The answer that I need is B, please leave as much detail as possible and TYPED. the following is the reading.

a. What are the problems faced by Pat Waller? Identify each in detail. b. What are the causes of each problem identified in the previous question? Case 1.1 The Valley Winery Pat Waller, recently hired as sales manager of the San sales. Brands in the pop line are Califomia Dream and Francisco region's chain division, was lamenting the Mile High. The Valley Winery sells more than 40 per- problems he inherited. Despite favorable sales results cent of all wine produced in the United States cach year, for the San Francisco region, turnover was so severe The Valley Winery is also one of this nation's larg- Waller could not understand how sales increased dur est privately held companies. As such, it is not required ing the past several years. He was surprised to leam to disclose any financial information. However, accord- the average sales rep had been with the San Francisco ing to financial analysts who specialize in the wine and division of Valley Winery for only seven months and distilled spirits industry, 2009 sales were believed to sales force turnover neared 100 percent a year. In fact, have exceeded $1.5 billion. Of the various producers of only one sales rep had more than two years' experi- wine and distilled spirits, the Valley Winery is believed ence. Waller had heard that high tumover was a prob- to be the best managed and most innovative lem nationwide but did not expect such high figures for Valley's phenomenal growth and success can be San Francisco traced to two broad factors. As already stated, it pro- Waller supervises two area managers, who in tum duces wines of consistently high quality at relatively direct nine district managers. District managers super- low prices. Second, Valley's sales force, using a push vise five to six sales reps, of which there are 50 in the strategy, is considered by many to be the most aggres- San Francisco division. Approximately 50 new sales sive and innovative in the industry. As the manager of reps are hired cach year, but the sales force size remains a San Francisco liquor store states, "Turn your back on relatively constant. Waller knew the increased competi- a Valley sales rep, and your store becomes a Valley tiveness in the market would make it more difficult to warehouse." Heading up the sales force is Carl Roman, continue to obtain future sales increases. The excessive whose passion for detail and success is well known. turnover problem would command immediate attention. Valley Winery distributes nationwide through liquor and boer distributors located in metropolitan areas, Valley owns roughly 50 percent of these distributors, THE COMPANY mostly those that are larger and more profitable. Val- ley's field representatives call on noncompany liquor The Valley Winery, founded in 1933 in Napa, California, and beer wholesalers across the country. Valley uses is the largest domestic producer of wine in the United a major account system with reps calling on the head- States. Started with only a $7,500 investment at the end quarters of large chain stores. of Prohibition, it has become the leading producer of The organization of the San Francisco division is low-priced, consistent-quality wines. Favorite brands typical, especially in those market areas where Valley include Santo Rey and Valley premium table wines, owns the distributor. There are three sales groups. The Astral sparkling wines, Valley brandy, and most recently first group calls on liquor stores and bars. Career-type the Cool Valley line of wine coolers. As is true with most salespeople dominate this group and most are older. other wineries, Valley produces a low-grade, fortified These sales reps are paid a straight commission of sherry known on the streets as "Sneaky Pete." This prod- 6 percent on sales. Almost all, 95 percent, are male. The uct appeals to a small market niche and receives virtually second group calls on restaurants, resorts, hotels, and no marketing support. The Valley name does not even motels. This predominantly female sales group is paid appear on the label, a practice followed by other wineries a straight salary ($39,532 to 546,233) plus a company as well. Brand names for this low-end product include car. The third group is the chain division. This group. Snake-Eye, 20/20, and Acey-Deucy. Valley also bottles 99 percent male, receives a straight salary plus car and a line of pop wines, which have never achieved high a year-end bonus. Their salaries range from $45.563 to $52,263. The chain group is considered the major Source: Neil M. Ford, 2009. source of future sales managers. Case 1.1 The Valley Winery 175 EXHIBIT 1 San Francisco division chain store division organizational chart (December 2008) Sales manager Wine division Cool Valley division Area manager Area manager District managers District managers DO ODDDD Sales representatives Sales representatives EXHIBIT 2 San Francisco division: chain store division organizational chart (January 2009) Sales manager Premium division Valley wines Aperitif wines Astral Vintage division Estate wines Santo Rey Cool Valley Valley brandy Area manager Area manager District managers District managers OOTD Sales representatives Sales representatives The San Francisco chain division sales organization structure and created a product line division reflecting has experienced numerous changes. Historically, the premium and vintage products. Within the premium company had a wine division and a wine cooler division division were the Valley wines, the aperitif wines, and (Exhibit 1). Early in 2009, Carl Roman revamped the the Astral sparkling wines. The vintage division