INTRODUCTIONS TO THE TWO SECTORS: JVS AND SOES

SALES FORCE MOTIVATION IN THE CONSUMER GOODS MARKET IN VIETNAM: A
CASE STUDY OF THE TOILETRIES AND BEVERAGES INDUSTRIES.
by
Luong Vu Quang
A research study submitted in partial fulfillment of the requirements for the degree of
Master of Business Administration
Examination Committee Dr. Mark W. Speece (Chairman)
Dr. Lalit M. Johri
Dr. Clemens Bechter
Nationality Vietnamese
Previous Degree(s) Bachelor of Economics
Hanoi National Economics University
Hanoi, Vietnam
Scholarship Donor Government of Switzerland
Asian Institute of Technology
School of Management
Bangkok, Thailand
April 1999
Abstract
There is no doubt that motivation to the sales force is very important in sales management,
especially in Vietnamese today’s conditions, where selling as a career is in its infancy stage. The
conditions impose difficulties for sales management to determine what motivates salespeople and
how to motivate them effectively. Thus, this paper aims to make clear these issues in two sectors:
joint ventures (JVs) and state owned enterprises (SOEs).
With in-depth interviews with nine representative companies of the two sectors, the research finds
that, though in the same macro-economic conditions, salespeople in JVs place more value on
high order rewards such as training, recognition, promotion. Meanwhile their SOEs counterparts
show more interest in low order rewards such as salary/commissions, fringe benefits, job security
and stability. This is mainly because sales and sales force management in JVs are more
professional, systematic than in SOEs.
To improve, JVs need to fine tune current practices while SOEs need fundamental changes.

Specifically, the research suggests that, JVs should employ a multi-ladder sales system and
SOEs should replace their centrally-planned minded sales managers by market-oriented ones.
ii
Acknowledgement
For the completion of this research, I would like to express my deepest gratitude to Dr. Mark
Speece – Chairman of the Examination Committee – for his continuous guidance and
encouragement throughout the research period.
I also would like to express my profound gratitude to Dr. Lalit Johri and Dr. Clemens Bechter –
Committee Members of the Examination Committee – for their continuous comments and advice
during the conduct of this research.
Great thanks to my friends, the sales people and the companies that have helped to collect
valuable information which is essential for the completion of this research.
I also wish to express my thanks to the Switzerland Government for providing the scholarship in
AIT. Sincere thanks to all of my friends at SAV and AIT, who have been sharing with me the
studying and living during the program.
I am extremely grateful to my beloved brothers and sister for their understanding, supporting and
inspiration through my life. And, no word could possibly express my gratitude to my parents. Their
loving encouragement and many sacrifices could never be forgotten.
iii
Table of Content
Chapter Title Page
Abstract.............................................................................................................................ii
Acknowledgement...........................................................................................................iii
Table of Content...............................................................................................................iv
List of Tables....................................................................................................................vi
List of Figures.................................................................................................................vii
CHAPTER 1..........................................................................................................................................1
INTRODUCTION.................................................................................................................................1
2.1RATIONALE OF THE RESEARCH...................................................................................1
2.0 Role of motivation to the sales force.................................................................1

2.1 Selling as a new career in Vietnam..................................................................1
2.1PROBLEM STATEMENT.................................................................................................1
2.1RESEARCH OBJECTIVES...............................................................................................2
2.1INFORMATION NEEDS..................................................................................................2
2.0 From the sales reps............................................................................................2
2.1 From sales managers........................................................................................3
CHAPTER 2..........................................................................................................................................4
LITERATURE REVIEW....................................................................................................................4
2.1MODEL OF SALESPERSON MOTIVATION.......................................................................4
2.1PREVIOUS FINDINGS ON MOTIVATION OF THE SALES FORCE.......................................5
2.0 Expectancy estimates.........................................................................................5
2.1 Instrumentality estimates...................................................................................6
2.2 Valence estimates..............................................................................................6
2.3 Fairness.............................................................................................................7
CHAPTER 3..........................................................................................................................................8
RESEARCH METHODOLOGY........................................................................................................8
2.1DATA COLLECTION......................................................................................................8
2.0 Companies investigated.....................................................................................8
2.1 In-depth interviews ...........................................................................................9
2.2 Interviewing and data processing...................................................................10
2.1SCOPE OF THE RESEARCH..........................................................................................10
2.1RESEARCH FRAMEWORK...........................................................................................12
CHAPTER 4........................................................................................................................................13
FINDINGS 13
4.1INTRODUCTIONS TO THE TWO SECTORS: JVS AND SOES .........................................13
4.1.1 State owned enterprises (SOEs)...................................................................13
4.1.2 Joint ventures (JVs)......................................................................................13
4.2 BACKGROUND FINDINGS..........................................................................................14
iv
4.2.1 Channels.......................................................................................................14

