Summer 2012

Master of Business Administration - MBA Semester 3

Mk0010 Sales, Distribution and Supply Chain Management- 4 Credits
Book ID: B1220
Assignment Set- 1 (60 Marks)
Note: Each question carries 10 Marks. Answer all the questions.
Q.1 Explain any two types of sales organisation structures.
Answer : Different types of Sales Organization
1) Organizing the Sales Force
:An effective sales force is a powerful asset for any company. Doctors &
physicians in United States have consistently ranked Pfizers sales force as one
of the best in the pharmaceutical industry. As a result, when Parke-Davis
launched its blockbuster cholesterol-lowering drug, Lipitor, it entered into an
alliance in which Pfizers sales force helped selling the drug to physicians
throughout the United States. A companys management process is
fundamentally affected by the firms overall business strategy and its strategy
for accessing its target markets. The relationship between business strategies, a
firms marketing strategy, and a firms strategic sales force program is
discussed in this unit. Sales force organization is primarily a function of properly
sizing the sales organization to assure that customers and prospects receive
appropriate coverage, company products get proper representation, and the
sales force is stretched but not overworked. The appropriate planning of the
sales force will also depend on the size of the opportunity a firm faces and its
expected sales level.
2)Roles & Structure of the Sales Force:
To be successful and produce profitable results, the sales force must implement
a firms business strategy and market access strategy. In other words, strategic
plans are implemented through the activities and behaviours of the sales force.
Key sales force behaviours include calling on certain types of customers and
prospects, managing customer relationships and creating value for individual
customers. The role of the sales force in implementing a firms market access
strategy is very important. To meet customer needs efficiently and effectively
and to sell the firms products and services, a sales force must be well
organized. Sales force structure decisions influence how customers seethe firm
because sales force structure will affect the selling skills and knowledge level
required of salespeople. In turn, sales management activities such as
compensation, recruitment, training, and evaluation are affected.
3) Building Sales Competencies:
Sales managers are responsible for hiring salespeople with the appropriate skills
and backgrounds to implement the sales strategy. Good sources must be found
for new hires, and those who are weak in these areas must be carefully
screened out. In addition to hiring qualified people, salespeoples competencies
are usually developed through training before they are sent into the field. Sales
managers are responsible for making sure that training is completed, and they
often conduct some of the classes. Most initial training programs are designed
to familiarize salespeople with the companys products, services, and operating

procedures, with some time devoted to development of selling skills. Because

sales training is expensive, the sales manager is responsible for selecting the
most cost-effective methods, location, and materials.1
4)Leading the Sales Force:
Effective sales managers know how to supervise and lead their salespeople.
Sales managers provide leadership by inspiring people to grow and develop
professionally, while achieving the revenue goals of the firm. Good leaders
provide models of behaviour for employees to emulate, often developing strong
mutual trust and rapport with subordinates. Leadership styles vary, but effective
leaders are adept at initiating structure that is, organizing and motivating
employees, setting goals, enforcing rules, and defining expectations. In addition
to leading the sales force in business results, sales managers are also expected
to lead by example in encouraging ethicalbehavior within the sales force.
Salespeople are continually confronted with ethical dilemmas. Sales managers
use a variety of tools in their efforts to motivate salespeople to work more
efficiently and effectively.1
5)Goal directed effort:
There are many techniques that have proved to be effective motivators,
including sales meetings, quotas, sales contests, and recognition awards. The
most powerful motivator for salespeople is often a well-designed compensation
package. Money is an important consideration for attracting and motivating
people to work hard. A key task for sales managers is to devise an effective mix
of salary, bonuses, commissions, expenses, and benefits without putting the
firms profitability in jeopardy.
6) Evaluate the performance of the sales force:
The final step in the sales management process is to evaluate the performance
of the sales force and develop the skills of their people. This involves analyzing
sales data by account, territory, and product line breakdowns. It also means
reviewing selling costs and measuring the impact of sales force activities on
profits.

Q.2 Explain different sales strategies.

Q.3 What do you mean by compensation? Explain various modes of

compensating sales team.
Q.4 What are the challenges faced by International sales managers?

Q.5 What do you mean by relationship marketing & also explain three
types of consumer.
Q.6 Assume yourself to be the sales manager of a car showroom. How
will you ensure that the selection procedure is smooth and you select
right candidates for the job?

