Improving sales management and performance the case of thyssenkrupp materials vietnam’s hanoi office

Lunghwa University of Science and Technology Department of Business Administration Dissertation for a Master’s Degree Improving Sales Management and Performance – the case of Thyssenkru

Lunghwa University of Science and Technology Department of Business Administration

Dissertation for a Master’s Degree

Improving Sales Management and

Performance – the case of Thyssenkrupp

Materials Vietnam’s Hanoi office

Researcher: Le Thi Thuy

Lunghwa University of Science and Technology

Approval Certificate of Master's Degree Examination Board

This is to certify that the Master’s Degree Examinations Board has approved the dissertation Improving Sales Management and Performance – the case of Thyssenkrupp Materials Vietnam’s Hanoi office published by

Ms Le Thi Thuy in the Master Program of Graduate School of Department

of Business Administration

Master’s Degree Examination Board

Board

Members：

Prof.PhD Tsan Chia -Chi

Assoc Prof PhD Nguyen Van Dinh

Dr Doan Thu Trang

Advisors： Shih, Chiao-Wang

Nguyen Phu Hung (PhD)

Chair： Prof.PhD Tsan Chia -Chi

ABSTRACT

Dissertation Title: Improving Sales Management and Performance – the case of Thyssenkrupp Materials Vietnam’s Hanoi office Pages: 52 University: Lunghwa University of Science and Technology

Graduate School: Department of Business Administration

Date: July, 2017 Degree: Master Graduate Student: Le Thi Thuy Advisor: Nguyen Phu Hung (PhD)

Keywords: Sales management; performance management

The dissertation is to evaluate the competency of Thyssenkrupp Materials Vietnam and discuss the implications to how Thyssenkrupp Materials Vietnam could improve the performance The research helps to understand the current situation, advantages and difficulties of Thyssenkrupp Materials Vietnam at the moments

The research found challenges in sales management from the sales force and from the environment The research propose 2 groups of solutions – the first is to improve the sales management control, and the second is to improve the sales

I would like my proposals would provide valuable contribution to COMA2 to make its business better

ACKNOWLEDGEMENT

It is a great pleasure for me to work with this dissertation I would especially like to thank all teachers, professors for all knowledge, skills and information I received It is very wonderful chance to work with so excellent and enthusiastic professors

I am also very grateful to my tutor, Professor Nguyen Phu Hung, for his support I appreciate all his time and efforts to encourage and guide me during my dissertation writing

I would like to thank my colleagues, my customers for helping me to support me information to complete this dissertation and answer the questionnaire for my research This dissertation cannot be done without their help

Finally, I would like to thank and dedicate this dissertation to my family for the unconditional support, who consistency motivated me to complete the dissertation Best regards,

Thank you!

Le Thi Thuy

TABLES OF CONTENTS

ABSTRACT 2

ACKNOWLEDGEMENT ii

TABLES OF CONTENTS iii

LIST OF TABLES vi

LIST OF FIGURES vii

1 BACKGROUND OF THESIS 1

1.1 Introduction 1

1.2 Problem statement 1

1.2.1 Introduction to Thyssenkrupp 1

1.2.2 Key issues Thyssenkrupp Materials Vietnam is facing and the necessity of this research 8

1.3 Dissertation objective 8

1.4 Research questions 8

1.5 Scope of research 9

1.6 Structure of dissertation 9

1.7 Plan of implementation 10

2 LITERATURE REVIEW 11

2.1 Introduction 11

2.2 Sales management – definition and concept 11

2.3 Components of sales management 11

2.4 Sales Force Performance and Methods to improve sales results 13

2.4.1 Behavioral performance 13

2.4.2 Outcome performance 14

2.4.3 Sales Management Control System 14

2.4.4 Sales Force Performance Ratings 15

2.4.5 Methods to improve sales results 16

2.5 Factors affecting sales management performance 17

2.6 Framework to analyze this case study 18

3 METHODOLOGIES AND DATA 20

3.1 Methodologies 20

3.2 Data 20

3.3 Survey description 20

3.3.1 Target respondent 21

3.3.2 Questionnaire 21

4 DATA RESULTS AND FINDINGS 22

4.1 Introduction 22

4.2 Survey results 22

4.2.1 Sales analysis 22

4.2.2 Sales management analysis 26

4.3 Discussions of the results 29

4.3.1 Challenges in production affect the sales performance 29

4.3.2 The quality of workforce should be improved 29

4.3.3 Price risk in the competitive market 30

5 RECOMMENDATIONS FOR IMPROVEMENT 31

5.1 Introduction 31

5.2 Solution to enforce the sales management control to improve outcome performance 31

5.2.1 Reevaluate and Rebuild the performance measurement system 32

5.2.2 Improve the behavior-based sales management systems 32

5.2.3 Give sales managers higher authority and room to monitor, direct, evaluate, and reward salespeople to create high-performing sales forces 33

