Advantages Of External Sales Force

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In chapter 5 on page 112 the book mentions how there are four factors-economic criteria, control, transaction costs, and strategic flexibility-that need to be considered when deciding whether to use an outside sales force or your own. Of course hiring your own sales force poses certain advantages/disadvantages as does hiring an outside sales force. Three advantages to having an internal sales force are revenue, control, and transaction costs. In the long run having a company sales force team compared to independent agents is said to be a better investment because company salespeople focus entirely on the firm’s products, they are most likely to be better trained, and more aggressive when selling due to their future with the company (p.113). The next advantage is control. With having an internal sales force, managers have an easier time getting sales personal to conform to the firm’s principles. They can train, supervise and hire salespeople and this helps them maintain control and also track each salespersons progress. The third advantage is transaction costs. The cost of using and administering independent agents is more expensive than having a company sales force. This is because independent agents are said to be out for their own self-interests.

Now that I have explained the advantages its only right to argue the disadvantages of having an internal sales force. The first disadvantage is cost. Most of the time it will cost you more to start out with a company sales team because you have to pay salary and reimbursement to your employees while with sales agents you only pay them commission. So if they don’t make a sale then you’re not losing as

much money. Second disadvantage is flexibility. When dealing with an internal sales force you have a hard time changing it quickly.

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