Case Study Essay
Initially the most effective way for the company to keep all selling expenses in line with sales was paying six percent commission on all sales and sales people would handle their expenses. This, method had worked for sometime, keeping all sales people and …show more content…
The fixed fund expense system will force salespeople to be mindful of how they are spending their money, which may be difficult coming from a “pay own expenses” system. Although it allows the reps some form of flexibility with how they will budget this fixed fund there must be a sense of responsibility.
Although I believe the present system is sufficient and does not require any adjustments, if Mr. Marshall forces a change than I would go with his proposal. Yes, the salespeople will loose out on a tax advantage but for the changes Mr. Marshal wants, this would be most effective. The salespeople will have some type of leverage with their expenses as long as they budget right. Mr. Marshall wants control and this the best way for him to get it. This method is economical and allows the company to budget their expenses ahead of time as oppose to having an unlimited plan.
If the decision were up to me I would keep it as is. Mr. Marshall may feel he doesn’t have control over the sales expenses of the company but it cost him nothing. His salespeople were