Pcl: A Breakdown In The Enforcement Of Management Control Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Problems have to resolve

PCL is a large and famous company of consumer electronics and is operating in china since 1995. China has become the second largest producer of the consumer goods and it is the most versatile markets for consumer electronics. It makes Chinathe second largest producer of the consumer electronics.

Consumer electronics business grows in Chinawith greater ratio and represents a significant growth. However,at the end of 2008 it showedhigherpercentage of sales return, about 5% of the total sales of the division returns.These returns increased the PCL concern in terms of increased cost. In addition to this, it also indicates that the 37% of the returns are without reason or no there was fault found that was analarming situation for PCL.

PCL authorized the third party for after sales services and appointed them to check the returns from the retailers and if they are appropriate then forward to the factory. Increase in the number of no fault found shows that the after sales service department did not perform its job effectively.

Furthermore, the retail stores are also bound to accept the faults and non-faulty units from the dealers in order to maintain the good relationship with the dealers for the purpose to achieve sales targets because each retailer is further distributing the products to many dealers in the specific region.

Acceptance of returns by the chain stores from the dealers and then the after sales services without appropriately evaluating the reason of the returns results in an increase in the returns with greater percentage.

The task force and after sale service department designed by the PCL is responsible for the increased in the ratio of returns and it shows their inefficiency regarding the execution of better services.

In addition to this,China is the second largest producer of the televisions and this adds the value to the local industry of television. Local producers make more specific products with the greatest quality and the low cost due to the local competitive advantage and low labor rate.

Increase in the amount of local producers and of the competitors’ results in the price war between the largest competitors and local producers.It forces the large chain stores to cut down their prices and offer more after sales services in order to get the desired level of sales targets.It could also be the reason of the increase in the amount of sales returns.

Evaluation of both tries to solve problem

First try

PCL attempts to solve the problem of increased in the number of sales returns. For this purpose, the marketing manager of the product is appointed of the TV division. It is expected that the product manager has great knowledge regarding the process of product return and the correct and suitable measures are expected to be taken.

A special task force is designed by the product marketing manager in which financial controller, the service manager and operation manager are appointed. Their primary task is to identify the reasons behind the increased in the percentage of sales return.

They found that both retailers and after sale service department were not capable to train customers about the proper usage of the products. Most customers use cable at homes, therefore when they do not find the same quality that they checked at the store, they return the product and retailers and chain stores replace them with the new product without proper screening in order to maintain the good relationship with the customers because of the intense competition and to achieve the desired sales target.

They also found that the team designed to look after the after sales service department is not working properly and they were breaking the reporting lines of reporting to the general manager instead of the TV division.

Pcl A Breakdown In The Enforcement Of Management Control Case Solution

On the basis of their analysis, the management takes certain decisions in order to deal with the problem. They suggested linking the annual performance measure with the sales return and the after sales service cost. In addition to this, they decided to fine the after sale services department with the three times of the value of the labor charge on the return in which no fault found.

By taking these action teamsit is expected that after two months of the implementation of these rule positive results will be generated. They estimated that after introducing this scheme sale returns will reduce to 3.5% from 5% and it is also expected that the rate of the returns of no fault found products will also decrease to 20%.............................

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