BUSINESS CASE ANALYSIS AND VIVA

(subject Code : 576122(76) Submitted in the partial fulfillment for the award

of degree

MASTER OF BUSINESS ADMINISTRATION (MBA )

Of

Chhattisgarh Swami Vivekanand Technical University

Bhilai (C.G)

Session 2021 – 22

Submitted To : Submitted by: Supervised by:

Dr. SANJAY PANDAY NAME - B Sandeep Acharya Mr.Amit stieve henry

Principal and Hod MBA -1st Sem Assistant Proff.

CASE STUDY ON AMWAY
AMWAY
More than one million Amway Business Owners (ABOs) are the heart and soul of our
company. Their success is integrated into everything we do. We’re here to support their
goals, whether it’s extra cash, financial flexibility or personal freedom.

Our ABOs are supported by more than 15,000 employees who work in hundreds of locations
around the world. We offer incredible, cross-cultural career opportunities for some of the
best talent around the globe. From farming to finance, technology to teaching, our
international team helps build better lives for themselves, their customers and their families.
continents with a presence in more than 100+ countries and territories. While many things
have changed over the past 60 years, our four Founders Fundamentals and six company
values still guide us today. And, we remain one of the largest family-owned companies—an
attribute that’s rare in 2021
Our values
Our reason for being is simple. We exist to help live better, healthier lives. To help us
realize this belief in others, we follow the six values our business was built upon:
partnership, integrity, personal worth, achievement, personal responsibility and free
enterprise.
Major Milestones
A legacy is made of moments. Our company has a history as remarkable and unique as the people who created it.
1959

Amway is founded
Rich DeVos and Jay Van Andel made a pact in high school to become business entrepreneurs together. They started a flying
school and opened a drive-in restaurant. Eventually, from the basements of their homes, they founded Amway in 1959,
building their success on the desire to make other people successful.
1959

Amway launches its first product

Amway launches its first product, Liquid Organic Cleaner - one of the world’s first biodegradable, concentrated multi-
purpose cleaners. Liquid Organic Cleaner becomes a high seller and initiates our legacy of taking stewardship of the earth
seriously.
1962

Amway becomes international

Amway opens its first International office in London, Ontario, Canada. This would be the second of over 100+ countries
and territories into which Amway would eventually expand.
1968
Artistry brand debuts
The Artistry cosmetics brand debuts with 11 products and 37 color shades. Artistry would grow to
become one of the top-five-selling premium skincare brands in the world.
1972

Amway acquires Nutrilite

Amway acquires the Nutrilite brand, rounding out our brand offerings to include home, beauty, and
nutrition categories. Nutrilite would grow to become the world’s leading brand of vitamin and dietary
supplements.
1980

Amway tops $1 billion

Amway’s international sales top 1 billion dollars.
1990

Amway expands
Amway expands into 33 additional markets around the world, including China and South Africa.
Amway would eventually more than double in size during this decade.
2015
Amway acquires XS energy drinks
Amway acquires the XS™ brand of energy drinks and sports nutrition. XS is instantly popular with
younger generations and emerging markets, quickly becoming one of Amway’s most popular product
categories.
2019
#1 Direct Selling Company
Just over 50 years after our founding, Amway is the “World’s Number-One-Direct Selling Company”
according to Direct Selling News Global 100.*

History

Founding

Amway Japan head office

Amway Vietnam

Jay Van Andel and Richard DeVos had been friends since school days and business partners in various
endeavors, including a hamburger stand, an air charter service, and a sailing business. In 1949, they were
introduced to the Nutrilite Products Corporation by Van Andel's second cousin Neil Maaskant. DeVos and Van
Andel signed up to become distributors for Nutrilite food supplements in August.They sold their first box the next
day for $19.50, but lost interest for the next two weeks. They traveled to Chicago to attend a
Nutrilite seminar soon afterward, at the urging of Maaskant, who had become their sponsor.
They watched promotional filmstrips and listened to talks by company representatives and
successful distributors, then they decided to pursue the Nutrilite business. They sold their
second box of supplements on their return trip to Michigan, and rapidly proceeded to
develop the business further.
Earlier in 1949, DeVos and Van Andel had formed the Ja-Ri Corporation (abbreviated from
their respective first names) to import wooden goods from South American countries. After
the Chicago seminar, they turned Ja-Ri into a Nutrilite distributorship instead.In addition to
profits on each product sold, Nutrilite offered commissions on sales made by new
distributors introduced to the company by existing distributors—a system known as multi-
level marketing or network marketing. By 1958, DeVos and Van Andel had built an
organization of more than 5,000 distributors. However, they and some of their top
distributors formed the American Way Association, or Amway, in April 1959 in response to
concerns about the stability of Nutrilite and in order to represent the distributors and look for
additional products to market.
Their first product was called Frisk, an organic cleaner developed by a scientist in Ohio.
DeVos and Van Andel bought the rights to manufacture and distribute Frisk, and later
changed the name to LOC (Liquid Organic Cleaner). They subsequently formed the Amway
Sales Corporation to procure and inventory products and to handle sales and marketing
plans, and the Amway Services Corporation to handle insurance and other benefits for
distributors. In 1960, they purchased a 50% share in Atco Manufacturing Company in
Detroit, the original manufacturers of LOC, and changed its name to Amway Manufacturing
Corporation.In 1964, the Amway Sales Corporation, Amway Services Corporation, and
Amway Manufacturing Corporation merged to form the Amway Corporation.
Amway bought a controlling interest in Nutrilite in 1972 and full ownership in 1994.

