Deck 8: Evaluating the Effectiveness of the Organization

Question 1

A definition for sales organization effectiveness would be

A) an overall evaluation of how well each salesperson performed in his/her situation.
B) an overall evaluation of how well the sales organization did in achieving its goals and objectives.
C) an overall evaluation of how well the firm did in achieving its sales goals and objectives.
D) an overall evaluation of how well the sales organization did in developing new accounts.
E) a comprehensive approach toward evaluating the performance of the managerial component of the firm.

Answer 1

B

Question 2

Sales organization effectiveness evaluations generally result in

A) recommendations that are tactical in nature, such as specific actions designed to improve the performance of an individual salesperson.
B) suggestions to cut back staff positions.
C) the implementation of new cost containment procedures.
D) general strategic or policy changes.
E) a complete restructuring of the organization.

Answer 2

D

Question 3

A sales organization audit can best be defined as

A) a systematic and diagnostic tool that is used to determine the adequacy of a firm's advertising expenditures.
B) a prescriptive device that is generally used in the redesign of territories or districts.
C) a framework that can be used to assess salespeople for promotion potential.
D) a tool that is used by all organizations to help them achieve their goals.
E) a comprehensive, systematic, diagnostic and prescriptive tool used to assess the adequacy of a firm's sales management process.

Answer 3

E

Question 4

Which of the following statements regarding the sales organization audit is false?

A) It is an expensive and time-consuming process.
B) It should be conducted by someone within the sales organization.
C) It generates diagnostic information that can help management correct problems in early stages or eliminate potential problems before they become serious.
D) It should be performed on some type of regular basis.
E) Its purpose is to make a systematic and comprehensive investigation to identify problems, determine their causes, and take the necessary corrective action.

Question 5

Which of the following is not one of the four major areas covered by the sales organization audit framework?

A) Sales management evaluation
B) Sales organization history
C) Sales organization environment
D) Sales management functions
E) Sales organization planning system

Question 6

Extraorganizational factors including technological, political, legal, and economic-demographic factors are considered in this area of the sales organization audit framework:

A) sales-management evaluation.
B) sales-organization strategies.
C) sales-organization environment.
D) sales-management functions.
E) sales-organization planning system.

Question 7

Recruitment, selection, and sales training are examples of factors considered in this area of the sales organization audit framework:

A) sales-management evaluation.
B) sales-organization strategies.
C) sales-organization environment.
D) sales-management functions.
E) sales-organization planning system.

Question 8

The adequacy of sales managers and management practices is assessed under this area of the sales organization audit framework:

A) sales-management evaluation.
B) sales-organization strategies.
C) sales-organization environment.
D) sales-management functions.
E) sales-organization planning system.

Question 9

Intraorganizational factors such as company organization are considered in this area of the sales organization audit framework:

A) sales-management evaluation.
B) sales-organization strategies.
C) sales-organization environment.
D) sales-management functions.
E) sales-organization planning system.

Question 10

Which of the following is not one of the four types of analyses outlined in the text as a method for analyzing sales organization effectiveness?

A) cost analysis.
B) profitability analysis.
C) productivity analysis.
D) sales analysis.
E) market-share analysis.

Question 11

The most often-used sales definition defines a sale as

A) paid order.
B) shipped order.
C) placed order.
D) received order.
E) delivered order.

Question 12

According to the text, which of the following is one of the methods used most often to measure salesforce effectiveness?

A) return on investment of sales resources
B) sales results versus goal
C) sales employee feedback
D) cost of sales
E) market share

Question 13

In a sales analysis, which of the following comparisons would not be made?

A) Comparisons with forecasts
B) Comparisons with previous period
C) Comparisons between actual and budgeted costs
D) Comparisons with industry/competitors
E) Comparisons within the sales organization

Question 14

An evaluation of sales results throughout the sales organization from a top-down perspective is a

A) hierarchical sales analysis.
B) scaled sales analysis.
C) stepladder sales analysis.
D) pyramid sales analysis.
E) single stage sales analysis.

Question 15

Which of the following statements regarding sales organization effectiveness is true?

A) Most firms conduct annual assessments of cost, profit contribution, net profit, or return on assets.
B) Sales analyses are performed only at the lowest level of the sales organization, typically by territory.
C) The one summary measure of sales organization effectiveness is a productivity analysis.
D) Sales analyses can be conducted in several ways, including by total sales or by sales to specific customers.
E) Most firms employ the same type of sales analysis, an analysis of sales of specific products.

