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1.

Introduction
The case analyzed in this written analysis is on Barro Stickney Inc., an
organization developed by John Barro and Bill Stickney as a small
manufacturers

sales

representative

agency.

These

two

men

left

representative firms to establish their own organization as they considered


that their personalities complemented each other and thus facilitated their
working together.
What needs to be noted is that the organization became successful quickly
and overtime the Barro Stickney hired two more members into the
organization, i) Todd Smith (JT) and Elizabeth Lee. Together these four
individuals made the following contributions to the performance of the
organization:
Member
John Barro
Bill

Contribution
1.75 million dollars
1.5 million dollars

Stickney
Todd Smith
Elizabeth

2 million dollars
Hired to keep track of orders and

Lee

schedules and for problem resolution

1.1 Key Case Facts


Key case facts to be considered are presented as under:

i)

The organization has exclusive territory assignment in Pennsylvania,

ii)

New Jersey and Delaware Area.


The organization operates like a family in a close knit environment

iii)

where their personalities and skills complement each other.


BSIs biggest principal is pushing for BSI to hire a new sales rep.

1.2 Recent Development and Issues


The case presents the organization which has had an almost smooth and well
complemented introductory phase in the organizational life cycle to be faced
with

fluid

situations

requiring

important

strategic

decision.

The

developments and issues requiring this strategic decision to be taken are:


- The first issue and the more important issue is that BSI is being offered a
new territory of its sustained and relatively less effort requiring customer of
Franklin. The development has been that Franklins representative died and
now the organization faces jeopardy of over 800,000 dollars. Franklin is
desperate and is seeking BSI to step in to help the organization is saving the
customers. The state of the principal before and after taking the territory will
be as under (assuming BSI is able to retain 800,000 dollars for the account).

Franklin
BSI Portfolio

Current
45354
302360

Share of Portfolio
Commission

0.15)
15%
5%

Expected
845354
(45354 / 1102360
800, 000)
27.4%

(302360 +

- Its largest principal, R.D. Ocean has got a new sales manager and he simply
wants BSI to hire a new salesperson for their territory because he thinks that
since the members are buying new cars, they can afford a new salesperson.
He has not stated any quantitative requirements and BSI itself does not think
that in order to achieve the new sales projections, an additional resource is
required. The case facts present that R.D. Ocean deliberately makes sales
difficult for all its representatives.
- Swansons market share is expected to decline because of a threat from a
new entrant and a substitute product which the organization did not focus
on. This means a loss of companys sales.

2. Critical Analysis
In deciding for the decisions to be taken regarding Franklin and R.D. Ocean
BSI has to take into consideration a number of qualitative and quantitative
facts.

2.1 Qualitative Analysis


R.D. Ocean is simply putting extra pressure on the organization out of habit
even though it has not presented any specific benefits that BSI could achieve
after hiring a new sales rep. This can also be seen through the difficulty to
benefit chart developed by Elizabeth according to which Ocean gives the
most difficulty in sales and the lowest return. However on the other side, R.D.
Ocean is the biggest account that BSI has and it will be best to serve the key

customer effectively. The question however is whether BSI should let Ocean
backseat drive its internal policy or not? If the existing members do not
think it is time to bring a new member to the family, will they be able to
accommodate and effectively work with the new member?
The second element that needs to be considered is whether a new
representative is required to cover Franklins sales. Because the area has
more military accounts, it would mean larger sales for the representatives
thus larger sales for whoever takes the accounts. Because of the distance a
new office will have to be opened which is then likely to raise the cost and
decrease the interaction of the main office with its branch. On the other hand
however 800,000 is a large sales growth for BSI which would give BSI a
significant boost.

2.2 Quantitative Analysis


Costs
Salary of New Sales Rep

Ocean
25000
(+ 0% Commission of sales up to
500,000, 20% Commission of first 0.5
million

over

500,000,

25%

commission for next 0.5 million; 30%


commission for next 0.5 million; 40%
commission for sales over 2 million)
66, 000
24,000
115000

Support Costs for New Rep


Incremental Costs for New Rep
Total Fixed

Benefits
Expected from Ocean
Expected from Franklin

800,000

Fixed Costs

20000 + 22000 + 16000 + 28000 =

Salary + transport + insurances + 86,000


sales support

3. Conclusion
Looking at the quantitative and qualitative analysis, it is concluded that BSI
should open a new branch for the Franklin account and be there to support
its customers in its time for need. Not taking the account will force Franklin
to look for a rep agency which can put BSI in a difficult situation as the
current portfolio of Franklin might decline. The difficulty benefit chart shows
that Franklin pays more for lesser effort and therefore this account needs to
be maintained. Plus, this is a growth opportunity for BSI and it needs to start
considering its organization more as a business and less as a family.
With the new rep hiring for Ocean, BSI should negotiate with the principal to
give it exclusive territory rights for Virginia area also if it is to hire a new
sales person. This pitch is likely to be a win win for both the manufacturing
organization and the agency. Through this the new Virginia office can benefit
from both the Franklin sales and Oceans expected sales.