International expansion

Amway expanded to Australia in 1971, to parts of Europe in 1973, to parts of Asia in 1974, to
Japan in 1979, to Latin America in 1985, to Thailand in 1987, to China in 1995, to Africa in
1997, to India and Scandinavia in 1998, to Ukraine in 2003, to Russia in 2005, and
to Vietnam in 2008.
In 2014, a Russian loyalty card program called "Alfa-Amway" was created when Amway
joined with Alfa-Bank.
Amway was ranked by Forbes as the 42nd-largest privately held company in the United
States in 2018, and as the number one largest company on the Direct Selling News Global
100 list in 2018.


SWOT Analysis of Amway

STRENGTH
Strong Global Presence: Amway is present in over 80 countries with over 3 million
business owners/agents. This shows that Amway is not overly dependent on a
single market.

Amway has received many accolades: Amway has a long list of awards like Asia Pacific
Frost & Sullivan Filtration company of the year Award, LEED gold certification etc.

Wide Product range: Amway offers about 115 products in 5 different categories, personal
care, home care, nutrition and wellness, cosmetics and gift catalogue.

Wide Range of consumers: Amway’s product portfolio caters to a wide range of consumers
from babies to elders.Although, women are the main consumers of Amway products.
Weaknesses in the SWOT Analysis of Amway :
Limited mode of availability: Amway products are only available through business
owners/agents who are the direct sellers or online selling. This reduces Amway’s market
share.

Falling sales: Amway’s sales have dropped in the previous two years. Amway reported a
decline of 7 per cent in its sales in 2016.

Costly Products: Amway products are relatively costly and thus the target market is limited
to the premium segment.

Heavily dependent on word of mouth: Amway does not advertise on TV or through

a brand ambassador and hence is totally dependent on word of mouth publicity.

Multi level marketing: MLM is always considered to be a risky business and the chain can
collapse at any time when a top player leaves or creates any ot
Opportunites in the SWOT Analysis of Amway :
Increasing availability: Amway should increase the availability of its products and should
explore more mediums to expand its customer base.

Using different modes of communication: Amway should also look to invest in

communication and should explore options such as digital marketing
to advertising internationally.

Tie-ups with salons and health experts: Amway should also explore the option of tying up
with salons, beauty experts and health experts.

Threats in the SWOT Analysis of Amway :

Increasing competition: Amway is facing intense competition nationally as well as
internationally which stops it from increasing its market share.

Low Switching Cost: Due to the availability of similar products in the market and the
emergence of E-commerce, switching cost is very low and thus brand loyalty reduces.
 Question and Answer

Q.1 Why Haven’t I Heard of Amway Products ?

Ans It’s common for direct selling companies to have less product visibility and name recognition
than traditional consumer brands. Since Amway™ products are sold exclusively through Independent
Business Owners (IBOs), either in person or online, you won’t see our products in retail stores or on
retail websites.
Amway also doesn’t do much advertising and promotion. Instead, we invest more in R&D, supply
chain and supporting our IBOs – if you hear about Amway™ brands and products, it’s usually
through an IBO or a friend who uses and likes our products.
Amway is the #1 direct selling company in the world – proof that our high quality products, like our
proven business model, meet the needs of our IBOs and their customers and families.
Q.2 What Products Does Amway Make ?
Ans Our mission to help people live better lives is fulfilled through a growing family of respected
brands and science-based products that benefit your nutrition, beauty and home, including:
 Nutrilite™ is the world’s #1 selling vitamins and dietary supplement brand* and the only global
vitamin and dietary supplement brand to grow, harvest and process plants on their own certified
organic farms.*
 Artistry™ is among the world’s top 10, largest selling, premium beauty brands.* These
personalized skincare and makeup products are infused with natural botanical ingredients and
backed by Amway’s scientific expertise in skin health.
 Amway Home™ is a leading brand of environmentally-sensitive home cleaning products that
are better, naturally.
 eSpring™ is the world’s largest-selling selling brand of home water treatment systems.† These
powerful purifiers effectively destroy 99.9% of disease-causing microorganisms and effectively
reduce more than 140 potential health-effect contaminants.
 Atmosphere™ is the best-performing HEPA air purifier among top competitors for removing
allergens and other contaminants. †† These best-in-class air treatment systems that deliver clean
air to your home or your car, connected to you on mobile
 iCook™ is cookware that builds confidence in the kitchen and brings family and friends together
through food.
 XS™ Energy was the first exclusively sugar-free energy drink brand sold globally.*
For nearly 60 years, we’ve researched, designed and manufactured premium products that combine
the best of nature and the best of science to make the world a healthier place for our Independent
Business Owners and their customers.

