Professional Documents
Culture Documents
in C hi na
ADAPATING TO CH ANGING
ENVIRO NMENT
MADE BY:
PRATEEK GUPTA
SAHIL JAGGA
NEHA ARORA
MUKESH KUMAR
SONAL MATHUR
KUNAL NAYAR
JATIN SETHI
RAHUL KHEMKA
BALPREET SINGH
LUBNA SALEEM
Amway
Established in 1992
Founders- Richard DeVos and Jay Van Andel
Chairman of Asia Pacific Amway- Steve Van Andel
Joint venture between Amway Asia Pacific and
the Guangzhou Economic Technological
Development Zone (GZETDZ)
In April 1995, started a manufacturing plant
Employs direct distributors , called independent
business owners (IBOs)
Responsibility of IBOs
Perform functions associated with
management
Organize meetings and events
Co-ordinate distributors
Devise incentive programs for recruits
Marketing for Amway products and the
Amway business
Product line up
Home care
Personal care
Jewellery
Electronics
Nutrilite dietary supplements
Air purifiers and Water purifiers
Insurance and cosmetics
Amway’s MLM Business model
MLM strategy Similar to illegal pyramid type
Faced problems in USA, France and South
Korea
Selling distributorship and high entry cost
Amway worked hard to distinguish itself from
illegal pyramids
No high entry cost and no emphasis to purchase
large inventories
Refunded legitimate claims and repurchased
stocks from distributors
Amway’s competitors
Direct competitors
AVON
MARY KAY
SUNRIDER
Indirect competitors
P&G and Unilever
Local Chinese companies
Changing Political & Economic
Atmosphere
Distributors seldom used the products
Products used as samples to persuade relatives
and friends to join Amway
IBOs emphasized profits plans - perceived as best
way to motivate potential recruits
Focus shifted from selling products to recruiting
Popularity increases - distributors distorted the
business Model
Fraud and deception maximum in 1998.
Changing Political & Economic
Atmosphere
Chanting slogans of affirmation and asking
followers to believe that they will succeed.
Taught skills for developing customers and
asked to invite friends and relatives to join
business
Most of the business were scams
April 1998 – Chinese Government imposed a
ban on all direct selling operations
Trade policies imposed by developed nations
including US.
New Strategy of Amway
Agreement with the government and company
resumed operations
Goods will be sold in retail outlets and through
sales representatives
Income of sales distributors will be based on direct
selling done by them
Same Distribution centers served as retail outlets
for the company
New Strategy of Amway
Localization of employees
Localization of Business Model
Localization of production and Raw Material
Localization of research and development
Support for China’s entry into WTO
Active community development
Transparency and Credibility of company’s
management
Facing the future
Government allowance.
Production base in china for export to Asian
countries
Supportive for china’s entry into WTO.
ECONOMICAL
localization of production and raw materials.
Own production plant in china
50% of raw materials acquired itself from china
Localization of employees
More than 2000 employees were Chinese or
overseas Chinese.
SOCIAL
Active involvement of community
Financial and human support in areas of human
services education ,art ,culture etc.
Invested $ 4 million for this purpose
TECHNOLOGICAL
setup R&D department
Invested $ 1.5 million
developed new and tailored products like
whitening make up for Chinese women.
SWOT
STRENGTH
Based on direct selling operation
Training to staff
Functions are performed by IBOs
Organize meetings and events time to time
Have good customer service system
Return and refund policies
WEAKNESS
More power to IBOs
Initially high entry cost
Rumors for direct selling operations
Focus shifted from selling products to
recruiting
OPPURTUNITIES
Setup a manufacturing plant
Population of china
Popular in China
THREATS
Too much freedom to IBOs
Change in government policy
Competitors
CRITICAL ANALYSIS AND
CONCLUSION
Solid distribution network
New competencies with localized business
model
Good relations with government & Positive
public image
Amway continued to operate profitably and
was successful in China due to its
localization strategy
Amway succeed in China.