5.2.4 Improve skill of sales managers 34

5.2.5 Conduct internal research to identify useful predictors of salesperson performance 34

5.2.6 Build the Sales Territory Design for each salesman 35

5.2.7 Manage sales knowledge 36

5.3 Solution to improve sales results 37

5.3.1 Promote the organizational commitment of salesforce 37

5.3.2 Improve recruitment process and selection to get better employees 37

5.3.3 Strengthen the role at any level of customer-centric 38

5.3.4 Training sale representatives 39

5.3.5 Create sales scorecard to track and review performance 40

6 CONCLUSION 42

6.1 Contribution of this research 42 6.2 Future research 42

LIST OF REFERENCES 43

LIST OF TABLES

Table 1: The assessment of different challenges/risks involved to Thyssenkrupp Materials Vietnam business 23Table 2: Problems from external business context 24Table 3: The average age of workers 24Table 4: The comparative quality of Thyssenkrupp Materials Vietnam’s employees compared to others competitors 25Table 5: The main causes of the spread of certain cases of poor production performance 26Table 6: The factors affecting the profitability of Thyssenkrupp Materials Vietnam company 27Table 7: Example of metrics by timeframe 40Table 8: Example of a weekly table Thyssenkrupp Materials Vietnam can use 40

LIST OF FIGURES

Figure 1: Development of Thyssenkrupp Material Vietnam 1

Figure 2: Material facility 2

Figure 3: Products of Thyssenkrupp Material Vietnam in Mechanical Cateogry 2

Figure 4: Plant products of Thyssenkrupp 3

Figure 5: Cutting machines 3

Figure 6: Products of Thyssenkrupp in Plant category 4

Figure 7: Services the company provides 4

Figure 8: Customers of Thyssenkrupp Materials Vietnam 5

Figure 9: The new and Sleeping Customer FY2016-17 5

Figure 10: Structure of the Thyssenkrupp Material Vietnam 6

Figure 11: Business result for 5 years 7

Figure 12: Business result for 5 years - output by industry 7

Figure 13: Business result for 5 years, cycle of using cash 7

Figure 14: Components of sales management 13

Figure 15: Analytical framework to assess the sales management performance of Thyssenkrupp Materials Vietnam company 19

1 BACKGROUND OF THESIS

1.1 Introduction

This dissertation will study the case of the Thyssenkrupp AG and Thyssenkrupp Materials Vietnam In this Chapter, I will briefly review the status-quo of Thyssenkrupp Materials Vietnam, the problems it is facing that necessitate to be solved

1.2 Problem statement

1.2.1 Introduction to Thyssenkrupp

Thyssenkrupp possesses engineering expertise in the three areas of Mechanical, Plant and Materials that enable customers to gain an edge in the global market Thyssenkrupp focuses its actions geared towards long-term value growth

Figure 1: Development of Thyssenkrupp Material Vietnam

Figure 2: Material facility

1.2.1.1 Products and services

The company is providing a broad range of materials, processing and innovative supply chain solutions to customers With its deep market understanding, the company believes that its international footprint and passionate employees would make the company an efficient, reliable and customer – oriented service partner

The products are classified into 3 categories: Mechanical, Plant, and Materials

In Mechanical category, Thyssenkrupp Material Vietnam provides local customers with

• Design and manufacture of components for the automotive, machinery, energy and construction sectors;

• Design, production and servicing of elevators, moving walks and escalators

Figure 3: Products of Thyssenkrupp Material Vietnam in Mechanical Cateogry

In Plant category, Thyssenkrupp provides customers with

Da Nang: approx 400m2

• Planning and construction of plants and machinery for the raw material and chemical industries;

• Global engineering and service network

Figure 4: Plant products of Thyssenkrupp

Figure 5: Cutting machines

In Materials category, Thyssenkrupp Materials Vietnam provides customers with the following products:

 Customer-specific material solutions;