Question 16

When using a top-down perspective in sales analysis, the emphasis is on identifying potential problem areas at each level and then

A) using analysis at the next highest level to pinpoint the specific problem.
B) having that level's sales management analyze the problem and provide an explanation.
C) using analysis at lower levels to pinpoint the specific problems.
D) analyzing what impact that problem might have on the next level's performance.
E) attempting to prevent these problems from occurring through effective sales management.

Question 17

A __________ represents an expected level of firm sales for defined products, markets, and time periods and for a specified strategy.

A) sales forecast
B) sales quota
C) market forecast
D) industry forecast
E) sales budget

Question 18

What is the effectiveness index of a salesperson whose previous year's sales totaled $6,000 and whose sales quota for that period was $5,000?

A) 83
B) 120
C) 97
D) 106
E) 69

Question 19

What is the effectiveness index of a salesperson whose previous year's sales totaled $7,000 and whose sales quota for that period was $8,000?

A) 88
B) 114
C) 97
D) 106
E) 72

Question 20

The sales growth experienced by different organizational levels can be determined by

A) a comparison of actual sales results to those achieved by competitors.
B) a comparison of actual sales results to sales forecasts.
C) a comparison of actual sales results to sales quotas.
D) a comparison of actual sales results to previous periods' sales.
E) a comparison of the sales effectiveness index of the different organization levels.

Question 21

The most common type of sales organization assessment focuses on

A) cost analysis.
B) profitability analysis.
C) productivity analysis.
D) sales analysis.
E) market-share analysis.

Question 22

What is the key sales management budgeting task?

A) To develop sales forecasts that will provide the expected level of sales for the next planning period.
B) To translate the sales forecasts into sales quotas for each territory, district, etc.
C) To determine the amount of selling budget necessary to support the sales function.
D) To determine the best way to allocate sales resources throughout the sales organization and across the different selling activities.
E) To instill a sales consciousness throughout the sales organization.

Question 23

Which of the following provides a benchmark for the evaluation of selling costs?

A) Sales quotas
B) Selling budgets
C) Cost quotas
D) Variance analysis
E) Sales forecasts

Question 24

Which of the following would not be an expense category for a selling budget?

A) Recruiting expenses
B) Salespeople's lodging expenses
C) Production expense
D) Salespeople's salaries
E) Sales office expense

Question 25

A more centralized sales organization will place budget responsibility

A) with the sales manager.
B) with the salesperson.
C) at lower sales management levels.
D) at higher sales management levels.
E) with the accounting personnel.

Question 26

In budgeting for each expense category, a sales manager should attempt to

A) set the budget at the lowest possible level.
B) determine the lowest expenditure level necessary to achieve the sales quotas.
C) cut costs from last year's level of expenditure.
D) justify the highest possible level of expenditure in order to have some flexibility in the budget.
E) improve profitability in the short run by cutting unnecessary expenditures for training and travel.

Question 27

Probably the most often used method to establish selling budgets is

A) objective and task method.
B) profitability projections.
C) cost-justification method.
D) zero-based budgeting.
E) percentage-of-sales method.

Question 28

The ___________ method calculates an expenditure level for each category by multiplying an expenditure percentage times forecasted sales.

A) objective and task
B) expenditure projection
C) cost-justification
D) zero-based budgeting
E) percentage-of-sales

Question 29

Which method of determining expenditure levels for selling expense categories depends upon accurate sales forecasts?

A) Objective and task method
B) Zero-based budgeting
C) Cost-justification method
D) Profit margin budgeting
E) Percentage-of-sales method

Question 30

The basic form of this method for determining expenditure levels for selling expense categories could be called zero-based budgeting:

A) objective and task method.
B) profitability projections.
C) cost-justification method.
D) profit margin budgeting.
E) percentage-of-sales method.

Question 31

Which of the following statements regarding the objective and task method of determining expenditure levels for selling expense categories is true?

A) It is probably the most popular method for establishing selling budgets.
B) This method calculates an expenditure level for each category by multiplying an expenditure percentage times forecasted sales.
C) This method uses typical expenditure percentages provided by readily available published sources.
D) Each sales manager prepares a separate budget request; these are reviewed and through an iterative process selling budgets are approved.
E) This method separates out the major accounts, which are then budgeted for individually.

