Answer questions 1, 2 and 3 with the explanation Questions1. Is it reasonable to charge CVPS' salesforce withsimultaneously building and holding marketshare?2. What are the pros and cons of Sophia Rones'five-point plan?3. Since the meeting with the regional managersended on a sour note, what should Gaines donow? What should the regional managers do? MAKING SALES MANAGEMENT DECISIONSdealers has become more commonplace. It wastaking CVPS an average of 60 days to find newdealers when existing dealers decided to leave thebusiness. When a dealer operation closed, CVPSrarely converted it to a company-owned store, astheir aggressive growth strategy at the corporatelevel left little capital for acquisition of existingoutlets.Sophia Rones called her five regional managersinto her California headquarters office to discussthe problem with declining sales volume and possi-ble remedies to the problem. Given that the corpo-rate strategy would continue to be to build marketshare and sales volume, Rones outlined the follow-ing five-point plan:CASE 3.1: COUSINS VIDEOAND PARTY STORESBackgroundCousins Video and Party Stores (CVPS) is a well-established company with over 150 outlets scat-tered along the West Coast. A little over 100 oftheir outlets are in California. Each outlet is a com-bination video store with a larger than usual partystore. The party store side of the business hasexpanded over the past 10 years to carry almostanything a Celebration store might carry. The partystore items can be anything from balloons andstreamers for a birthday to seasonal holiday items.This combination has worked quite well for CVPS.Of the 150 stores, 47 are company-owned stores withthe remaining stores leased to independent owners ina quasi-franchising agreement. The independentowners agree to buy their DVDS and party suppliesfrom Cousins Video's parent company, EntertainmentInc. through their designated distributors. They alsoagree to uphold uniformity and facilitate appearancestandards as set by Cousins Video. Every store's layoutis exactly the same throughout the entire West Coast.The independent owners are encouraged to buy theirconvenience store merchandise from Cousins Video'sdesignated distributor, but they are not required to doso. Lease payments are collected from independentowners when DVD deliveries are made each monthwhen new releases come out.1. Each salesperson would continue to supervisecompany-owned stores and independent dealers.2. Salespeople would be given specific objectives forfacilities appearance and a percentage of sales ofconvenience store merchandise purchases fromCVPS's designated distributors.3. Salespeople would be given mandates that noretail outlet would remain closed for more than30 days.4. Sales volume objectives for salespeople wouldremain in place. Current year volume objectiveswould not change.5. Regional sales managers' annual objectives wouldbe revised to be consistent with salespeople's newobjectives.Current SituationIn the past 12 months, Cousins Video and PartyStore's growth rate has slowed considerably. This hasbeen a major concern to CVPS's upper manage-ment, including Sophia Rones, vice president forsales. Rones has analyzed the declining growth rateand found that sales volume at company-ownedstores is growing at a very acceptable 12 percent onan annualized basis. In contrast, stores run by inde-pendent dealers are lagging behind with an annualgrowth rate of only 2 percent. Rones believes theindependent category is underperforming for threebasic reasons. First, the independent stores are gener-ally not kept as clean and professional looking as thecompany-owned stores. Second, many of the largerindependent operators have begun buying a largershare of their party store merchandise from low-costdistributors other than CVPS's designated distribu-tors. This hurts sales volume results, since CVPS'sretail operation gets rebates from their designateddistributors, which counts as sales volume in theFamily Video financial system. Third, CVPS has suf-fered volumeThe regional managers saw the need for therevised strategy but raised several concerns. Theyfelt that the corporate strategy focused on build-ing market share, but that the sales organizationwas expected to both build and hold market share.They complained that the new-dealer team, a cor-porate group, should be adding new dealers at afaster rate, and that part of the volume shortfall wasdue to poor performance of the new dealer team,not the salesforce. They also pointed out that CVPSsalespeople were paid on a straight salary basis, pri-marily because they had previously functioned moreas managers of multiple retail outlets than as puresalespeople. The discussion became heated, andfinally Lyle Holtzer spoke for the regional manag-ers: "Look, Sophia, we know that corporate strat-egy can shift, and we know we have to adapt whenthat happens. But this drop in sales volume is partlythe fault of the corporate new-dealer team. We don'tsee them having to change their ways. And we arereally concerned that without some incentive pay, itwill be hard to redirect our salespeople." Rones,lossesfromclosed outlets.Competition has intensified, and turnover among

In the above case, CVSP has a well-established outlet across the west coast, and the in the above…

Answered: Answer questions 1, 2 and 3 with the…

6th Edition

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Author:WINSTON, Wayne L.

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Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...