Question

What could be a possible problem Mr Omar Al Balushi face if he goes ahead with his decision on recruiting a marketing manager in management t am? Does he have any other option if the management refuses to recruit a marketing manager so to bring the change in company philosophy and behaviour toward marketing?

Omar Al Balushi, the senior executive of ACT Technology Company, was saying to himself, "One more year has gone without making a good profit and if it continues at this pace, so soon the company will go bankrupt". He added, "profit has decreased by 15% in a market of 20% of growth per annum."

Omar Al Balushi, who has been a senior executive at ACT Technology company, witnessed a decrease in sales and profit for the last three years. ACT Technology, which is based in Muscat, manufactures sophisticated electromechanical control devices for factory production lines, more specifically, ACT Technology is specialized in producing control devices only for chemical manufacturing facilities. The products suit to chemical processing plan which provides safety and cut-out mechanisms.

ACT Technology products are sold across all the GCC counties and middle east though salesforces based in the capitals of these countries; 12 salesforces based in Riyadh, Abu-Dhabi, Dubai, Kuwait city, Manamah, Doha, Beruit, Amman, Muscat, Jeddah and Tehran. As can be seen from the previous geographic distribution the focus is on the major cities in the region and all of the sales representatives are qualified, mechanical engineers. Despite the fact that 95% of ACT Technology sales come from the chemical industry, the electrochemical control device has many applications in a wide variety of industries.

For the reason to do with the history of the company, the owner (Mr Bala Bathichara) of the company, who happened to be an engineer, found an opportunity in such a device. His father in law who was a rich man doing business in the detergent industry supported him by being one of his first customers and a generous financer of Bala's project. However, nowadays, Mr Bala is not anymore in the executive position, but he still maintains the company financial affairs. Mr Bala's philosophy on business felt among the company's executive team.

The excellence in products and production is the essence of Mr Bala's Philosophy which is backed by strong technical sales support. He believed that if products are well designed and produced in high-quality, there will always be a market. It is self-evident that such type of products required for salespeople to push the products by showing the consequences of not buying the safety mechanisms which may result in damage to the clients manufacturing process. Therefore, the technical salespeople used to emphasize the negative aspect (of not having such device) rather than the positive aspects (of how good, they were, time-saving in the case of plant breakdown, etc). This technique of sales was pivotal to the success of ACT Technology sales strategy, according to Mr Bala. The embedment of the philosophy in salespeople is still clear in their behaviour, decision-making process and sales approaches unless most of customers' show no interest in updating their control equipment.

Few thousands of Rials spent on advertisement and sales promotion, however, from time to time, whenever there was a surplus of cash, Mr Bala would have spent on advertising in the local magazine " Y-Magazine". Due to the associated expenses, the company follows a cost-plus pricing structure basis, fixed prices by the accounting department. In other words, the company salespeople given no room to negotiate the price with clients. Hence, a disappointment has prevailed among the salespeople for not being able to negotiate with clients over price and delivery terms as per the customers' requirement because Bala's philosophy prevails, " If they wanted the product badly enough, they will wait for it, and Why offer a discount for large quantities - if they did not want that many they would not order them".

During the last few years, many competitors from the GCC countries entered the market. In plain English, the market became so competitive and thus, the ACT Technology market share dropped sharply. ACT Technology used to be the traditional supplier of the device across the GCC countries. However, the new competitors introduced updated and innovative devices based on the new advancement in electronics. However, ACT Technology management believed in the superiority of their products/device, therefore believing once the trend of novelty is worn off, the customers will revert to ACT.

Unlike many of his colleagues, Al Balushi was worried by developments over the past five years and felt there was a need for many changes. He was aware that the more successful new entrants to the industry had introduced a marketing philosophy into their operations. Compared with ten years ago in this type of business, it was now common practice for companies to appoint marketing managers. Furthermore, he knew from talking to other people in the industry that such companies considered sales to be an integral part of marketing. At a recent meeting with his senior staff, he mentioned to the sales manager the possibility of appointing a marketing director. The sales manager, who was shortly expecting to be made sales director, was scathing about the idea. His view was that marketing was suitable for a baked beans manufacturer but not for a company engaged in the manufacture and sale of sophisticated control devices for the chemicals industry. He argued that ACT Technology customers would not be swayed by superficial advertising and marketing ploys.

Now, Mr Omar Al Balushi is intending to appoint a marketing manager based on the recent figures which strongly indicate that a change must be brought in the management philosophy and the way sales are functioned at ACT technology; he needed a marketing manager has marketing experience but has come from the chemical industry. The person appointed would have equal status to the sales manager, and ultimately either the new appointee or the existing sales manager would be promoted to the board of directors.

Answer 1

The owner of the company was not interested in reforming the policies of the companies which was very old as the company. He was not ready to change himself and nor the ways to do business. Being a company dealing in the electrochemical control device which is not a conventional product, the company has to modify its selling strategy in order to make continuous profits. It was seen that the company is not making any profits in the past three years which is a situation of fear for the company and the employees who are working. Many competitors have also entered with much more advance technologies and they also do business according to the needs of the customers. Mr. Balushi was of the view to hire marketing manager for the company so that the products of the company can have a platform so that the sales can be increased resulting in profits for the company. The problem which he could face in hiring the marketing manager was the availability of finances. As there was increase in the losses of the company, providing salary will be an issue. Also, the owner was a person who sticks to age old practices and he was not willing to change. He can opt for promotion an existing employee for the post of marketing manager so that the sales can be increased without increasing the burden of giving additional salary.