UNIVERSITY OF ECONOMIC HO CHI MINH CITY International School of Business ------------------------------- Le Thi Ha WEAK SALES MANAGEMENT AT JUPITER PACIFIC MASTER OF BUSINESS ADMINISTRATION Ho Chi Minh City - 2017 UNIVERSITY OF ECONOMIC HO CHI MINH CITY International School of Business ------------------------------- Le Thi Ha WEAK SALES MANAGEMENT AT JUPITER PACIFIC MASTER OF BUSINESS ADMINISTRATION SUPERVISOR: Dr. Pham Phu Quoc Ho Chi Minh City - 2017 SUPERVISOR’S REPORT ON THE THESIS PROPOSAL SUBMITTED FOR DEGREE OF MASTER of BUSINESS ADMINISTRATION The thesis proposal title: WEAK SALES MANAGEMENT AT JUPITER PACIFIC Student Name: Le Thi Ha Supervisor: Dr. Pham Phu Quoc 1. General comments: Remarks on the student’s attitude: …………………………………………………………………………… …………………………………………………………………………… Remarks on the assignment’s academic quality: …………………………………………………………………………… …………………………………………………………………………… 2.
Overall assessment: Meet requirement for submitting Not meet requirement for submitting 3. Other remarks: Did the student follow the report schedule? Yes No Other…………………………. The Turning plagiarism percentage: Supervisor’s signature Table of Content Executive Summary 1. Supporting information Appendixes References 1 Executive Summary Recently, Jupiter Pacific’ financial statement has showed the sharply reducing in sales and hasn’t showed signal of recover yet.
In order to determine why sales are decreasing, the data of selling rate and cargo volume were collected. Then it found that company sales reducing since the reducing of air cargo volume. Indeed, company cargo volume has sharply decreased year by year while cargo volume at Tan Son Nhat international airport has grown; contrary to Jupiter’ trend. In order to define the potential problem of reducing air cargo volume, the first interview was proceed to four relative managers, who are Sales manager, Airfreight manager, Admin supervisor and company CEO then the information revealed that the weak sales management is the key elements of such decreasing.
Sales management itself cannot be considered as a performance indicators for the company as such; however, the interviews and data revealed that weak sales management leads to reduction on existing customers, couldn’t get many new customers and lost market share, leads to decrease operation therefore weak management is consider the central problem of Jupiter as current. There are number of potential causes were deployed also; those are weak sales activities in Japan, lack of sales strategy, weak sales force, while others not effective KPI system and the changing trend of market as caused. As it is based on the limited number of interviews, there is no guarantee that the problem and the causes mentioned are valid and reliable. Nor that all importance causes have been examined already.
Therefore it should conduct an in-depth interview sales manager to determine whether the company sales management is actually too weak and indeed had the adverse consequences to company. Second, it needs to search theories for other causes and validate the potential causes as well as validate the problems. Finally the result has showed that the central problem is weak sales management at Jupiter and the potential causes are weak sales leadership and weak sales forces. Recognize that 2 the central problem come from internal aspects which company can solve, then the alternative solutions are develop and the action plan for implementation are propose.
Introduction The company background Jupiter Pacific is a Japanese forwarder, is a subsidiary of Japan Airlines and belongs to Jupiter Group. Jupiter Group has operated for 30 years; it has 18 subsidies around the world. In Vietnam, Jupiter Pacific has operated for 20 years. It’s located at No.
112 Hong Ha Street, Ward 2, Tan Binh District, Ho Chi Minh City. The principal activity of the Company is to provide Air, Sea forwarding and logistics services. In which, 90% sales belong to Air services, 8% sales belong to Logistics and 2% sales belong to Sea services. As at 8 August 2017, the Company has 50 employees, including 2 salesmen.