4.2.2 Recruiting.....................................................................................................15
4.2.2.1 Recruiting at JVs...........................................................................................................................................................15
4.2.2.2 Recruiting at SOEs .......................................................................................................................................................16
4.2.3 Orientation ...................................................................................................17
4.2.3.1 At JVs............................................................................................................................................................................17
4.2.3.2 At SOEs.........................................................................................................................................................................18
4.2.4 A typical sales rep’s profile..........................................................................18
4.3MOTIVATIONAL PERCEPTIONS...................................................................................20
4.3.1 Effort – Performance Relationship..............................................................20
4.3.1.1 At JVs ...........................................................................................................................................................................20
4.3.1.2 At SOEs ........................................................................................................................................................................21
4.3.2 Performance – Rewards relationship and Fairness....................................22
4.3.2.1 At JVs ...........................................................................................................................................................................22
4.3.2.2 At SOEs ........................................................................................................................................................................22
4.3.3 Valence of rewards.......................................................................................22
4.3.3.1 Basic financial compensation: Salaries, Commissions, Fringe benefits.......................................................................22
4.3.3.2 Work supports .............................................................................................................................................................24
4.3.3.3 Prizes............................................................................................................................................................................. 24
4.3.3.4 Training......................................................................................................................................................................... 25
4.3.3.5 Job achievement ...........................................................................................................................................................26
4.3.3.6 Recognition of management..........................................................................................................................................27
4.3.3.7 Advancement opportunities...........................................................................................................................................27
4.3.3.8 Job responsibility...........................................................................................................................................................28
4.3.3.9 Job security and stability...............................................................................................................................................29
4.3.3.10 Freedom and supervision.............................................................................................................................................29
4.4MOTIVATIONAL PRACTICES.......................................................................................31
4.4.1 Setting up motivational policies, incentive packages, or/and campaigns,
programs................................................................................................................31
4.4.2 Communicating these program to sales reps...............................................32
4.4.2.1 At JVs ...........................................................................................................................................................................32

4.4.2.2 At SOEs ........................................................................................................................................................................32
4.4.3 Monitoring and facilitating implementation................................................32
4.4.4 Evaluating, reinforcing and improving the programs.................................33
4.5LIMITATIONS AND DIRECTIONS FOR FUTURE STUDIES..............................................33
CHAPTER 5........................................................................................................................................34
RECOMMENDATIONS....................................................................................................................34
5.TO JOINT VENTURES: CREATING A PARALLEL MULTI-LADDER SALES SYSTEM ..........34
REFERENCE......................................................................................................................................40
APPENDIX 1: GUIDELINE QUESTIONS FOR INTERVIEWS................................................42
APPENDIX 2: RANKING OF THE IMPORTANCE OF REWARDS.......................................43
v
List of Tables
Table Title Page
TABLE 1: SAMPLE OF COMPANIES INVESTIGATED.............................................................8
TABLE 2: SAMPLE OF INTERVIEWEES......................................................................................9
TABLE 3: A TYPICAL SALES REP’S PROFILE........................................................................20
TABLE 4: PERCEPTIONS ON MOTIVATIONAL FACTORS..................................................30
vi
List of Figures
Figure Title Page
FIGURE 1: A MODEL OF SALESPERSON MOTIVATION.......................................................5
FIGURE 2: TYPICAL STRUCTURE AT JVS AND SOES..........................................................10
FIGURE 3: THE RESEARCH FRAMEWORK.............................................................................12
FIGURE 4: SALES FORCE AND DISTRIBUTION ARRANGEMENTS.................................15
FIGURE 5: AN EXAMPLE OF A PARALLEL MULTI-LADDER SALES SYSTEM............35
FIGURE 6: VICIOUS CIRCLES AT SOES ...................................................................................37

