Olympia Machine Company, Inc Harvard Case Solution & Analysis


Olympia Machine Company, Inc is located in the Rhode Island that is involved in making a supply of the parts related to the replacement parts and the capital equipment. It has been involved in this trading for almost 100 years until now. Apart from that, an intense competition in the market can be seen in which Olympia Machine is operating. However, the main focus of the company initially was to manufacture the replacement parts merely and the business related to the manufacturing of the pulverizing and specialized machines but that was intended to be the side business of the sideline business.

Moreover, the machines that are being used by Olympia Machine Company, Inc.are mainly used in the specialty chemical plants. Olympia had differentiated itself in such a way that each of the manufacturers was involved in selling the parts merely related to the replacement for the machines that are under the use. However,Olympia machine company, Inc.manufactured and it also made sales of the replacement parts. Moreover, the intense competition in the market was due to the presence of three competitors among which there was one who was larger than the size of Olympia Machine Company.


The main problem related to this case is about compensation of sales people relatively. This review has been taken into account by the management team of an industrial equipment supplier. Several directors have made an offer of several alternatives to the current method that is based upon the straight salary plus expenses, respectively. On the other hand, each and every option is having a different implication for the strategy that is adopted by the business, the organizations, control systems at the organization and the requirements related to the sales requirements.

However, the issues that are present in this case are having a major impact on the existing plan that has been adopted by the business. The main elements that are included in the case are the salaries, the volume of sales and the expenses related to each and every sales person. Apart from that, there are four primary considerations, which are taken in this case. There is an inclusion of the gross margin and the sales volume related to each salesperson.

Furthermore, the company has to take account of the existing compensation plan that has caused a lot of problems in the organization. This is the root problem of the case that has to be identified and resolved on a timely basis. The executives, as a result, have taken decisions that will result in the improvement of these measures.

The straight salary plus expense plan has to be taken into account and the tasks that have been performed by the sales people were not effective due to their efficiency that is quite clear by looking at the way in which they were performing as a result, the executives have taken the steps to deal with the current compensation plan by reviewing it.Hence, by April there was an announcement made by the management of Olympia to make amendments in the compensation plan.

Olympia Machine Company, Inc Case Solution


There is a need to present several alternative solutions in order to deal with the existing problems that have been faced by the organization. There are three alternatives that have been presented as per the information available about the case. Apart from that, there is also a need to evaluate the ability that these alternative solutions have to resolve the issues.

Alternative # 01: Point System

The first alternative that has to be taken into account is the Point System, respectively. This proposal mainly includes the system that is based upon the bonus and salary or the points related to penalty payments that are related to the different activities based on sales. In this solution, the sales managers are going to tell the sales people to perform certain tasks and in return they will be rewarded by providing them with sufficient points.

Hence, by receiving these points, there will be an increased chance of the availability of direct compensation to the sales people. On the other hand,these penalty points are mainly related to the number of complaints made by the customers. The reason behind this step is to deal with the complaints that have been made by the customers by not getting appropriate services. Apart from that, the bonus plan will be used for the purpose to bring improvements in the efforts that are being made by the sales people. This alternative can be linked to the financial incentive because bonus is generally the financial benefit, which is provided to the company’s staff in return for achieving the targets that they had to achieve..........................................

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