The paper "Aspects to Consider When Developing Key Account Management" is a great example of management coursework. One of the strategic merits of KAM planning is the eventual organizational new thinking. In this regard, the application and adoption of KAM system would facilitate and involve the development of alternative organisational systems through which a reorientation in the long run management of the organisation can be based. As such, this, in particular, involves the establishment of relationships through which the respective consumer involvement is facilitated and promoted. Thus, with consumer involvement and relationship development, the virtue of loyalty and long term gains is eminent.
However, in the development and application of KAM is its complexity. As such, the process involves the learning and incorporation of diverse consumer cultures that are often different. Consequently, this requires the sales staff to develop different portfolios through which to manage the different consumer cultures and decision-making practices (Emery and Oertel (2006, p. 15). Although such an approach is bound to increase overall competency and consumer satisfaction, the KAM practice risks increasing production and operational costs in an organization.
For instance, if the organisation sets the employees’ salaries based on their sales at 2% standard rate as per the cost of sales existing rates, the new salaries for the representatives would be as follows Current Basic Salary ($) Sales ($) Proposed Salary on a 2% increase ($) T1 26000 1800000 36000 T2 33000 2000000 40000 T3 27000 900000 18000 T4 38000 1600000 32000 T5 20000 800000 16000 T6 22000 1200000 24000 T7 23000 700000 14000 189000 180000 Total Difference $ 9000 Percentage 2% Although there is a $9000, the actual cost of effecting the changes could be higher than the revenue gains thus negating the overall KAM system establishment system. Thus, the proposed key accounts management system should be based on a cost-benefit analysis. A cost-benefit analysis I an approach through which a strategy application benefits to an organization both direct and indirect.
On the other hand, a strategic cost is described as the expenses incurred in developing and implementing a strategy in an organization. For instance, consideration should be developed on an evaluation of the implications of employee payments against revenue gains in the proposed system. For instance, a calculation evaluation should be developed to establish the ideal percentage per annual sales made by organizational regional sales representatives. As such, this should be developed based on the overall costs of sales and the desired organizational profit margin.
Consequently, in order to develop a sustainable key account management system should be based on a critical evaluation of ensuring overall revenue benefits to the organization rather than on the incurred costs. Finally, a critical evaluation aspect that the organizational executive management should consider in the proposed categorization of its accounts into a prospect, and key accounts categories. In this case, due diligence should be placed on the strategic contribution to the organizational strategic goals. In this case, the need to increase sales value by 10% should be evaluated based on the need to increase sales regions allocations.
In this case, the cost of developing and sustaining an additional sales region, as well as the movement of the sales for employees from one region to the other should be based on the need to increase organizational competitiveness into the future. Therefore, the management should consider the strategy of long-term market implications.
Aswathappa, K., 2005, Human resource and personnel management: Text and cases, Tata McGraw-Hill, New Delhi.
Dumont, M., Stojanovska, N. & Cuyvers, L. 2011, "World inequality, globalisation, technology and labour market institutions", International Journal of Manpower, vol. 32, no. 3, pp. 257-272.
Emery, C.R. & Oertel, S. 2006, "An Examination Of Employee Culture-Based Perceptions As A Predictor Of Motivation", Journal of Organizational Culture, Communication and Conflict, vol. 10, no. 2, pp. 13-29.
Sharma, R. R., 2007, Change management: Concepts and applications, Tata McGraw-Hill, New Delhi