IDS Financial Services Case Study

2657 Words Oct 23rd, 2006 11 Pages
Situational Analysis

Introduction:

IDS Financial Services operate in the consumer financial service industry. After the acquisition by American Express in 1984 the company went through tremendous growth for three consecutive years in terms of revenue (average 30%), financial plan fees (174%) and its sales force (annual rate11%). The company was facing new challenges as to how to maintain this 30 percent growth rate in the market place where the competition was increasing day by day. The consumer financial industry is growing very fast which creates new opportunities to be exploited. With this the competition is also growing as the competitors are becoming more and more aggressive in marketing and selling their products. Now the company
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To achieve the target of 30% growth in revenues one of the options with Saunders is to expand his Sales force. This expansion plan might be curbed internally as it goes against the other key objective of reducing cost.

Saunders would have to put across this expansion as an investment and not a cost.

He should also reiterate the fact that IDS' competitors are doubling their sales force.

Saunders would probably face a challenge to change the complex salary structure of the planners as well. It is critical that this complex structure be simplified and the remuneration benefits be clearly shown (to the sales force) if Saunders has to curb attrition (attrition rates being high the expected growth might not be possible). He might face a hurdle in this regard due to the fact that a complex system would have been put in place to handle all the paper work e.g. there are 150 different commission schedules but general repulsion to change in the workplace would be a hurdle.

Here, Saunders could emphasize that keeping the sales force is all important especially since:

- Big players like Merrill Lynch have also started operating in the middle market and IDS has to consolidate its position there. This is possible only with a trained retainable work force.

-If IDS has to target the higher market of high net worth individuals where it has a smaller presence, then retaining trained personnel is all the more important

- The fact that this investment would help
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