vii
Chapter 1
Introduction

2.1 Rationale of the Research
2.0 Role of motivation to the sales force
According to Douglas and William (1998), by nature, salespeople handle such type of a job that is
• Hard since they have to frequently deal with new people, namely customers, who are tough
and demanding. And they only start selling when customers say “No”.
• Flexible and self-controlled because salespeople spend majority of their time out of office.
• Ambiguous in terms of roles perception since they have little supervision and under pressure
from dual masters: their customers and their companies.
Thus, managing sales force requires more motivational methods rather than controlling ones.
Quite many researches, studies have been working on the issue of how to motivate salespeople
to achieve their most productivity. However, almost all of these studies were carried out in
developed countries, far fewer studies were carried in developing countries. So the first issue this
paper aims to address is whether motivational techniques that work in developed countries can
also applied developing countries like Vietnam?
2.1 Selling as a new career in Vietnam
Vietnam has recently emerged as a new developing country. Vietnam was a closed and highly
centrally planed economy until 1986. Under this economy, there was no real selling since selling
to whom, at what price, at what quantity, etc. are determined from the government. As a result,
there are no real salespeople.
To shift to a market economy, Vietnamese government has been undertaking “doi moi” program
(meaning economic renovation program) to open the economy since 1986. The move forces
companies to do real selling tasks, and some employees become salespeople. The “doi moi”
program has also brought in several foreign firms, who are helping to build a professional sales
career in Vietnam. However, selling as a career in Vietnam is characterised with no systematic
education, very fragmented (because each company develops its sales force differently), and no
clear way to develop. In this situation, at the infant of selling as a career, the question of how to
motivate salespeople becomes more blurred to sales managers in Vietnam. Thus, this paper
would like to contribute to make clear motivational issues of the sales forces in Vietnam.
2.1 Problem statement
Thus, this research aims to address these issues of what motivates salespeople in specific

conditions of Vietnamese economy at the time being? And how can management utilize these
factors to increase their sales forces’ productivity.
1
2.1 Research objectives
Specifically, the research’s objectives are as follows:
• To find out what factors field salespeople in Vietnam perceive as motivators to them and what
factors sales managers perceive as motivators to their subordinates?
⇒ Money: salary, bonus, fringe benefits, commissions.
⇒ Management’s recognition: medals, certificates, titles.
⇒ Prizes: physical valuables like mobile phones, motorbikes, watches, etc.
⇒ Work supports: tools that facilitate doing a job.
⇒ Training
⇒ Advancement opportunities
⇒ Job achievement
⇒ Job security and stability
⇒ Freedom and supervision
• To compare Joint Ventures’ (JVs) motivational practices to salespeople and that of
Vietnamese State Owned Enterprises (SOEs) in:
⇒ Setting up a motivational policies, incentives packages or programs,
⇒ Selling (communicating) these programs to salespeople,
⇒ Monitoring and facilitating implementation of such programs, and
⇒ Evaluating, reinforcing and improving the programs.
• To try to recommend applicable models for sales management in Vietnam to motivate their
subordinates.
⇒ To joint ventures
⇒ To state owned enterprises
2.1 Information needs
To achieve the above objectives, following information is needed.
2.0 From the sales reps
• What factors do they value most in term of motivating them: salaries, fringe benefits, prises,

