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ABC Corporation is a company which is into heavy engineering and technology.

It has 4
key divisions executing projects in 4 different fields of

1. Rubber machinery & projects,


2. Food machinery & projects,
3. Textile machinery & projects
4. Furniture making machinery & projects.

James is the Managing Director with 4 Vice Presidents (divisional heads) reporting to
him. Sales and marketing function is handled by 4 divisional VPs for their respective
divisions.

There are other functional Vice Presidents who are also reporting to James. They are
1. Manufacturing & Quality,
2. Design and Engineering,
3. Installation, commissioning & services
4. Purchasing
5. Finance
6. HR
7. Estimation

All these functional departments are centralized and each division avails their services as
& when required.

Average project order value of ABC corp. is USD 40 – 50 Million and the company’s
annual turnover is USD 400 Million.

Karl is VP – Installation, Commissioning & services and look after these activities for all
4 divisions. He also has additional responsibility of selling stand alone products and
equipment which are required in the projects of the divisions. (e.g. selling only heat
exchanger for food project etc.) Generally these equipment values are in the range of
USD 1 to 3 Million. Since they are of lesser value compared to projects, James had given
this task to Karl who’s team used to sell it along with spares.

James always has a concern that all its other competitors are making at least 20% of their
turnover in spares and equipment whereas ABC corporation hardly gets 2 to 3% from
such activities. James was fully aware that project business is fully risky business and in
case of any down turn in economy will jeopardize operations of ABC corp. Couple of
years back, to mitigate this risk James has decided to improve its revenue from
equipment and spares sales and make it at least 15% of turnover of ABC corp.

James and Karl had no. of meetings about it but Karl has to support project warranties &
manage all service needs for all divisions hence he was completely pre-occupied. James
was also aware about this fact and hence he could never expect Karl to sell equipment.
The situation never improved in the last two years finally James has got alarm in the
board meeting about improving after sales revenue.
James has decided to recruit a dedicated person for the task of equipment selling &
decided to recruit a senior manager, Kim, for this task. For the time being (till this
equipment division becomes sizeable) Kim’s reporting is kept to Karl. Karl has given free
hand to Kim explaining that he will be busy in projects and can hardly spend any time for
this. But Karl has agreed to support Kim in all the initiatives he would like to take to
improve sales of equipment.

Kim, is experienced in selling capital goods and understand the dynamics of the market.
But he is disappointed by the operations of company. ABC corp. being a projects
company, its all the tenders/enquiries used to go to design and engineering first. There
D&E used to develop technical specifications & develop material estimates. Then this
data will be sent to estimation department wherein they used to decide the commercials
of the tenders/enquiry. James/divisional VPs used to personally close the deals since they
were almost 10% of the turnover of the company.

Kim has seen that the same methodology is being followed for equipment sales as well.
This used to prolong the response time. All the competitors used to respond in a week’s
time to customers whereas ABC corp. used to take 2 – 3 weeks.

Kim also realized that there is no data available with his division for pricing or technical
discussions. For every small enquiry, he has to go to D&E for technical query &
estimation for commercial query. Both these departments were also reluctant to co-
operate Kim since they were always pre-occupied with projects work. Also no. of
enquiries those are to be responded by Kim was much more than those of any of the
project division.

Being lesser value, manufacturing always used to take equipment order on last priority.
In the market, the other equipment manufacturers used to deliver the equipment in a
month’s time whereas ABC’s lead time was minimum 2 months.

Kim has a task of achieving USD 60 Million from equipment sales within 2 years with
full support from James & Karl. There are also no dearths of enquiries because of brand
name of ABC corp. and good economic conditions.

Propose your solution for Kim to achieve this goal.