This website uses cookies to ensure you have the best experience. Learn more

Loctite Case Study

1092 words - 5 pages


US-based Loctite is the market leader in adhesives and sealants business, with Mexico and Permatex as subsidiaries and business operations in Mexico. The net earnings growth has been slowed down since 1987 amid economic downturn, to achieve greater growth, the management control system is being tailored to local environment to better align the behavior of employees with the objectives and strategies of the organization. Performance-based compensation system covers result controls that provide incentives to boost sales and also action controls, particularly behavioral constraints in this case restrict employees’ actions.

Issues identified
Talent Retainment - Due ...view middle of the document...

The flaws in compensation system may partly contribute to the breakdown of the territorial system as salespeople do not get punishment for their violation. When all salespeople go to the areas with more big companies, leaving no sales effort put into other areas that have fewer but still have prospects, in long run, customer pool may diminish. Also, the manpower is not put into full use in this case, lowering the overall efficiency of the company.
Pricing Authority – Prices are fixed by Jose and salespeople have no pricing authority and cannot take into account clients’ needs. Given numerous aggressive competitors, it becomes difficult to capture and retain clients. Consequently, potential profitable deals may be lost and in long run, client base can shrink significantly since the switching cost for customers can be low.

Expected improvements
As Jose suggested, salespeople are the greatest asset for the company, and so, talent retainment is the most urgent in order to remain as a dominant market leader with 85% market share. Also, internal competition, which adversely affects sales and employees’ morale, can be eliminated. While boosting sales, commissions should be given appropriately since the current commission-sales ratio is high.

Suggestions for Improvements

Several changes could be made to performance-dependent compensation. First, to retain talents while reducing financial burden, the base pay could be lowered but higher than their competitors’ offer. Loctite’s recent salary increases had been far above inflation and so the company may lower it to a level that is just above their competitors. Also, unrealistic sales targets should be adjusted according to the current situations to make them challenging but motivational.
Second, bounded by law, the profit sharing cannot be lower than 10%. A further increase will significantly increase financial burden and so non-monetary benefits shall be introduced more widely in the company like family vacations and medical benefits but not just the few top OEM and MRO salespeople.
Third, the regular salary increase should be objective based on SOP and sales goals and profit margins and should be reversible, which means salaries could be lowered in cases of worsened performance. However, employees should be provided with support by having annual reviews with their supervisors who shall help analyze problems and help improve performance.
Forth, to particularly address the...

Other Papers Like Loctite Case Study

Rational Emotional Behavior Therapy Case Study Conceptualization And Treatment Plan

2140 words - 9 pages Rational Emotional Behavior Therapy Case Study of Sarah: A Conceptualization and Treatment Plan Rational emotive behavior therapy, REBT, was developed by Albert Ellis and holds the central belief that the events in our lives do not cause our disturbances but that they are instead caused by our view of the events (Murdock, 2009). Murdock (2009) states that “people are seen as responsible for their behavior” (p. 279) but, because they are

Holidays In Albania Essay

1636 words - 7 pages Have you ever thought about having exciting and incredibly cheap vacations? Albania might be the right choice. According to My Travel Guide, Albania is ranked the fourth among ten places worth visiting in Eastern Europe (“Top 10 Eastern European Destinations”). One can encounter three kinds of vacations in this Mediterranean country: winter, summer, and cultural. The ideal places to spend your winter vacations are the Albanian Alps. They are

A Heart Of Darkness

1748 words - 7 pages In this short story, there are frequent significant subject and ideas that make the story, "A Heart of Darkness," by Joseph Conrad, and haunting novel. The main theme is absolute white power over the natives. The theme validates the corruption, and the dependence caused by the white people as they took over the Congo. White men were giving all the power; they had no self-control, and in the end they did not use wisely. The white men became

The Aspects Of Vulnerability Among The Exploited In Medical Research

2287 words - 10 pages proceeding examples. The Willowbrook Hepatitis Studies was a case in which individual rights were severed and respect for one’s autonomy was lost. In 1947, in Staten Island, NY, Willowbrook was opened. Willowbrook State School was a state-funded institution for developmentally disabled children intended to accommodate approximately 4,000. By 1965, that number reached a population high of about 6,000. This high population mixed with a short staff led

The Hitchhiker’S Guide To The Galaxy

1171 words - 5 pages had this strange unaccountable feeling that something was going on in the world, something sinister.’ ‘No,’ said the old man, ‘that’s just perfectly normal paranoia. Everyone in the Universe has that,’” (Adams 160). The novel reinforces absurdity in the universe as Arthur’s fair attempt to study the universe is refuted with a simple response suggesting that the facets of the universe should be easy to comprehend. The film however, had Arthur make

