HRM 370.

2 Alchemy Case Analysis

Name ID
Quazi Sadaf Sadman 1711431630
4
Nazia Tasnim 1711398630
Jannatun Naher 1721319030
Nafees Hafiz 1521711630
HRM 370.2 Alchemy Case Analysis

Date of Submission: 30th March 2020

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HRM 370.2 Alchemy Case Analysis

Table of Contents

Background 1-4

Dates and Data 5-7

Needs Assessment 8

Main Issue 9

Internal/External Needs 9-11

Assessment
Existing Arrangement 12-15

Training & Development Plan 16-18

Realization 19-20

Appendix 21-22

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HRM 370.2 Alchemy Case Analysis

Bac
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HRM 370.2 Alchemy Case Analysis

Background
September 25, 2003, was a busy day for Andy Wong. The top sales representative of Alchemy, a
well-known training firm headquartered in Shanghai, Wong had just visited three potential
clients to sell two training seminars on supply chain management — the freshly launched
training programs developed to target the emerging segment in supply chain management. He
turned on his computer and started to replay in his mind the day’s meetings, and he wondered
how to assess the success of the sales calls and whether there was anything he could have done
differently. Alchemy was a Shanghai-based training firm founded in 1997. In 2003, the company
had a staff of 18 with revenue of RMB8 million (Cdn$1.4 million) and had branches in Beijing
and Guangzhou. Li’s father was an influential official in the emerging biotech industry in the
region, which meant that Li brought with him an existing client base. Ye, Li and Gan each
owned one-third of the new company. On decision-making, they agreed that decisions critical to
the viability and healthy development of the company must be through consensus wherever
possible. Alchemy started in sales management training, the hottest topic in the Chinese market
for corporate training at that time. As one of the first local Chinese companies to move into this
market, Alchemy was competing primarily with powerful international firms. Alchemy strong
bargaining power, which allowed the company to charge basically on par with large
multinational training firms. . These external trainers were brought in to run courses when
demand was high, but they were not permanent employees. There were three divisions in the
company: research and development (R&D), sales and operations. Their responsibilities included
market surveys, customer satisfaction surveys, feedback and evaluation, lecturer development,
and relationship development and research on skills sets and knowledge areas for practitioners.
There was no sales manager at Alchemy; all sales representatives reported directly to Ye, the
managing director. Li, the vice-president of operations, was charged with three lines of
responsibilities: customer service, financial/accounting and information technology/automation.
All the sales representatives were recruited, trained and managed by Ye himself. Criteria for
selecting a sales representative was pretty simple: candidates needed a Bachelor of Arts degree,
an outgoing personality and motivation. The bonus was calculated on the basis of the revenue
generated from accounts, rather than on the number of accounts opened. Sales reps were
deployed by geographic area. Of the four reps in the Shanghai office, three were in charge of the

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HRM 370.2 Alchemy Case Analysis

greater Shanghai area, and one had responsibility for the neighboring provinces of Jiangsu and
Zhejiang. There were two ways to generate sales leads at Alchemy: networking and cold calls.
By networking, a sales rep would normally get, through their connections and referrals, a contact
name in human resources (HR) or training department of a target client. A sales rep must impress
the receiver, no matter who they were, in probably 10 to 15 seconds in order to secure a face-to-
face meeting. From this first meeting, it was essential to maintain a relationship through phone
conversations or meetings. In particular, sales management training was a very competitive
market. Back in the early 1990s, corporate training was still a novelty in China. Most local
Chinese companies did not have professional. Professional training programs were mostly
provided by the local Chinese offices of international training firms. There were no more than 30
professional training service providers in Shanghai at that time. The training market was
segmented, by and large, into two parts: public training and corporate training. Public training
referred to the training seminars and workshops run for the general public. In order to entice the
candidates with similar interests in a certain topic area to attend seminars or workshops. The
training firm would normally rent the meeting space, either in the function rooms of a hotel or in
a conference room of an organization. Attendees would register for the seminar, pay the training
fee, normally ranging between several hundred to several thousand in local Chinese currency. A
working lunch and students’ handbook were usually included in the package. Corporate training
referred to the training programs provided exclusively to the internal employees of a certain
organization. The trainers delivered the training program at the corporate site so the trainees
would enjoy the maximum flexibility. In many cases, corporate training was provided to the
employees not only as a chance to learn more skills but also as a benefit rendered to the staff.
The benefit of building in-house training capability was that it accommodated the training needs
of one’s staff in a more precise and targeted way. For a company like Alchemy, the difficult part
of running a corporate training program for a company was the relatively quick shifting of hot
topics. The cost of the training was an important criterion in the selection of a provider for
corporate training programs. In the past two years, the market price for a corporate training
program had been plummeting due to competition while the salaries of good trainers kept
growing. In the early and mid-1990s, the competitors were large multinational training firms the
trainers working for these firms in China were mostly from Hong Kong, Taiwan and Singapore.
Trainers came into China for the course, then returned to their country. During the mid to late

