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BPMN3023 STRATEGIC MANAGEMENT Sman Tairos (2017)
30
6.2 TOWS Analysis
For the
purpose of formulation of strategy, TOWS ana...
BPMN3023 STRATEGIC MANAGEMENT Sman Tairos (2017)
31
7.0 Recommendation
After
performing extensive research on the company ...
BPMN3023 STRATEGIC MANAGEMENT Sman Tairos (2017)
32
8.0 References
Adamkasi.
(2017, September 14). Porter’s five forces mo...
BPMN3023 STRATEGIC MANAGEMENT Sman Tairos (2017)
33
Rouse, M. (n.d.). Definition
SWOT analysis. Retrieved on December 5, 2...
BPMN3023 STRATEGIC MANAGEMENT Sman Tairos (2017)
34
9.0 APPENDIX
Logo of
Avon Products Inc.
Andrea Jung
Executive Chairman...
BPMN3023 STRATEGIC MANAGEMENT Sman Tairos (2017)
35
Sheri McCoy
Chief
Executive Officer, Avon Product
Avon Cosmetics Produ...
BPMN3023 STRATEGIC MANAGEMENT Sman Tairos (2017)
36
Avon Fashion Products
Jewelry Products of Avon
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Avon is facing the issue of management changeover and severe financial loss due to the global bribery charged in China.
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27. 27.
BPMN3023 STRATEGIC MANAGEMENT Sman Tairos (2017)
27
was supported by Andrea Jung to begin this company. Andrea Jung is Senior Advisor
to
Avon Products, Inc. since January 1, 2013. Jung graduated magna cumlaude from
Princeton University and served as the CEO of Avon from November
1999 to May 2012.
This company has very experience BOD and in the same way have supported by CEO who
has a lot of experience in Avon’s company.
6.1.2 Weaknesses
6.1.2.1 Lack of Innovative Technology
A problem that was evident for Avon was the inability of this company to change with the
new
technological world, which was fast emerging. As times were changing Avon did not
implement vital technological processes that could manage the firm’s
inventory and sales
more efficiently. Rather Avon continued with onerous paperwork which consequently
leads to the slow growth which occurred in 1998-
1999. The ability to move with changing
times illustrates a lack of strategy on the management’s behalf to meet their objective
outcomes.
The impact of poor
in innovative technology affected to Avon’s operating. For example,
the operation margins have gradually declined from 15.9% in 2004 to 8.9% in 2006,
driven
by intense competitive pressures in the North America and Asia Pacific regions. The
operating margins in North American region declined by 1.3% in
2009 compared to 2008.
6.1.2.2 Poor Focusing Product
Avon’s products include cosmetics, skincare, fragrance, personal care, hair care, and
jewelry. Avon
offers gift and decorative products, housewares, entertainment and leisure
products, and children’s and nutritional products through its home product category.
In
addition to these, this company also produces health and wellness products. However, this
company does not have a clear marketing and operational
strategy for its non-core product
line. The lack of strategic focus has affected this company’s non-core business in fashion
and home product lines. As a
consequence, the non-beauty products business have lagged
behind and reported a poor performance.
28. 28.
BPMN3023 STRATEGIC MANAGEMENT Sman Tairos (2017)
28
6.1.3 Opportunities
6.1.3.1 Embrace Technology Advantages
In a modern era, run the
business through social media can assume as a trends. The
popularity of social media continues to gain ground with internet sites such as Facebook,
Twitter
and Instagram. Avon already has a presence on the social media giant Facebook‘s
site with their brand “Mark” but not use it effectively to gain sale. They
have been on the
forefront of leveraging this technology to produce more sales. There are currently more
than 500 million active users on Facebook, which is
about one person for every fourteen
in the world. Half of these users log on in any given day and Facebook users spend 700
billion minutes per month on
Facebook. Avon can take this opportunity to increase their
sale per day. Build a website that customer can purchase from website directly without
make any
deal with third party.
6.1.3.2 2. New product innovation (Eco-green products): Re-branding Strategy
In 2009, this company invested approximately $56
million incrementally in the
representatives through Representative Value Proposition program (RVP) by continued
implementation of the Sales Leadership
program, enhanced incentives, increased sales
campaign frequency, improved commissions and new e-business tools. The aggressive
marketing would help
the company in increasing the brand awareness and boost sales.
Besides, direct-selling 14 companies like Avon depend upon the motivation of its
representatives. Measures like RVP would help to boost their motivation levels and
encourage the sales.