*Euromonitor International Limited, www.euromonitor.com/amway-claims.

†Based on a Verify Markets study of 2012 global sales.
††Based on Internet claims as of February 2018 and based on 99.99% removal of airborne allergens
and contaminants down to 0.007 microns that pass through the system.
Q.3 How Can I Make Money With Amway ?
Ans Our Independent Business Owners (IBOs) earn income by selling Amway™ products to
customers and by building a business where they sponsor and mentor others to do the same.

Simply put, you make money by:

 Selling Amway™ products with a retail markup and pocketing the margin.
 Earning personal sales bonuses based on your personal volume of products sold.
 Achieving Growth Incentives for building a team of others, who in turn also sell Amway™
products.
Retail markup: IBOs can sell Amway™ products at a markup (the difference between cost and retail
price) to earn retail margin on the sale. While IBOs can set their own prices, Amway does establish a
suggested retail price for every product.

Bonuses: IBOs can earn monthly bonuses based on their personal sales volume (how many products
and what types of products they sell).

Growth Incentives: As their business grows and they sponsor new team members, IBOs receive
monthly bonuses based on the product sales volume of their team. IBOs earn Growth Incentives for
reaching key business building milestones, such as one-time cash awards and business trips.

Amway offers a performance-based compensation plan. How much IBOs earn is largely dependent on
how much time and effort they consistently put into their businesses. Rest assured, we reward your
success. In fact, since 1959, Amway has paid out more bonuses and cash incentives to its distributors
worldwide than any other direct selling company in history.*
Q.4 How much money Can I Make With Amway ?
Ans Our Independent Business Owners (IBOs) earn income by selling Amway™ products to
customers and by building a business where they sponsor and mentor others to do the same.

Simply put, you make money by:

 Selling Amway™ products with a retail markup and pocketing the margin.
 Earning personal sales bonuses based on your personal volume of products sold.
 Achieving Growth Incentives for building a team of others, who in turn also sell Amway™
products.

Retail markup: IBOs can sell Amway™ products at a markup (the difference between cost and retail
price) to earn retail margin on the sale. While IBOs can set their own prices, Amway does establish a
suggested retail price for every product.

Bonuses: IBOs can earn monthly bonuses based on their personal sales volume (how many products
and what types of products they sell).

Growth Incentives: As their business grows and they sponsor new team members, IBOs receive
monthly bonuses based on the product sales volume of their team. IBOs earn Growth Incentives for
reaching key business building milestones, such as one-time cash awards and business trips.

Amway offers a performance-based compensation plan. How much IBOs earn is largely dependent on
how much time and effort they consistently put into their businesses. Rest assured, we reward your
success. In fact, since 1959, Amway has paid out more bonuses and cash incentives to its distributors
worldwide than any other direct selling company in history.*
SUMMARY
Amway (short for "American Way") is an American multi-level marketing (MLM) company
that sells health, beauty, and home care products. The company was founded in 1959
by Jay Van Andel and Richard DeVos and is based in Ada, Michigan. Amway and its sister
companies under Alticor reported sales of $8.4 billion in 2019. It conducts business through
a number of affiliated companies in more than a hundred countries and territories.
Amway has been investigated in various countries and by institutions such as the Federal
Trade Commission (FTC) for alleged pyramid scheme practices. It has never been found
guilty, though it has paid tens of millions of dollars to settle these suits
Amway Progress Report
CONCLUSION
In conclusion, the company has many development opportunities in China, while at the same time
faced many challenges. Only constant innovation can keep the development of enterprises.
Many people say that direct selling is the trend of the future. In fact, some of the ideas and essence
of direct selling may be the future development trend. For example, the construction of direct
selling network platform. With the rapid development of science and technology, the global
economy is becoming more and more networked and informationized. In the era of innovation,
traffic is king, direct selling is inseparable from the Internet.
Internet technology will be given full play in direct selling. Direct selling enterprises through Internet
technology not only can have a lot of publicity for the ads effect, also can expand the market.
Direct selling network platform will be through direct selling and the integration of Internet
technology, and integrate the resources to achieve the biggest advantage of direct selling.
The direct selling network platform is a big leap forward in the realization of the direct selling
business. With the development and improvement of the direct selling market economy, the advent
of e-commerce era will have more market space. Therefore, the development trend of the future of
the direct selling industry must be toward networking and the marketing model of multiple
channels.