Peter Kelly became CEO of Med-Mart, home delivery company, shortly after his fundraising purchased it in 1993. Unfortunately, at the time of purchase, sales of Med-Mart, inventory and trade receivables were highly inflated, resulting in an unstable financial situation, as soon as these errors are discovered after the transaction was completed. In the summer of 1995, Kelly hired Tim Martin Med-Mart vice president of sales, to increase sales and help save the Med-Mart from financial risk. However, Martin's proposal to increase the sales involved reorientation Med-Mart of thousands of products to several high-margin products, eliminating more than 80% of operating revenues. Kelly was such a sudden fear of the plan and knew that success depends entirely on the ability of sales to increase sales of the few remaining products dramatically. Kelly thought they could reorient sales team to implement the proposed changes Med-Mart's strategy effectively by changing the commission scheme. Kelly next step is to develop a new plan of the Commission, with the dollar value and timing of payments made, and any thresholds, caps, or increasing commissions. He wondered how the sales force will respond to the compensation process of reconstruction and selling one primary product. "Hide
by James Lattin, Mark Leslie, Erin Yurday Source: Stanford Graduate School of Business 19 pages. Publication Date: July 14, 2003. Prod. #: E163A-PDF-ENG
Related Case Solutions & Analyses:
Compulsory Licensing Thailand and Abbott Laboratories
John Smithers at Sigtek
New York City Against AIDS Video
Merck & Co. Inc. (A)
Ocean Park Corporation (Hong Kong)
Tanzania Case Study
Brand Recovery: Communication in the Face of Crisis
Challenge the Boss or Stand Down
Strategic Financial Planning in Mining Industry
Steve Rogers Case Study