carried 176 Part One Formulation of a Sales Program EXHIBIT 3 San Francisco division: chain store division organizational chart (June 2009) Sales manager Safeway division Lucky and Alpha Beta division Area manager Area manager District managers District managers Sales Sales representatives representatives the Estate wines, Santo Rey wines, the Cool Valley line for a specific number of stores taken from all major of wine coolers, and the Valley brandy (Exhibit 2). Less grocery chains. Thus, a sales rep will call on Safeway, than six months later, Roman introduced yet another Albertson's, and Cala stores. The total number of out modification reflecting the importance of key custom- lets constitutes the sales rep's territory. ers, which were classified as major accounts (Exhibit 3). The sales rep is responsible for reaching monthly Sales reps calling on major accounts represented the display quotes on each line of products. For instance, entire Valley line of wines and distilled spirits. The one month the representative is responsible for display San Francisco division is responsible for sales to all ing 50 cases of Santo Rey wine in 1.5- and 4.0-liter of the major grocery headquarters, such as Safuway. sizes. The next month the rep may have a display quota Albertson's, and Cala Foods. of 50 cases of Santo Rey in 3.0-liter sizes. This pattern Forward integration decisions are a function of how repeats itself throughout the year. Exhibit 4 illustrates well the independent distributor covers the market and monthly quota patterns for different display results by the size of the market potential. Roman had been very sales rep and the extent of the turnover problem, concerned with the chain store sales performance in Sales reps call on either the store manager or the wine the San Francisco arca for some time. The previous clerk, using preprepared sales shoets. The store manager distributor assigned 15 sales reps to call on the chain or wine clerk must then order the beverages from the outlets and had resisted Valley's pleas to increase the chain's warehouse, where all wines and distilled spirits salesforce to 30 to 35 reps. After Valley Winery bought are stored. The sales rep is responsible for all merchan- out the San Francisco distributor, sales of Valley Wines dising, service, and anything else related to Valley Wis increased dramatically, primarily due to the increased cry that is needed in the chain outlet. number of sales reps calling on chain stores-from 15 Rumors are abundant about the aggressiveness dist up to 50. None of the 15 reps who worked for the pre- played by sales reps in the wine and liquor industry vious owner was retained after Valley purchased the especially Valley sales reps, who have been accused distributorship. of relocating competitive displays and products 10 The buying process for these major chain accounts is obtain the best space for Valley wincs. Sales Top fairly standard. Each sales rep is personally responsible from other wineries dislike the competitive spirit Case 1.1 The Valley Winery 177 EXHIBIT 4 Cases on display: quota versus actual results by sales representative Product: Cool Valley Store: Safeway 211 Month F MAM S OND EMA M $ Quota 40 15 40 75 75 100 125 125 75 25 25 40 40 0 50 75 100 110 125 125 115 Mike Fisk 28 15 32 50 0 0 (terminated Tom Rhea 22 45 39 25 30 27 045 62 94 94 96 100 120 70 Product: Santo Rey Store: Albertson 42 Month 1 F M M $ O N D 1 FMA A 5 Quota 30075 75 60 0 800 90 0 30 0 750 750 60 080 Stan Smith 0 0 120 50 0 60 (terminated) John Mahom 021 028 (terminated) Steve Anderson 018 4200 (terminated Neil Johnson 500 500 85 Product Valley Wines Store: Cala 572 Month FM A M A $ ON DEMA M A Quota 500 600 75 500 800 900 500 600 75 0 SO 080 Paul Baring 30 027 0 60 0 45 0 450 50 0 (terminated) Mark Beringer 330 45 0 50 0 50 075 DO -88 -O shown by Valley reps, who have also been accused Mike Wehner, personnel manager for the San of such tactics as spraying hair spray on competitive Francisco division, was responsible for hiring all displays and bottles so that they will gather dust and personnel for the division, including warehouse work- 30 discourage sales. ers, truck drivers, office personnel, and the sales force. Waller's concern about the tumover problem led to a Wehner used a variety of methods to attract sales series of conclusions. First, recruiting and training costs candidates. Recruiting college graduates from a num- approached $30,000 per year per representative. Waller ber of area universities was common. This generally knew that with less turnover, Valley Winery and the San resulted in 10 to 15 new sales reps a year. Newspaper Francisco division profitability would improve. Second, advertisements and posting job notices on selected job Waller believed sales would improve. The $30,000 fig- search Web sites usually produced 10 hires per year. ure does not include opportunity costs associated with The use of six local employment agencies, with fees lost sales resulting from not having accounts called of approximately $3,000 per hired individual, resulted on. And these costs do not include the time it would in 15 to 20 new reps per year. Last, any employee take for a new rep to adequately develop rapport with recommending a friend or an acquaintance who was the accounts. Considering all these factors, Waller felt subsequently hired received a $300 finder's fee. This confident that decreasing turnover would improve sales practice typically cost the company $3,000 per year. and company profits. On the other hand, Waller knew Wehner claims not to recruit personnel from com- Carl Roman was pleased with the division's improving petitors or customers. He thought those hired through performance. employment agencies were the most successful, but he Pat Waller decided at least to investigate the situa- was not positive. tion. As a start, he examined two possible sources to The hiring process generally followed a similar pat- see if they were the crux of the problem. These included tem. The selected applicant completes a simple appli- the recruiting and hiring process and the nature of the cation form and is then interviewed by Wehner or his position. To research the recruiting and hiring process, assistant for approximately 30 minutes. During that Waller contacted the personnel office. To learn about time, if the candidate seems motivated and enthusiastic, the nature of the position, he traveled with a number of and asks for the sales job, the applicant is asked back the sales reps. for additional interviews. 