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Introduction:

Barro Stickney was formed by John Barro and Bill Stickney as a small manufacturers representative agency. Over the years, as business grew J. Todd was added to the business as a sales representative and Elizabeth Lee as office manager. BSIs territories ranged over Pennsylvania, New Jersey and Delaware. . Barro Stickneys office was located in the suburb of Pennsylvania known as Harrisburg.

Quantitative Facts:
1. Total sales of BSI totaled up to $5.5 million. 2. John Barro, Stickney, J.T made a sales of $1.75, $1.5 and $2 million respectively. 3. R.D Ocean was the largest principal with a total share of 32% of BSIs revenues. 4. Franklin Key was another important principal for BSI. It was one of the initial and consistently contributed 15% to BSIs revenues. 5. Franklin key offered BSI an account with sales of $800,000 in Virginia after its sales rep in that area met a sudden death. 6. Estimated support costs for a new rep were $66,000 7. The total expenses for going into a new territory were $24,000 8. BSI had a total of 8 principals. 9. R.D Ocean contributed the maximum to the revenues with a total of 32% 10. Knox contributed the lowest with 5%. 11. The salary for the new sales officer lie between $15000-25000, depending upon the experience and skills of the sales person.

12. According to the ERA meeting, safe portion of revenue lies between the ranges of 35% 30%.

Percentage of Revenue Contribution


35 30 25 20 15 10 5 0 R.D Franklin Swanson Butler Ocean Knox Dickens Moore Horizon

Qualitative Facts:
1. BSI was formed by John Barro and Bill Stickney 2. Both of the partners left their jobs to open the agency 3. BSI is a prominent and reputable manufacturer representative firm 4. Company sells or solicits a manufacturer products as an agent in a defined territory 5. Territories covered include Pennsylvania, New Jersey and Delaware 6. Eventually as business grew they added J.T as a sales rep. 7. Business had comfortable and relaxed atmosphere 8. Recent requests from two principles; Franklin electronics and oceans has forced BSI to focus its attention on the question of expansion 9. Franklin key offered the territory of Virginia to BSI. 10. Most of the accounts in Virginia were military accounts and they were sizeable as well.

11. Although a very different and specialized approach was required in Virginia. 12. Personalities of John, Bill and Todd:

John Bill Todd

Out going and ambitious Strategist Strong sales man

Current Scenario:
In the case the principle are demanding to cover a vacant territory. R.D ocean new sales manager felt that BSI needed a new sales representative, whereas franklin key offered a new territory to BSI. This meant that BSI was now faced with the question of expansion. Careful deliberations had to done on BSIs part in order to reach at a pertinent decision. Swot Analysis of the company can be seen below:

Table 1

Manufacturers R.D Ocean Franklin Key Butler Dickens Horizon Swanson Moore Knox

Market Saturation High High Low Low Medium High Medium Low

Commission Rate 5% 5% 12% 5% 5.5% 5.25% 5.25% 8.5%

Shares of BSI Portfolio 32% 15% 3% 10% 10% 14% 11% 5%

Level of Sales Effort Low to medium Low High Medium to high High Medium Medium to high Medium to high

It can be seen from the above table that the top 3 principals are in market saturation and they require less low to medium level of sales efforts.

Calculations:
Hiring Cost Current Revenue = 96,756 Current Commission= 5% Cost of new representative = $115,026 (salary 20 000, expenses 66000 and commission bonus of 29026)

Income Statement: Revenues = Commission 342362 Expenses: Salaries Support Costs Increment Costs Manager Salary Misc. 183250 66000 24000 20000 128279

Net Income/ Loss

- 79167

Recommendations:
As far as hiring a new sales person is concerned the company should not hire and they should negotiate with the principal. It they are unsuccessful then they should concentrate more in the other accounts. Plus as far as opening a new office is concerned take new territory, pursue military accounts because happy clients = more business and new market opportunities (potential for sizeable orders from military accounts in Virginia). There is an opportunity to grow- possibility of exponential growth Market potential and sales potential for expansion. Sales are over 800000 in Virginia is lucrative and later bsi can capture new accounts as well and negotiate for higher commission rate you can also sell some of your current principals products in Virginia too.