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SALES

ORGANIZATION
STRUCTURE

-Varun Bansal,
058 EF
What is Organization
Structure ?
• Organization structure is a pattern of
relationships about various components or
parts of the organization it prescribes the
relationships among various activities and
positions.
• A sales organization defines duties, roles,
rights, and responsibilities of sales people
engaged in selling activities meant for the
effective execution of the sales function
The Sales Organization
I. Purposes of sales organization.
• To permit the development of specialist.
• To assure that all necessary activities are
performed.
• To achieve coordination or balance.
• To define authority.
• To economize on executive time
Setting up a sales
organization
• Defining the Objectives.
• Determination of activities and their
volumes of performance.
• Grouping activities into positions.
• Assignment of personnel to positions.

• Provision for coordination and control


Sales Organization Concepts
Sales Force Specialization Continuum

Generalists Specialists
Some
All selling activities Certain selling
specialization
and all products to activities for
of selling
all customers certain products
activities,
for certain
products, and/or
customers
customers
Span of Control vs.
Management Levels
Flat Sales Organization

Management Levels
National
Sales
Manager

District District District District District


Sales Sales Sales Sales Sales
Manager Manage Manage Manager Manager
r r

Span of Control
Span of Control vs.
Management Levels
Selling-Situation Factors and

Organizational Structure
Organizational Environmental Task Performance
Structure Characteristics Performance Objective

High Envir.
Specialization uncertainty Nonroutine Adaptiveness

Low Envir.
Centralization Uncertainty Repetitive Effectiveness
Customer and Product
Determinants
of Sales Force Specialization
Customer Needs
Different
Market- Product/Market
Driven -Driven
Simple Specialization Specialization Complex
Produc Range
t Geography- Product- of
Driven Driven
Offerin Product
Specialization Specialization
g s
Customer Needs
Similar
Basic types of sales
organizational structure
• line
• Line-staff

• Functional

• Geographic
• Product
• market
Line sales organization.
Line sales organization.

Merits –
• Simplicity.
• Authority and Responsibility are clear and logical.
• Problems of discipline and control are small.
• It is difficult to evade or shift responsibility.
• Simplicity is structure makes it easy for execution to develop close relations with
sales personnel.
• Sometime in making policy changes, deciding new plans and converting into actions.
• Administration expenses comparatively low.
Limitations –
• It depends more on departmental head.
• No subordinates with specialized skills and knowledge to provide advice and
assistance.
• Less time for policy making more on operational direction.
• For big organization this structure is inappropriate.
Line and staff sales
organization
Merits –
• Specialized services available.
• Executive can concentrate more on coordination
and control.
Limitation
• Staff work has to be coordinated which is costly.
• Close control over staff line relations is essential.
• Critical decisions tend to be delayed.
Functional Sales
Organization
National Sales
• . Manager

Field Sales Manager Telemarketing Sales


Manager

Regional Sales Managers District Sales Managers


(4) (2)
District Sales Managers Salespeople (40)
(16)

Salespeople (160)
Geographic Sales
Organization
National Sales
Manager
Sales Training
Manager

Eastern Region Sales Western Region Sales


Manager Manager

Zone Sales Managers (4) Zone Sales Managers (4)

District Sales Managers (20) District Sales Managers (20)

Salespeople (100) Salespeople (100)


Product Sales Organization
National Sales
Manager

Office Equipment Sales Office Supplies Sales


Manager Manager

District Sales Managers (10) District Sales Managers (10)

Salespeople (100) Salespeople (100)


Market Sales Organization
National Sales
Manager

Commercial Accounts Government Accounts


Sales Manager Sales Manager

Sales Training
Manager

Zone Sales Managers (4) District Sales Managers


(5)

District Sales Managers Salespeople (50)


(25)

Salespeople (150)
Customer and Product
Determinants of Sales Force
Specialization
Comparison of
Sales Organization
Structures
Organizational
Structure Advantages Disadvantages
• Low Cost
• Limited
• No geographic
specialization
Geographic duplication • Lack of
• No customer
management
duplication
control over
• Fewer management
product or
levels
• Salespeople become customer emphasis
• High cost
experts
Product • Geographic
in product attr. &
duplication
applications
• Customer
• Management control over
duplication
selling effort
Organizational
Structure Advantages Disadvantages
• Salespeople develop
better understanding of
unique customer needs • High cost
Market • Management control over • Geographic
selling allocated to different duplication
markets

• Geographic
• Efficiency in performing
Function duplication
selling activities
al • Customer duplication
• Need for
coordination
Hybrid Sales Organization
Structure
National Sales Manager

Commercial Government
Accounts Accounts
Sales Manager Sales Manager

Major Accounts Regular Office Office Supplies


Sales Manager Accounts Equipment Sales Manager
Sales Manager Sales Manager

Field Sales Telemarketing


Manager Sales Manager

Western Eastern
Sales Manager Sales Manager
Hybrid Sales Organization
Structure
• Customer knowledge
• Market knowledge

• Economies of scale issues


Global aspects
• Market scope , and market entering
strategy(joint venture, strategic
alliance, etc)
• Coordination and communication
• Simple, flatter structures
• “suck-ups” who just provide hollow praise to their bosses.
Static????Dynamic????
• Entropy
• Evolution
• Economics
Thank you