178 Part One Formulation of a Sales Program The candidate then interviews with the distributor- When Waller congratulated Flanigan on the 50-case ship's top manager for no more than 10 minutes. The display, Flanigan quipped, "Thanks, but unfortunately San Francisco distributor is owned by Valley, and the it's not enough to make quota. Nobody, but nobody, new sales rep works for the distributor. Valley can reas ever makes quota. That's 25 cases short, and that store sign the sales rep to wholly owned distributors. All sales is one of my best accounts. And did you see my Santo reps interact with the area distributor and often partici- Rey quota--90 cases--no way!" pate in training programs with the other two sales groups. During their afternoon together, Waller observed Waller learned the distributor's top manager regards a very aggressive sales promotion that Flanigan pre- youth and physical characteristics as the most important sented to a wine clerk at a Safeway store (1724). traits an applicant should have to pass this stage. Afterward, Waller questioned the tenuous sales figures The next step involves an interview with Waller's Flanigan quoted to the wine buyer. He responded by predecessor, John Ruppert, who was promoted to a claiming. "John (division's previous sales manager) home office assignment as a major account manager. and Rick (Mary's current area manager] told me to The recruit is then whisked off to spend a day in the stretch the sales estimates. Continuing, he revealed, field with an experienced salesperson. Waller ques. "They said it's the only way to make my numbers. Rick tioned whether this day in the field, during which the even told me to pump up the numbers on the recap I recruit is "wined and dined," is an accurate representa-send to Napa." tion of the job. If all of these hurdles are passed, the Pumping up the numbers meant a salesperson would applicant is then offered the job. claim a 50-case display had been installed when the store Before being promoted to the sales manager posi manager or wine clerk would only order a 25- to 30-case tion for the San Francisco division, Waller had moved display. The display would only look like a 50-case dis- through the ranks, starting as a sales rep in the Seattle play, center boxes in the display would be empty. division. As a sales rep, Waller served primarily in a On September 23, 2009, Waller worked with Bill missionary capacity, calling on liquor stores and taverns. Murphy. Murphy, a six-month veteran, arrived grum- He then advanced to district manager for the Seattle bling. He said his district manager called him at 10:30 division. Next, Waller moved to the Phoenix division, the night before complaining about the condition of where he served as area manager before accepting a Safeway #507. After 30 minutes of specific instructions home office assignment as a product manager assis. and other messages, Murphy had agreed to visit the tant. This progression was typical for a person selected store early that moming to correct the deficiencies. He to move into sales management, except that most sales mentioned that he received calls at night from his dis- managers are promoted from the chain store sales force.trict manager about two to three times a week, often to Waller's new assignment represented his first exposure check his progress on winery directives. These usually to major account management. occurred, he claimed, during the hour or two he spent On September 8, 2009, Waller traveled with Marv on preparation each night. Flanigan, a nine-month veteran. Although scheduled During lunch, Murphy discussed his desire to move to meet at 7 A.M., Mary was late, stating his hour into management. He said, "Although district manag- long drive was delayed by a terrible accident. Flaniers are often considered to be no more than baby sit- gan said the latest territory change created a longer ters for the new reps, I really think that I can do a great commute for him. Since he was late, they started to job. The pay doesn't even bother me. (District manag work immediately, forgoing the customary cup of ers received $5,000 to $6,000 more.) I mean, with all coffee Waller intended to buy as a warm-up tactic the cases I've sold, if I were paid on commission, 1'd to learn about Flanigan's plans for the day. Waller already be rich. I think I can really train those new reps and Flanigan spent nearly the entire morning at an just as the manual says." Albertson's store (#561) building a 50-case display Pat Waller's work with the sales reps provided use- for Valley wines, resetting the cold box, and servic- ful information. At this point, Waller thought he was ing the shelves. After a 15-minute presentation to the starting to get a good sense of the situation. What do wine clerk, Flanigan and Waller left for the next call you think is happening at Valley Winery