The Company organization 3 2. Problem Context Recently, company financial statement has showed the sharply reducing in Sales; it has dropped 15%, 23% and 28% respectively in year 2014, 2015, and 2016 in comparison to the year 2013; it continues trends of reducing and couldn’t show any signal of recover. Table 1 is presented below: TABLE 1: SALES DATA Y2013 Y2014 Y2015 Y2016 Sales in USD 7,459,024 6,307,224 5,746,141 5,353,895 Vs.Y2013 -15% -23% -28% Sales (USD) 8,000,000 7,459,024 7,000,000 6,307,224 6,000,000 5,746,141 5,353,895 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 - Y2013 Y2014 Y2015 Y2016 The main reducing come from Forwarding services, in which Air service has drop by 18%, 24% and 28% respectively in year 2014, 2015, and 2016 in comparison to the year 2013. Sea forwarding service also sharply decreased in sales.
The trend of such decreasing is presented in Table 2. TABLE 2: BREAKDOWN SALES DATA 4 Y2013 Y2014 Y2015 Y2016 Air 6,648,581 5,463,771 5,019,925 4,797,509 Vs.Y2013 -2% -29% -69% Logistics 412,643 452,018 444,036 434,928 Sum 7,459,024 6,307,224 5,746,141 5,353,895 Sales of Sea services 450,000 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 - Y2013 Y2014 Y2015 Y2016 Sales of Air services 7,000,000 6,000,000 5,000,000 4,000,000 3,000,000 2,000,000 1,000,000 - Y2013 Y2014 Y2015 Y2016 5 The reducing of sales might be due to the reducing of selling rate or reducing sales cargo volume; By reviewing selling rate and quotations have applied for customers in those years, it found that company has reduced 5 cents Air freight per kilogram to HASFARM in Oct 2014 due to competition pressure; Nevertheless Company management has negotiated with Hasfarm to collect cooling charge 5 cents in Dec 2014, therefore the reducing of selling rate to Hasfarm is not the cause of reducing company’ Sales. However, the data of air cargo volume at Jupiter has shown the decreasing in those years. It has dropped 14%, 16% and 18% respectively in year 2014, 2015, and 2016 in comparison to the year 2013.
Table 3 is presented. TABLE 3: AIR CARGO VOLUME AT JUPITER Y2013 Y2014 Y2015 Y2016 Weight (ton) 2,926 2,528 2,452 2,388 Vs.Y2013 -14% -16% -18% Air Cargo volume at JPT(ton) 3,500 3,000 2,926 2,500 2,528 2,452 2,388 2,000 1,500 1,000 500 - Y2013 Y2014 Y2015 Y2016 Surprising, contrary to Jupiter, the observation of an increasing trend in Air cargo volume of TAN SON NHAT international Airport during the time when Jupiter cargo volume has 6 declined. It has increased 13%, 20% and 42% respectively in year 2014, 2015, and 2016 in comparison to the year 2013, table 4 is shown: TABLE 4: AIR CARGO VOLUME AT TAN SON NHAT AIRPORT Y2013 Y2014 Y2015 Y2016 Weight (ton) 133,865 150,726 161,100 190,054 Vs.Y2013 13% 20% 42% Air Cargo volume at TSN airport (ton) 200,000 190,054 161,100 150,000 150,726 133,865 100,000 50,000 - Y2013 Y2014 Y2015 Y2016 The reducing sales leads to reducing company gross profit year by year, it has drop USD 150,000 in year 2016, equivalent to drop14% in compare to year 2013. GP (USD) 1,100,000 1,068,882 1,050,000 1,049,232 1,000,000 950,000 936,776 918,842 900,000 850,000 800,000 Y2013 Y2014 Y2015 Y2016 To summarize, It can recognize that the reducing of sales mainly come from reducing of Air cargo volume at Jupiter as year 2014 to 2016, It is abnormal in compare with trend of 7 increasing volume at TANSONNHAT Airport on those years.
The reducing sales for many years affect to company profit then directly effect to company return on investment. Therefore it should be seriously consider and investigate in order to find right solution to solve it. Problem Identification Based on the symptoms of reducing sales for many years at Jupiter, the first interview were plan and conduct with four relative staffs of the company, one of them is Sales manager, one is Airfreight manager, one is Admin supervisor and last one is company CEO. According to initial interviews, not develop new customers, not develop new market and reducing on number of existing customer leads to the reducing sales in recent years.
