Operations Avon Introduction Brief History Brief Company Overview Organizational Structure Mission, Vision & Slogan Existing Why change? Proposed Internal Assessment Financial Ratio Analysis Net Sales by Product Category Revenue by Product Segment Revenue by Geographic Segment Market Positioning Map Map Locating the Firms

Strengths and Weakness IFE Matrix External Assessment List of Competitors Major Closest Competitors

CompetitorsAnalysisSales Pie Chart of Competitors Competitors Financial AnalysisOpportunities and Threats EFE MatrixCompetitive Profile Matrix (CPM) Porter's Five Forces Model Strategy Analysis SWOT Matrix SPACE Matrix BCG MatrixBy Product DivisionBy Geographic Division The IE matrix Grand Strategy Matrix Decision StageQSPMPossible Alternative Strategies Balance Score Card Conclusion References Q &A

Outline

Founded

Product Divisions

Sales/Distribution

First Offices

Global Divisions

In 1886

By David H. McConnell

Beauty Fashion Home

Direct Selling

Sales Leadership

Limited Retail Store Sales E- Sales

Head Office at New York

Montreal, First Overseas Office Japan, First Asian Office in 1969

North America Latin America Europe and West Asia Asia Pacific

Introduction

David H. McConnell

Travelling Book Seller

California Perfume Company (CPC) in 1886

CPCs first office outside United State was opened in 1914 in Montreal, Canada

Name Change and Advertising

The Companys name was change to Avon Products Inc. after the British town Stratford-upon-Avon in 1938.

In 1946 the company become Public and started advertising campaign such as Avon Calling

International Expansion

During 1950s Avon expanded overseas to countries such as Puerto Rico, Cuba and Venezuela

In the 1970s U.S sales top $750 million and the first AvonAsian business was opened in Japan

Brief History

Avon is a leading global beauty company, with over $10 billion in annual revenue in 2008

World's largest direct seller

Operating in 143 countries worldwide through 6.4 million independent Avon Sales Representatives

It is the largest micro lender to women

Avon is among the world top global brands

Increased Investments by $ 120 m in 2007 to develop a new Sales Leadership

Changed marketing approach from a homey image and started celebrity promotions

Brief Overview

Avons largest manufacturing plants, Brazil, China and Poland received the ISO14001 certifications in 2008

The Clean Industry Certificate to the manufacturing plant in Mexico

During the same period Avons revenues increased 7.5 percent

Avon implemented reconstructing programs in 2009

There is heavy investment in online search engines and internet carrier sites

Andrea Jung is the Chief Executive Office who is leading the management team of thirteen

Brief Overview . . . . . . . Contd

CEO & Chairperson Andrea Jung

President andChief OperatingSVP RetailEVP FinanceSVP Global ITSVP HR Officer

SVP Corporate Communication

SVP Latin America

SVP North America

SVP Asia Pacific

SVP Europe and East Asia

SVP Global Marketing

VP Global Marketing

Organizational Structure

Avon: The Company for Women

Avon Slogan (Actual)

ActualProposed

Avon: TheCompany forWomenAvon: The

Company for Everyone

Avon Slogan

ActualProposed

To be the company that best understands and satisfies the product, service, and self-fulfillment needs of women globally

To be the leading beauty and cosmetics company that best understands and satisfies the self-fulfillment needs of our

AVONVisioncustomers globally.

Proposed VisionAnalysis

To be the leading beauty and cosmetics company that best understands and satisfies the self-fulfillment needs of our customers globally.

Word Women is replaced with Customers

To identify the industry

words beauty and cosmetics are included.

AVONVision

The Global Beauty Leader We will build a unique portfolio of Beauty and related brands, striving to surpass our competitors in quality, innovation and value, and elevating our image to become the Beauty company most women turn to worldwide.

The Womens Choice for Buying we will 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.