recognition, work supports, advancement opportunities, training, responsibility, job security
and stability, autonomy, and supervision.
• What are salespeople’s opinions about effort and performance relationship?
• What are salespeople’s opinions about performance and rewards relationship?
2
• How do salespeople value the rewards? Are rewards worth their effort?
2.1 From sales managers
• Do sales managers understand their salespeople’s motivational factors?
• How are quotas set?
• What are criteria to evaluate salespeople’s performance?
• How are rewards given? What are the most frequently used rewards?
• How do sales managers design, implement an incentive program, and evaluate its
effectiveness?
• What are compensation and promotion policies?
• What is a typical sales rep’s profile?
3
Chapter 2
Literature review
2.1 Model of salesperson motivation
In general, a person is motivated to do a task when he himself desires to put effort into the task,
continues to put forth or expend his effort over a period of time to fulfil the task (Douglas and
William, 1998, p 483). There is a lot of literature on how a person gets motivated. The most
influential theories include Maslow’s (1970) hierarchy of needs, Vroom’s (1964) expectancy
theory, Herzberg’s (1987) hygiene-motivation theory, and equity theory (Adams, 1976).
According to Maslow (1970), one has five levels of needs and the lower level must be satisfied
before the next higher level is sought. The five levels are as stated in terms of sales management
by Douglas and William (1998, p 520) as follows:
(1) Basic needs like cash wages and bonuses,
(2) Safety and Security needs such as job security and fringe benefits,
(3) Belongingness and Social needs such as President club for more than $1 million salespeople,

(4) Esteem needs like recognition, and
(5) Self-actualization like challenging tasks calling for creativity.
In his hygiene-motivation theory, Herzberg (1987) classified factors into two types: hygiene
factors are those make workers feel dissatisfied if these factors are not sufficiently available but
they do not make workers feel satisfied if there are more than enough of them. These factors
usually are company policy and administration, supervision, salary, work conditions. Only
motivation factors make workers feel satisfied with their presence. These factors usually are
achievement, recognition, work itself, responsibility, and advancement opportunities.
Vroom’s (1964) expectancy theory and Adams’s (1976) equity theory are the two main theories
that explained the process of human being motivation. These theories provide the basic ideas for
the model of motivation of the sales forced described in following paragraphs.
Walker et al. (1977, 1979), Douglas & William (1998), and Futrell (1991) combined and
developed these theories specifically into the field of sales force motivation. According to these
authors, motivation of a salesperson is a function of (1) expectancy, (2) instrumentality, (3)
valence, and (4) fairness. This is shown in Figure 1.
Expectancy refers to a salesperson’s question “if I try harder, will my performance improve?” In
essence, it is the salesperson’s perception on effort – performance linkage. The stronger the
belief that the answer is “Yes”, the more likely the person spends more effort on the task.
Instrumentality refers to the salesperson’s question “if my performance improve, will I get
rewarded for that?” In other words, it is the salesperson’s perception on performance – rewards
relationship. Again, the stronger the belief that the answer is “Yes”, the more the person wants to
improve his performance.
4
Valence refers to the person’s question “Are the rewards worth trying for?” This means how
valuable rewards are perceived to the recipient. Obviously, the more important the reward is to
the person, the harder he will try to achieve those rewards.
Fairness refers to how his rewards are compared with others’ rewards in relative terms, i.e. by
value of a ratio between each person’s rewards over that person’s contribution. If a salesperson
thinks his ratio is somehow similar to his peers’ ratios, he will feel fair. If he feels fair, he will exert
more effort.

