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Hannover Bates

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Background Hannover-Bates Chemical Corporation is a leading distributor of processing chemicals for the chemical plating industry. In essence the company is a mixing operation; chemicals are purchased from various suppliers and are mixed according to consumer needs. While they do not produce commodity type chemicals, Hannover-Bates’ customers perceive minimal quality differences between them and their competitors. Currently, Hannover-Bates employs 40 sales representatives operating in seven sales districts and its products are made in four different plants located in Los Angeles, Houston, Chicago, and Newark. Sales representatives’ salaries range from $28,000 to $48,000 in addition to commissions of .5% of their dollar sales volume on all sales before reaching their sales quota, after their sales quota is reached the commission rises to 1% of total sales. Recently, Jim Sprague became the Northeast District Manager at Hannover-Bates. Sprague’s predecessor was known for his reluctant acceptance of the national sales plans and programs and was ultimately pressured in to an early retirement. The national sales manager decided to put Sprague at the head of the northeast division because of his management skills and fresh perspective to a struggling district. The northeast district is third in sales numbers, but dead last in terms of profit performance. Unfortunately for Jim there was some backlash from senior sales representatives; Hank Carver, a 34 year sales representative, is irritated that he was not given the position. Hank, the top salesman for the district, does not believe that Sprague is the right man for the job. Carver has been a sales representative for three decades, while Sprague has been at the national headquarters for two years. However, it is clear that the company needs to increase its profit margin and the fact that Carver is retiring in three

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