AVON Product Case Study Analysis
Avon Products Case Study Analysis
Avon Products was founded in 1886 by David H. McConnell, a door-to-door book salesman who had a knack for making perfume. As the company grew, it took on a regional approach to business and was one of the first pyramid-styled businesses, allowing agents the ability to maximize their success within the company. Up until 2005, the company was growing and very healthy. It was an $8 billion dollar public company and had been globally active for some time. In fact, 70% of the company's profits were obtained outside of the United States.
As with any fast-growing company, a problem emerged for the company, in 2006. This problem prompted the attention of the directors when the revenues of the company began flattening and operating profits started declining. These declines prompted an investigation into what could possibly be the causes, and the discoveries revealed some painful, but necessary changes within the company's overall operating and talent sectors. The changes both resulted in management cutbacks and some painful changes and moves away from the company's traditional model of doing business. The results, however, drastically improved the company and ensured further growth in the marketplace.
In order to improve their company's revenues, the company underwent what they dubbed a fundamental restructuring of the organization. In business, a fundamental restructuring happens when the core components and structures of a company are changed to better meet the company's modern needs. Additionally, the changes seem to be those of a punctuated equilibrium, being decisive, quick and complete (Brown, 1997). The changes are always drastic and involve complete change, leaving absolutely nothing of the past...
Recommendations: Sell the 5 HP unit under $4/unit, thus making up the largest margin per volume than with a higher price and an unlikely volume. Sales estimates of roughly $10.5 million would be generated, and allow for a great ROI than pricing at a premium level, but dramatically cutting the number of units sold in the market. Further, pricing the 5 HP unit reasonably, there are greater inroads to the
The company's founders and senior managers however feared this would make the company less agile and able to respond to market requirements (Grammenou, 2009). Demographic Analysis There have been many socioeconomic and demographic changes that have affected Avon's business model in the last two decades. The greatest socioeconomic force affecting them today is the need for many women to work full-time jobs to contribute to their household's income. This has drastically
This strategy of investing face-time has continued to scale extremely well in the U.S., yet has faced many challenges in other nations that value data, hard numbers and strong methodologies to validate the claims of products. One nations' buyers of cosmetics in particular, the Japanese, are more focused on the specifics of the how a product is produced and want to know in great detail what the ingredients are
Avon has both word-of-mouth and trust on its side as a provider of cosmetics, beauty and health aids. Their distribution strategy is one of the aspects that make their unique value proposition all the more effective as well, as it reinforces trust with face-time between their representatives and customers. The Avon model and competitive strength is all predicated on buying from someone you know and trust. Supply Chain Implications for
Andrea Jung's Makeover Of Avon Products Business CASE STUDY ANDREA JUNG'S MAKEOVER OF AVON PRODUCTS, INC. Avon is a well-known and well-established company that has struggled to maintain financial health over the past decade. Under new leadership, a turn-around has begun. An in-depth industry analysis identifies several internal and external considerations for the company, such as the effects of globalization, the benefits of technology, the strength of the existing direct-sales model, brand recognition
AVON Calls on Foreign Markets Avon believed that having regionalized new product development centers, supply chain operations, marketing and sales divisions would make them more competitive in foreign markets. Ironically the exact opposite happened, as the case illustrates. Avon's performance was drastically reduced and the duplication of effort crippled the organization. Unfortunately the highly decentralized, market-driven organizational structure that Avon had such high expectations for failure to deliver the results needed
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