Product and Marketing Divisions
A shown in the partial organization chart in Exhibit 1, Abrams had a “product division" for each of its three part groups. Each of these product divisions was managed by a vice president and general manager who was expected earn a target return on investment (ROI). Each product division manufactured parts in several plants and sold a major portion of its manufactured parts to OEMs. Each product division had its separate OEM sales department (see Exhibit 1) that worked closely with OEMs to develop new products or change existing products. The remaining manufactured parts were sold by the product division to Abrams's fourth division, called the AM Marketing Division (see Exhibit 1) or “AM Division,” as it was known to managers. This division was also managed by a vice president and general manager and was solely responsible for marketing Abrams's entire line of a parts to AM wholesalers. The AM division operated several company-owned parts distribution warehouses in the US and foreign markets. The AM division was also expected to earn an annual return on investment target
Inside and Outside Sales
In 1992, the four divisions sales totaled $500 million, which included “inside” sales of $100 million from the three product divisions to the AM division. The $500 million sales were recorded as approximately $100 million for the ignition parts division, $100 million for the transmission parts division, $90 million for the engine parts division, and $180 million for the AM division. After elimination of inside sales, Abrams's outside sales totaled about $400 million. Because of anticipated growth in the parts aftermarket due to the increase in the number of vehicles being driven and their ages, one of top management's goals for the AM Division was for its sales to reach 50 percent of Abrams' total outside sales.