Reasons behind the diversification of Rayovac
Rayovac has been dealing with two interlocking issues that informed the decision to consider the acquisitions, and these are: increased growth of competitors, thereby diminishing the presence of the company in the market, and saturation of the market. The rivalry with the c competitors has been a threatening force that managers of Rayovac are grappling with. The high level of competition has led to increased price competition, which has cut greatly into the company’s profits. Competitors have been aggressively cutting prices of products and services in an attempt to increase their market share. The result is a decrease in income for the company. Although rivalry with existing competitors has been an issue, so is the potential for new competitors in the market. Based on these factors, the company’s executives required a new strategy, which came from diversification through acquisitions.
The acquisitions were based on the belief that the acquired companies could employ the skills and resources present within Rayovac to improve efficiency and value. Such skill transfers were expected to improve the chances of the company as a whole to reduce costs and increase synergy between the acquired companies and the parent divisions.
Increased sales: Rayovac and its competitors have already occupied a big portion of the market. This, coupled with the threat of incoming competition, means that there is little chance of improvement when it comes to increased profits. Big service providers like Wal-Mart are determined to ensure that Rayovac and other competitors are forced out of business. Acquisitions have allowed the company to seek alternative sources of income and ensure that consumers are provided with alternatives that are likely to create brand loyalty.
Reducing dependency: perhaps one of the most threatening factors for Rayovac in an industry where mergers were becoming common was vulnerability due to reliance on a particular service and product. This made it easier for competitors to formulate effective attacks and reduce Rayovac’s revenue. Diversification helped the company not only increase revenue but also have a cushion against incoming competition advantages. With many channels of revenue, it is possible that the competition can only harm one arm of the company. The increased diversification provides better chances of survival should this happen.
Open opportunities: while the retail business was completely saturated, with the major retail brands taking up a large portion of the market, other industries in manufacturing, such as shaving and grooming products, provided an excellent opportunity for growth. It should be noted that Rayovac did not just move into acquiring any manufacturing company in the market. Excellent research was relied upon to ensure chances of success in the industry. With few competitors and even fewer chances of new competition, these companies provided Rayovac with something that lacked in the retail business, increased chances of higher profits with proper and efficient management and growth opportunities.
The portfolio strategy employed by the company has been largely successful in apportioning financial resources among divisions to increase financial returns and to spread risks among the different investments. It has also been possible to increase the value of the Rayovac brand even among the existing competition within the industry.
Existing Sales Force Structure
Due to increased diversification, the company’s sales team has metamorphosed into a product structure system. In this system, the hierarchy begins with the vice president in charge of sales. This vice president is in charge of managing all the issues about sales and management. Under him come to the various teams headed by their managers in product and company lines, such as NuGro, Rayovac, and Tetra. Simply put, these teams sell and market the products under their brand. They are trained and skilled in dealing with only these products and call upon their colleagues in the other divisions to handle sales where a client would prefer a product, not in their portfolio. Through this structure, the company has placed distinct product lines in its self-contained division and given the managers of these divisions the responsibility for devising an appropriate strategy to allow the division to become an effective competitor in the industry. This strategy has provided several distinct advantages for the company:
First, the company has allowed managers to grow their skills and become experts in a particular field. For example, the sales team for NuGro is the most skilled in handling and understanding the products under them, including pesticides and fertilizers. With this in mind, they are able to give professional assistance to consumers.
Secondly, no single salesperson or tea can effectively handle the sale of different products. Such a team would indeed suffer from a lack of skills, confusion, and probably decreased income. By ensuring that the sales team remains focused, the company has the advantage of developing a unique strategy for the brand products and the team’s skills.
Structure Of The Competition
The most distinguishable difference with the competitor’s organizational structure for the sales team is that the competition is more geographically than product-focused. The competition teams are tasked with marketing and selling products of the various product lines within their geographical boundaries. The competition has generally broken down its functions through geographical regions and created sales teams for each, which are in turn headed by the vice president for sales. This is because the companies focus on a multi-national and domestic strategy. Instead of diversifying with the products as Spectrum has done, the companies are more focused on geographical diversification, creating an international presence. Managers of these sales teams are responsible for customizing their strategy not to products but to the unique needs of the people and customers in their region. This strategy has provided the following distinct advantages for the competition:
Where products are not well received, the sales team on the ground can refocus efforts on products that are selling within that region, thereby increasing revenue. Whereas the spectrum team is forced to sell the same product over and over, this team can change and shift between products according to consumer tastes and preferences.
Secondly, the company can manage a smaller sales team, thereby decreasing the cost of employment. This is because the teams handle many products at once rather than one product for each team.
Available Alternative Sales Force Structures
Maintenance of separate sales force
This means that Falconi would continue with ensuring that each sales team handles only particular products under their brand names. While many other companies have often found this structure to be too simplistic, it has its distinct advantages, such as:
Increased skills and knowledge: separate sales teams allow the employees to become skilled in selling a specific product. Such skills and knowledge come in handy when strategizing marketing strategies. In addition, consumers are more likely to turn to these teams as they are renowned for their vast knowledge of the products.
Value to the customer: the market has evolved so that customers are no longer measuring companies through cost alone. A company that can provide more value through a sale gains a bigger market share. A separate sales force can be equipped with additional knowledge, such as ensuring proper use and maintenance of a product, which translates to increased value for the consumer.
Targeted product marketing: each product is unique and appeals to a unique set of consumers. Maintaining a separate sales force allows the company to develop strategies for increasing revenues in the different products, which translates to a higher percentage increase of income in all the products.
Merged sales force
This is a team that sells and markets all products within the company. The majority of today’s companies maintain a merged sales team to cater to all the product lines within the company. This sales force has the following advantages:
Easy to maintain: this is often a much smaller team than independent sales teams. This team, therefore, requires smaller maintenance and makes it easy for the managers to maintain. Furthermore, this team is able to capitalize on brand loyalty to sell various products at the same time.
