Submission for session 16

Vaishnavi khandelwal
PGMB1951

Case Analysis of Outdoor Sporting Products Inc.:

Key Facts:
 The annual sales volume of Outdoor Sporting Products, Inc., for the
past six years had ranged between $6.2 million and $6.8 million.
 Products of the company, numbering approximately 700 items were
grouped into three lines:
1. Fishing supplies,
2. Hunting supplies
3. Accessories.

 The fishing supplies line, which accounted for approximately 40 % of

the company's annual sales.
 30% of annual sales were in the hunting supplies line.
 The accessories line, which made up the balance of the company's
annual sales volume.
 Outdoor's sales volume was $6.37 million in the current year with
self-manufactured products for 35 percent of the total.
 50% of the company's volume consisted of imported products,
which came from Japan, Items manufactured by other domestic
producers and distributed by Outdoor accounted for the remaining
15 % of total sales.
 January to April- Fishing
 May- August- Hunting
 December is the lowest
 Outdoor's market area consisted of the New England states, New
York, Pennsylvania, Ohio, Michigan, Wisconsin, Indiana, Illinois,
Kentucky, Tennessee, West Virginia, Virginia, Maryland, Delaware,
and New Jersey.
Problem Faced:
 Sales staff compensation structure
 Many staff was paid guaranteed wage, on the top of commission.
 Sales had not increased appreciably from year to year.

Existing Compensation plan:

 The salesmen were paid straight commissions on their dollar sales
volume.
 The commission rate was
 5% on the first $300,000
6% on the next $200,000 in volume
 7% on all sales over $500,000.
 The salesmen provided their own automobiles and paid their traveling
expenses.
 Weekly sales increase awards
 Annual sales increase awards

Compensation Plan Proposal:

Existing Plan Comptroller's Plan
Salesme Sales Commission Guarante Earning Commission Guarantee Earning
n
Allen $329,21 $16,753 s e
$30,000 s $16,753
$30,00 s $12,500 $29,25s
Duvall 414,656 21,879 30,000 30,000 21,879 12,500 34,379
Edwards 419,416 22,165 30,000 30,000 22,165 12,500 34,665
Hammon 358,552 18,513 30,000 30,000 18,513 12,500 31,013
Logan 447,720 23,863 30,000 30,000 23,863 12,500 36,363
*Exclusive of incentive awards

Analysis:
If we see the above table, the comptroller’s plan is costlier than the
existing plan.

Improvement Plan:
 Ten Percent Self-Improvement Plan.
 Monthly bonus commission of 10 percent on all dollar volume.
 The bonus commission would motivate the salesmen.
 Both those with and without guarantees will lead to increase the
 sales.
 Discontinuation of the two sales incentive plans currently in effect.

Alternative:
 Providing larger sales incentives
 Increased sales would be gotten from inspiration of enormous
reward for expanding earlier years, week by week deals
 No guaranteed pay, however motivations are essentially higher