CETUS COMPUTER CORP.

SALES FORCE

Presented by:

Group 1 | Sec. D | PGDM | 2016-18

Aankush Tyagi (2016190)

Abhradita Sen (2016191)
Aditya Subramaniam (2016192)
Aishani Das (2016193)
Aishwarya Usgaonkar (2016194)
Alankrita Mishra (2016195)
 TOPIC

CETUS Computer Corporation manufactures and sells high-speed powerful personal computers

CETUS had been distributing its products through third parties but now it decided to develop its own sales
force for dealing with large end-use customers and was faced with decisions on how to staff its sales force

To take decision on the above we did profit maximisation using Marginal Analysis

2
OBJECTIVES

Options that the CETUS sales manager must consider:

1. How many, if any, highly experienced sales representatives (HESRs) to hire
2. How many, if any, less experienced sales representatives(LESRs) to hire

3
 ASSUMPTIONS

1. Allocated corporate overhead are sunk costs since these include costs which have already been
committed. Therefore, they are not considered while making economic decisions on whether we want to employ
less experienced or high experienced professionals
2. The costs for installing, production, shipping and sales commission is $10,000 per sales representative and it
varies with the number of systems sold. So, it is included in the variable costs
3. Other variable expenses as mentioned in the case exhibit is $75,000, which does not vary with the
number of systems sold

4
MARGINAL ANALYSIS

5
 CONCLUSION

Best match is Scenario #1

Hire 30 HSERs and 200 LSERs
Total Profit will be $69,00,000
300 accounts will remain unserved
We feel Scenario #1 is best suited for CETUS Corp. as they are able to achieve maximum profit in this case
As presented in the previous slide, we have deduced 5 scenarios, each of them giving a different profit figure. The
organization may choose any of these 5 hiring strategies, based on their requirement. They may choose to
achieve maximum profits, or they may choose to cater to all the accounts

6
KEY TAKE-AWAYS

1. While making economic decisions organisations do not consider the sunk costs involved because these
costs are already incurred and cannot be reversed
2. The Law of Diminishing Returns is noticed. As the number of AST increases, the marginal increase in sales
decreases, i.e., 1 Sales Representative in 30 ASTs can sell 8 units, in 60 ASTs s/he can sell 12 units(marginal
increase of 4 units) and in 90 ASTs s/he can sell 15 units(marginal increase of 3 units)
3. The marginal product is zero beyond 30 ASTs for Highly Experienced Sales Representative category due to
time-selling constraint

7
 REFERENCES

Managerial Economics by Ivan Png, 5th Edition (Special Indian Edition), Routledge
https://www.scribd.com/presentation/63089815/Cetus-Guidelines-3-9-2010
https://www.scribd.com/document/37211864/Greenwald-Cetus-Computer-Corp-1996
Cetus Guidelines ppt shared by Senior Prof. Arindam Das-Gupta, Goa Institute of Management, Goa