Dialing for dollars

1. Dialing for dollars Group D: Michael Bury David Nguyen Kurt Cannarella Wesley Ortiz

2. Summary • The quarterly sales for a company is in danger of falling below quota. • VP of sales offers a 20% discount on new orders with the stipulation being that customers must take delivery before end of quarter. • You come up with an offer to take back any unsold inventory in the next quarter. • An email is sent to the client signifying the stipulation, as placing it on the purchase order would force accounting to leave out a portion of the order.

3. Summary (Continued) • In an effort to meet your quota, you convince your brother-in-law to represent a fictional company to purchase $40,000 of product. • The MRP II system recognizes the sharp increase in product demand from the sales activity and concludes that there should be a boost in production. • The MRP system continues to place orders on the material requirements in order to boost inventory.

4. Is it ethical for you to write the email agreeing to take the product back? If that email comes to light later what will your boss say? • Writing the email agreeing to take back the goods sold after the sale is an unethical decision. It leaves management in the dark and the salesman may be unable to follow through with his/her promise. • This may lead to the employees termination, and can lead to legal repercussions taken against both the employee and the company. • The boss would presumably take action against the employees unethical behavior and suggest that he/she be removed from the sales team.

5. Is it ethical for you to offer the “advertising” discount? What effect does that discount have on your company’s balance sheet? • It’s not ethical because it isn’t your place to assume or promise certain funds would be used toward advertising • It’s not logical either because next quarter as the salesperson, you know that most likely they will NOT use the money for advertising hurting the bottom line for the quarter. • The books will be off balance since you have offered the credit of 20% • The result will end up in a loss for the company in the assumption that they will not use funds for suggested advertising and not order product for the following quarter since they have extra

6. Is it ethical to ship something to a fictitious company? Is it Legal? • It is not ethical or legal to ship product to a fictitious company because it’s considered fraud. • It incurs costs (labor, raw materials, etc.) to the company based on the fact that they use last quarters sales to project what sales will be for the next. • As the sales person you would be held accountable if your superior were to find out

7. Describe the Impact on your activities on next quarter’s inventories? • The next quarter’s inventories will be inaccurate. • The production center will end up producing more product without an adequate demand, the MRP (Manufacturing Requirement Planning) system was not properly used.

8. As the COO of the company, would you instruct manufacturing to ignore the increase in sales? • As the COO, you would have no option but to tell the manufacturing sector to ignore the increase in sales for many reason • Increase of inventory costs • Surplus of product • Unnecessary transportation All of which will end up losing the company money

9. What would you do if you were the salesperson in this situation? • Be an honest seller • Build a strong relationship with the buyer • Offer each company(s) the same promotion deal • Do not take short cut in order to make quotas • What goes around, comes around • Could lead to big problem in the next quarter

10. What, in your opinion, should this company do? • Just do your best • Take a lost and push harder in the next quarter • You don't want any legal action down the road or have huge problem