The Ford Motor Company Wage Increase Of 1914 And The Theory Of Incentives And Efficiency Wages

1252 words - 6 pages doubling these wages can only be justified if, in some other way, it generates an equal or superior amount of value (either through a better product, lower costs, or both). According to the theory of incentives and efficiency wages, this is indeed the case, and Henry Ford even asserted that this decision was one of the best-cost cutting judgements they ever made (Raff and Summers 1987). This paper will outline the history of Ford Motor’s 1914

Historical Analysis Of The Economical Breakthroughs Of The Industrial Revolution

1396 words - 6 pages revolution, capitalism was used as the dominant form of economy in England. This helped England’s economy become consistent and organized throughout the country. However, it also posed certain, significant, problems. In order for the perfect capitalism to be achieved, every citizen had to begin equal. This was not the case, as many descendants of nobility and very early entrepreneurs started England's switch to capitalism with a lot more money than most

Leadership Portrayed in Monologue from Shakespeare’s Henry V

1214 words - 5 pages for their family and their country’s reputation. (Jacqueline and Milton, 2012)In real life case, a successful leader usually has good communication skill when talk to followers, people cannot influence their team members without connect communication to them. Language is a most powerful tool used by leader to manage and influence people in different industries. (Seargeant, 2009) Henry’s speech with unlimited energy and confidence, he cheers up

Cuba Civil Rights

1906 words - 8 pages Oct 2013. "World Report 2013 Cuba."Human Rights Watch.Human Rights Watch, 2013.Web. 14 Oct 2013. Wylie, Lana. "The Special Case of Cuba."International Journal 67.3 (2012): 661-84. ProQuest.Web. 9 Oct. 2013. "2012 Human Rights Reports: Cuba." U.S Department of State Diplomacy in Action.Bureau of Public Affairs, 19 04 2013.Web. 14 Oct 2013.

US Freight System

1273 words - 6 pages “Free Riders” are part of the business. When the Supreme Court decides a case that NITL has analyzed and promoted from the beginning, that decision applies across the land, everyone benefit from it. Bruce J. Carlton The League members pay a membership due every year, and they expect as a return a benefit, and whenever NITL accomplish goals, its members benefit but all the other shippers benefit as well. This is a threat that open the door

Democratic Peace Theory

1852 words - 8 pages the United States against the USSR as an example of how emotions almost destroyed two nations. People were spying on their own family members out of fear of being branded a communist and the fear of nuclear annihilation was ever present danger that children were doing drills in case of nuclear fallout. Had it not been for Gorbachev assuming power in Russia and letting his people see what freedom was about through his policies, we would not be here

Related Essays

Loctite Company Essay

595 words - 3 pages LOCTITE1) What is Loctite's distribution strategy? What are the different distribution channels which are used by Loctite?Loctite's distribution strategy is to reach a worldwide sale capability in the chemical adhesives industry. Loctite wants to offer a full range of sealant and adhesive products which meet the different needs of its customers. The company provides a great support to distributors, training the distributor's salespeople

Corporate Sustainability Essay

5144 words - 21 pages : Changes in the global economy (rise of emerging markets, demographic shifts, technological advances, etc.) heighten the importance of sustainability practices that increase organisational resilience and ensure companies’ long-term competitiveness. Adoption of Corporate Sustainability   Adoption of corporate sustainability varies significantly by industry. A new study by MIT Sloan Management Review (Knut Balagopal et al, “The Second Annual

Freedom And Responsibility Essay

2141 words - 9 pages amendment is “Congress shall make no law respecting an establishment of religion, or prohibiting the free exercises thereof” (Jordan, 1999). Therefore, the first amendment states citizens have freedom of religion and exercises of the religion. The article entitled “Lawsuit alleges FBI violated Muslims’ freedom of religion,” published by Jerry Markon, Washington Post Staff Writer, justifies the detailed case of the FBI surveillance targeting Muslims for

Hate Crime Laws Essay

2348 words - 10 pages Death of James Byrd”). While this particular case may give the appearance that perpetrators of hate crimes receive appropriate punishment, almost a decade later, one particular case demonstrates the inequity in the application of hate crime punishments: In 2007, Sean Kennedy of Charleston, South Carolina, left a bar around 3:45 am and was confronted by Stephen Moller, who called him a “faggot” and then punched him so hard in the face that his