Case Barro

7/27/2019 Case Barro

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Introduction:

Barro Stickney was formed by John Barro and Bill Stickney as a small manufacturers

representative agency. Over the years, as business grew J. Todd was added to the business as a

sales representative and Elizabeth Lee as office manager. BSIs territories ranged over

Pennsylvania, New Jersey and Delaware. . Barro Stickneys office was located in the suburb of

Pennsylvania known as Harrisburg.

Quantitative Facts:

1. Total sales of BSI totaled up to $5.5 million.2. John Barro, Stickney, J.T made a sales of $1.75, $1.5 and $2 million respectively.3. R.D Ocean was the largest principal with a total share of 32% of BSIs revenues.4. Franklin Key was another important principal for BSI. It was one of the initial and

consistently contributed 15% to BSIs revenues.

5. Franklin key offered BSI an account with sales of $800,000 in Virginia after its sales rep inthat area met a sudden death.

6. Estimated support costs for a new rep were $66,0007. The total expenses for going into a new territory were $24,0008. BSI had a total of 8 principals.9. R.D Ocean contributed the maximum to the revenues with a total of 32%10.Knox contributed the lowest with 5%.11.The salary for the new sales officer lie between $15000-25000, depending upon the

experience and skills of the sales person.

12.According to the ERA meeting, safe portion of revenue lies between the ranges of 35% -30%.


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Qualitative Facts:

1. BSI was formed by John Barro and Bill Stickney2. Both of the partners left their jobs to open the agency3. BSI is a prominent and reputable manufacturer representative firm4. Company sells or solicits a manufacturer products as an agent in a defined territory5. Territories covered include Pennsylvania, New Jersey and Delaware6.

Eventually as business grew they added J.T as a sales rep.

7. Business had comfortable and relaxed atmosphere8. Recent requests from two principles; Franklin electronics and oceans has forced BSI to focus

its attention on the question of expansion

9. Franklin key offered the territory of Virginia to BSI.10.Most of the accounts in Virginia were military accounts and they were sizeable as well.

0

5

10

15

20

25

30

35

R.D

Ocean

Franklin Swanson Butler Knox Dickens Moore Horizon

Percentage of Revenue

Contribution


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11.Although a very different and specialized approach was required in Virginia.12.Personalities of John, Bill and Todd:

Current Scenario:

In the case the principle are demanding to cover a vacant territory. R.D ocean new sales manager

felt that BSI needed a new sales representative, whereas franklin key offered a new territory to

BSI. This meant that BSI was now faced with the question of expansion.

Careful deliberations had to done on BSIs part in order to reach at apertinent decision.

Swot Analysis of the company can be seen below:

Out going and ambitiousJohn

StrategistBill

Strong sales manTodd


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Table 1

ManufacturersMarket

Saturation

Commission

RateShares of BSI

Portfolio

Level of Sales

Effort

R.D Ocean High 5% 32% Low to medium

Franklin Key High 5% 15% Low

Butler Low 12% 3% High

Dickens Low 5% 10% Medium to high

Horizon Medium 5.5% 10% High

Swanson High 5.25% 14% Medium

Moore Medium 5.25% 11% Medium to high

Knox Low 8.5% 5% Medium to high

It can be seen from the above table that the top 3 principals are in market saturation and they

require less low to medium level of sales efforts.

Calculations:

Hiring Cost

Current Revenue = 96,756

Current Commission= 5%

Cost of new representative = $115,026 (salary 20 000, expenses 66000 and commission bonus of

29026)


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Income Statement:

Revenues = Commission 342362

Expenses:

Salaries 183250

Support Costs 66000

Increment Costs 24000

Manager Salary 20000

Misc. 128279

Net Income/ Loss - 79167

Recommendations:

As far as hiring a new sales person is concerned the company should not hire and they should

negotiate with the principal. It they are unsuccessful then they should concentrate more in the

other accounts.

Plus as far as opening a new office is concerned take new territory, pursue military accounts

because

happy clients = more business andnew market opportunities (potential for sizeable orders from

military accounts in Virginia). There is an opportunity to grow- possibility of exponential growth

Marketpotential and sales potential for expansion. Sales are over 800000 in Virginia is lucrative

and later bsi can capture new accounts as well and negotiate for higher commission rate you can

also sell some of your current principals products in Virginia too.

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Case Barro