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HRM 370.2 Alchemy Case Analysis

1990’s, many small local Chinese training firms (more similar to Alchemy) emerged. Unlike the
multinational training firms, the local companies were usually set up by one or two founding
partners who had some expertise in certain functional areas. The local companies usually
charged 30 per cent to 40 per cent less than the multinational companies, although their quality
of training was, in many cases, comparable or even superior to that of the multinationals. By
2001, the need for new topics grew, and this diversification posed challenges to the local training
providers due to the nature and structure of the organizations. In most cases, these contract
trainers had a stable income from an educational institute or a company. They made training an
additional revenue stream in their spare time by contracting with training firms. During 1997 to
2003, not only did many small and medium-sized training firms emerge, but almost all
educational institutions in Shanghai began to offer training courses as well. During 1997 to 2003,
not only did many small and medium-sized training firms emerge, but almost all educational
institutions in Shanghai began to offer training courses as well. Alchemy had started with sales
and sales management training and had stayed in this market. The management team once had
some discussions about where to go in 2000 when the market for sales training in Shanghai area
appeared saturated. As a compromise, Alchemy set up two offices in Beijing and Shanghai and,
at the same time, established the R&D department to keep an eye on really hot topics for us to
move into. In 2002, when China joined the World Trade Organization and strong foreign direct
investment in China for manufacturing and production followed, China became a global
workshop. . Finally, they all agreed to price the new programs in the middle and kept online
sales of the programs as a backup option. He thought it would be more cost-effective to buy a
mailing list from China Federation of Logistics and Supply Chain Management and sell the
program online. Finally, they all agreed to price the new programs in the middle and kept online
sales of the programs as a backup option. Andy Wong was a psychology graduate from a
university in Beijing. At 26, Wong had been with Alchemy for one and half years after working
as a sales rep for a fast-moving consumer product provider for a year. But his orders were
usually slimmer in margin due to his higher expenses and lower ending prices. He started
spreading information to his clients even when the plan was still in its infancy. In addition, Wong
did some reading about the two programs Alchemy was about to launch.

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HRM 370.2 Alchemy Case Analysis

Dat
es
and
Dat
a
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HRM 370.2 Alchemy Case Analysis

Data and Dates

1. Alchemy was a Shanghai-based training firm founded in 1997
2. In 2003, the company had a staff of 18 with revenue of RMB8 million (Cdn$1.4 million).
3. Gan had a master’s degree in management and, in 1995
4. As the business grew, Alchemy contracted with 2 external trainers, both successful sales
practitioners
5. The sales division, nick-named the “muscle division,” was the largest with 6 full- time
sales representatives, 4 in Shanghai and 2 in Beijing
6. The sales reps were paid a straight salary plus bonus. In the best cases, the bonus could
be twice the annual salary, and in worst cases, only half the salary.
7. A sales rep must impress the receiver, no matter who they were, in probably 10 to 15
seconds in order to secure a face-to-face meeting.
8. Back in the early 1990s, corporate training was still a novelty in China
9. There were no more than 30 professional training service providers in Shanghai at that
time.
10. The demand for training began to pick up from the mid-1990s, spurred by three factors.
11. The training market was segmented, by and large, into 2 parts: public training and
corporate training
12. Attendees would register for the seminar, pay the training fee, normally ranging between
several hundred to several thousand in local Chinese currency (RMB), depending on the
nature of the topics and reputation of the lecturers, and attend the seminar, usually for 1
or 2 days
13. But the downside was the difficulties in handling the risk of capacity management and
higher cost of marketing: a 3 foot by 3 foot advertising in a local daily newspaper could
easily cost several thousand RMB.
14. In fact, the budget for training for most Chinese companies kept increasing in the period
from 1998 to 2003
15. 1 tendency for large companies was to establish their own training arm
16. In the past 2 years, the market price for a corporate training program had been
plummeting due to competition while the salaries of good trainers kept growing

