Reference no: EM131124511
Ralph Kramden established Bike World(retailer of bike and parts) in 2001. The company grew to six stores in 2007, and remains at six stores to date. Kramden acts as the general manger of all six stores. Each of the six stores has a store manager and, depending on the size of the store, from two to seven sales people plus bike repair specialists. There are usually two sales people on the floor at any time, but during slow periods only one sales person may be working.
Bike World sales grew rapidly for the first few years, but sales declined as the Great Recession started and have stayed low even though the recession has ended. Kramden can’t determine any single cause of the stagnant sales levels even as the economy has been improving. Bike World has aggressively cut costs to improve profitability, but at this point the only meaningful cost reductions would come from closing stores.
Most employees rely on the Bike World job for all money support, but some have another job in addition to Bike World. When Bike World began, Kramden paid sales people a straight salary of $25,000 to $40,000 depending on sales experience. Annual bonuses up to $10,000 could be earned if the sales person met an annual quota. As all Bike World employees are riding enthusiasts, the employee discount on all items in stock is a nice perk. In an effort to increase sales and profits, Kramden decided to drop the salary plan and shifted all sales people to a straight commission basis. Sales people have a “draw” feature and are able to borrow on future commission earnings. This plan has been in place for three years, but sales and profits have not grown as hoped.One recent trend is the number of new hires who draw on their commissions and then quit to eliminate their debt to Bike World
Kramden has recently considered Bike World’s business goals. First, and most important, is increasing sales revenue. Second is customer satisfaction and loyalty. Third is increasing sales of specific, high margin, product lines. Fourth is encouraging community involvement in biking events.
-Specifically identify the compensation problem(s) to be resolved
-Specifically identify the relevant stakeholders and their viewpoints.
-Develop a range of viable alternatives for the sales manager. Alternative analysis must demonstrate how the alternative resolves the problem and the impact on all stakeholders if the alternative were implemented
-Make a recommendation to the sales manager.
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: Ralph Kramden established Bike World(retailer of bike and parts) in 2001. The company grew to six stores in 2007, and remains at six stores to date. Kramden acts as the general manger of all six stores. Develop a range of viable alternatives for the ..
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