The King Group of Companies

Larry Dy, special assistant to the President of the King Group, was trying to determine what actions to recommend to Mr.
John King, the President. Earlier, King had called him to his office being concerned about the internal conflicts among the
Sales, Brand, and Production department of Alpha Foods Company, one of the divisions of the King Group of Companies.
Larry, can you tell me what's going on at Alpha? Rene Cruz (the National Sales Manager for Alpha Foods) and Tommy
Rivera, (the Production Manager) always seem to be in conflict. Almost every month-end, I receive memos from Rene
claiming that sales was not able to sell much because there was no stock available for selling. Then, I receive another
memo, this time from Tommy pointing out that they had produced sufficient stocks as per Brand forecast.
When I ask Andy Diaz, (Brand Division Manager for Alpha) regarding low sales, he insinuates that it was largely because
Sales was not doing its part. Though he does not say it straight, being the gentleman that he is, I can sense that he hates
Rene`s guts for not pushing the salesman enough.
Can you explain the situation to me? I have this feeling that the reason why Alpha is not performing well in the market is not
because we have inferior products but because our own people are not giving their best efforts. What can we do? I was
thinking of placing Marlon Teh, (one of the Group's vice presidents) on top of the situation. Please look into this and give me
some explanation and recommendations.
Corporate Background--The King Group of Companies was one of the largest conglomerates in the Philippines. Its
business ranged from food manufacturing to detergents to chemicals to hotel services.
The King Group had three flagship corporations: Alpha-King Corporation, Kings Commercial Corporation, and Republic
Kingdom Corporation. Each flagship corporation had its companies and divisions, each involves in its own line of business.
The King Group had humble beginnings in 1951. It gradually grew as what it is now largely due to the hard work of John
King. From a textile trading firm, King went into sales distributorships of such products as soy sauce, fish sauce, cooking oil,
and milled corn.
By 1961, Alpha Foods Company was established to manufacture and sell chocolate candies and coffee. Eventually, biscuit
products were included in the company's product line.
Through the years, King's businesses experienced rapid expansion. Alpha Foods eventually became just a division of AlphaKing Corporation. Its businesses ranged from foods, pizza parlors, plastics and tin packaging materials, and toys and dolls.
Other flagship corporations were soon organized. Kings Commercial Corporation was into a five-star hotel, a shopping
complex, a chain of theaters, a department store, and a supermarket.
Republic Kingdom Corporation was into poultry and hog raising, vegetable farming, fertilizers, chemicals, flour milling,
textiles, garments, and snack foods, among others.
In all these undertakings, John King was personally involved. He was the epitome of hands-on management. He always
wanted to be involved in all key decisions to be taken.
It was only by the mid-seventies, when he realized that he could not handle the whole conglomerate by himself that he
started pirating so-called professional managers to run certain aspects of his businesses. He hired managers to handle
marketing, production, sales, and research and development.
But despite the move towards professionalizing management, King saw to it that managers whom he would turn over
operations were trustworthy. Thus, he placed a [premium on loyalty and trust. This is why key operating managers in his
businesses are usually veterans in that they had been with the company for quite some time. This was so because before
King gave full authority to a manager, the manager had to prove that he could be trusted.
Larry Dy- Larry Dy was one of the trusted men of King. He had joined the King Group out of graduate school. He had
finished his MBA from recommended him to King. And because of his educational background as well as his father`s
recommendation, King hired him as special assistant. He was supposed to assist the President in almost anything as he
usually describes his job.
Larry knew King almost inside out. He knew that King was a tough boss with a heart. Though he may have been ruthless in
business, Larry knew that King had a soft for persons he trusted. These include some managers of the King Group.
When King called him that evening, Larry knew that King was troubled. He decided that the first step to do was to gather as
much information and views from the three departments concerned.
Sale`s Views-From talks with salesmen and an informal conversation with Rene Cruz, Larry got a viewpoint of the apparent
conflict.