Question 32

When actual selling costs far exceed budgeted costs

A) it is considered a bad situation, as the objective is to minimize selling costs.
B) it is considered a good situation, as high selling costs automatically mean high sales.
C) it is cause for concern, since costs are only allowed to exceed the budgeted amount by a small percentage.
D) it is cause for concern, since top management will cut future budgets to reduce costs.
E) it is cause for further analysis to discover whether a specified relationship between sales and selling costs was maintained.

Question 33

Last year sales were 16,400,000 and compensation costs were 1,312,000. Compensation costs for the year were budgeted at 7% of sales. It appears that compensation costs were

A) greater than budgeted.
B) less than budgeted.
C) exactly as budgeted.
D) there is not enough information to tell.

Question 34

The two most direct approaches for evaluating sales organization effectiveness are

A) sales analysis and income statement analysis.
B) productivity analysis and cost analysis.
C) sales analysis and cost analysis.
D) residual income analysis and sales analysis.
E) sales analysis and profitability analysis.

Question 35

Which of the following are types of profitability analysis?

A) income statement analysis
B) activity-based costing
C) return on assets managed analysis
D) all three of the above
E) none of the above

Question 36

One of the major difficulties in developing the income statement approach in profitability analysis is

A) determining how to handle costs that are shared between organizational levels or sales types.
B) determining the cost of goods sold for individual organizational levels or sales types.
C) breaking down total sales into individual unit sales.
D) explaining how to interpret the results to senior managers.
E) figuring the investment in assets required to generate the net profit or profit contribution.

Question 37

In this type of profitability analysis, the shared selling costs are allocated to individual units based on some type of cost allocation procedure:

A) the contribution approach to income statement analysis.
B) the full-cost approach to residual income analysis.
C) return on assets managed approach.
D) the full-cost approach to income statement analysis.
E) the contribution approach to residual income analysis.

Question 38

In this approach to profitability analysis, the indirect or shared costs are not included in the individual unit analysis:

A) the contribution approach to income statement analysis.
B) the full-cost approach to residual income analysis.
C) return on assets managed approach.
D) the full-cost approach to income statement analysis.
E) the contribution approach to residual income analysis.

Question 39

Though two approaches to income statement analysis have been used, there seems to be a trend toward

A) the full-cost approach.
B) the cost-allocation approach.
C) the contribution approach.
D) the gross-margin approach.
E) the indirect-cost approach.

Question 40

The basic concept underlying the use of this analytical method is that costs are allocated to individual units on the basis of how the units actually expend or cause these costs.

A) activity-based costing
B) cost analysis
C) profitability analysis
D) hierarchical sales analysis
E) productivity analysis

Question 41

Please calculate the asset turnover rate if sales = $18,000,000; cost of goods sold = $10,000,000; and total assets managed = $10,000,000:

A) 1.8.
B) .67.
C) 1.2.
D) 1.5.
E) .83.

Question 42

Please calculate the profit contribution as a percentage of sales to be used in the ROAM calculation, if sales = $20,000,000; accounts receivable = $8,000,000; and profit contribution = $5,000,000:

A) 20 percent.
B) 40 percent.
C) 50 percent.
D) 5 percent.
E) 25 percent.

Question 43

The assets that are typically included in the formula for calculating return on assets managed (ROAM) are

A) accounts payable and short-term loans.
B) accounts receivable and notes payable.
C) inventory and fixed assets.
D) accounts payable and inventory.
E) inventory and accounts receivable.

Question 44

District 1 has a poor level of ROAM. However, their profit contribution percentage is acceptable, but they have a very low asset turnover ratio. What might cause this?

A) Selling too many low-margin products
B) Problems with accounts payable
C) Negotiating low selling prices
D) Problems with accounts receivable
E) Excessive selling expenses

Question 45

Which of the following actions would improve future ROAM performance?

A) Increasing selling expenses
B) Reducing inventory levels
C) Increasing accounts receivable
D) Reducing total sales
E) Reducing short-term notes

Question 46

A major advantage of productivity ratios is

A) the ability to integrate sales growth and productivity assessments into one analysis.
B) the ability to compare total productivity to targeted productivity.
C) the inclusion of asset investment considerations in the ratio analysis.
D) that they can be compared directly across the entire sales organization and with other sales organizations.
E) that they eliminate the need for allocation judgments and are therefore viewed as more objective.

Question 47

Which of the following statements regarding productivity analysis is false?