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HRM 370.2 Alchemy Case Analysis

17. With these 2 tendencies, a lot of companies, particularly those without their own trainers,
are almost stripped to the bone
18. In the early and mid-1990s, the competitors were large multinational training firms.
19. During the mid to late 1990’s, many small local Chinese training firms (more similar to
Alchemy) emerged.
20. The local companies usually charged 30 percent to 40 per cent less than the multinational
companies.
21. By 2001, the need for new topics grew, and this diversification posed challenges to the
local training providers due to the nature and structure of the organizations.
22. During 1997 to 2003, not only did many small and medium-sized training firms emerge,
but almost all educational institutions in Shanghai began to offer training courses as well.
23. By 2003, there were over a thousand training providers in Shanghai alone, and at least 20
per cent of them were offering sales training programs.
24. For a corporate training program, there were 2 ways of pricing: a flat rate and a variable
rate.
25. Ye estimated that the 2003 price for a generic training program plummeted to roughly
one-quarter of what it was in 1997.
26. About RMB20000 to RMB30000 for a corporate training program of 10 to 20 people,
roughly twice as much as those for generic topics; such as sales training.
27. A trainer was usually paid in the range of RMB 3,000 to RMB20000 depending on their
reputation and the currency and attractiveness of the topic.
28. In many cases, a good trainer easily takes 50 per cent of the revenue for a corporate
training program sold by a training firm.
29. The management team once had some discussions about where to go in 2000 when the
market for sales training in Shanghai area appeared saturated.
30. Alchemy set up 2 offices in Beijing and Shanghai and, at the same time, established the
R&D department to “keep an eye on really hot topics for us to move into.”
31. In 2002, when China joined the World Trade Organization and strong foreign direct
investment in China for manufacturing and production followed, China became a global
workshop.

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HRM 370.2 Alchemy Case Analysis

32. Chen charged a flat rate of RMB8000 per day for a one-day corporate training seminar
and RMB1000 for a 2-day seminar.
33. In September 2003, Alchemy started selling these programs.
34. Chen, and were promised an additional 20 per cent premium over the normal bonus base
for revenue generated by the new supply chain programs.
35. At 26, Wong had been with Alchemy for one and half years after working as a sales rep
for a fast-moving consumer product provider for a year.
36. Wong was regarded as an excellent sales rep in the company, and in 2002.
37. He was energetic and talkative, and he successfully closed 70 per cent of the accounts.
He pursued, far above the average of 30 per cent to 40 per cent.
38. In addition, Wong did some reading about the 2 programs Alchemy was about to launch.
39. Wong had made appointments with three sales leads for September 23.
40. Alchemy had some connections with 2 of the potential customers.

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 Nee
HRM 370.2 Alchemy Case Analysis

ds
Ass
ess
me
nts
&
Mai
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HRM 370.2 Alchemy Case Analysis

Needs Assessment
1. There is no sales manager at Alchemy; all sales representatives reported directly to Mr. Ye, the
managing director.

2. There is a risk in the public training program, the downside is the difficulties in handling the
risk of capacity management and the higher cost of marketing.

3. For a company like Alchemy, the difficult part of running a corporate training program for a
company was the relatively quick shifting of hot topics and the shorter life cycle of topics.

4. Due to the lack of topics and the constant shift of topics, there is a low salvage value of an
existing client, they are unable to retain their clients for longer periods.

5. The market price for a corporate training program had been dropping due to competition while
the salaries of good trainers kept growing.

6. Alchemy needed external contracted trainers to grow.

7. There was a clash among members of the Alchemy management team regarding the pricing
strategy.

8. The most qualified employee of Alchemy who was supposed to deal with the clients was not
well prepared and couldn’t deal in a professional way regarding introducing their new program.

