Avon Case Study

Contents

Introduction 2

The general environment 3

Demographic 3

Economic 4

Political/ Legal 4

Sociocultural 5

Technological 5

Global 6

The Structure of the Industry 6

Porter’s Five Forces Model 7

Threat to new entrants 7

Bargaining Power of Buyers 9

Bargaining Power of Suppliers 9

Threat of Product Substitutes 10

SWOT Analysis 10

Evaluation of the SWOT 11

Value Chain analysis 13

Main issues facing the company 14

Corporate Level Strategies 15

Business Level Strategies 16

Organization Structure 17

Corporate Governance 18

Financial Analysis 19

Short list of strategic alternatives 21

Recommendation. 22

Appendices 23

References 24

Introduction

Avon is a cosmetic company created to conduct business on enhancing women's beauty. This brand is now a global leader with massive growth and high revenues. Being the world's largest direct seller, Avon has captured a large market in more than hundred countries with millions of the sales representatives across the globe. The product line of Avon is quite large in spatial extent; it includes beauty products, fashion jewellery and clothing. Avon Vision along with the Mission is; to be the company that best understands and satisfies the product, service, and self-fulfillment needs of women globally. Their mission is to be, The Global Beauty Leader

Which build a unique portfolio of Beauty and related brands, striving to surpass their competitors in quality, innovation and value, and elevating the image to become the Beauty Company most women turn to worldwide. Secondly, The Women’s Choice for Buying, become the destination store for women, offering the convenience of multiple brands and channels, and providing a personal high touch shopping experience that helps create lifelong customer relationships. To be the Premier Direct Seller to expand the presence in direct selling and lead the reinvention of the channel, offering an entrepreneurial opportunity that delivers superior earnings.

Avon was established in America in 1886 with distinctive approach of selling womens cosmetics with the name of Avon calling.This idea of business was initiated by David McConnell from newyork.The main merchandise of business was not perfume and creams but at the age of sixteen mcconnell started to sell books through door to door selling. He found out he was not able to entice the consumers to buy the books so he initiated the campaign by offering free gifts as perfumes which he produced with the collaboration of the pharmacist.Subsequently this turned out to be an incentive that became a mainline product for avon and the books were abolished, paving the way for Avon cosmetics' existence. The door to door selling was made specifically to specification and later by 1887 Mcconnell hired a number of women representatives. Moreover, with the passage of time the company began to grow and the name was changed from California cosmetic company to Avon Products, Inc. Presently is ranked first across the nation in cosmetic industry with high revenues.

The general environment

Demographic

Most beauty suppliers have come to realize that a crucial way of earning above average returns is to target different demographic groups.

The increased attention that has been given to beauty and personal care may be accredited to the reformed traditional lifestyle patterns, as we see Generation Y (The Millennials) whose earnings are usually less than the average income, prioritizing appearance over other personal expenditure. This is evident as increasingly we see traditional aspirations, like getting married, having a family and investing in real assets are being postponed to later in life. Others even chose the alternative, to continue living with their parents for longer periods to delay paying