A Change In Designation.

If an employee asks for demotion in an organisation for example, he/she was a sales executive previously and latter on promoted to the position of an area sales manager, but due to various factors both internal and external to the individual, he/she could not achieve his/her targets and he/she demand from the organisation to put him/her back to the position of a sales executive where he/or she was performing good and the organisations refuses to do so. what could be the probable reasons with the organisation to refuse?

Very Good question!
If I handle this situation:
I would give counseling to the guy, make him realise why he was unbale to perform, find root cause, arrange training and metoring etc., and will see whether he improved himself within the time frame.
If he suceeded good, otherwise I will surely drop him
Reasons, why I cannot depromote him will be:
1. That will demoralize other emplyees in the department, No body will accept that they underperformed.
2. His superiors and Sunordinates will not be comfortable.
Better to have his resignation letter and thro away.