Case 3.2 Hanover-Bates Chemical Corporation Hanover-Bates Chemical Corporation produces chemicals for the chemical plating industry. It has plants in Los Angeles, Houston, Chicago, and Newark. The production process involves taking chemicals purchased from other suppliers and mixing them into user-based formulas. The Hanover-Bates has a strong balance sheet and trades on the over-the-counter market. There are seven sales districts within the organization with a total of forty sales representatives. Each receives a salary, fringe benefits, and commissions of 0.5 percent of their dollar sales volume up to their sales quota. Field sales efforts are extremely important and quality control is critical with supplying the plater with the processed chemicals. These services are provided by the sales representatives of the firm. The northeast district sales manager had recently been persuaded to take early retirement and had been replaced by James Sprague. He has directives from the national sales manager to be responsive to the company’s sales plans and policies, improve the district’s profit performance, and to manage a group of sales representatives who are older, more experienced, and not very happy about his promotion.
Problems concerning Hanover-Bates Chemical Corporation James Sprague accepted the position knowing what was ahead of him. He knew that his northeast district (District 3) had some problems that needed to be addressed. The first of those problems was profit performance. Although his district was ranked third in dollar sales, it ranked last in profit performance out of the seven districts. This was one area that the national sales manager expected him to correct. The second problem dealt with management. The last manager for district seven did not support the sales plans and programs developed by the national sales manager. It is