Appliance And Analyses Of Sales Performance Evaluation Of CNPCGD

At present, subject to the macro adjustment and control of the Chinesegovernment, competitors of different nature are involved in the domesticmarket of the refined products. Such competitors include PetroChina andSinopec, two leading state-controlled players,franchised enterprises,the localrefineries not belong to PetroChina and Sinopec and foreign investedrefineries. With the full competition of all kinds of competitors in resource,price, operation and management mechanism and the operation philosophy,the market is very energetic and vigorous. With the opening up of thedomestic market and the deepening of the market mechanism, the structure ofthis market is undergoing a potential change, the old balance being brokenand the new balance emerging. No single enterprise can become the absoluteleader of the market and the state-controlled refined products marketing andsales companies are facing the ever-increasing difficulties in their operationand management. Under such conditions, in order to increase the profit, therefined products marketing and sales enterprises have to seek to improve themanagement, explore the market by inspiring the sales staff through theappropriate remuneration and promotion mechanism and stablize the marketshare by increasing the sales volume and sales price.Guangdong province is an area where the market economy is the mostactive in China. Adjacent to Hong Kong and Macao, Guangdong is the first tobreathe the air of free economy and to get involved in the internationaleconomy. At the same time, as the front door of China's reform andopening-up, taking advantage of its advanced land and waterwaytransportation network, low cost, advanced technology and management skillslearnt abroad, Guangdong has become the leading force of China's economicdevelopment. In the past 20 years, Guangdong's gross economy has beenincreasing at a great speed and the demand for energy has played a key role inthe overall economic development in the area. As a result, Guangdong hasbecome a big consumer and importer of the refined products. Its annualconsumption of the refined products accounts for 1/8 of the total domesticconsumption.PetroChina's refined products marketing and sales enterprises got accessto Guangdong market in 1998 with the set-up of Guangdong MarketingCompany. The company got a foothold rapidly and its market share has beenincreasing. By 2002, Guangdong Marketing Company's sales volume hasaccounted for 1/3 of Guangdong market share. At the same time, a stable salesnetwork, in form of sales branches, sales spots and the sales representatives,has taken shape. Guangdong Marketing Company, a newly establishedcompany with so many sales branches, faces lots of challenges, including howto effectively manage sales and evaluate performance of branches, how toeffectively inspire the sales branches and sales staff at a relatively low cost,how to direct and monitor the marketing activities, etc. The solutions to theseissues are important to Guangdong Marketing Company since they willdetermine the effectiveness of the sales management systems and corecompetitiveness of the company after China's entry into WTO.In accordance with agency theory, when the controlling right (or theoperating right) of the enterprises was separated from the ownership, therelationship between the owners and operators of the enterprises became anagency relationship. Such relationship involves two parties: the principal andthe agent. The discrepancy in these two parties'targets and the informationasymmetry between these two parties determine the logic basis on which theenterprises establish their performance evaluation systems and the resultsrelationship between the principal and the agent determines the scope that theperformance evaluation could be applied. There exists multi-layer agencyrelationship within an enterprise. In order to tackle the issues of the ethicalrisk and opportunitinism of the agents, the principal must establish amechanism to discipline the agents behaviour, to minimize the targetdiscrepancy and the agency risk, and to increase the enterprise performanceand investment return.In addition, according to the agency theory, the principals have to pay forliberalizing themselves from the operating activities. Enterprise PerformanceEvaluation System is an effective arrangement in that such a system can helpto monitor and discipline the agents behaviour effectively and to save thesupervision cost.The operation and management of state-owned enterprises is the mosttypical agency behaviour involving complex multi-layer of agencyrelationship. Take Guangdong Marketing Company as an example, thereexists agency relationship between the company and its sales units, salesbranches and sales staff etc. The authorization of different agents at differentlayers is quite different. For sales units and staff to become the driving forcesof the success of the company's marketing strategy, the following elementsshould be considered when the company designs the performance evaluationsystem: the key performance index, remuneration and promotion arrangement,and the consistency of such arrangement and the company's target.Now PetroChina is calling for the reform of the marketing and salessystem, encouraging the adoption of the advanced marketing models such asusing the marketing representatives. Against this background, by combiningthe theory and the practical experience, The Marketing Department ofGuangdong Marketing Company designed the sales performance evaluationscheme applicable to the branches and assisted the branches to set up theirinternal sales representative performance evaluation system of "GaoYaoModel".The main contents of the sales performance evaluation schemeapplicable to the branches are as follows: all branches are defined as salesrepresentative units; their sales results are evaluated on a monthly basis by aquantitive method, the evaluation results are used as the basis on which thetotal salary and expenses are adjusted. With the target sales volume and salesprice as the benchmark, the branches are encouraged to increase both the salesvolume and sales price. The branches with higher-than-the-benchmark salesvolume and sales revenue will get the bonuses, and the total salary andexpenses of the branches that do not meet their sales target will be deducted...