Financial Consequences For A Truck Leasing Company

1596 WordsJan 26, 20177 Pages
Almost every company in its history have made mistakes, some big, some irreparable, some not so harmful. Mistakes can vary in type widely. Some mistakes are hiring, some in using assets to its fullest potential, etc.; while other mistakes are unfortunately intentional. Truth is that every time that management in a company makes a mistake there are financial consequences for the company. IN this work we are going to analyze three cases where something was wrong and we are going to provide a comprehensive solution to each problem. The first case we are going to analyze took place within a Truck leasing company in the fall of 2000. The main problem is that the company was having problem in making money. According to Froeb (2016), the company…show more content…
The second way we could determine feasible to fix the problem at hand was to leave the salespeople without a limit on how low to go, but change the actual commission system to better align with the company profitability goals. This will mean to change the performance metric from trucks closed to actual net revenue from sales. With this method, salespeople would have the incentive to try to lease trucks with the highest rate they can get, but still, if at some point salespeople are satisfied with the sales they have made already there goes the incentive to keep selling. The third and last way to approach this problem would be a good combination of the two solutions previously exposed. First, we will set the limit based on the average cost of doing business per truck plus some profit. This will ensure that there is no lost in any deal. Along with that we will also implement the commission program based on net revenue from sales per person, adding a little tweak of scale. Say, for the first $50,000 this person makes for the company they are going to have a bonus of 10%, when they reach $100,000 they will get a 15% bonus, and so far so on until the system caps at some percent. This will be more likely to keep motivation among salespersons to keep selling in order to achieve the bonuses. The second problem we are to analyze is about managing

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