 Efficient materials manufacturing and processing;

 Material services on the basis of powerful IT and logistics systems

Figure 6: Products of Thyssenkrupp in Plant category

Figure 7: Services the company provides

1.2.1.2 Customers

Customers of the Thyssenkrupp Material Vietnam include mostly big corporations operating in Vietnam Most of them are leading in their markets

added Services

Value-Proc essing

Ban

d Sawing

S awi ng S awi ng Tu

be cuter

Pla sma cuter

S

aw

Cuter

Figure 8: Customers of Thyssenkrupp Materials Vietnam

For the FY2016-2017, Thyssenkrupp Materials Vietnam has acquired many new

projects with both old and new customers However, there are a number of customers

have not had new deals with Thyssenkrupp Materials Vietnam

Figure 9: The new and Sleeping Customer FY2016-17

1.2.1.3 Organizational Structure and people

Thyssenkrupp glbal has around 155,000 employees global working to develop

innovative products and solutions for sustainable progress Thyssenkrupp Material

Vietnam has between 100 – 200 staffs nationwide now and then

Figure 10: Structure of the Thyssenkrupp Material Vietnam

The company pays attention to carrier path of talented staffs Many employees were

promoted to new positions in FY 2016-17 At Management level, 4 staffs have been

promoted as Supervisor (02 Business Monitoring, 02 Supervision under BP Support)

At Senior Official level, 03 new Senior Sales Officers and 01 new Senior Associate of

BP Support have been promoted

Recently, the Thysenkrupp Vietnam hires 35 new employees (accounting for 28%

total staffs), 14 for Hà Nội Office, 12 for Hochiminh office, 2 for Da Nang office; For

those new employees, 28/35 (80%) belong to Business unit, 10/35 (20%) belong to

Support and Logistics unit

1.2.1.4 Key performance indicators

The figures below present key performance of Thyssenkrupp Ha Noi in the recent

years

Figure 11: Business result for 5 years

Figure 12: Business result for 5 years - output by industry

Figure 13: Business result for 5 years, cycle of using cash

1.2.2 Key issues Thyssenkrupp Materials Vietnam is facing and the necessity of

this research

Recently, Thyssenkrupp Vietnam is facing a number of issues in sales management First is sales growth is slowing down due to difficult economy Second, many employees (27/122 or 22% of the total workforce) are to leave for seeing little expectation in time of slow business For those 27 peoples leaving, 9 (or 33%) had hard working time and their contracts are not-renewable; 6/27 staffs (or 22%) left due to poor performance; 21 staffs (17%) is of voluntary resignation Among staffs leaving, 20 out

of 27 staffs (or 74%) belong to the Business units Third, Thyssenkrupp Vietnam does not have enough number of managers to supervise all operations, making the quality control a problem

Being a sales manager of Thyssenkrupp, I would like to devote my efforts to find relevant solution to improve the sales management performance of my team

so that the sales performance of the company will go up Specifically, the research

objectives and questions are described in detail in the next section

1.3 Dissertation objective

Thyssenkrupp is facing a number of issues, including human resource management, manufacturing, imports, and sales In this dissertation, I am going to address the issue of sales only The major objective of this dissertation is to determine factors making the sales management to perform and find solutions to improve the overall sales management performance at Thyssenkrupp Materials Vietnam

1.4 Research questions

The dissertation will address the following research questions

 How managers and staffs perceived about the sales management operations at Thyssenkrupp Materials Vietnam?

 How to improve the sales performance and sales management performance of

Thyssenkrupp Materials Vietnam?

The dissertation will recommend solutions for these 2 research questions Solution will be put into 2 groups: one is for improving sales management and the other is for improving sales

2.1 Sales management – definition and concept

2.2 Sales Management performance

2.3 Factors affecting sales management performance

2.4 Lessons of success and failure

3 Methodologies and Data

4 Survey results and discussions

5.4 Conclusions

1.7 Plan of implementation

The schedule to conduct the dissertation

3 Analyzing survey responses Feb 2018

4 Recommending solutions for

company

March 2018

5 Submitting dissertation first draft March 2018

6 Submitting dissertation second draft July 2018

2 LITERATURE REVIEW

2.1 Introduction

This Chapter reviews the theories and researches regarding the sales management The review will help to define the framework to analyze the current performance of Thyssenkrupp Materials Vietnam to detect problems or flaws to be addressed

