Inside Or Outside

1. Using the information in this chapter, discuss the advantages and disadvantages of having your own sales force versus hiring outside sales agents?

There are advantages and disadvantages to using both your own sales force and hiring outside agents. The decision to use outside agents or a companies sales force involves many different exchanges. There are four factors manager must take into consideration which include: economic criteria, control, transaction costs and strategic flexibility.
When evaluating the economic criteria you should begin by comparing costs. Fixed costs are usually lower amongst independent agents because they do not receive salary and are not reimbursed for selling expenses. However, costs rise faster as sales volume increase since they are paid a higher commission than company salespeople. Agents are advantageous in smaller territories or where success is uncertain because of this matter. They are also appealing when the company is moving to a new geographic location or into new product lines because of their expertise and relationships they have already established. On the other hand, most managers believe having your own sale force will generate a higher volume of sales because they will be focused solely on the company’s product.
A disadvantage of having independent agents is the lack of control over them. It is harder to depict whether they will pursue their own short-run benefits at the expense of the companies long-term goals. It is difficult to tell whether an agent’s poor performance is due to lack of effort or other factors beyond their control while company’s sales people can be monitored. It easier to control your sales force though training, rewards, reprimands and procedures, this is seen as an advantage.
A disadvantage to employing your own sales force is the inability to alter it quickly. Agents