Figure 1: A model of salesperson motivation
The above model works this way: If the salesperson believes that his additional effort will lead to
improvement of performance AND he will be rewarded for that performance improvement AND
rewards are valuable to him AND rewards are fairly given among reps, the salesperson will
probably feel satisfied, thus he will put more effort into the job. The multiple sign reflects the
relationship among the four factors: All the factors must be present if motivation is to be achieved.
Managers’ task is to assure a strong “Yes” answer to each and all of the above questions.
2.1 Previous findings on motivation of the sales force
How to assure a strong “Yes” answer to each of the above questions has long been managers’
tough challenge. Now we will see what has been done to get the desired answer in each element
of the model.
Since no research has been done on the issue in Vietnam, the present research uses some
findings in studies carried out in the US, China, Hong Kong, and South Korea as benchmarking
ideas.
2.0 Expectancy estimates
Obviously, how much effort to put on a specific task is within each salesperson’s control.
Therefore the person’s perception on this relationship depends on what it means by performance
and improvement of performance. Previous researches show that these concepts, in turn, depend
on job descriptions, systematic evaluation (Yoo and Lee, 1987), specific organizational
procedures and practices (Chung and Lee, 1989) and feedback or communication in an
organization (Alan et al. 1994). These help sales personnel have a clear picture of what is
expected from them so they could direct their effort into right areas or “working smarter” (Barton
5
Effort Performance Rewards
Motivation Expectancy Instrumentality Valence Fairness
=
X X X
Belief that
more effort will
lead to greater

performance
Belief that
greater
performance
will be
rewarded
Perceived
value of
rewards
Perceived
fairness of
giving rewards
among reps
et al. 1986). Benson and Stephen (1980) also found that clear task is the most important
determinant of salespeople’s motivation. Feedback and communication are critical in informing
salespeople about how they are performing and how much improvement they have made. This
helps them realize the linkage between effort and performance (Alan et al. 1994).
Cron et al. (1986) found that salespeople in different career stages have different expectancy
estimates since they have different experience and knowledge. The more experience a
salesperson acquires, the better the person can guess his performance. That means salespeople
in later career stages have higher expectancy estimates.
2.1 Instrumentality estimates
Clearly, this relationship depends on how rewards systems are designed. For example, if it is a
straight salary, sales reps will not see why they have to try harder and still get the same amount
with less effort. But, if it is a commission salary, “salespeople know how much they will be paid for
each sale and that their incomes will increase as a result of more sales” (Douglas and William,
1998). Thus, rewards systems should be designed in a way that effort is rewarded properly.
However, “pay-for-performance” is not an easy task since one cannot always clarify any task
(Benson & Stephen, 1980).
Feedback and communication also play an important role in making salespeople have clear

instrumentality estimates since feedback and communication confirm, enforce, and reinforce
salespeople’s belief that better performance will be rewarded (Alan et al. 1994).
Instrumentality estimates also vary with career stages due to two reasons. One, role perception
becomes clearer when a salesperson proceeds into later stages. Two, the person becomes more
committed with the organisation. Therefore, salespeople in each successive stage (with the
exception of disengagement stage) have higher instrumentality estimates (Cron et al. 1986).
2.2 Valence estimates
Finding what really motivates salespeople has long been manager’s most difficult area. This is
probably the richest documented area on motivation. Maslow’s (1970) hierarchy of needs theory
and Herzberg’s (1987) hygiene-motivation theory fall in this area. The common assumption is that
people seek things to satisfy their needs, and the things they seek are motivators to them.
In sales settings, Futrell (1991, p 373) classifies these factors into seven categories as a
motivation mix as follows:
(1) Sales climate: ceremonies and rites, stories, symbols, and language.
(2) Basic compensation: salary, commissions, and fringe benefits.
(3) Special financial incentives: bonuses, contests, and trips.
(4) Non-financial rewards: opportunities for promotion, challenging work assignments, and
recognition.
(5) Sales training: initial, ongoing, and sales meetings.
(6) Leadership: style and personal contacts, and
(7) Performance evaluation: method, performance activity and publicity.
6
Douglas and William (1998) and Cron et al. (1986) argue that a salesperson’s needs vary in
accordance with career stages. Walker et al. (1985) confirmed this by stating that young
salespeople have higher attraction to higher order rewards such as promotion, personal growth
opportunities while older salespeople place relatively more on money.
Stephen and Benson (1980) found in the US context that the most important determinants of
motivation to a salesperson are (1) a clear task, (2) need for achievement, and (3) type of
compensation plan. Some of the factors found in the US are applicable to Asian salespeople
while some are not. For example, Keun and Anil (1997) found that overall model of relationship

