berger written analysis of case

8/18/2019 Berger Written Analysis of Case

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LAHORE SCHOOL OF ECONOMICS

SALES FORCE MANAGEMENT

Written Analysis of Case Study

Case Study: Berer !aints " Reainin t#e lost lory

$

Table of Contents

%& Introdu'tion:........................................................................................................3

(& )ualitati*e Fa'ts...................................................................................................4

+& )uantitati*e Fa'ts:................................................................................................5

,& !ro-le.s / Issues:................................................................................................7

0& Core !ro-le. / 1ustifi'ation:..................................................................................8

2& Solutions / Re'o..endations:................................................................................9

3& Con'lusion:.......................................................................................................10

A!!EN4I5 A:......................................................................................................... 11


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1. Introduction:

Company:Berer !aints&

T#e 'o.6any started o6erations in1950&

Type of company: !u-li' Li.ited 7as of %$3,8

Major Shareholders:Firstly t#e .a9ority of s#ares ere #eld fro. ,$&+;< -y !a=istani

in*estors and 0>&2(< -y 1enson / Ni'#olsan " !arent Co.6any

Major Shareholders: Later on in %$$%? Slotra6id Li.ited " an Enlis# 'o.6any

a'@uired t#e 'o.6anys t#rou# 0>&2(< s#ares&

Initial o6erations started fro. ara'#i " re6resentin t#at t#e .a9or infrastru'ture as

-ased and .onitored t#rou# ara'#i 7#i'# is #y t#e finan'ial 6erfor.an'e 'ould -e

lin=ed to t#e fire in'ident of ara'#is fa'ility8

T#e 'o.6any #ad a competitie adanta!e at t#at ti.e to -e t#e first 6aint 'o.6any in

t#e oranied se'tor in !aint Industry of !a=istan as ell as 6ro*ision of ide *ariety of

6rodu'ts& T#e industrial de*elo6.ent era 'reated de.and for 'o.6anys 6rodu'ts&

T#e 'o.6any offered a di*ersified 6rodu't .iD it# 6rodu'ts and t#eir a66li'ation

'ateories as follos:

4e'orati*e !aints7(>< s#are of t#e .ar=et8

General Industry Finis#es7Industrial !aint8

Auto.oti*e !aints 7Industrial !aint8

Road Mar=ins 7t#rou# 1oint enture it# a Malaysian Co.6any8

Go*ern.ent / Marine !ro9e'ts

Resin C#e.i'al

!oder Coatins7Industrial !aint8 !rintin In=s

Ad#esi*es

Constru'tion C#e.i'als

!rote'ti*e Coatins7Industrial !aint8

e#i'le Refinis#es

T#e eDternal en*iron.ent of t#e 'o.6any re*ealed t#e folloin 'o.6etitors:

ICI 7National Le*el8 " +>< s#are of t#e .ar=et

ansai 7National Le*el8 " ;< s#are of t#e .ar=et

Ni66on 7National Le*el8"0< s#are of t#e .ar=et

1uton 7National Le*el8 4ia.ond 7Reional Le*el8

Bri#to 7Reional Le*el8

Master 7Reional Le*el8

Ha66ila' 74istri't Le*el8

Nelson 74istri't Le*el8

Go-is 74istri't Le*el8

Bla'= Horse et'& 74istri't Le*el8

Co.6anies ot#er t#an ICI? ansai and Ni66on #ad a 'olle'ti*e +0< .ar=et s#are&

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". #ualitatie $acts

T#e Manain 4ire'tor of Berer !aints as Ma#.ood A#.ed e*aluatin t#e finan'ial

6erfor.an'e of t#e 'o.6any " an i..ediate 'onse@uen'e of destru'tion of fa'ility in

ara'#i it# *ery lon 'y'led loss i.6a't&

T#e .anae.ent s#ifted o6erations in La#ore? and .ade finan'ial arrane.ents fro.insuran'e 'lai.s 7Rs& ; -illion8 and -an= -orroins&

T#e .anufa'turin unit of La#ore as , ti.es -ier t#an t#at of ara'#i&

T#e 'o.6any also a'@uired (>< s#ares of BuDly !aints Li.ited #i'# as a lo'al

'o.6any o6eratin sin'e %$,;& T#e aree.ent as t#at Berer ill 6rodu'e and sell

BuDly de'orati*e 6aints under fran'#isin ter.s& T#e stratey as ai.ed to 'o.6ete it#

'o.6anies li=e ICI #i'# #ad an esta-lis#ed .ar=et s#are already&

T#e 'o.6any retained sele'ti*e distri-utors and used dire't sellin -y settin u6 dis6lay

'enters in La#ore&

T#e 'o.6any used a 'o..ission -ased 'o.6ensation 6lan for its sales for'e salaries&

T#e sales reions ere di*ided as follos: SOTH: Sind# / Balu'#istan

CENTRAL: La#ore? Gu9ranala? Faisala-ad / Multan

NORTH: Isla.a-ad? 1#elu.? Nort#ern Areas / Af#anistan 7First !aints Co8

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%. #uantitatie $acts:

T#e 'o.6any fa'ed #ue losses eD'e6t in (>>$ #i'# 'an -e attri-uted to insuran'e 'lai.

