“Analysis of Wholesaler’s Operating Costs”

T.M. McNiece article, “Analysis of Wholesaler’s Operating Costs” provided detailed information on allocation of cost for operating expenses, fixed expenses, and selling expenses. In cost of wholesaling, selling expenses is usually one of the largest if not the largest class of expenditures and therefore one of the most important (McNiece, 1928). Selling expenses are salesmen’s salary, commission and expenses, catalog, and advertising just to name a few. Commission expense will one day be obsolete based the how fast and innovative technology and people are as of today. For a sales incentive plan to produce this double win, there are two necessary conditions:

· Salespeople must have a large impact on sales results by focusing on activities that add value and directly influence customer buying decisions.

· The company must have the ability to measure individual results by separating out each salesperson’s contribution and determining how much an individual’s actions affect the outcome (Andris, 2017)

Car salesman and Realtors, which have always been known to work on commission may not be able to consider commission as additional income. Two important purchases in life besides education is buying a car and/or a house. Recently there is a new service being provide is allowing customers order a brand-new car right from the comfort of their home and with out any verbal communication. Today digital channels make buyers more informed, connected, and socially influenced (Andris, 2017). The Advertising expense will be second runner up to commission sales becoming obsolete, social influence will continue to be a streamline for advertising instead wasting money on commercials and newspapers.

McNiece, T. M. (1928). Analysis of Wholesaler’s Operating Costs. Harvard Business Review, 7(1), 20.

Andris A. ZoltnersPK SinhaSally E. Lorimer. (2017, August 3). Are Sales Incentives Becoming Obsolete? Retrieved from https://hbr.org/2017/08/are-sales-incentives-becoming-obsolete

Discussion 2

The article I chose to read and review was the Harvard Business Review article called “Managing for Business Effectiveness.” I thought that the article was written and articulated very well and got the main point across about how business managers have a responsibility to “strive for the best possible economic results from the resources currently employed or available.” What I found interesting was when the author, Peter Drucker, talked about how 90% of results related to the business are being produced by only 10% of events that happen. Still very true with companies and businesses today.

The article continues and looks at what action bust take place to produce the best economic results with the resources available. This looks at how managers need to focus their attention on the smallest number of products and services which will then produce the largest amount of revenue. When businesses focus their efforts on the very few areas that need extra work, the cost performance will have significant impact on business performance.

Working at the Walt Disney Company in the parks and resorts sector, I find that points that the article looks at are true today. The article mentions that most large companies end up with thousands of items, but fewer than 20 to 30 really sell and do well. That is very true to working at Disney. In the parks and the resorts, they have tons of areas where they sell merchandise, but only a few items really sell and make a huge profit. The items that are currently popular are the ones that will sell out quickly while other items remain on the shelves.

The article ends with discussing how a manager’s real work requires increasing business effectiveness with a plan of action and understanding the tools that are needed. That holds true today with companies and how the allocation of efforts is what makes for the crucial decisions that happen. This could mean the riskier painful decisions are the ones with the highest potential.

Resources

Drucker, P. F. (1963). Managing for Business Effectiveness. Harvard Business Review, 41(3), 53-60

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