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case analysis
History
Arrow electronic - A broad line distributor of semiconductor & electronics components to OEMs (Original
Equipment Manufacturer)
It began as a radio-equipment retailer in 1935
Listed in NYSE in 1979
Became the second largest distributor in the US by 1980
CUSTOMER BASE
VALUE ADDITION
Commercial semi-conductors
Military and aerospace conductors
Passive and connector products
Computer systems, peripherals and software
Start-ups
Small and mid-sized manufacturers of electronic products
Also handles suppliers sales of goods
Company Summary
profile
30 40 year old
No college
degree/technical training
High energy
Highly aggressive
Monetary motivation
Relation based selling
Did their own thing
difficult to inject new idea
Sales force
expectations
Achieve sales goals and deliver good
performance
Manage the territory
Understand the customer strategy : Knowledge
about company, products in pipeline, demand
creation for the same , need analysis of consumer
and supplier
Make cold calls
Overcome objections and persuade
Structure
Branch General
Manager
Area Sales
Manager
(1-3)
Admin
Manager
Marketing
Manager
Admin
Personnel
Inside
Sales
Manager
Yearly Avg: $40k-$50k
Max Earning: $100k
Commission: 4%-6% of
Gross Margin
Sales force
Problems
Lack of sales personnel
Sales force
No Standard
Training
Concept of Selling
Brief
Hire students from college campuses and train them to sell the way modern salespeople
should sell.
3 fold objective
Needed more
salespeople
Only 300 people before
Sprouts started
Sprouts Program
SELF STARTERS
Changes sought
Selling based on relationship
PEOPLE SKILLS
Kind of people
NO TOP GPA
Selling parts
Sprouts Program
BUSINESS MAJORS
LEADERSHIP SKILLS
GOAL ORIENTED
Compensation
NEW
1st YEAR
$18,500
$24,000
2nd YEAR
$27,000
HIRING
Sprouts training
process
Headquarters
[1 week]
Sprouts Program
Field office
Warehouse
[2 weeks]
Field office
[6 months]
Headquarters
[1 week]
Why?
Varied results across branches
Field organization didn't have time to
train people
Friction between Sprouts and
managers
changes
Create common bond: espirit de corps
Like an MBA program
Demanding workload
Understanding of real time computer systems
process
HIRING
Sprouts 2.0
Xerox facility
[13 weeks]
Field office
[13 weeks]
Xerox facility
[3 weeks]
Field office
[permanent]
For better compensation: Sprouts who were in first year were offered guaranteed annual salary of $30,000
by the competitors. And those in their second year and had their own sales territory (with a salary of $25000
- $30,000) were offered $40,000 to $45,000
To move up the management ranks: Since sprouts were fresh out of college, their career advancement to
management positions was slow. However, other competitors recognised their management potential and
Sprouts were offered faster career growth
Changes made:
Deferred Compensation Program:
A part of salary was given a commission rate and put
to individual accounts, a percentage of which was
given out every quarter and at the end of two years.
Non Compete Agreement:
Employees were made to sign an agreement that they
would not leave to work for a competitor
questions
For
Against
Possible solution
questions
2. Training
Theoretical frameworks
Scenario based
Gamification
Possible solution
What should
Arrow do to retain
the talent?
questions
Possible solution
Programs
questions
This will also de-risk Arrow from potential loss of Clients when FSRs leave
Possible solution
Thank
You