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Master of Business Administration - MBA Semester 3

Mk0010 Sales, Distribution and Supply Chain Management- 4 Credits
Book ID: B1220
Assignment Set- 2 (60 Marks)
Note: Each question carries 10 Marks. Answer all the questions.
Q.1 What do you mean by physical distribution management? Describe
various components of it.
Answer : This has been defined as the study and evaluation of the relative
profitability or costs of different marketing operations in terms of customers
marketing units, commodities, territories or services.
As you read earlier in the lesson physical distribution cost in the third largest
component in the total cost of business operations. Hence there is good scope
for cost reduction in this area as it has not received the attention due to it till
recent years.
One feature of distribution costs distinguishing them from other functional costs
is that they have to be looked upon as a unit. Indiscriminate cost reduction in
any one of the individual cost elements, such as inventory maintenance,
warehousing, transportation or clerical services, can have a disastrous effect on
the efficiency of the system as a whole e.g., if we cut inventories it will save
capital investment and the costs of supplying capital and it may save some
expenses in storage, taxes and insurance. On the other hand a cut in inventory
levels may seriously affect reliability of the delivery service to customers. As Mr.
John F Magee puts it, it saves money but destroys competitive position.
Similarly a cut in transportation costs will result in lack of flexibility and
responsiveness to market changes more inventories at more stock points will
need more investment and will increase the risk of obsolescence.
Again refusal to allow any cost increase may be equal damaging. It may mean
wiping out an opportunity for improving the efficiency of the distribution system
as a whole. The use of high speed data processing and communications may
increase the cost of distribution. But they will cut down the delays in feeding
information back to production and control the lags in the movement of
materials into the distribution system in response to customer demand. Thus
they may actually cut total distribution costs.
Distribution Costs
The following is meant to be a tentative list of various costs of distribution. They
are not exhaustive.
1. Costs of transportation by common carrier, contract carrier or firms own
transport equipment.
2. Warehousing costs in public or private facilities
3. Order handling costs
4. Packing costs
5. Inventory costs of
a) Insurance
b) Taxes
c) Handling
d) Obsolescence
e) Capital invested

Ever since marketing managers began to express concern for the distribution
function the total cost approach borrowed from logistics and operations
research, many firms have achieved tremendous improvement in their
performance and profitability.
Even before we can analyze the distribution costs by evolving proper criteria we
face a major difficulty. Many concerns do not collect these costs under the
separate heading of distribution costs. In actual practice these costs are lost in
unlikely cost centres or manipulated to satisfy departmental or individual
requirement. In other worth managements, as a matter of policy may not
identify distribution costs. In a recent investigation into distribution cost in the
U.K. the finding was that most firms contracted were unable to produce a
composite breakdown of their distribution costs. In the final analysis the
identified distribution costs varied from 3% to 42% of sales.
In some industries especially perishable goods and fashion goods industries
distribution costs are critical and may represent the major trading cost.
Major Stumbling blocks is distribution cost analysis
1. Problems is the attempt to break down total distribution costs into specific
components of cost.
2. Difficulties in apportioning these costs to different cost centres of cost units.
The common bases adopted are product groups, market segments, geographic
location, etc or a combination of these.
3. Problems in the measurement of actual cost associated with a particular
distribution activity and in the estimation of future cost in the light of a
distribution changing environment.
It is generally agreed that the functions of production or manufacturing have
been terminated when a product has been placed in a saleable state and that
the distribution function has begun.
Distribution costs can broadly classified and accounted for it terms of sales
departments, territories, salesmen, lines of products, sales and production
orders and customers, or a combination of these.
To provide adequate detail the accounting system provides the
following records
1. Controlling accounts in the general Ledger to reflect the total cost of sales
division and administrative division.
2. A subsidiary ledger supporting each of the divisional controlling accounts or
recording the objects of selling and administrative expenses such as salaries,
supplies, taxes, insurance, deprecation etc.
3. Proper procedure for allocating the items of distribution costs among
territories products salesman or other desired breakdowns.
4. Budgets and standards for distribution costs.
The Objectives of the accounting system described above are as
follows
1. Classification and accounting for distribution costs by channels of distribution,
departments, territories, salesman, orders, lines of products and customers
comparative statements being submitted to management periodically.
2. Preparation and user of standards for distribution functions to control costs by
delegating responsibility, establishing measures of efficiency providing

incentives to personnel and supplying predetermined costs as an aid in budget

preparation and formulation of pricing policies.
3. Analysis of distribution costs as a guide to management in making current
business decisions and setting future policies.

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Q.2 What are the various types of distribution channels?

Q.3 Describe the various types of retailers.

Q.4 What are logistical operations? What are the major components of
logistical operations?

Q.5 Explain vertical, horizontal and Multi-channel marketing system in

detail.

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Q.6 Explain the various strategies of supply chain management