among organizational formalization, role stress, organizational commitment and propensity to
leave developed in the US can be applied in South Korea. While Alan et al. (1994) found that US
salespeople have higher valence for pay increase, job security, promotion, formal recognition,
personal growth and development, and worthwhile accomplishment than their Japanese and
Korean counterparts. Even though within China, salespeople in Hong Kong have different set of
motivators to their Mainland salespeople (Sandra, 1998).
2.3 Fairness
Equity theory (Adams 1976) states that a worker’s perception on fair rewarding depends on the
ratio of inputs into the job over rewards received by that person. If one’s ratio is similar to his
peers, it is perceived fair. The implication to sales management is developed by Futrell (1991, p
379) that sales managers when evaluating a salesperson’s performance and when devising a
rewards system must make them appear fair to salespeople. The problem is that fair or unfair
notion are completely are subject to each salesperson’s judgement. Thus, one way to get rid of
this is to thoroughly discuss with salespeople and get them agree on the methods. It also requires
transparency during implementation process of the program.
7
Chapter 3
Research methodology
2.1 Data collection
Since there are no previous study on the issues in Vietnam, this paper just aims to make an
exploratory research. Therefore, qualitative approach is used with in-depth interviews are the only
way of collecting data.
2.0 Companies investigated
In total, nine companies are investigated for the research. Of which five companies are joint
ventures (JV) and four are state owned enterprises (SOE). Specifically, they are:
Table 1: Sample of companies investigated
Industries Joint Ventures State Owned Enterprises
Toiletries
• Procter & Gamble VN (Hochiminh)
• Colgate Palmolive VN (Hochiminh)

• KAO VN (Hochiminh)
• Hanoi Soap Company (Hanoi)
Beverage
• Coca-Cola Ngochoi (Hanoi)
• Vietnam Beverage Company
(Hochiminh)
• Hanoi Beer Company (Hanoi)
• Vietha Beer Company (Hanoi)
• Thanglong Wine Company (Hanoi)
All of these companies are considered big in Vietnam with nationwide sales network. However,
their sales forces vary substantially in size from 6 people of Thanglong Wine Company to 50
people of P&G VN to 400 people of Coca-Cola VN. The difference results from each company’s
selling method and way to organise its sales force, which will be discussed in details in later
parts. Of these companies, five are based in Hanoi and the other four in Hochiminh City (as
shown in blankets in Table 1).
All investigated companies are quite representative both for the industries they are in as well as
for each group, i.e. JVs and SOEs. All of them are leading companies in their industries.
However, JVs often claim much more market share due to several reasons. One of the reasons is
that JVs always have bigger, stronger, and more skillful sales forces. (This will be explained in
more details later in this paper). The investigated SOEs are those companies that are strong
enough to compete directly with these JVs.
Getting these companies into the research’s sample is mostly based on the author’s personal
relationship with managers, employees working there or through recommendations of the
author’s friends, relatives. This is because getting data form SOEs companies are very difficult
due to their naive belief that any information released would harm their business. And there is no
existing system for collecting data otherwise.
8
2.1 In-depth interviews
In total, I had 17 interviews with 27 people as follows:
Table 2: Sample of interviewees