'as# inflos&Gra6#i'ally re6resented -elo:

2008 2009 2010 2011 2012 2013

-140000

-120000

-100000

-80000

-60000

-40000

-20000

0

20000

40000

60000

After Tax Prot

After Tax Prot

2008 2009 2010 2011 2012 2013

-50

-40

-30

-20

-10

0

10

Earning per Share

Earning per Share

T#is neati*e relation as also lin=ed it# #i# ad.inistration 'osts&

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T#e .ost re'ent analysis of @uarterly ratios re*ealed t#e folloin trends:

Q1 Q2 Q3 Q4

-2

-1.5

-1

-0.5

0

0.5

ROE

!E

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Q1 Q2 Q3 Q4

-0.35

-0.3

-0.25

-0.2

-0.15

-0.1

-0.05

0

0.05

0.1

ROA

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T#e .a9or sales re*enue 'a.e fro. t#e de'orati*e 6aints 'ateory i&e& 30< of total re*enue& Ot#er

.a9or sour'e of sales re*enue as fro. t#e Allied !aints 7i.6orted -y a'tin as sole su66lier of

Allied 6aints in !a=istan8 " 6ro*idin 6aint to 6u-li' se'tor of t#e 'ountry in'ludin Ar.y&

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&. 'roblems ( Issues:

T#e6rodu'tion fa'ility of t#e 'o.6any lo'ated in ara'#i as destroyed in a fire a''ident

in (>>;&4ue to fire a''ident? t#e 'o.6any as not a-le to 6rodu'e li=e -efore? fulfill

de.and and t#erefore t#e ained .ar=et s#are as lost&

Alon it# t#e losses fro. ara'#i unit? t#e 'o.6any as also alleed it# serious

'#ares aainst ot#er da.aes and #u.an losses&

In t#e .ean#ile? ara'#i as ell as ot#er areas and 6ro*in'es ere also a *i'ti. of

se*ere 6oliti'al unrest and terroris. #i'# 'ould -e dire'tly lin=ed de'line in

'onstru'tion a'ti*ity and e*entually de'line in 6rodu't de.and&

T#ere as 'o.6etition fro. t#e unoranied se'tor #i'# as not reulate 6ro6erly -y

t#e o*ern.ent? t#erefore 'reatin #urdles for -usinesses t#at ere 'onfor.in to t#e

o*ern.ents reulations es6e'ially t#rou# 6ay.ent of #ea*y taDes le*ied u6on

.e.-ers of oranied se'tor -e'ause t#e unoranied se'tor did not 6ay taDesa''ordinly&

T#e rot# of oranied se'tor as -ein stalled -y unoranied se'tor&

T#e de.and for 'o.6anys 6rodu'ts as al.ost 6ro6ortional to t#e National G4!

Grot# 6er'entaes -ut it as una-le in .eetin t#e 6u-li' se'tors de.ands&

T#e 'o.6any did not use a-o*e t#e line ad*ertisin& It used -elo t#e line ad*ertisin

7'onsists of instore 6ro.otions and sellin ter.s it# fran'#ises in*ol*ed8

NOTE: The above the line advertising consists of advertising targeted at mass level. I.e. the

use of radio, television, billboards, magazines and newspapers etc.

T#e first e*er tele*ision 'o..er'ial as laun'#ed *ery late in (>%,&

4ue to t#e fire in'ident of (>>;? a 6u-li' se'tor 6ro9e't is also under 'onstru'tion& It as

for t#e !E!COs Nandi !urr 6oer 6ro9e't&

Anot#er 6ro-le. as de'reasin sales trend fro. (>%% to (>%+ in'ludin sinifi'ant

de'line in (>%( of Industrial !aints 7/ Auto.oti*e !aints8 and Allied !aints&

T#e .ar=et s#are in s.all 'ities as also -ein ta=en don -y ne entrants #a*in

#i#er distri-ution in t#ese areas&

4ealers started enain in -a'=ard interation -y -uildin t#eir on lo @uality 7/

6ri'e8 -rands in t#e unorganized market.

