1. Critically review the sales performance.

Have
appropriate targets been set for each zone?

(Reference: Exhibit 1)
 2011 2012 Target growth in
Zone Actual Target
(US$ million) (US$ million) % over 2011

The distribution of the sales target over the regions is not

North 95 118 24.21052632 even, with the West having the highest share of 25% growth
over the previous year, followed closely by North and East,
East 84 102 21.42857143
and the Central and South regions have the least targeted
South 98 114 16.32653061
growth. The reason for this is not clearly stated in the case.
West 78 98 25.64102564
Central 65 72 10.76923077
Total 420 504 20

Zone Target Jan-Sept Jan -Sept % Target

growth in % 2011 2012 growth set in
over 2011 Actual Target Jan-Sept 2012
(US$ (US$ over actual of
million) million) Jan-Sept 2011

North 24.21052632 69 88.5 28.26086957 The target sales growth of 2012 over 2011 figures for the
and the target sales growth of Jan-Sept 2012 over 2011 do
East 21.42857143 64 76.5 19.53125 not match.
While the target from Jan-Sept for North, West and Central
South 16.32653061 76 85.5 12.5 regions are more than the target for the year, the target
from Jan-Sept are lesser than the East and South regions.
West 25.64102564 57 73.5 28.94736842

Central 10.76923077 45 54 20

Total 20 311 378 21.54340836

 Zone Jan -Sept Jan-Sept Actual sale
2012 2012 achieved
Target Actual compared to
(US$ (US$ target in % (Jan-
The actual sales achieved w.r.t. the target sales in all the
million) million) Sept 2012)
zones from January to September 2012 are close to 90%
North 88.5 77 87.00564972
East 76.5 69 90.19607843
South 85.5 83 97.07602339
West 73.5 65 88.43537415
Central 54 50 92.59259259
Total 378 344 91.00529101

In spite of the not achieving the target

sales, managed to exceed the growth
Zone Target Jan-Sept Jan-Sept Growth of rate
growth in % 2011 2012 Jan-Sept 2012
over 2011 Actual Actual over Jan-Sept
(US$ (US$ 2011
million) million)
The actual growth rate in Jan-Sept 2012 w.r.t. Jan-Sept 2011
North 24.21052632 69 77 11.5942029
is 10.6%
This shows a very poor performance of all the regions except
East 21.42857143 64 69 7.8125
Central, when compared to the overall target growth of 20%
needed to be achieved.
South 16.32653061 76 83 9.210526316
All the regions have not been able to come close to
achieving the target growth rate, with an exception of
West 25.64102564 57 65 14.03508772
Central region which has exceeded the target by ~1%, with
Central 10.76923077 45 50 11.11111111
the rest managing to achieve less than half the targeted
figures.
Total 20 311 344 10.61093248
• It can be clearly deduced that the growth target of 20% set by Parkin Laboratories is
not distributed appropriately among the regions.
• Moreover, the yearly targets set do not match to the targets set from January to
September (i.e. the first nine months) in 2012.
• With an exception of Central region, none of the others – North, East, South and
West – are able to achieve their target sales in the first nine months of the year.
• The actual sales achieved by the regions as compared to the target for first nine
months are:
o North – 87%
o East – 90%
o South – 97%
o West – 88%
o Central – 92%
Since the organization’s incentive plan was linked to the target achievement, and none
of the regions had managed to achieve the target, the uneven growth worked as a
demoralizing factor for many Medical Representatives (MRs)