9. Recently they have introduced a new sector supply chain management training but they didn’t
promote it properly so when they were trying to convince their client for the training client
couldn’t rely on them as they didn’t give much info regarding the new training program.

10. Their pricing strategy is a bit complicated as they have quite a huge gap between the
management training program and the supply chain management program. One costs 500-600
RMB per head and another one costs 1600-1700 RMB per head.

Main Issue
Can training the employees of Alchemy Training Firm improve their performance and increase
their clients' salvage value or will it only slimmer the profit margin by higher expenses?

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HRM 370.2 Alchemy Case Analysis

Inter
nal/E
xtern
al
Needs
Asses
sment
s
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HRM 370.2 Alchemy Case Analysis

Internal/External Needs Assessment

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HRM 370.2 Alchemy Case Analysis

Exi
stin
g
Arr
ang
eme
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HRM 370.2 Alchemy Case Analysis

Existing Arrangement
Following are given some of the existing arrangements and pros & cons of it :

1. There are three divisions in the company: research and development (R&D), sales and
operations. The R&D division, headed by Mr. Gan, was nick-named the “brain division” of the
company. The sales division, nick-named the “muscle division,” was the largest with six full-
time sales representatives and the operation part which included customer service,
financial/accounting and information technology/automation is to be said “Blood” of the
company.
Pros:
 Having three different divisions can make it easy for a company to run smoothly without
facing any kind of difficulties.
 When any new training program is arranged or introduced three divisions can work in
three sectors with proper supervision.\
 Having three different division can save time as each division takes care different issues.
Cons:
 Maintaining and looking after the work of three different divisions at once can be
difficult for the Managing director.
 Maintaining three different divisions and hiring different employees for the respective
division can be expensive.
 Hiring or assigning different employees for each division can be time consuming.

2. The training market was segmented, by and large, into two parts: public training and corporate
training. Public training referred to the training seminars and workshops run for the general
public and the corporate training referred to the training programs provided exclusively to the
internal employees of a certain organization.
Pros:
 The trainers delivered the training program at the corporate site so the trainees would
enjoy the maximum flexibility Training any other company’s employees, people of
Alchemy can learn something from them as well.
 The strength of the public training seminars lay in the possibility of attracting more
attendees.

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HRM 370.2 Alchemy Case Analysis

 In many cases, corporate training was provided to the employees not only as a chance to
learn more skills but also as a benefit rendered to the staff
Cons:
 The training providers advertised their training topic through the media: newspapers,
magazines, Web sites, e-mail, broadcasting, etc. in order to entice the candidates with
similar interests in a certain topic area to attend seminars or workshops. So, this can be an
expensive step.
 Doing all the activities regarding public training and corporate training in different scale
can be time consuming.
 As in this part Alchemy employees will be connected to the public directly any wrong
step can cause Alchemy a huge damage.

3. Alchemy was competing primarily with powerful international firms. But unlike those big-
name firms, Alchemy provide tailor-made sales management training programs customized for
customers in both depth and breadth; the programs are customized to suit the particular needs of
different industries, products and the size and business nature of the company.
Pros:
 This main feature can work as a huge competitive advantage for the company against any
other competitors.
 This can leave a good impression on the customers or clients; it can attract more
customer and this feature can be used to retain all the customers as well.
 This feature can help the company to sustain in the long run as this feature can be so
profitable for the company.
Cons:
 Customizing or tailoring all the services provided can be time consuming as employees
has to work all over against and go through every process differently for different
customers.
 Customizing every service for each customer can be expensive.
 Maintaining all the cases and training all employees for new cases can be difficult to
arrange.

