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Unit 3 - people management - Coggle Diagram
Unit 3 - people management
Breakdown Method:
Assumptions: Average salesperson productivity, accurate forecast.
Formula: N = (S/P)(1+T) (N = Number of salespeople, S = Annual sales forecast, P = Productivity, T = Turnover).
Example: Forecast = Rs. 50M, Productivity = Rs. 2M, Turnover = 20% => N = 30.
Advantages: Simple, straightforward.
Limitations: Sales forecast-driven, lead time needed.
Incremental Method:
Based on marginal-analysis theory.
Objective: Increase profits with additional salespeople if incremental sales revenues > incremental costs.
Example: Company's sales volume varies with salespeople. Costs: 60% of sales. Salespeople get salary + 6% commission + Rs 6,000/month allowance.
Decision: Add 4 more salespeople for profit, not 5.
Conceptually accurate, but needs historical data.
Not suitable for new salespeople without data.
Workload Method:
Assumes equal workload.
Simple and conceptually sound.
Applicable in all selling situations.
Needs accurate customer data.
Ignores sales productivity and turnover.
Steps
Group customers by sales potential.
Decide time per sales call and call frequencies for each customer class.
Calculate the total market workload required to cover all customers.
Determine the total work time available per salesperson (40 hrs/week x 45 weeks/year).
Divide the total work time into selling, non-selling, and traveling activities.
Calculate the total number of salespeople needed by dividing the market workload by the total selling time available per salesperson (24000/720 = 33.3).