Case Study Analysis Descon Chemicals

MBA II (Sec-II)

Submitted by: Ayesha Tahir Sidra Khan Yumna Azhar Zoya Raza

Submitted to: Prof. F.A. Fareedy Dated: 10.03.2014

Overview of case The case discusses the issues faced by Descon due to the declining performance of the sales force team. Introduction Descon Chemicals established in 1981 is also a leading player of chemicals and solution providers in Pakistan. It focuses on innovative customized services with applicable solutions available for all types of industries including paint, coating and emulsions, textile, paper, unsaturated polyester and adhesives. It is also the second player to come into the market after the pioneer Hercules. Furthermore, it has ISO 9001-2000 certification. It has explicitly defined strategies for the future of expansions, increasing customer base, and in face of the changing environment achieving operational effectiveness. The competitors are: 1. Shalimar Resins Industries (Pvt) Ltd started its business activity in 1997. Shalimar Resin is having an excellent manufacturing facility along with high level technical excellence and managerial skills. Shalimar Resin ins one of few resin factories who are producing full range of Alkyd Resin in Pakistan. 2. Premier Coating ResinPvt. Ltd is a privately owned company which was founded in February 2007. Premintly Coating Resin (Pvt). Ltd is currently running under the umbrella of Chandiwala Group of Companies which has many manufacturing sites trad business throughout Pakistan and in other region mainly Middle East and North Africa. Company has a manufacturing capacity of 3600 M Tons of Polyester Resin and 8000 M Tons of Epoxy Resins 3. M.B Dyes Chemical and SilkInd. (Pvt.) Ltd. Established in the year of 1989 as a manufacturing unit of Mahmood Brothers that was involved in the trading of Dyesstuff and Chemicals since 1980. M.B. Dyes Chemical and Silk Ind. (Pvt.) L TD. Is a manufacturer of diversified auxiliary chemicals and dyes/pigments for Textile, Leather and Paint Industries. They also deal with many raw materials used in these industries. Others competitors include:

 Lahore Resin Hercules Impex Resin Orient Chemicals

Facts and Qualitative Statements Quantitative Statements Descon Chemicals started its operations in 1981. During 2008 Descon was hit badly by recession. In 2009, 10% of the lost customers were gained and 20% new customers were taken aboard. Customers are associated with the company for 20 yrs on average Shalimar Resins started its business activity in 1997 Premier Coating Resin Ltd started its business in 2007. M.B. Dyes Chemical & Silk Ind (Pvt.) Ltd was established in 1989. Average customers were associated with company for more than 20 years. Every complaint that the company gets resolved within 1-3 days period of time.

Qualitative Statements Descon is one of the leading chemical producing company of Pakistan with huge customer base. Most of the customers have a long term relationship with the company. To increase customer base the main sources are word of mouth, good market reputation and referrals. The main focus of the company is the Customer Satisfaction.

B2B dealings of Descon requires a lot of training of the sales personnel and the front line sales people.

Current focus of the management training program is more on written skill. Customers are prestigious and they expect special treatment from sales personnel The leading companies are of the Global Chemical industry are BASF (Germany), Du Pont (USA), Exxon Mobil (USA), Dow Chemical (USA), Bayer (Germany), Total Fina Elf (France), Degussa (Germany), Shell (UK), ICI (UK), BP (UK), Akzo Nobel (Netherlands), Sumitomo (Japan), Mitsubishi Chemical (Japan).\ At the time of independence, chemical industry in Pakistan was practically non-existent. In early, 50s PIDC was set up by the government for the industrialization of the country. The large chemical estate comprised Pak America Fertilizers, Maple Leaf Cement, Antibiotics, Pak Dyes and Chemicals was established at Iskanderabad (DaudKhel), district Mianwali.

In 1960, another chemical complex was set up in the private sector at Kala ShahKaku, Lahore. Chemical factories also started emerging at Karachi due to investment friendly policies which gave confidence to investors. According to one customer of Descon Chemicals : Allied paints would not go for brand switching the reason being that for us quality is very important and if we are getting it from our respective suppliers then we will only switch if the competitor will offer better quality, but we would still like to maintain the relationship with our existing suppliers. (Mr. Malik Omer Director Allied Paint Industries)

Issues Lack of motivation and training among the front line sales staff in comparison to its competition Lack of networking skills in the sales personnel can be quite problematic in terms of gaining attention of the customer and closing the deal. The structure of the sales force is not correct that is not hiring the right people. Incompetent frontline sales staff

Descon offers its products at a higher price than competitors Lack of motivation and training among the front line sales staff in comparison to its competition Imperfect recruitment process for sales staff The morale of the workforce is very low.

Core issue

there is a poor recruitment process for the sales force team that is not hired the right people for the job, which has resulted in the loss of sales and lower performance levels of the sales force team
Solutions and recommendations 1. A proper sales training program should be developed by taking all the relevant stakeholders on board that is analyze needs, determine objectives, develop program and evaluate the effectiveness of the program then. 2. There should be territory designs for the correct implementation of the sales force structure. 3. They should hire dedicated salespeople for special clients e.g. key accounts managers. So their clients get the better treatment and also the salespeople will be more knowledgeable and they will be in a better position to recommend solutions to their clients 4. Reduction in the sales expenses can be done through budgeting the sales expenses in advance and setting targets for expense to sales ratio. 5. Focus on improving the selling skills of the sales force and hence boost morale. 6. Employees should be motivated by focusing on intrinsic and extrinsic motivation factors.