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HRM 370.2 Alchemy Case Analysis

4. As the business grew, Alchemy contracted with two external trainers, both successful sales
practitioners. These external trainers were brought in to run courses when demand was high, but
they were not permanent employees.
Pros:
 Hiring an outside training provider allows an organization to focus on its core
competencies.
 Qualified training providers can help organizations align training initiatives with key
business objectives, ensuring any and all training efforts support larger company goals.
 This aspect is especially important to companies that do not have a deep bench of subject
matter experts or access to advanced technologies.
Cons:
 External training is typically more expensive than internal training.
 External trainers may learn more about your business than you might like. Although they
may sign confidentiality agreements, their knowledge of sensitive information about your
company might not be the biggest problem.
 The focus of a generalized training program provided by an external supplier may not
exactly match any one company's needs

5. Alchemy set up two offices in Beijing and Shanghai and, at the same time, established the
R&D department to “keep an eye on really hot topics for us to move into.”
Pros:
 It can work as a competitive advantage for the company against competitors.
 In this way Alchemy will always remain one step ahead and efficiency will be increased.
 It can help the company to make organizational strategies in most effective way.
Cons:
 It can be expensive maintaining two offices regarding the matter.
 Balancing two different offices in different places could be difficult to manage.
 Establishing a whole new department regarding keeping eye on hot topic can be time
consuming and inefficient as well.

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HRM 370.2 Alchemy Case Analysis

T&
D
Plan

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HRM 370.2 Alchemy Case Analysis

Training & Development Plans

1. Problem: The most qualified employee of Alchemy who was supposed to deal with the
clients was not well prepared and couldn’t deal in a professional way regarding
introducing their new program.
Solution: They overestimated their employee’s efficiency skills and thus their employee
underperformed. So, they are required to provide adequate training to all the employees
on handling their clients professionally. Moreover, they are also required to give a
training to the employees on their every newly launched programs to provide them a
detailed overview of their tasks.

Pros:

 Their employees will be well-prepared before dealing with clients.

 They will have a clear concept on all their newly launched programs they are
offering.
 Will create a positive image of the organization to their potential clients.

Cons:

 The understanding of all the employees will not be the same.

 Human brain tendency cannot be controlled; what they have learned in the
training might not be implemented properly.
 It might be time consuming.
2. Problem: For a company like Alchemy, the difficult part of running a corporate training
program for a company was the relatively quick shifting of hot topics and the shorter life
cycle of topics.
Solution: Proper training should be provided to the employees on forecasting and trend
analysis so they can predict the hot topics beforehand and prepare their programs
accordingly.

Pros:

 This will give them a competitive advantage from their competitors.

 They will be able to act timely.

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HRM 370.2 Alchemy Case Analysis

 Will increase their revenue generation.

Cons:

 This will be costly.

 The implementation might be primarily difficult.
 The forecasting data might not be always accurate.
3. Problem: Due to the lack of topics, there is a low salvage value of an existing client, they
are unable to retain their clients for longer periods.
Solution: Project structure development. If they can add more topic or redesign their
training process into phases like primary stage, intermediary stage, final stage or in
intervals. It will help them to retain their clients for longer periods.

Pros:

 It will help employees to learn by practicing on the job or they will have more
time to implement what he has learned through the training.
 If they add more topic it will give them to cover more of its clients again who
chooses another institute as it lacks training topic.
 It will help them to add more advanced level training which will help them to
retain their clients for longer periods.

Cons:

 It will be a lengthy process some of its clients may dislike its restructuring of
training.
 Advanced level of training and adding more topic will need more resources,
managing and maintaining the resources can be more crucial.
 People who will be more likely not to do intermediary training might get lost after
doing the basics.
4. Problem: Alchemy needed external contracted trainers to grow.
Solution: Existing internal trainers should be developed through proper training and
assessment. External experts should be recruited or outsourced to train the internal
trainers so that it will help them to grow without external contracted trainers.

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HRM 370.2 Alchemy Case Analysis

Pros:

 It will help the organization to keep its confidentiality and strategy unshared.
 It will help them scheduling more flexible training classes. As full- time
employees and trainers will be always available.
 Recruiting or outsourcing an expert to develop existing employees will help to
fix its strategy to get competitive advancement.

Cons:

 Outsourced expert may lack of knowledge about culture and aims of the
organization.
 Internal employees might face problem to take additional task and classes.
 Existing internal employees might fail to fulfill all the prerequisites, it will make
the trainers training more costly and time consuming.
5. Problem: The market price for a corporate training had been dropping due to
competition while the salaries of good trainers kept growing.
Solution: Training the existing employees to make a strategy how to grab more clients,
teach them how to analysis competitive market gap for example: any time when
competitors rarely offers or offers less of corporate training and to minimize the cost of
contracting external good trainers with high salaries.