This company can leverage the status of the celebrity
to effectively communicate the values
associated with Avon brand. Hence, this company through these aggressive advertising and
branding strategy can
effectually interact with its target consumer groups and strengthen
its position against rivals such as L’Oréal and Procter & Gamble Co. (P&G). In December
2012, McCoy announced plans to downsize by cutting 1,500 jobs and exiting from the
South Korea and Vietnam markets. On April 8, 2013, Avon announced
plans to downsize
further by cutting 400 additional jobs and restructuring or abandoning operations in Africa,
the Middle East, and Europe, including exiting
from Ireland, as it aims to save $400 million
by the end of 2016.
29. 29.
BPMN3023 STRATEGIC MANAGEMENT Sman Tairos (2017)
29
6.1.4 Threats
6.1.4.1 Competitive Environment
Avon faces competition in both the
United States and international markets. In addition to
the products themselves, Avon competes with companies based on direct-selling strategies,
Internet, and
the mass-market channels of retail. Several direct-selling companies including
Mary Kay and Arbonne sell product lines similar to Avon and have
international operations
to compete with Avon globally. Aside from Mary Kay and Arbonne, Avon competes with
other beauty companies using a distinct
business model that relies heavily on the success
of its representatives for example L’Oréal and P&G. These companies have increased their
focus to gain
market share in beauty and personal care products in the US as well as
emerging markets. Also, in non-beauty segments, global brands such as Amway and
Party
Life have remained a cause of concern for the company.
6.1.4.2 Threat of taking over by other competitors
The beauty company faced an offer of taking
over by Coty, a Germany owned company at
$10 billion after a series of management changeover at Avon. However, it was refused
from the top management
since they believe that Avon can get up by itself to gain market
share as it used to do. The weakening in the top management drives company to the bottom
line of earning and incur heavy losses. Hence, the treat of taking over by other company in
the same industry is high.
30. 30.
BPMN3023 STRATEGIC MANAGEMENT Sman Tairos (2017)
30
6.2 TOWS Analysis
For the purpose of formulation of strategy, TOWS analysis is an
important tool. Four kinds
of strategies are developed by the managers with the help of matching tool of “Threats-
Opportunities-Weaknesses-Strengths”. On
the basis of this analysis, the organizations may easily
develop the successful strategies for their business after seeing and analyzing the competitors
deeply.
SWOT STRENGHTS WEAKNESSES
1. Strong brand image
2. Largest direct selling
company
3. Experience of Board of
Director
1. Lack of innovative
technology
2. Poor focusing product
OPPORTUNITIES SO STRATEGIES WO STRATEGIES
1. Embrace Technology
Advancement
2. New product
innovation (Eco-
green products)
1. Make a strong brand
image by innovating
new product line (Eco-
green products) (S1,O2)
2. Maximizes direct selling
through increasing of
the use of internet
present. (S2, O1)
1. Increase innovative of
product by embracing
technology advancement.
(W1, O1)
2. Increase
awareness of efforts
to increase revenue by
adding new product line
which is eco-green product.
(W2, O2)
THREATS ST STRATEGIES WT STRATEGIES
1. Competitive
environment
2. Threat of taking
over by other
companies
1. Gain competitive
advantage by making a
strong brand image and
emphasizes
direct
selling system. (S1,
S2,T1)
2. Secure the company
sovereignty position by
having experience BOD
who can make wise
decision which benefits
to all
stakeholders.
(S3,T2).
1. Create the innovative and
unique product in order to
gain competitive advantage.
(W1, T1)
2. Implementing new product
line can
minimize the
weakness of poor focusing
product and attract more
customer which can also
helps Avon from being
taken-over.
31. 31.
BPMN3023 STRATEGIC MANAGEMENT Sman Tairos (2017)
31
7.0 Recommendation
After performing extensive research on the company using
multiple online tools, journals,
articles and texts, we have collected enough evidence to make recommendations as to how Avon can
continue its global
expansion while still maintaining long and short term company objectives and
staying within core competencies. We believe Avon can and should expand
strategically into each of
the BRIC countries while also leverage the power of the technology and the Internet to increase
business through social networks.
There are some proposed strategies for Avon’s company which
is market penetration and eco-friendly product.
7.1 Market Penetration
Improved market
penetration this is an excellent way to boost sales and promote the brand.
Avon is already the market leader and people are aware of the brand. However,
through
more aggressive advertisement campaigns, sales promotions, mail-in discounts or coupons,
increase internet presence and bill boards. Avon will be
able to further heighten brand
awareness, build customer loyalty and create appeal for our products by new and existing
customers. To look Avon achieves this
over the first two years with an estimated amount
of 10 million dollars. With 5 million dedicated to further increase internet presence and the
remaining 5
million to cover the other activities.