Title JVs SOEs Total
General Manager (GM) 0 2 2
Vice General Manager (VGM) 0 1 1
National Sales Manager (SM) 3 3 6
Unit/Area Sales Manager (ASM) 4 0 4
Human Resource Manager (HRM) 3 0 3
Sales Representative (SR) 5 6 11
Total 15 12 27
All the interviews, except two, are individual between the interviewee and the author. The two
exceptional interviews are one group interview with four sales reps from JVs and one interview
with Hanoi Soap Company’s GM & SM at the same time. The group interview was conducted in a
quite informal manner since all of them are the author’s friends. All other interviews last about one
to one and half-hours.
Two General Managers (GMs) and one Vice General Manager (VGM) could be interviewed, all
from SOEs thanks to the author’s close relationship with them. GMs and VGMs at JVs were also
sought to be interviewed. However, they all declined quoting time limitation and the topic of the
research is not directly in their concerned areas. Thus, JVs’ GMs and VGMs just referred the
author to sales managers for interviewing. Six National Sales Managers (SMs), equally 3 from
each sector, are interviewed. These people are those who directly take care of sales in their
whole companies. Area or Unit Sales Managers (ASMs) are those who take care of sales in a
certain area (normally 2 to 4 provinces) and they have some sales teams to manage. SOEs have
no such position, therefore interviewees classified as ASMs appeared in JVs group only. In
SOEs, directly under SMs are some salespeople whose area of charge is as large as ASM in JVs
but they don’t have any subordinates to manage. Thus, these SOEs salespeople are classified as
sales reps, the lowest ranked salespeople in a company, even though they are in charge of quite
large geographical areas. (These are depicted in the following graphs of typical structure).
In addition, three human resource officers were interviewed, all come from JVs. As hindsight from
the research, it is realised that human resources managers (HRM) play a very important role in
recruiting and providing new reps to SOEs. However, no HRM in SOEs was interviewed since
difficult access to them. Fortunately, the two SOEs’ GMs and one VGM, in those SOEs that the

author could get access to, had provided some important insights that could replace the role of
human resource managers since these GMs and VGM are in charge of all sales issues relating to
Sales Department.
It is important to examine managers’ and human resource officers’ perception on salespeople’
motivation since (1) these people are close to salespeople in any companies and (2) these
people are those who devise and implement policies about the sales forces. Thus, their
9
perception on salespeople’ motivation will surely have large impact on motivational policies and
practices at companies. This is to detect the incompatibilities between their perception and that of
sales people so that management could devise better policies and practices to motivate
salespeople to increase their productivity.
Figure 2: Typical structure at JVs and SOEs
- At JVs:
- At SOEs:
2.2 Interviewing and data processing
The contexts are different among interviews. Normally, interviews with managers, human
resource officers, and SOE salespeople were conducted in meeting rooms. These interviews
were recorded both by taking notes and by recording tapes. Meanwhile, almost all interviews with
JV salespeople were conducted while they were on road. Thus, not all these interviews were
tape-recorded. Mostly, especially in later interviews, their answers were recorded by taking notes.
Basing on the guidelines for interviews (see Appendix), questions were developed. In interviews
with sales managers or human resource officers, the issues are asked in a quite direct manner.
Broad issues were brought out first, then elaborating questions were asked to get details of the
issues. In interviews with sales reps, the questions were asked indirectly. For example, in order to
ask sales reps’ valuation of different rewards, the question “what makes you work longer among
the following things (i.e. the rewards listed in the Appendix)” was asked. This is based on the
assumption that if a salesperson is motivated, the person will spend more time on the job that
those who are not. Then the interviews were asked to rank these rewards as the level of
importance of each reward vis-à-vis the others.
In processing, all the data collected was reviewed as whole once. Then, common perceptions

about the four main components of the sales person motivation mentioned earlier were grouped
together. Then, these opinions were further analyzed into subgroups or levels of how strong the
opinion about each component.
2.1 Scope of the research
As mentioned earlier, the research focuses on two industries, i.e. toiletries and beverage, for the
sake of comparability. Actually, the investigated companies use similar distribution system and
selling method: distributorship with direct sales force for JVs and only distributorship for SOEs.
(These distribution systems will be mentioned in more details about in later parts). Moreover,
these two industries are those that normally have quite big sales force since they often have to
use direct selling method to approach customers. Thus these industries are good representatives
of consumer goods markets.
10
General
Manager
Vice General
Manager
National Sales
Manager
Area Sales
Manager
Sales
Reps
General
Manager
Vice General
Manager
National Sales
Manager
Sales
Reps

