Lahore School of Economics

Sales force Management

Footlib Case MBA II-C

Group Members Faizan Khalid Gul Abbas Muaz Moeen Sheikh Zaigham Gondal Zunair Ahmed

Background
The case starts off with the Story of Mr. Saad Lodhi (MD of Footlib) and Mr. Zahid. Mr. Saad is enjoying and cherishing a good international sales of his companys product while Mr. Zahid puts up a concern regarding the domestic market sales operations that hindered the target of expanding up to the100 mile stone of outlets within 5 years of Operations.

Quantitative Information
There was 100 % exports of leather shoes in the first quarter of year 2010 by Footlib. Right now Footlib has 7 retail outlets with just 1 outlet in Liberty market. The company now intends to open over a 100 branches across Pakistan in the next 5 years as a part of future plan. Exports comprise of 97% of Footlib sales and 3% consists of domestic retail market. In January 2010 the export sales figure went up to 100% the exports. Many services were outsourced which were roughly 5% of total production. For the next 5 years in Pakistan they are targeting 100 shops The company provides its employees 24 leaves all of which has to be informed in prior.

Qualitative Information
Mr. Saad Lodhi (Managing Director of Footlib Pvt. Ltd.) was reviewing sales performance of Footlib as a consequences of its B2B operation in Italy. The leather expo of Italy boosted off having top of the line exporters from all over the world and presence of Footlib was on such a prestigious/exalted platform was another milestone achieved. Local market retail sales which seems to be doing not so well even after being around in the retail market for more than 2 decades and having a competitive edge of providing comfortable and world class quality shoes in differentiable price. The right thing of over extending his efforts solely towards exports that has tremendous sales which in actual have been cross subsidizing the local retail sales that made him ignore the domestic retail market altogether.

Footlib came into existence nearly 2 decades ago and was started as a partnership between Mr. Waseem Zakria and two of his friends but later both the partners sold their shares to Mr. Waseem and the company converted from a partnership to a private limited company.

The Dutch staff set up training for Standardization and Human Resource Practices. The focus of the company then shifted towards manufacturing boot shoes In the early life cycle of boot manufacturing the company was consistently failing to meet its export orders ( due to lack of consistency among their products ) Footlib took their leather and soles from biggest tanneries in Pakistan. Footlib started out of Lahore and slowly expanded moving towards the inner zone ( the expansion was zone wise ) The company is medium sized and it followed the centralize approach where every decision is being taken at top hierarchal level. There are only couple of managerial levels and a broad span of control. Organizational culture is informal where everything is done on mutual understanding although the company rules and regulations are strictly adhered to. The employees can leave organization whenever they feel, they need to due to which the employee turnover rate was high as the company hired fresh graduated from good background and foreign qualifications which has high expectation in terms of salary

The entire staff sits in a same place where there are two cabins only for the senior management, though this way of nontraditional work place environment, the communication with the upper management is made convenient.

our expansion is an ongoing process and we are learning about the market as we get along Footlib has four major brands: orange skin, free mood, flex system and Trentino. Market trends are showing positive trends for the retail industry therefore Footlib plans to create huge market share by further penetrating into retail market. From promotional activities the company management said financial resources to afford large scale advertisement campaigns they did not have the

The company puts off promotions mostly in the Eid seasons where their business in maximum, Footlib stalks up its best merchandize in every size, shape and color in Eid. Seasonal fluctuations are also experienced in the moth of Moharram when the sales takes a serious dip to low.

Symptoms to Problem
The production capacity was limited which was enough to meet the current demands Footlib has been doing extremely well in foreign markets due to which they started to underestimate potential of the local market There was no product development facility for the local market There was an issue of compromised quality standards by the local manufacturers which was resulting in dead stock. There was a high bargaining power of supplier because of resource dependency of Footlib on its suppliers ( mainly Shafi Tanneries ) There was no separate marketing Department and all the marketing related activities and operations were performed by finance and budgeting department, which was the major drawback for the company, moreover there was a lack of marketing research in the product development for the local market sales. Absence of service automation system due to which Footlib was unable to keep track of trends like what inventory at what price was sold the most or at around what tine of season the sales grew exponentially and when they took a dip. Footlib doesnt had the proper resource allocations system. There was improper rather than informal system of operating the business. As the production plant has not been updated at a good pace.

Core Problem 1. There was poor demand forecast, Unplanned expansion and trust deficit which was hindering Footlib to penetrate in local market along with no proper sales and sales and marketing department.

There was no automation system for the sales record of the foot wear by the company. The company doesnt know that what product was sold at what time and at what price and what were the peak season for the sale of products of different types ( out of four product domains ). This problem leads to poor strategy of the company to invade in the local markets. The company was lacking technology and proper strategy in terms of supplier relationship too. The company, Moreover, was having a trust deficit in Pakistani shoe market, all their activities and product were dedicated to the international market, there was no marketing and sales department for local market, no consumer and market research was allotted to know the trends and the fashions about the Pakistani market and company was moreover, dealing in the selling concept, that is making what it takes to sell without incorporating the needs of the consumer which hindered the main goal of achieving the penetration into local retail footwear industry.

Recommendations
1. Incorporate marketing department in Organizational structure. There is an immediate need of the marketing and sales department. The organization is centralized, which creates the sense of bureaucracy among the hierarchal level. There is lack of opinion from the consumers, and their actual needs about the footwear is ignored. A marketing department will work along the other functional departments. And the sales department will be initially geographically distributed, studying and finding out the general consumer needs and wants about the foot wear trends. 2. Distribute the outsourcing to more suppliers. As the company is experiencing high cost of the supplier, it may distribute its 3rd party operations to more suppliers to decrease the bargaining power of the supplier. The advantage of this would be that if one term of a supplier seems to be expensive, Footlib always has the other option. 3. Demand Forecasting should be based upon subjective and objective approach.

Most importantly is to formulate a system in which the local demand forecast exist. Approach all the book records of the product categories that are sell, distinguish them according to the sales time, product type, and season and formulate the seasonal index. Moreover for the future purpose formulate the automated system of inventory and sales activities and apply the objective approach of decomposition which includes the seasonal index for forecasting sales and formulate the workforce accordingly then define territories accordingly for the marketing unit. 4. Change the business orientation from seller approach to marketing approach.

CEO

Purchase

Audit

Accounts

Retail

Gen.Adm

Finance

Production

International

M and S

North

Incorporated with proper marketing research and demand estimates

Central

South