Alto Chemicals Europe (A) Case Solution And Analysis, HBR Case Study Solution & Analysis of Harvard Case Studies

Alto Chemicals Europe

At the time of Graaff’s appointment, how good a job do you think the sales force was doing?

When Graaff was hired to take over from his predecessor, the sales force was doing a decent job. They had clients, they had accounts and they were functioning quite well but in the long run it was an efficient strategy. The company had three accounts. The base account provided the largest portion of Polystab sales for the company. Strategic accounts were the long term source of sales and the key targets for conversion. Whereas, Swing accounts were low priced and usually counted on regular customers.

When Graaff was hired, sales force was spending a quarter of the time on conversion prospects which was almost 60% in the previous years. A salesman at the company on average managed 10 to 25 accounts per month. He usually spent most of the time in the office preparing reports and calling customers while the remaining time visiting new companies. Some of them however, visited each account once a month. However, the problem with the current sales strategy of the company was such that during the initial ten days of the month prices were set high, when order did not come in this period the sales force used to panic and reduce prices. This was a tradition in the company where after the ten days; the prices were reduced and eventually affected the average prices also. This was the basic flaw in the sales force strategy of the company, which although gaining reasonable profits was not efficient enough to sustain in the long run.

What are the key trends that Alto faces in the environment as of late 1980s? In light of these trends, carefully examine Graaff’s revision of the stabilizers strategy. Was it an appropriate response to the environmental changes? Why or why not?

During the 1980, Alto used to buy and sell barium itself. By the mid 1980’s Alto bough tins and converts customer raw material to tin. However, it changed the strategy to producing the tin and selling it too. Graaff’s revision strategy was a response to the significant change from the past to the new dimensions which included: segmentation, objectives, selling policies and head quarter control. Graaff strategy also provided a sharp plan for entering the unfamiliar market with not a lot of investment. The revision in the stabilizer strategy was proposed by Graaff because of the decline in total sales for Barium in the company. It was properly looked after the sales force and they were not making the required effort to increase the sales. Graaff believed the revision in stabilizer strategy will decrease the concern on the return on heavy investments. It will increase profitability and the selling approach too.

The revised strategy was a good one looking at the industry changing trends. Graaff was basically showing his proactive leadership skills which were targeting to increase sales and increase customer base for ACE. This was an appropriate response to the changing environment because it will overcome the over reliance of ACE over low profitability, narrow market base, price discrepancies and over reliance on price. Therefore, with the changing industry trends Graaff’s proposed plan can be of good use in the stabilizer industry.....................

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by Kamran Kashani Source: IMD 12 pages. Publication Date: January 1, 1995. Prod. #: IMD053-PDF-ENG