Pros:

 If existing employees and trainers are developed, the organization will get more
commitment towards its goal and it will bring efficiency.
 It will get a better marketing strategy to sell if employees are focused to get more
clients.
 It will minimize cost and fulfilling the market gap will give it a proper decision to
step ahead.
Cons:

 Inappropriate analysis of market gap can lead the organization in wrong way to
step, it will harm its constant success.

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HRM 370.2 Alchemy Case Analysis

 Internal trainers might demand more benefits or raise in their salary as they will
be the next experts.

T&
D
Rea
liza
4
tion
HRM 370.2 Alchemy Case Analysis

T&D Realization
Realization-1
One of the issues that Alchemy is facing is the fact that they overestimated their employee’s
efficiency and the employees are underperforming and not meeting the required standard. They
are not as qualified to perform according to the new program which is an issue that led to them
being unprofessional with the clients. Hence they are not as qualified or efficient for the
program. Firstly, the employee training and development in this case needs to be highly
prioritized because without proper training, the employees will not know the basics of the
program. They will not know how to and when to react and act with the employees. Hence
proper steps should be needed for the employee development and act accordingly. Secondly, the
resources need to be allocated with priority and properly among the employees so that the
employees understand the value of the program and exhaust the resources efficiently. Thirdly,
the surviving programs need to be integrated properly with the working plan because without it
the employees will not know how to work and how to behave with the clients.

Realization-2
The employees of Alchemy have an issue with relatively quick shifting of hot topics and shorter
cycle life of topics leads them to wrong information. They use to have very less idea about the
topics beforehand which led to difficulties in solving the day to day work for the employees of
Alchemy. Firstly, the employee training needs to be prioritized and because that will help in the
total development of the way the employees will behave with the customers. Because it is to be
remembered that customers are the highest priority. Secondly, the resources to justify that the
employees are properly trained needs to be allocated intricately and properly. They have to know
and forecast the data before every meeting so that they know what to do and how to do it.
Thirdly, the surviving programs need to be integrated properly with the working plan so that the
employees can forecasting and trend analysis so they can predict the hot topics beforehand and
prepare their programs accordingly.

Realization-3
The company faces a tough issue of low salvage value of the existing clients due to simply
having the lack of topics. This lacking has led to a business disaster as they cannot hold on to or
retain the customers for a longer period of time. Firstly, the employees have to be trained and

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HRM 370.2 Alchemy Case Analysis

prioritize to the stricture of the project development. Secondly, the resources should be allocated
in different departments properly so that no one faces any issues whatsoever. Thirdly, the
surviving programs need to be integrated properly so that the employees can add more topic or
redesign their training process into phases like primary stage, intermediary stage, final stage or in
intervals. It will help them to retain their clients for longer periods.

Realization-4
Alchemy needed external contracted trainers to grow. Existing internal trainers training and
development was needed. Firstly, the employees training and development should be highly
prioritised so that the Internal employees can help to grow the organisation by serving better and
making the external need fulfilled, secondly, resources need to be allocated with priority for a
better outcome, use of resources properly will help the organisation meet its employees training
outcomes and work efficiency. Thirdly, surviving program needs to be integrated properly with
the working plan because alignment of the steps how and when is really important while working
on the job.

Realization-5
The market price for a corporate training had been dropping due to competition while the salaries
of good trainers kept growing. Training the existing employees to make a strategy to grab more
clients and to analyse the market gap is needed. Firstly, employees training and development
should be highly prioritised because employees plays the obvious role for total development of
the organization. Secondly, resources should be allocated based on needs maintaining priority.
For example, for this training the team who will be focus on the acts should get enough
resources. Thirdly surviving program need to be integrated properly with the working plan
because employees has to know how this analysis are done and how to get data's and how to
filter and modify data so that they get to know how to work on data of competitors and get to
know how and when to use of it to grab more of competitive market.

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HRM 370.2 Alchemy Case Analysis

Appendix

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HRM 370.2 Alchemy Case Analysis