1. could have negative implications to the company.

1. Based on the facts given, evaluate Rajiv’s territory design.  What
other basic control unit might Rajiv have used besides cities? 
Why?

As may be read in the case, Rajiv
divided the state geographically into four equal-size regions. He then assigned
one account executive to take charge of the cities within each region. In
essence, Rajiv has been using cities as the basic control unit. Consequently,
the use of cities as a control unit tends to create some issues in the company.

Among others, the current territory design makes it difficult to equalize the
workload of the sales executives and also inhibits effective evaluation of
salesforce performance and growth (Grant, Cravens & Low, 2001). Possible
alternatives to cities would be metropolitan areas and major customers.

Ideally, the smallest control unit should be chosen so as to facilitate easy
calculation of market potential and sales potential (Ingram et al, 2015).  

2. What other forecast method(s)
should Rajiv have used besides the sales force composite moving
average?  Why?

In forecasting sales, Rajiv used the
sales force composite method, which involves asking the account executives
about the sales expectations for the coming year and afterwards totaling them.

To address also possible bias, Rajiv used the moving average of previous four
years of sales. Though the use of moving average could reduce bias, other
possible forecast methods can also be used such as exponential smoothing and
decomposition method (Ingram et al, 2015).   

3. What type of sales quota
did Rajiv use?  Did he set the appropriate quota level? 
Why or why not?

In setting the sales quota, Rajiv sets
quotas slightly higher than the forecasted sales. Looking at the sentiments and
feedbacks of sales personnel, assumption is that Rajiv failed to set the
appropriate quota level.

Statement
of the Problem

The current territory design makes it
difficult to equalize the workload of the sales executives and also inhibits
effective evaluation of sales force performance and growth.            

Summary
of the Facts

In determining the sales territory,
Rajiv Dembla, CEO of Lasting Impressions, divided the state geographically into
four equal-size regions. He then assigned one account executive to take charge
of the cities within each region. Consequently, the use of cities as a control
unit tends to create some issues in the company. In forecasting sales on the
other hand, Rajiv used the sales force composite method, which involves asking
the account executives about the sales expectations for the coming year and
afterwards totaling them. To address also possible bias, Rajiv used the moving
average of previous four years of sales. Finally, in setting the sales quota,
Rajiv sets quotas slightly higher than the forecasted sales. Conversations
between John Cook, Rajiv’s Executive Assistant, and the four account executives
revealed certain issues that could have negative implications to the company.

Analysis

Review of the case details revealed a
number of issues. In territory design for instance, Rajiv has been using cities
as the basic control unit. Consequently, the use of cities as a control unit
tends to create some issues in the company. Among others, the current territory
design makes it difficult to equalize the workload of the sales executives and
also inhibits effective evaluation of salesforce performance and growth. In
forecasting sales on the other hand, Rajiv used the sales force composite
method, which involves asking the account executives about the sales
expectations for the coming year and afterwards totaling them. To address also
possible bias, Rajiv used the moving average of previous four years of sales.

Though the moving average could somehow reduce bias, the problem is that there
is a possibility of under-promising and over-delivering. Finally, the sales
quota imposed on the account executive failed to: reflect performance
standards, motivate the salespeople, and identify strengths and weaknesses.

Recommendation

To address the issues, Rajiv may
consider the following: first, change the control unit either to metropolitan
areas or to major customers; second, change the sales forecasting method to
exponential smoothing; last, use a combination of profit margin and customer
satisfaction in setting sales quotas.