Ronald, an ambitious young executive had been sent to take over the sales branch of his American company in Sao Paulo, Brazil. He spent a few weeks learning the routines with the departing manager and was somewhat disturbed by the informality and lack of discipline that seemed to characterise the office. People seemed to indulge in excessive socializing, conversations seemed to deal more with personal than business matters, and not one seemed to keep to their set schedules.

Once he had formally taken over, he resolved to do something at a general meeting. He told them bluntly that work rates and schedules would have to be adhered to and hoped that a more business-like atmosphere would prevail. Over the next few months, he concentrated on improving on efficiency, offering higher bonuses and incentives to those who worked well and private warnings to those who did not. By the end of the first quarter he felt he had considerably improved the situation and was therefore somewhat surprised to find sales figures had significantly dropped since his takeover.

QUESTION: What reason would you give to Ronald for this drop in sales? One page