World Wide Equipment (China) Ltd: A Sales Performance Dilemma

Sales and Distribution Management

Submitted toProf. Jeevan Arakal

Submitted By:Ashutosh Narayan - U313007Indrajeet Kumar- U313021B Mahan Hansaraj - U313023Rahul Ranjan Sinha- U313040Saurav Anand- U313045Sumit Kumar- U313053

Q.2.What are some of the long term issues confronting Mr. Frank Wang? Lowest sales revenues- Beijing office was having the minimum sales revenue among the three offices in Asia-Pacific. His prime concern was boosting the sales figures. Sales lead generation and low negotiation power: Sales lead comes from networking and WWE is lacking behind and are also lacking in bid documents and quotes. They also lost two much important bidding (one of them was Handan project) just because of improper negotiation. Weimen termination- Weimen has only been able to gather 17 leads in the past six months and none of them has converted to contracts. Because of him the morale of other sales force is also going down. Performance measurement and evaluation of sales- Employees are not satisfied with the current performance appraisal and evaluation system. The relative indexing system is creating confusion among the sales team. The Beijing team is working with better prices and low expenditure but they are not enjoying the benefit as the bonus system is done by relative indexing.1. Recruiting and training- Recruitment in this organization is carried out in a conventional manner which is not sustainable as the final interview is taken by Wang who has the sole authority to take the decision. Also, there is no proper training for the newly recruited employees to properly introduce them into the system. It has to be taken care that the type of recruitment which took place for Weimen should not be repeated next time.1. Compensation The sales engineer was paid a straight salary and bonus but the criteria for position advancement in order of advancement depends on seniority, sales performance, sales lead and team spirit where there is no absolute tool to measure the team spirit. Also the amount of bonuses varies significantly among the offices and individuals.1. Changing market scenario- The job market is changing at a rapid rate. Moreover, the reform in the government system is making the situation worse. Moral issues- The morale of the sales team is not positive which is creating problem for sales force management. The failure of two projects coupled with the fairness of hiring Weimen is the resentful topic of daily discussion which will definitely create impact on the sales performance. The point which the sales team of Beijing is putting is that why should they work hard and bear the non performer only to get business from Guangzhou. So to build synergy in the system he needs to provide stimulus to boost the performance. Centralised nature of decision making-The decision to select Weimen was although taken by him but it was done with the pressure from Yu. Wang is not able to fire him because he is in a dilemma that this can breach his relationship with Yu. Developing cohesiveness among sales team- There is a need to develop understanding among the sales team to meet the target.

Q.3.What are the new competencies the sales force must develop given the changed market conditions? What are the key actions that need to be taken for the same?

The sales force of WWE China included a team of Sales Engineers and Senior Sales Engineers, headed by a Regional Sales Manager. Their major tasks were to generate sales lead, preparing sales and technical documents, making sales presentations and determining customers technical and commercial needs. However, in the recent changing market situation some of the senior sales engineers were also required to make quotations in some cases, under the guidance of the RSMs. This responsibility was becoming more & more crucial due to the need for getting tenders and contracts.With the changing market conditions, the need for tendering projects increased which in turn complicated the process of making bidding documents and quotations. The emergence of textile industry due to the Chinese govt. incentives led to more focus on public bidding process. Since the industry was price sensitive as well as crucial for WWE operations, lower prices were quoted with bargaining power of sales engineers and RSMs. The current scenario needed the sales engineers to be thorough with the terms and conditions of the contract so that they can integrate all this well with the services offered and bring benefit to the company in terms of protection from the commercial as well as the legal front. Proper training on tendering projects and rapport building was the need of the hour.The sales force at Beijing office had virtually no experience of making highly professional bidding documents and had no idea on how to decide on the prices to be quoted for a deal. They did not have any professional for the same nor did they have any guidance. Eventually they had to rely on their gut feeling to make these crucial decisions.For example, in the instance of hiring Li Weimin, despite his not fitting the role very well due to his introvert nature, he was hired because of pressure from Edward Yu (CMM) due to strong connections of Weimin with Jinchuan Fiber Co. This ultimately led to poor sales performance of the Beijing division in the long run. As is mentioned in the case, WWE faced terrible loss in the Handan project because of poor reliability of Weimin & his connections.Thus, there is a dire need of imparting professional training to the senior sales engineers and sales engineers at Beijing office which will make them adept in various skills to satisfy the market needs. They need to be given training in the following fields: Better presentation skills, Preparing complex bidding documents, Making quotations Information about commercial and legal technicalities & Building customer relationship.Beijing office needs to take the following decisions keeping in view the changed market conditions: Need to do the capacity building of sales engineers towards the new job responsibility of market analysis so that accordingly they can improve their quotation making skills. They also need to take the help of professional consultant to help them in drafting professional biding document Introduce the decision making capabilities as one of the important criterion for the selection of sales engineers. Roles and responsibility should be clearly defined and communicated as in the changed market scenario there can be ambiguity in it. The existing indexed dual performance incentive system does not take into account the geographical and market conditions diversities existing across different territories. Hence, a new system is to be designed to take care of these issues. While rewarding they should look for quality Vs quantity and results Vs behaviour trait for better result. Long term goal of team building should be envisaged with right methods so that it will lead to long and continuous growth. No compromise on the value system of the company for connections of any official.

