AVON Products Case Study
AVON PRODUCT CASE STUDY
Avon Products Inc. is a global company specialize in the production of women consumer products. Founded by David H. McConnell 122-year ago, Avon Product started with the distribution of sample perfume, and based on the success David H. McConnell realized from the sales of perfume, David H. McConnell concentrated on the sales of diverse women consumer products. Presently, the company has grown to become a leader in direct selling of fragrances, cosmetics and skin care products. At the end of the fiscal year 2005, Avon Product total worth was more than $8 billions. Between 2000 and 2004, Avon Products recorded 10% cumulative annual growth rate (CAGR) in operating profits and 25% cumulative growth rate in revenue. While Avon Product operates in the United States and in other several countries, 70% of the company revenues are earned outside the United States. Measuring Avon Product with all financial metrics, Avon Product was a very successful company.
However, in the first quarter of the fiscal year 2006, Avon Product faced several challenges, and the company recorded declining in the operating profits and flattening revenues. "While the situation had many contributing causes, one underlying issue was that Avon had grown faster than portions of its infrastructure and talent could support." (Effron, 2009 P. 2). To sustain the company historical financial success, the company proposed changes that would affect every aspect of its business process.
Objective of this paper is to provide description that led to the determination of changes within Avon Product Inc. The paper uses a leadership skill/competency model to discuss the determination of changes within the company
Leadership Skill/Competence Model
Leadership Skill/Competence model describes the capacity to lead through possession of skills and competency. In the contemporary business environment, having capacity to lead is very critical to achieve organizational success. Leadership Skill/Competence model argues that skill and competency of a leader is very critical to achieve business growth. A leader should be able to demonstrate competencies such as valuable skills, abilities, behaviors and knowledge to enhance leadership success. A competent leader should have ability to lead others, implement self-management and task management as well as enhancing innovation within a company. (Wagner, 2011).
The study identifies leadership skill/talent model as an essential model to implement changes within Avon Product because there are talent challenges within the company, and the challenges were affecting the effectiveness of the company. Within Anon Product, there is several overriding weakness hurting the progress of company.
First, management of Avon Product was unable to identify the existing talent practice such as succession planning and talent management.
Moreover, the egalitarian practice within the organization is hurting the growth of the company because performing employees were not being managed effectively. Identification of challenges in the leadership skill/talent practice necessitates urgent implementation of leadership skill/talent model to enhance organizational effectiveness.
To implement changes, Talent Management (TM) group was formed to build the company talent practice on the two key guiding:
First, TM was to implement simple well-executed talent practice to produce great leaders and produce consistence earnings for the company. Typically, fundamental talent practice is very critical to enhance organizational performances. Implementing effective talent practice is an essential factor to deliver flawless program. To implement changes, TM decided to build talent practices that was easy to implement.
More importantly, TM also decided to implement academic/therapy model to improve leaders and turn them into powerful proven effective machines. To enhance effective leadership goals, Avon Product decided to implement The Turnaround transformation in the talent practice. Evaluation of change practice implemented by the organization is critical to determine its effectiveness.
Evaluation Information of Information Collected
The research collects information through secondary data. The study collects data and information through secondary research because secondary data are widely available and they are cost-effective. The study searches academic database to collect information. From the academic database,...
AVON Case Study Overview of Avon Situation Leading Avon towards Change Model for Change Theory in Avon Types of Evaluation Information and Benefits to the Avon Success of Change in Next Five Years Avon is found to experience different issues causing changes in its brand and product lines. It reflected the positive net sales and earnings growth for past five years in single, which were observed to be declining every year afterwards. There are specific challenging
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.
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
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
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
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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