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What are the reasons behind the decrease in sales

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Reference no: EM132900931

The Perils of XYZ Widget Company

Sales have gone down at the XYZ Widget Company and nobody in the organization, including the CEO, seems to know why. They decide to hire you, an organizational development consultant, to do some action research. You and the CEO spend a lot of time discussing how to proceed and create a contract. The contract specifies that you will limit the scope to finding factors that led to the decrease in sales, come up with a plan of action within one month, and answer the following questions using the background data from the scenario below.

Scenario:

XYZ Widget Company has lost 20% of its market share over the past two years resulting in a sales loss of 1.5 million in 2017 and 2 million in 2018 for a total of $3.5 million. Each widget costs the consumer $29.99 to purchase, and the average customer will purchase three widgets annually. Each XYZ widget is produced for $8 dollars and is of higher quality than the competition.

One competitor (Jim's Widgets) in the widget industry with a similar product has increased market share by 12% due to a lower production cost of $4 per unit and price to the consumer of $9.99.

The CEO of XYZ Widget Company is reluctant to lower prices and has had to eliminate commissions and bonuses of sales employees who exceed goals. In addition, seven of the 21-member sales team were laid off for non-performance of sales goals.

Question 1: What are the reasons behind the decrease in sales?

Question 2: What actions or strategy (data/sales/changes) should be taken to turn sales around and regain market share?

Question 3: What strategy should be taken to increase employee morale?

Question 4: How long should this strategy take to complete?

Reference no: EM132900931

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