7.2 Eco-friendly products.
Avon’s director or leader should take a part to more research about “green” product.
Improve
research and development to introduce more “green” products because customers
nowadays more refer to “green” product cosmetic. This will be achieved
through
investment in research and development. The demand for “green” products appears to be
a very viable market as consumers and distributors are
becoming more conscious about
protecting the environment. Thus creating a demand for these products, this also presents
the opportunity to increase brand
loyalty.
32. 32.
BPMN3023 STRATEGIC MANAGEMENT Sman Tairos (2017)
32
8.0 References
Adamkasi. (2017, September 14). Porter’s five forces model of Avon.
Retrieved on November
20, 2017, from http://www.porteranalysis.com/porters-five-forces-model-porter-analysis-
of-avon/
Alkhafaji, A. (2003). Strategic
Management. Formulation, implementation, and control in a
dynamic environment. New York: The Haworth Press, Inc.
Ambler, T. (2017). What are strategic
issues in business? Retrieved on November 20, 2017,
from https://www.reference.com/business-finance/strategic-issues-business
cc4b64ab8c9067f8
AVON.
(2013, Feb 12). Avon Reports Fourth-Quarter and Full-Year 2012 results. Retrieved on
November 11, 2017, from
http://media.avoncompany.com/index.php?
s=10922&item=126205
Dagmar R. (2001). Porters 5 forces. Retrieved on December 2, 2017, from
http://www.themanager.org/Models/p5f.htm.
Dess, G. G.,
Lumpkin, G. T. & Eisher, A. B. (2006). Strategic Management. Text and cases.
International edition. London: McGraw-Hill.
Dilwa, E. (2015, March 23).
Avon company product analysis. Retrieved on November 20, 2017,
from https://www.ukessays.com/essays/marketing/avon-company-product-analysis-
marketing-essay.php
Hill, C. W. L and Jones, G. R. (2007). Strategic management theory: An integrated approach.
Seventh edition. New York: Houghton
Mifflin Company.
Hutchins, M. (2010, July 20). Marketing theories – PESTEL analysis. Retrieved on November 25,
2017, from
https://www.professionalacademy.com/blogs-and-advice/marketing-theories--
-pestel-analysis
Palade, A. (2011). Analysis of marketing mix on cosmetics
products. Annals of the University of
Petroşani, Economics, 233-244.
Pearce, J. A., II and Robinson, R. B. (2005). Strategic management formulation,
implementation,
and control. Ninth Edition, New York: McGraw-Hill.
Porter, M.E. (1985). Competitive advantage: Creating and sustaining superior
performance. The
Free Press, New York, NY.
Riley, J. (2012). Porter’s five forces model: Analyzing industry structure. Retrieved on
November 29, 2017,
from
http://www.tutor2u.net/business/strategy/porter_five_forces.htm.
33. 33.
BPMN3023 STRATEGIC MANAGEMENT Sman Tairos (2017)
33
Rouse, M. (n.d.). Definition SWOT analysis. Retrieved on December 5, 2017, from
http://searchcio.techtarget.com/definition/SWOT-analysis-strengths-weaknesses-
opportunities-and-threats-analysis
UKessays. (2015, March 23). The history
of Avon Product Inc.Retrieved on Noveber 1, 2017,
from https://www.ukessays.com/essays/marketing/the-history-about-avon-products-inc-
marketing-
essay.php
Wheelan, T.L., & Hunger, J. D. (2008). Strategic management and business policy. 11th Ed.,
Prentice Hall, London.
34. 34.
BPMN3023 STRATEGIC MANAGEMENT Sman Tairos (2017)
34
9.0 APPENDIX
Logo of Avon Products Inc.
Andrea Jung
Executive Chairman &
CEO
https://www.slideshare.net/tairossman/avon-case-study-solution 23/27
19:48, 05/12/2021 Avon case study solution
35. 35.
BPMN3023 STRATEGIC MANAGEMENT Sman Tairos (2017)
35
Sheri McCoy
Chief Executive Officer, Avon Product
Avon Cosmetics Products
36. 36.
BPMN3023 STRATEGIC MANAGEMENT Sman Tairos (2017)
36
Avon Fashion Products
Jewelry Products of Avon
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Avon is facing the issue of management changeover and severe financial loss due to the global bribery charged in China.
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