2.2 Sales management – definition and concept

Sales management is the practical application of sales techniques and the management of a firm's sales operations Sales profit drive most commercial business Sales management is an important task because it provides the coordination efforts and motivation to the salesforce to increase the sale volumes of products and services These are also typically the goals and performance indicators of sales management (Spiro, Rich, & Stanton, 2008)

Sales management focuses on explaining and predicting phenomena with implications for sales management practice (Hunt, 2002) The primary unit of analysis within sales research include the salesperson or the sales function Focus also include sales organizations and application of specialized skills and knowledge Theory development and practice in sales management focuses on macro (sales function related) and intra-organizational issue, specially knowledge-based sales management strategy (Churchill, 1985)

2.3 Components of sales management

Researcher have attempted to define and examine the components of salesperson performance and sales management control Components of sales management include (i) Marketing, (ii) communication, (iii) compensation management, (iv) technology, (v) sales knowledge management There are also hypotheses about relationships among these constructs (Spiro, Rich, & Stanton, 2008) Grant and Cravens contended that the

Sales management include knowledge of (i) the role of the sales management control system in salesperson performance, (ii) what impact salesperson behavior performance has on outcome performance, (iii) the relationship between the salesperson's organizational decisions, promotions, pay increases, and legal disputes Therefore, sales management theory and practice point to placing more sales management emphasis on the activities (such as call planning and sales presentations) to improve their performance (Grant & Cravens, 1996).

First, Marketing is one of several functions of sales management The company has

to consider several issues in Marketing: the context of advertising, marketing communications, marketing management, marketing research, marketing science, and sales message creation (Boozer, Wyld, & Grant, 1990) The role of marketing in the sales management is important

Second, globalization is increasing and has numerous implications for industrial marketing managers Communications is helped by technology which permits each of sales staffs to work as economically with clients in-town, out-of-town, around the nation, or even around the world

Third, for industrial salespersons of the future, technology will be important Technology allows the sales force to communicate more efficiently with clients and to access the marketplace (with computers, faxes, the internet, and cellular phones) These media allow promotional materials and request-for-quotations to be electronically transmitted to clients In addition, technology helps to reduce the size of the back-office staffs and need for central offices and allows even small companies to compete on a level playing field by utilizing the Internet The Internet provides critical basis for industrial marketing process in cutting costs, merging database and communication technology, and speeding up decisions In certain situations, however, technology will displace today's information-dispensing salespeople with technical specialists who possess sales skills (Spiro, Rich, & Stanton, 2008)

Figure 14: Components of sales management

(Source: Kramer & Meisenheimer, 2018)

2.4 Sales Force Performance and Methods to improve sales results

Salesperson performance is the basic criteria for the managers to control the sales

It is defined as an evaluation of the salespersons’ behavior (the tasks they expend effort

on while working) based on the contribution of the behavior to the organization's objectives Measuring salesperson performance must be considered in the context of what they do (e.g., sales forecasting, sales planning) and the outcomes (e.g., sales amount, account receivable) that can be attributed to them Thus, salesperson performance can be separated into behavioral performance and outcome performance (Spiro, Rich, & Stanton, 2008)

2.4.1 Behavioral performance

This component of performance considers the various skills and activities that are important in fulfilling the responsibilities of the sales job This includes dimensions of salesperson behavior performance such as technical knowledge, adaptive selling,

teamwork, sales presentation, sales planning, and sales support (Spiro, Rich, & Stanton, 2008)

Most sales managers base their performance assessments heavily on the sales results of salespeople Other sales managers prefer sales team who can build long term relationships with customers (i.e., in banking industry) Sales managers continue to keep score using sales results but also recognize the importance of the salesperson behavior that leads to sales results There is some evidence from sales management practice that there is changes in the emphasis on salesperson performance Many researchers have asked senior sales managers to assign importance ratings to a large number of behavior- and outcome-based performance factors; Interestingly, the managers ranked almost all

of the behavior-based factors higher than outcome factors (sales, net profit, and new accounts) (Grant & Cravens, 1996)

2.4.3 Sales Management Control System

Sales management processes range from a management focus on salesperson outcomes to a primary focus on salesperson behavior

First, behavior-based control systems involve sales manager monitoring, directing, evaluating, and rewarding salespeople In behavior-based control, the compensation is linked as a high proportion of fixed salary The compensation is guided by sales results

of salesman The choice of the measures used in performance evaluation and the performance standards used as benchmarks are very critical for such behavior-based control to work effectively For comparing actual performance, the sales information management system is critical to provide the information used in monitoring performance and feedback given to salespeople by the sales manager (Churchill, 1985)