You know, Larry, we salesmen are doing our demand best to sell our products. Six days a week, we're out there in the field,
offering our products. The problem is our products lack support. Brand is not supporting us.
Of all the brands we are selling, coffee is really in demand. SO, naturally, we sell more coffee than any of the lines. Then
Brand complains that we are not selling other products. Those people are out of their minds. They know nothing of what's
happening in the field.
As you know, Larry, our compensation is commission-based. This means that we have to sell more to earn more. And
because of this, because of our families, we really have to strive to make that sale. We kill ourselves trying to earn a living.
Then, Brand accuses us of not doing our jobs. It`s not fair for us.
How can the salesman sell when there are no stocks? Salesmen always want to sell. That's our job-to sell. We earn our pay
through selling. If we don't sell, we lose out since we do not get any commissions. But, salesmen go to warehouses and find
out there are no stocks to sell. Now, tell me, how can we sell when there is nothing to sell?
In my long years here at Alpha, I think I can honestly say that my salesmen are doing their damn best. You can even ask
Mr. King. It`s just that stocks seem to be lacking when we need them most. I don't know how Rivera produces the stocks.
But I am sure that stocks are not available when we need them.
I don't understand why these Brand people always complain that their products are not selling well. I am given a quota in
terms of per sales. And every month, I know I am reaching my quota or else I would have been fired a long time ago. True, I
may be selling more coffee than any other product line but that is because coffee is the easiest to sell. Outlets are always
asking about our coffee. And outlets have a budget to spend. SO after buying our coffee, they do not have funds to buy the
other products.
I suppose you've heard or seen how a character Mr. Cruz is. He really sows fear among salesmen. And since we wish to
avoid being called to his office for a sermon, we do our best to meet our quota. We're doing our jobs. Brand and Production
are the ones sleeping.
Brand`s Views-Larry got to talk with some Brand men regarding the issue. There's really something wrong with Sales. It
seems that all they know is how to sell coffee. And even that is not good sometimes.
Chocolates and biscuits brands are at a natural disadvantage since salesmen are compensated based on commissions.
And because of this, naturally, they will sell that which will bring in sure money and that is coffee.
The problem is Cruz. He is an armchair sales manager, why, I don`t think he`s ever been on a store check other than
Unimart or Liana`s. He does not know what his people are doing in the field.
Do you know that Cruz used to handle the sales force of the Grocery Division as well as that of Moonbeams? Well, the
sales force petitioned Mr. King to remove these from his control. That`s how unpopular Cruz is to his own sales force. How
can we expect the sales force to follow someone they do not respect?
Cruz is not a good sales manager. He is grossly unprofessional. At his stage, he is banking on the fact that Mr. John King
trusts him because he`s been tried and tested. I think he`s getting old in that job.
Larry, I suppose you're cognizant of the fact that we've lined up very effective marketing plans. We have a very good
advertising. We have very attractive posters. We have a long list of sales promotions efforts lined up for our brands. The
lacking ingredient is that of sales support. It`s really very difficult to get the support of Rene Cruz and his people. Perhaps, if
it`s the coffee brand, then they will cooperate. But this is not always the case, especially in the provinces. Now, if it`s hard to
get their cooperation for coffee, what more for chocolates and biscuits?
I don't understand these sales people. You give them good products to sell but they don't sell. I`ve tried recommending a
higher commission rate for my biscuit brand, but still they don't sell it as expected. Don't they realize that they stand to earn
more if they sell more of other brands?
It`s a really funny situation we have here. Our forecasts have to be approved by Cruz as Sales Manager. So, when he signs
that document, he also commits his department to that forecast. But when Sales fails to meet the target, Cruz points to
brand for not giving enough marketing support. Or sometimes he claims that the forecast was too high. But didn`t he also
approve the forecast?
Production`s View-Larry Tried to get Tommy Rivera`s views regarding the apparent conflict.
Here in Production, we work on the basis of production schedules. And to come up with month`s schedule, we have
forecasts to base these schedules on. The problem is these Brand forecasts are always late. So what we do is to use the

previous month`s forecast as a temporary set of figures to use for production planning. Once we get those forecasts, then
we just adjust the figures accordingly.
You can check all the records. Production is seldom remiss in our task of producing the right quantities of our products.
Records will show that we have always produced what is forecasted as a minimum because sometimes we produce more
due to efficiencies.
Those claims of Cruz are baseless. He`s probably not looking at the Stock Position Reports.
Marlon Teh- To get another view, Larry sought Marlon Teh, a vice president of the King Group. Teh used to be in-charge of
all manufacturing operations of Alpha Foods. Rivera used to report to him. And even before being assigned to handle
manufacturing, Teh was a Decision Manager of the Grocery Division as well as the Moonbeams Company. As Division
Manager, he was in-charge of both marketing and production. Currently, Teh is the Division Manager of the Dairy Products
Division as well as the Kingdom Garments Company.
I'd rather reserve my comments on the personalities involved for obvious reasons. But regarding Production, I know that
Production has a very efficient and effective system of production scheduling. Thus, there is very little chance of them not
producing the forecasted quantities per month. Of course, there will always be times wherein they may be short on some
lines but these can easily be covered by the first week of the following month.
As to Sales and Brand, theyre also doing their work. But I guess the problems you mentioned show a seeming lack of
coordination between the two departments. You see, both of them think that they are important. Without Sales, how can
Brand survive? But Brand thinks that they are the ones calling the shots for these brands so they are important.
Larry DY pondered on the situation. He had to draft an explanation and recommend certain moves to John King. His
recommendations should solve once and for all this apparent conflict among these departments.