A) The most useful input unit for productivity analysis is total sales per salesperson.
B) Productivity is typically measured in terms of ratios between outputs and inputs.
C) Sales productivity and profitability are highly interrelated.
D) Productivity analysis is managerial oriented.
E) Improvements in sales productivity should be achieved by an increase in output with the same level of input.

Question 48

The most useful input unit for productivity analysis is the

A) product.
B) salesperson.
C) manufacturing worker.
D) sales manager.
E) sales call.

Question 49

Productivity improvements can be obtained by

A) increasing output.
B) increasing input.
C) increasing output with the same level of input.
D) increasing input with the same level of output.
E) maintaining the same level of input but using less output.

Question 50

All of the following are characteristics of benchmarking except

A) It is an ongoing measurement and analysis process.
B) It involves comparing an organization's current operating practices to average industry operating practices.
C) It can lead to greater customer satisfaction.
D) It may lead to lower operating costs.
E) It may lead to improved operations.

Question 51

According to the text, which of the following is not included in the implementation and control phase of the benchmarking process?

A) Communicate benchmark findings and gain acceptance.
B) Establish functional goals.
C) Develop action plans.
D) Implement specific action plans and monitor progress.
E) Recalibrate the benchmark.

Question 52

A benchmarking study should provide all of the following except

A) a measure that compares performance for the benchmarked process relative to the organization studied.
B) identification of the organization's performance gap relative to benchmarked performance levels.
C) identification of best practices and facilitators that produced the results observed during the study.
D) performance goals for the process studied.
E) a set of solutions to commonly encountered performance problems.

Question 53

Which of the following is not considered a key to successful benchmarking?

A) Clearly identify critical activities that will improve quality or service or reduce cost.
B) Properly prepare and benchmark only one activity at a time.
C) Provide adequate resources--financial and personnel.
D) Make sure that you clearly understand the processes of your benchmarking partner company first.
E) Verify that your benchmarking partner company is the best in its class.

Question 54

____________ is a data-driven methodology that attempts to eliminate defects in any process.

A) Activity-based costing
B) Benchmarking.
C) Six Sigma
D) Productivity analysis
E) Sales analysis

Question 55

Which is the correct order of the steps involved in the Six Sigma process?

A) Define, measure, analyze, improve, control
B) Define, analyze, measure, improve, control
C) Define, measure, analyze, control, improve
D) Define, analyze, measure, control, improve
E) Measure, define, analyze, improve, control

Question 56

Assessing the success of a sales organization is difficult because so many factors must be considered.

Question 57

When assessing the sales organization, the success of the sales organization must be differentiated from the success of individual salespeople.

Question 58

Sales organization effectiveness and salesperson performance are essentially the same.

Question 59

Salesperson performance contributes to but does not completely determine sales organization effectiveness.

Question 60

Results of salesperson performance evaluations are typically tactical.

Question 61

Evaluations of salesperson performance are confined to the individuals.

Question 62

The sales organization audit is a tool that needs to be used only by those firms that are not achieving their goals.

Question 63

The sales organization audit typically will provide an assessment of sales management functions.

Question 64

The sales organization audit is the most comprehensive approach for evaluating sales organization effectiveness.

Question 65

The sales organization audit should be performed just when problems are evident.

Question 66

Only outsiders should be involved in a sales organization audit.

Question 67

Much of the information collected in a sales organization audit comes from various sales managers and salespeople.

Question 68

The costs of a sales organization audit, in time and money, typically outweigh the benefits.

Question 69

Potential benefits resulting from an audit include, among others, increases in productivity, sales and profits due to improvements and efficiencies in production operations.

Question 70

The probability of identifying and correcting potential problems before they become troublesome increases with the regularity of the auditing process.

Question 71

A sales organization audit might ask a question such as "How is our sales training program developed?"

Question 72

There is no one summary measure of sales organization effectiveness.

Question 73

Separate sales analyses need to be performed for the different levels in the sales organization.

Question 74

Some firms use customer satisfaction surveys to help evaluate salesforce effectiveness.

Question 75

In sales analysis, the emphasis is on assessing the costs incurred by the sales organization to generate the achieved levels of sales.

Question 76

It is possible for sales volume to seem unchanged even though units sold increased.

Question 77

Analysis of sales dollars or sales units provides the same evaluative information.

Question 78

Sales managers at each level need sales analyses at their level and the next level above for evaluation and control purposes.

Question 79

One type of sales analysis involves comparisons with previous period.

Question 80

The hierarchical sales analysis begins with total sales for the sales organization and proceeds through each lower level in the sales organization.