Q.4.Is the sales management system of World Wide Equipment China effective, what are the changes that may be necessary given some fundamental changes in market conditions?Please map changes in market conditions with changes in sales force management?The sales management system of World Wide Equipment China is not much efficient and hence not fully effective. With the change in market scenario they need to undergo an overhaul in the process and make the team efficient and competitive.Issue and changes required with the current sales management system:

1. Recruitment Criteria: The recruiting criteria should include relevant work experience in the targeted industries of World Wide. For example the textile industry which is one of the growing sector being a huge potential market for Worldwide, it can recruit sales engineers having relevant experience in textiles.2. Tender and Bidding Training: The traditional purchasing by Industrial houses is getting replaced by Bidding. So there is a need to provide training in tendering projects and customer rapport building to meet the increasing competition in china. Example- the regional and senior sales manager getting influenced in bidding price quoted by novice Weimin in Handan project.3. Abolition of Relative Index, as the relative index criteria leads to cross conflicts among the branch offices and could act as a threat to mutual support in generating sales leads4. Incentive to motivate: The compensation package should include bonus for training and development of employees by regional manager. Of course it would have difficult to measure the improvement of the employees but without the incentive the regional sales manager would not be motivated to give special training to the employees which is very evident in case of Wang in his reluctance to give special training to Weimin. In caseoff Handan Project,morale has been decreased and employees are not interested to work harder so the performance measurement should be changed to motivate them.5. Training for Market Penetration: There should be a system in place for providing training to sales staff on new sectors which the company is trying to penetrate like textiles. After training there should be a mechanism to measure the sales staff performance.6. Separate HR department: In order to have better management of the Human resources World Wide should have separate HR department which will take care of recruitment, performance appraisal , promotion , lay off issues or they should give training on HR issue to its upper management team at various sales offices as Wang himself admitted having zero knowledge about firing of people.7. To tap the potential of cash crunch textile industry, product can be offered on instalment basis with minimal interest rate.

Change in market conditionChange in sales force management

1. Prior to 1965 market was relying upon the import to supply chillers. During economic boom international chiller companies entered china market and in1996 chinese private enterprise and Joint ventures of chinese local company and foreign entered the market increasing the competition in terms of price reduction. Worldwide equipment positioned itself in high end premium price but having low operational cost. The training of sales force for better negotiation and bidding skills. Training on basic etiquettes of business like dressing sense and presentations.

2. The textile market is the market having favourable tax and foreign policy booming continuously. For these types of industry the good quality chillers are most important for optimum production. So hiring of sales personnel with quite good amount of knowledge in textile industry is an initiative which should be taken up seriously. Training of existing employees about basics of textile industry.

3. Chillers market being price sensitive textile manufacturer are keen to spend more on production related equipment rather than peripheral equipments like chillers. The sales person should communicate the low operating cost of worldwide chillers due to energy savings design and low maintenance cost. Even if the old sales person are not textile background training can be given in order to convince the buyer about the value of good quality chillers in maintaining quality of textile.

4. Change in purchase process of market that is bidding or tender process. Special training to sales force about details of bidding and pricing process.

5. In market the cycle time of the lead to convert into a real contract is increasing. From three and half month from 5 years ago to 6 month now. Training on negotiation skill, time management and compensation for conversion of lead to the real contract.