The Sales Manager, whose team is paid a commission on sales revenue prefers to s

Question

The Sales Manager, whose team is paid a commission on sales revenue prefers to sell the higher priced Advanced service. This is also the preferred service for the Accountant, although not for the same reason, as her argument is that the Advanced service is better because of the higher contribution per unit sold. The Operations Manager argues that the Advanced Service consumes more labour hours than the Standard or Modified services and as labour availability limits his ability to process work, this should also be taken into account. The Operations Manager prefers the Standard or Modified service as this provides greater ability to use his capacity more flexibly.

The General Manager has asked for your advice in relation to this disagreement within the management team.

Explanation / Answer

Advice :

There always has to be a compromise between all three of them regarding the service that needs to be provided. It cannot completely be only Sdvanced service that the company provides as this would put more pressure on the opeartions manager and in turn would lead to resentment among the employee.

Completely standard service would reduce the company profits and an unhappy sales manager. It is the slaes manger that is teh final position for dispatching the company's end product.

Thus the company must decide its budget for cost consumption(including all the costs) based on this the target must be set.

Now based on this target the company must distribute its sevice in the two parts. For example advanced service can used as an offer during the festive season whine the standard sevice caould be used in the normal days. Thus a limit must be set based on the target to be achieved.

In unsteady case where the company faces a chance of loss in businee then it can ramp up the advaced service to an extended duration ensuring the operations manager and its employees some bonus,

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