Sales & Distribution Management

Chapter 2 : The Sales Organization

 Role of a sales organization

 Basis for designing a sales organization

+Types of organizations

+Types of sales force structure

+Sales culture

Chapter Summary

Owing to intense global competition, slow growth in markets and different customer expectations, sales organizations have to reengineer their organization structures and streamline their processes. An inefficient organization structure can frustrate top managers as it may result in strategic plans going astray due to absence of clearly defined responsibilities and reporting relationships. Developing customer-centric organizations, building strong relationships within and outside the organization, modifying the traditional top-down hierarchical structure and introducing cross-functional teams are some steps companies are taking to improve their efficiency and profitability.

The organizational structure should fulfill the purpose for which it has been designed. The role of a sales organization is to achieve company objectives, streamline reporting relationships, facilitate effective coordination and control and develop an efficient sales force structure to ensure effective selling strategy. Designing the sales organization plays a crucial role in a company’s overall success. One must consider the influence of external and internal factors while designing a sales organization. External factors include the markets targeted and the technology prevailing in the target market.

Internal factors influencing the design of a sales organization include the company objectives, the size of the sales force, core competence of the company, compensation system, reporting relationships, etc. Based on the span of control, authority, hierarchical levels and departmentalization, four basic organization structures are possible. These are formal and informal structure, centralized and decentralized structure, vertical and horizontal structure and line and staff organization structure.

To efficiently serve the ever-changing needs of customers in the best possible manner, a company can have a product-based, geographic-based, customer-based or a combination-based sales force structure. The type of customers, the market size and its potential, the type of industry in which the company is operating, level of sales desired, size of the sales force and the width and depth of the product mix are some factors that influence the decision on the type of sales force structure to be adopted.

Sales culture plays an important role in the success of a sales organization. Sales culture is a collective impression of the values, attitudes and personality of top management in an organization. It pervades down to the lower levels of hierarchy over time. Sales culture has a significant influence on sales force activities and attitudes. The various components that make up sales culture include symbols, language, ceremonies, rites and rituals, role models, tales and stories, and values and beliefs. The strength and direction or fit of the sales culture also play a crucial role in developing a sound sales organization.

Next Chapter>>