Only big and nationwide-operating companies are taken into the research’s sample since they
probably have better established, more professional, sales systems. So that better in formation
could be obtained since these companies probably have more sound understanding about the
concepts of the topics. In fact, there are no difficulties in discussing with JVs but with SOEs. Even
though the SOEs are big, nationwide operating but there management have little ideas
specifically to motivation of the salespeople. Therefore, instead of asking focusingly on motivation
of the sales forces, the questions are expanded to include some other sales management issues
such as sales system arrangement, territory management. Thus, the initial scope of the research,
which was on motivational aspects only, is now broadened to other sales management fields,
which will be mentioned in details in finding parts.
The research was carried out solely in Hanoi and Hochiminh cities since these cities are the two
biggest business centers in Vietnam and all big companies are based in one place or the other.
Thus, with the research’s objectives, these cities are the two best places to go for.
11
2.1 Research Framework
Figure 3: The research framework
12
Comparative
Analysis
Gap
Analysis
Conclusions and
recommendations
Sales Managers’ perspectives
on:
Motivating factors to reps
Setting quotas
Evaluating sales rep’s performance
Designing implementing,
evaluating incentive programs

Sales reps’ perspectives on:
Motivating factors
Effort – Performance relationship
Performance – Rewards
relationship
Rewards worthiness
Joint ventures’
practices in
motivating their
salespeople
State owned
enterprises’
practices in
motivating their
salespeople.
Individual
Analysis
Group
Analysis
Chapter 4
Findings
4.1Introductions to the two sectors: JVs and SOEs
4.1.1 State owned enterprises (SOEs)
There are around 6,200 state owned enterprises in Vietnam now. They are still the backbone of
Vietnamese economy, which account for 39% of GDP as of July 1
st
, 1997 (except agriculture -
Statistical Yearbook (SY) 1998, p 27). The interviewed companies are quite big among other
SOEs in the same industry. Unfortunately, they just claim a small market share in comparison
with international competitors. Only Thanglong Wine Company can claim major part of wine

markets since there is no international competitors producing similar products with it.
The old way of selling at an SOE is not really one of its own functions because there was some
government body that determined the SOE’s customers and prices. At beginning of a year, SOEs
were given quotas to produce. And regardless of how good quality of their products were, all of
the produced products were bought and consumed by someone. Therefore, selling was just a
formal procedure to fulfil their quotas. Majority of sales activities was just processing paperwork.
Thus, sales were given little attention from management.
At present, SOEs are not assured of consuming outputs anymore. They have to learn how to
improve and sell their products to market. However, affected by old thinking in command
economy, managers in SOEs, who virtually all had worked in command economy for a quite long
time, do not consider selling as important as it should be. That is changing now but little progress
has been made. For example, SOEs do not really have a sales network throughout the country
even though their products are sold nation-wide. Motivation to salespeople is worse.
Management lacks of a general understanding about the concepts, not only how to do it
effectively.
4.1.2 Joint ventures (JVs)
Vietnam has had its investment law since 1977. However little foreign investments from Western
countries were made until 1987, when Vietnam introduced a new version of the laws and started
its “doi moi” program to open its economy to Western countries. Then, JVs and other types of
foreign invested companies were booming up. Now they account for 7.5% of GDP as of July 1
st
,
1997 (except agriculture – SY 1998, p 31). This sector has been becoming more and more
important to the economy with its highest growth rate of 14.7% annually while that of state owned
sector was 10% only in 1997 (SY 1998, p 33).
In JVs, selling is considered one of the most important functions. Many companies have been
spending a lot of money in attracting, training and setting up their sales forces. At the moment,
JVs’ sales forces are models for SOEs to imitate. JVs have aggressively built a nation-wide and
strong sales network, which helps them claim majority of market share. In terms of motivation,
JVs’ managers, who are mostly Western-styled trained, have been applying current theories such

as Maslow’s (1970) hierarchy of needs, Vroom’s (1964) expectancy theory, Herzberg’s (1968)
hygiene-motivation theory. Foreign partners are introducing the models and ways how to make
them work effectively to Vietnamese business community.
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