, the sales manager must know the selling price, fixed costs, variable costs, and forecasted sales by the agents to determine the breakeven or switchover point. The process is described below by the formula:

Q* = Fixed costs

CM_sp– rCM_a

where: Q* = point of indifference where salesperson and agent costs are equal, Fixed costs = costs that are obligated whether the salesperson works or not, CMsp = contribution margin (sales price – variable expenses) of salesperson, CMa = contribution margin of sales agent,

r = percent of time an agent focuses on product line versus salesperson. If we assume that

monthly fixed costs for the territory are $2,000 and that the contribution margins for the sales- person and sales agent are $60 and $50 × 50 percent focus, respectively, Q* is 2,000/(60–0.5 × 50) = 57 units per month. Total forecasted sales for the territory are 100 units.

Once Q* is computed, the forecasted sales in units are compared to the point of indif- ference. Since the forecasted sales figure (100) is greater than computed Q* (57), the most economical sales party to service the territory is the company salesperson. If, on the other hand, forecasted sales are less than Q* (any number less than fifty-seven units), the sales manager should hire or continue to employ a sales agent. A practical example of computing the point of indifference is provided in Figure 9.1.