Hanover-Bates Chemical Corporation

Company’s Overview

Hanover-Bates Chemical Corporation is a leading producer of processing chemicals for the

chemical plating industry. The company is operating in four different locations including Los

Angeles, Houston, Chicago, and Newark, New Jersey. The company’s production process is

a mixing process in which chemicals are purchased from a broad range of suppliers and then

mixed in different varieties of user-based formulas. Company in the long run is trying to

increase profit performance, however the sales were increased of $2.86 million from 2003-

2004.

Market of Hanover-Bates consist of several thousand job-shop and captive (in-house) plating

operations. Currently there are forty sales rep working in different seven districts. Salaries of

Hanover-Bates sales representatives range from $33,000 to $45,000, with fringe benefit

costing to an additional 15% of their salary. A commission of 0.5 percent is paid, based on

dollar sales, on all sales up to established sales quotas and 1% percent above sales quota.

District sales manager’s salaries range from $47,250 to $52,000. They are not paid a

commission in excess to salary, however a yearly bonus is distributed based on the district

performance. Hanover-Bates and the majority of the firms in its industry manufacture the

same line of basic processing chemicals for the chemical plating industry such as:

1. Trisodium Phosphate cleaner (SPX)

2. Anesic Aldahyde brightening agents for zinc plating (ZBX)

3. Cadmium Plating (CBX)

4. Nickel Plating(NBX)

5. Protactive post-plating chromate dip (CHX)

6. Protactive burnishing compound (BUX)

Case Background

Hanover-Bates has appointed James Sprague as a new district Sales manager who has less

experience and age than a few Sales representatives in the company. The National sales

manager wanted Sprague to improve district’s currently depressing product performance

numbers. It was a known fact in the company that Sprague’s predecessor was not a good

sales manager. He had no interest in improving district performance and had an attitude of

reluctant compliance of district manger’s sales plans. He was convinced to take an early

retirement as the company was not improving in product profit performance although there

was a lot of potential in that district. When Sprague was appointed as a new manager he was

told that although the Northeast sales district ranked third in dollar sales it was the worst

district in terms of profit performance. James Sprague started searching on his own and

started analyzing the data which he had collected from the national sales manager’s office, he

analyzed his division’s gross profit quota. He came with an analyzed conclusion that north-

east area seemed critical as misallocated sales efforts either in terms of customer focus or the

mix of product line items sold. After his first meeting with district’s most experienced sales

rep Hank Carver he mentioned that one of his top priorities would be to conduct a sales and

profit analysis of district’s business in order to identify opportunities to improve the district’s

profit performance.