Second, the outcome-based control consists primarily of monitoring salesperson outcomes Because of this, it is important that the control system adopted by the organization correspond to sales management's objectives and the selling strategy utilized by the sales force

Factors of Sales Force Control Systems include (Grant & Cravens, 1996; Cron, Marshall, Singh, Spiro, & & Sujan, 2005)

1 Product knowledge

2 Company knowledge

3 Integrated sales expertise

4 Professional competence

5 Commitment to the sales organization

6 Acceptance of direction and authority

7 Cooperates as a team player

8 Welcomes performance reviews

9 Risk-taking propensity

10 Intrinsic motivation

11 Motivated by peer recognition

12 Motivated to serve the sales organization

13 Amount of call planning

14 Number of calls

Researchers have recognized the role of the sales managers in helping salespeople perform well by providing behavior-based management (monitoring, directing, evaluating, and rewarding) According to Grant and Cravens (Grant & Cravens, 1996), behavior-based management processes are used by many companies Compensation practices are consistent with behavior-based control, with fixed salary representing nearly 90% of total compensation

2.4.4 Sales Force Performance Ratings

According to Hite & Bellizzi (Hite & Bellizzi, 1986), since each sales manager provided a summary performance assessment of the salespeople supervised, it is possible that all managers would give their sales forces relatively high performance ratings In case there was little variation in the performance ratings of salesforce,

results Thus, there was not sufficient variation in performance to examine differences between the high and low-performance groups

In fact, there often is a positive bias in the distribution of rating – a substantial number of managers gave ratings of either neutral or unfavorable performance (l , 2, 3) The aspects of performance where more respondents considered sales force performance below a satisfactory level were technical knowledge, teamwork, sales planning, and sales support A small proportion of the managers often did not give outcome performance a high rating Sales presentation performance was the highest rated (Hite & Bellizzi, 1986)

2.4.5 Methods to improve sales results

The accepted sales management practice is to hire promising candidates, use incentives to motivate salespeople, and give them the opportunity to produce superior results Managers must take into account what salespeople do, as well as the outcomes attributed to them in seeking to improve their performance These activities include call planning, making sales presentations, and team selling, the commitment and performance, and the role of territory design in salesperson performance

According to Grant (Grant & Cravens, 1996), factors for improving sales effectiveness include the following:

1 Encouraging the sales force to build long-term relationships

2 Improving product/service quality

3 Increasing amount of selling training for salespeople

4 Increasing advertising/sales promotion expenditures

5 Increasing amount of training provided to field managers

6 Providing information systems capabilities to sales people

7 Increasing the amount of training provided to field managers

8 Improving sales force compensation systems

9 Decreasing response time from order receipt to delivery

10 Increasing coordination with other departments

11 Increasing amount of incentive compensation for salespeople

12 Developing team selling approaches

13 Increasing the number of new products

15 Increasing the amount of management direction to salespeople

16 Providing telemarketing support to field salespeople

17 Increasing size of sales force

18 Reducing selling prices

19 Increasing product specialization of the sales force

20 Changing territory/customer assignments of salespeople

21 Increasing sales of products produced by other firms

In addition, the organizational commitment is one of major drivers to improve the sales results Organizational commitment indicates the strength of a salesperson's involvement and loyalty to his company Therefore, the higher salespeople's commitment to the organization, the higher will be their behavior performance, the higher will be their outcome performance The salesperson's commitment to the sales organization should be higher when working under a behavior-based management control system Moreover, sales force behavior performance should also be higher Thus, it is suggested that managers should install behavior-based control so that the output sales results will be higher

2.5 Factors affecting sales management performance

Improving salesperson performance enhances the effectiveness of the sales organization Therefore, understanding what drives performance is a high priority of sales management responsibility

Common assumptions about sales management performance include:

 Salespeople who perform well on the skills and activities that are important in fulfilling the responsibilities of the sales job (behavior performance) will have high sales outcome performance

 The greater the extent of behavior-based sales management control, the higher will

be sales force behavior performance, the higher will be sales force outcome performance This is based on the logic that salespeople who perform well in carrying out the job tasks expected of them by management will achieve high sales outcome performance Depending on the sales process followed by an organization,