Barnett’s is a boutique clothing store serving high-income customers. The store has two departments: women’s and men’s. Each salesperson receives a base salary plus commissions on net sales (sales to customers less returns) and has the authority to resolve customer problems including:

• Returning or exchanging merchandise

• Holding sale merchandise for individual customers

REQUIRED

A. To be effective, do the salespeople require general knowledge, specific knowledge, or both?

B. What are the pros and cons of giving salespeople the authority to resolve customer problems?

C. Does each sales associate seem to have a wide, moderate, or narrow span of control? Discuss.

D. Suppose the store owner is considering adopting a bonus plan. Discuss the advantages and disadvantages of each of the following measures as a basis for salesperson bonuses:

1. Total store sales

2. Department sales

3. Store gross margin

4. Department gross margin

5. Store earnings before interest and taxes (EBIT)