HR de6art.ent as also not .u'# de*elo6ed / for.alied& T#e 'o..on re'ruit.entas done fro. referrals of senior .anaers&

E.6loyee turno*er as #i# 7es6e'ially it#infinan'e de6art.ents audit unit -e'ause

t#e internal audit #ead stayed on a*erae only 2 .ont#s8e*entually in'reasin re'ruit.ent

and trainin 'osts 7anot#er 'ontri-utor of lo 6rofits8&

T#ere as no -onus allo'ation syste. in 'o.6ensation 6lan and 6ro.otion 7'areer

ad*an'e.ent8 o66ortunities ere also lo and usually 6ro.otions resulted after ( years&

4e'rease of in*estors 'onfiden'e in t#e 'o.6any and enery 'rises lead to lo sales&

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*. Solutions ( +ecommendations:

T#e re'o..ended solution for rot# in sales isas follos:

1. Refine the safety of production units making it a safe workplace:

T#e first t#in t#e 'o.6any needs to do is first of all eradi'ate any future 6ro-a-le reasons

t#at ould 'reate an in'ident of su'# a le*el li=e t#at #i'# #a66ened in (>>;& Stri't

or=6la'e refine.ents and safety standards s#ould -e i.6le.ented and as=ed -y or=for'e

in t#e 6rodu'tion unit to follo and 'o..uni'ate t#orou#ly&

2. Focus on above the line advertising:

T#e 'o.6any s#ould find t#e ri#t .ar=et se.ent and taret t#e se.ent usin a66ro6riate

a-o*e t#e line ad*ertisin tools li=e lo'al nes6a6ers and .aaines at least 7if tele*ision and

outdoor .ar=etin is eD6ensi*e8 in order to .a=e 'onsu.ers aare of t#e 6rodu't and its

features&

3. Seek governments assistance with other players to regulate the unorgani!ed sector "

ta# collection:

T#e .e.-ers of t#e oranied se'tor s#ould for. an influential rou6 and raise *oi'e and

.edia 'a.6ains in order to re@uest t#e o*ern.ent to reulate t#e unoranied se'tor it#

6ro6er -usiness o6eration 'onfor.an'es and taD 'olle'tion so t#at t#e industry doesnt et

-iased and a fair .ar=et 'o.6etition 'ould -e esta-lis#ed&

$. %#pand distribution to smaller cities and redefine distribution system:

T#e 'o.6any s#ould also in'rease t#e 6rodu't a*aila-ility in s.aller areas #ere #i# sales

#a*e already -een re6orted -y ot#er .ar=et 6layers so t#at anot#er in'o.e eneration sour'e

s#ould -e identified and utilied -y t#e 'o.6any&

&. Revise organi!ational structure" human resource planning policies:

T#e oraniational stru'ture s#ould -e re*ised& T#e 6ro.inent lin= -eteen t#e -oards of

dire'tors #ead of audit s#ould -e re.o*ed so t#at all a'ti*ities 'o.e under sinle fun'tional

de6art.ents #old i&e& t#at of CFO& Moreo*er t#e 'o.6any s#ould esta-lis# a dedi'ated

.ar=etin de6art.ent in order to e.6#asie and ada6t .a9or .ar=etin a'ti*ities&

Finally t#e roles of #ead distri-ution as ell as #u.an resour'e 6lannin s#ould -e 'losely

.onitored so t#at a for.al and .ore 6roa'ti*e fun'tional tea. 'ould -e esta-lis#ed ena-lin

syste.ati' inflo of s=illed la-or and .anaers and allo a s.oot# and idely s6read

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6rodu't outflo t#rou# t#e distri-ution syste.& T#e 'o.6any s#ould also in'rease

ad*an'e.ent o66ortunities and -rin in -onuses in order to .oti*ate sales for'e&

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,. Conclusion:

T#e o*erall 'on'lusion fro. t#e o-ser*ation of t#is 'ase study re*eals? t#at for 'o.6anies

dealin it# 6rodu'tion of #i#ly fla..a-le 6rodu'ts? t#ere s#ould eDist a *ery safe and fool 6roof syste. in 'ase any su'# in'ident #a66ens aain& T#e standard o6eratin 6ro'edures as

ell as 'ontinent aids s#ould -e s6e'ialied in order .ini.ie su'# #u.an as ell as

.onetary loss in t#e future& Moreo*er? 'o.6anies 'annot su''eed it#out 6ursuin #i#ly

alined .ar=etin strateies it# ot#er fun'tional de6art.ents li=e t#e finan'e 7internal

audits8 and #u.an resour'e 6lanners& T#e 'o.6any s#ould use -alan'ed a-o*e t#e line

6ro.otion and try to find out t#e .edia tools t#at ould #el6 to lo'ate and 'ater needs of t#e

ri#t se.ent and -oost u6 sales re*enues e*entually& Moreo*er? t#e 'o.6any s#ould -roaden

its distri-ution in s.aller areas also as t#ey also 'ontri-ute a .a9or .ar=et s#are& Finally?

#en forein 'o.6anies in*est in t#e 'ountry? t#e for. a sour'e of .onetary a'ti*ity andflo it#in t#e G4! so #ene*er t#ey dis'o*er t#at t#ere is so.e fla it#in t#e rele*ant

industry? t#ey s#ould raise *oi'e and re@uest t#e o*ern.ent to 6ro*ide #el6 in su'#

situations&

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!ro6osed Oraniational Stru'ture:

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berger written analysis of case

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