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Supersonic Stereo Company’s Situation Analysis Essay

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Updated: Jun 26th, 2020

Introduction

Supersonic stereo is one of the leading manufacturers of stereo equipment in the country, formed in 1962. The company produces various stereo products namely receivers, turntables, and speakers. The company distributes its products through selective basis. In addition, the company has experienced growth in the past but in last five years, its sales have stagnated and profits declined. Therefore, sales management is important to attain maximum sales and utilize the available resources. Indeed, proper sales force management allows sales managers to identify strengths and weaknesses, maximize sales, optimize selling expenses and identify profitable products and areas (Trehan & Trehan 444). This paper explores the situation in Supersonic stereo Inc. in Atlantic and investigates how the sales manager should handle.

Problem statement

The company’s sales have stagnated for the past five years and at the same time, the profits have shrunk. An additional problem is that some sale representatives are seeking higher pay, while the executives of the company are in the opinion that they should cut back the salaries or commission paid to its sales reps. If these problems persist, they are likely to affect the production and the profitability of the company as a whole. Moreover, the company’s dealers are engaging in discounting hence reducing the profit margin.

Situation Analysis (SWOT)

The current situation is a result of combined factors that are affecting the marketability of the products of the company. A close review of the internal and external factors surrounding the business illustrates the place where the shortcomings are arising. Primarily, the external business environment is experiencing radical changes namely: technological, globalization, business crises, more competitive climate, and more demanding and sophisticated customers (Carter 4).

The greatest strength of the company is that, it is a leading manufacturer of stereo equipment. The company has existed since 1962 hence it has established itself in the market. In addition, the company’s products have enjoyed good reputation over the years of existence of producing high quality stereo equipment. This is coupled by a qualified expertise that is involved in producing quality products for the market.

The company also has production strategies that facilitate incorporation of new technology advancement in the production of equipment, as well as human resources that have the capabilities of innovation; hence, they can meet the current needs of the market. Moreover, the company has capital resources that help to compete with other companies, for instance, the amount spent in marketing is far beyond what the rest of the companies are spending.

The weaknesses of the company are in the manner it has been marketing its products. The company is spending a lot of money in national advertising campaigns. Five percent of the total sales go to advertising, which has not been translating to increase in sales. Therefore, the marketing strategies need to be reviewed. Another weakness is that the policies of after sale service are not at the level of competitors. Moreover, the company in Atlanta has over-relied on some dealers and sales persons; hence, it does not have diversity in distribution of its products.

The company has opportunity to diversify its products through innovation hence attain a competitive edge. The threats that are facing the company include high competition from other companies producing similar products; for instance, the market has been flooded with stereo equipment from Asia. These products from Asia come at a cheaper price compared to our products, hence the tendency of customers to go for the cheap products. Technological advancement is threatening the company in several ways. The cost of upgrading to new technological standards is high and the rate at which technology is changing is also high. Moreover, rapid innovation has contributed to lack of market to some of our equipment. The government policy of increasing taxes of stereo products is hurting the company.

Goals, Objectives and Criteria

The objective of the company is to increase its sales hence its profitability. In addition, the company has interest in retaining its productive and reliable sales representative.

Alternatives

The company can use one of these methods to solve the problems affecting it; however, each of the method has its advantages and disadvantages.

The company needs to automate its sales force. The sales representatives and the dealers should be trained on how to automate their sales (Carter 23). For sale force effectiveness, there is need for competitive sales information and technology. Primarily, technology can be useful in informing the company about the current trends and collect feedback from customers.

In addition, introduction of technology will bring down the cost of operation, the cost of sales calls and travel allowances, which the company meets. It is estimated that the use of sale force technology saves time for sales reps; this time can be used to develop or seek more customers. One limitation of this method is the fact that, the cost of implanting the program is considerably high. In addition, the period for implementation is long but the company needs urgent turnaround. Moreover, the technology needs constant maintenance for it to be effective in the end.

Alternatively, the company can introduce management by objective mode in its policies. Primarily, management by objective (MBO) is management based on set objectives by all parties in a company including the subordinate (Anon 42). The collective involvement in setting of goals results to commitment from every stakeholder. In this case, each sales rep will be given a sales target that will qualify them to earn commission; therefore, MBO will help to evaluate the performance of all sales persons. However, limitation of this approach is that it is result-oriented approach and it may not give clear guidelines of obtaining the goals; the sales force might not accept and own the plans (Johnston and Marshall 2006).

Choice among alternatives

The best approach for the company is to use management by objective, as it will aid the company to meet its objectives of increasing sales. Involving the sales representatives in setting of goals will ensure that they get committed to the targets. Moreover, this model requires minimal resources hence suitable for current situation.

Contingencies

The sales manager will constantly monitor the performance of his sales representatives, a task that could cause additional cost in the operation. By incorporating technology system, the company can lower the costs involved. Generally, MBO emphasizes short-term goals and it is inflexible (Anubvlan 57). However, this limitation can be countered by integrating long-term objectives that can be achieved through the short-term goals of MBO.

MBO is result-oriented and not work-oriented which exerts much pressure to sales representatives. Therefore, training of staff is essential in helping the staff to understand the expectations and other marketing strategies. To avoid over-reliance on sales representatives, the company can introduce direct sales, which can be done through technology i.e. online store – here, the company will not require resource to set up a physical shop and employ attendants. It is assumed that all parties will cooperate for MBO to be effective. If people fail to cooperate, the plan does not success.

Works cited

Anon. Principles of management. New Delhi: FK Publications, 2009. Web.

Anubvlan, K. . New Delhi: Firewall Media, 2007. Web.

Carter, Tony. Contemporary sales force management. NY: Routledge, 1997.

Johnston, Mark and Marshall, Greg. Sales Force Management. 10th Edition. NY: McGraw-Hill Irwin, 2006.

Trehan, Mukesh & Trehan, Ranju. Advertising and Sales management. New Delhi: FK Publications, 2009.

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