Atif Iqbal
Ahmed Shoib
Submitted To:
Sadiq
Date:
Babar Aziz
Mr. Imran
20 - 02 -2015
Disclaimer
Acknowledgments
Our first and sincere appreciation goes to Mr. Imran Sadiq, our
subject
Instructor, for all we have learned from him and for his continuous
help and
support in this project. We would also like to thank him for being an
open person
to ideas, and for encouraging and helping us to shape our
interest and ideas.
Executive Summary
Introduction
International Petrochemicals Pvt Ltd is a group of companies trading in raw
materials for various industries worldwide. It has been in this business since 1978
and it has offices and warehouses in Pakistan, Iran, Russia, U.A.E, China,
Mauritius, Seychelles, Vietnam and Brazil. The head office is in Pakistan where
they also have two fertilizer plants that are situated in Bhai Pheru and Multan. The
website address is www.ipchem.com.
Besides being a Fertilizers producer, IPC is involved in B2B business. In B2B, IPC
deals in petrochemicals that are obtained by cracking of Crude Oil. These
petrochemicals are used in the various industries including Tires, Rubber Products,
Leather, Plastic Pipes and Plastic Products, Lubricants and Greases, Fertilizers,
Paints, Varnishes, etc.
The current organizational structure of IPC is extremely flat, in fact too flat to be
efficient enough to tackle the dynamic environment of the industry it operates in.
Just to give an idea, all the decisions from the hiring/firing of a sweeper to hiring
firing of a plant manager, from the purchase of a printer toner to the purchase of a
plant for factory, from the deal of $ 10,000 to the deal of $ 5,000,000, all the
decisions are taken by the Chief Operating Officer (CEO) of the organization. The
decision making power is not shared at all.
So, the rough structure of the organization is as follows:
Figure 1Current Organizational Structure
Country
Manager
(UAE)
Country
Manager
(China)
Country
Manager
(Vietnam)
30 Sales Persons
(Head Office)
Plant
Managers
(2)
to persuade the CEO in a face to face meeting that it is a lucrative deal and we
should grab this business. Only if the CEO approves, the deal is proceeded,
otherwise passed.
Now, the CEO is an extremely busy person, receiving calls from overseas offices,
plants, domestic office, and also he is having frequent visits from the 30 sales
persons from the international sales office. The most of the times, the sales person
has to wait outside his room and wait for his turn to talk to the CEO.
It is obvious that the CEO is tired of handling so many things at a time, and there
are people still waiting outside his room, there is too little time for the CEO to
listen to your complete proposal and make a decision based on complete facts and
figures. So what happens is, the deals are approved or rejected based on the mood
and the basic instinct of the CEO. It may sound unrealistic, but its true. If the
mood of the CEO is off, your deal is highly likely to be cancelled no matter the deal
is bringing a reasonable profit. And if the mood of the CEO is good, it is highly
likely that your deal is going to be approved on the minimum possible margins
(profit). Same is for the basic instinct, if the first feeling of the CEO is negative
about your deal, it is going to be rejected as you are not going to get option to
explain the details and persuade him.
No Standards of Profit and Payment Terms:
As mentioned above, there are no set standards for minimum profit or payment
terms for the deals to be approved. Many times, a sales person goes to the CEO
with full belief that the margin in his deal is good and the payment terms (L/C,
Advance, TT, etc) are also safe enough, but he gets a shock when the CEO
refuses to approve saying the profits are still low. So, the sales person is always
uncertain about the best price or the payment terms that results in the
communication gap between the customer and sales person and a lot of deals
are missed.
The Consequences of these Issues:
The above issues result in the following:
Because of the above, the employee turnover rate in IPC is extremely high
because of which the experienced sales persons leave the organization which
could bring a lot of revenue on continuous basis. So, besides loss of current
business, the company is also losing the future business.
7
Country
Manage
r Iran
Country
Manage
r UAE
Country
Manage
r China
Country
Manage
r
Vietam
Director
Manufacturing
Plants
Plant
Manager
Bhai Pheru
Plant
Manage
r
Multan
Director Sales
Team
Leader
1
Team
Leader
2
Team
Leader
3
Sales
Persons
(10)
Sales
Persons
(10)
Sales
Persons
(10)
Since the project is based on the sales of the organization, the sales structure has
been explained in full details. However, the structure of the other departments can
also be changed following the similar criteria.
The Expected Results after the Changes in Structure
We believe that by following our recommended structure, the organization can
increase their sales by at least 25%. This is because of the following reasons:
Each deal would be given the maximum possible time and attention that
would ensure many more deals are saved from being lost.
The transparent set of rules of minimum margins and workable payment
terms would provide confidence to the sales persons while communicating
with the customers, enabling them to finalize more deals.
The motivation of sales persons would increase when they would be able to
finalize deals that were declined earlier, hence they would stay with the
organization and keep bringing in more revenue.