Caters to various customer needs: the sales team becomes like a one-stop shopping for the consumers. Most of the time, consumers may not be willing to work with many people in a sales team to cover their many needs. Instead, they often prefer to have one specialist with many products.
Understanding the customer: a merged sales force is often more directed toward understanding the customer than understanding and mastering the product. Such a team has a knack for addressing the direct consumer need each time, ensuring they meet their preferences, which translates to increased revenue.
This is a system that has recently been introduced in the business. Few companies have taken up the challenge offered by independent distributors. The advantages are:
Wider network: independent distributors make it easier for the company to transcend borders and create a wider sales network. To enter a market, all the company needs is to find an independent distributor with channels of distribution in the market.
Reduced investment: companies often have to spend much when attempting new markets, however with this channel the networks are already in place and all that is required is to find the right distributor, (Calvin 2001). With this sales team, the company has lower risks in terms of investment and higher chances of success, especially when exploring new markets.
Each of the above models will provide a unique set of challenges to the employees and Falconi himself.
Independent sales teams: whereas the skill set of these sales teams will be high, they may be too specified within their fields. This creates a redundant force that can only manage and sell one product. Employees may feel that they are being forced into a particular skill set creating a feeling of restlessness. A high turnover could result from employees attempting new fields and opportunities suffered by competitors. Furthermore, the job may become too routine for the employees. This will, in turn, lead to increased burnout and boredom, which translates to a loss of income as employees are no longer motivated to sell the same products day in and day out. For the short term, this is an ideal strategy for managing a sales team; however, it may be detrimental in the long term.
Merged teams are often characterized by too much confusion and conflict. The high level of competition often translates to some products being ignored. Often, employees go for the easy products to sell which means that particular lines will be ignored and in turn become redundant because employees are not willing to take the risks of selling them.
Distributors: these teams are not affiliated with the company and, therefore, often fail to ensure that the company maintains high standards. They have often cut corners with products and advertising to ensure sales. Furthermore, they are less likely to take on difficult products for long often giving up because their livelihood is not dependent on the income and sales of these products.
Inspire subordinates: Falconi needs to develop skills that ensure that subordinates feel they are vital to the company’s growth. This means recognizing the sales team’s efforts and all team members. When employees feel important and recognized by the company, they are likelier to work harder toward the company’s success and personal growth. Falconi needs to note that sometimes employees are not aware of the importance of their jobs and are, therefore, likely to feel restless. Making them awarded ensures that they learn the part they are playing and therefore their importance to the organization is recognized. Therefore, they are aware of how necessary it is for them to perform their jobs as best as possible so that the organization can attain its goals without failure.
Communication: Falconi must consider sharing everything with the subordinates to ensure an all-inclusive decision-making process. By engaging employees, he can be made aware of the existing problem and assist so that such challenges are viewed not as obstacles but as opportunities for growth. He can also be made aware of new ideas, ensuring that the company’s growth is assured and objectives are met easily.
Charisma: The majority of team leaders are often not excited and enthusiastic about their vision and the team’s achievements. Only through excitement and self-confidence can Falconi influence the team and inspire them to work harder and be successful in their duties.
Organizational structure for spectrum brands
As a company, much success would be gained from maintaining a separate sales force for different products. While the merged sales teams and distribution outsourcing may seem cheaper and easier to manage, these are alternatives that are likely to injure the performance of particular products. Arnold (2002) states that with an independent sales team, it is much easier to focus efforts on products that are underperforming despite various efforts. None of the company’s products will be given less investment time and resources. Each of the products will have an equal chance of success in the market as efforts by each team will include a special set of skills and knowledge in line with this particular product.
In addition, the majority of the spectrum brand competition has failed to ensure that they increase customer value. This is a unique opportunity for the company to become recognized as a brand with value for the consumers. With a separate sales force for each product, consumers are more likely to be drawn by the professionalism and vast knowledge of the sales team. The company is also uniquely positioned to ensure that consumers get extra value with their products, thus increasing sales and revenue.
Implementing the organizational structure:
Communicating the strategy: most managers and executive leaders often take too long to communicate intended changes in an organization. When managers, subordinates, and employees are involved in the planning stages, they are likelier to own the changes, offering little, if any, resistance. The changes in the organizational structure need to be communicated in the early planning stages. This communication should include the various alternatives that are available and why the company has opted to go for the chosen alternative including the advantages of the same. Feedback gotten from employees on such communication is vital in implementing the plan and structure.
Allocating authority: the next step involves selecting a few individuals who are equipped with leadership skills to assist in the decision-making process. Delegation is important as no one individual can be able to complete all the tasks involved in making changes within an organization. These individuals will also act as a stepping stone to understanding the employee’s needs and concerns with the changes. This allows for changes to be made before implementation and during implementation. They will also smooth out any challenges employees encounter during the implementation process.
Finding the right human resource: this is the process of evaluating the skill set of each of the employees to ensure that they are fully maximizing their skills. Each set of skills needs to be matched to the right task and in this case the right product line to ensure maximum productivity. Where required, this stage will also include recruitment and re-assignments. The insight of employees needs to be considered to reduce resistance.
evaluation: once the structure has been rolled out, there is a need to consider monitoring and evaluating the same to ensure that it is working towards the benefit of the company and the achievement of spectrum brand goals and objectives. Where necessary, changes may be made to smooth out obstacles and handle the challenges presented by the new organizational structure.
Arnold, D. J. (2002). Sales management. Boston, MA: HBS Pub.
Calvin, R. J. (2001). Sales management. New York: McGraw-Hill.
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