It also revealed that weak sales activities in Japan leads Jupiter Japan couldn’t support Jupiter Vietnam in finding new customers, new markets; the lack of strategic plan from top management; weak of sales forces; ineffective KPI system and shifting to sea transportation of existing customers are the main causes of the reducing sales volume. Based upon such information, the initial cause effect map has been drafted. 8 Weak sales activities in Selling rate Japan decrease Not develop new customers Lack of strategic plan Sales decrease Cargo volume Not develop new decrease market Weak sales Weak sales management force Reduction on existing customers Not effective KPI system Customer shift to Sea transportation 9 Indeed, recently Jupiter couldn’t increase number of customers more quickly to cover the loss of segment. Even Jupiter did try open new office in Dalat to develop new potential agriculture customers in Dalat area but not strong revenue creating.
Jupiter also did try to explore inbound service from Japan in corporation with shopping center, mall but not successful yet. Jupiter also did to cooperate to Nankai, a Japanese Sea forwarding in order get competition rate of Sea shipments, however company couldn’t find any new potential customers in that segment. It only three new customers have used Jupiter services in year 2016, count for 3% of total sales of that year, those are NAN, TWZDI and VNF1C. TABLE 5: LIST OF NEW CUSTOMERS IN SALES Customers name Y2013 Y2014 Y2015 Y2016 NAN 179,632 TWZDI 4,400 VNF1C 1,121 SUM - 185,153 Moreover, in three years, from 2013 to 2015, Jupiter lost VNJVA, one top five existing customers and two another customers in Air forwarding services, Those customers had chosen rivals instead of Jupiter due to lack of closely take care of the company.
Further, three existing customers are VNVTN, VN3GM and VNHNI had shift use Sea forwarding services of competitors. The below table shows revenue of top ten customers in year 2016 drop USD1,4 million, equivalent to drop 28% in compare to year 2013. TABLE 6: TOP CUSTOMERS IN SALES Y2016 Customers Y2013 Y2014 Y2015 Y2016 vs.Y2013 Notes VNAGR 2,104,368 1,950,468 1,972,344 1,991,683 -5% shift to Sea of VNVTN 729,173 60,310 6,710 32,054 -96% competitors 10 VNSPC 640,600 799,229 655,214 797,217 24% VNFJT 412,041 497,835 671,273 382,052 -7% Customers use VNJVA 272,931 81,286 - - Lose competitor' services shift to Sea of VN3GM 249,889 117,233 324,387 22,526 -91% competitors shift to Sea of VNHNI 248,223 261,438 63,106 55,351 -78% competitors VNSWA 134,083 142,073 151,411 165,135 23% VNJUK 119,624 150,767 115,650 110,000 -8% shift to Sea services of VNSTP 109,714 122,374 136,705 54,528 -50% competitors SUM 5,020,647 4,183,013 4,096,801 3,610,546 -28% Jupiter couldn’t success develop new market segment, couldn’t success diversify segment, Jupiter maintains air forwarding service for long time even though the market nowadays trends shift to Sea forwarding. The diagram below shows that the Air forwarding service has kept biggest part in sales proportion of Jupiter, keep 88% total sales in year 2013 and keep 86% total sales in year 2016; In addition, Sea forwarding has not increased but also reduced for the times, drop from 4% of total sales in 2013 become 1% of total sales in year 2016.
11 Proportion of sales in Y2016 Proportion of sales in Y2013 Sea Sea Sea import Sea Logistics import export 1% export Logistics 8% 2% 2% Air 4% 5% import Air 1% import 3% Air export 86% Air export 88% To conclude, Sales management itself cannot be considered as a performance indicators for the company as such. However, the interviews and data revealed that weak sales management leads to reduction on existing customers, couldn’t get many new customers and lost market share, leads to decreased operation performance. Effective sales management has numerous positive impacts to company performance such as increase revenue and profitability, increase sales productivity, increase customer satisfaction and loyalty, and increase salesperson motivation. Therefore, weak sales management is proposed of central problem in Jupiter.