The Premier Direct Seller We will expand our presence in direct selling and lead the reinvention of the channel, offering an entrepreneurial opportunity that delivers superior earnings, recognition, service and support, making it easy and rewarding to be affiliated with Avon and elevating the image of our industry.

The Best Place to Work we will be known for our leadership edge, through our passion for high standards, our respect for diversity and our commitment to create exceptional opportunities for professional growth so that associates can fulfill their highest potential.

The Largest Womens Foundation we will be a committed global champion for the health and well-being of women through philanthropic efforts that eliminate breast cancer from the face of the earth, and that empower women to achieve economic independence.

The Most Admired Company We will deliver superior returns to our shareholders by tirelessly pursuing new growth opportunities while continually improving our profitability, a socially responsible, ethical company that is watched and emulated as a model of success.

AVONMission (Actual)

Proposed MissionCharacteristics

Avon is committed to be the leading global provider of home, fashion and beauty products that will enhance the beauty and satisfaction of our customers. We will utilize latest technology and will pursue new growth opportunities that will bring about wealth for all our stakeholders. At Avon, we firmly care for the people and environment.

Broad in Scope

Less than 250 words

Identify the Utility of Products

Social Responsibility

Includes Nine Components:

Customers, Product, Market, Technology, Growth, Philosophy, Self Concept, Concern for public and employees

AVONMission (Proposed)

Financial Ratio Analysis

INTERNAL ASSESSMENT

200820072006Beauty72 %70 %69 %Fashion18 %18 %18 %Home10 %12 %13 %Total100 %100 %100 %Net Sales by Product Category

INTERNAL ASSESSMENT

Net Sales by Product CategorySales

Beauty FashionHome 10%

18%

72%

INTERNAL ASSESSMENT

2008% Age20072006Beauty7,603.7+ 9.66,932.56,019.6Fashion1,863.3+ 6.21,753.41,562.7Home1,121.9- 3.21,159.51,095.0Total10,588.9+ 7.59,845.28,677.3Revenue by Product Segments

($ million)

INTERNAL ASSESSMENT

Growth Graph

By Product Division

INTERNAL ASSESSMENT

Division20082007Latin America3,884.13,298.9North America2,492.72,622.1Europe,Africa andAsia3,071.22,886.4Asia Pacific and China1,242.11,131.1Revenue by Geographic Segments

INTERNAL ASSESSMENT

SalesR G S e e e v o g

Latin America

North America

EU Africa & East Asia

Asia Pacific & China

e g m n r e u a n e p th s b iy c

INTERNAL ASSESSMENT

Market Positioning Map

INTERNAL ASSESSMENT

Map locating the firms Operations

INTERNAL ASSESSMENT

StrengthsWeaknesses

1.Avon is a Global Market Leader

2.Committed and dedicated workforce - 6.4 million Avon representative in over 100 countries making Avon the largest sales force

3.Worlds Largest Micro lender for women -extending some $1 billion in product and credit each year to help women start their own entrepreneurial businesses

4.Channel of distribution worlds largest direct seller

5.Manufacturing operations match ISO 14001 standards

6.Avon owns its major manufacturing and distribution centers

7.Increased in revenue in most geographic area. Due to increase in internet presence. (Revenues increased 7.5% from year 2007 to 2008)

8.Avon is one of the worlds top global brands. Avon has major brand names such as Anew, skin-so-soft, Avon Color etc. with 90% recognition worldwide.

1.Decrease in NorthAmerican Sales Revenue by 129.4 million

2.Weak Brand Image

3.High advertising costs Companies advertising spending went from $136millions in 2005 to $249 million in 2006 to $368 million in 2007 and 14%higher in 2008

4.Poor brand loyalty

5.Does not target urban trendsetters

6.Beauty Sales in the first quarter 2009 were 12% lower compared to sales revenue in previous year 2008

7.Avon lagged behind seven of their cosmetic companies in customer loyalty

9.First cosmetic to permanently end to animal testing INTERNAL ASSESSMENT

Internal Factor Evaluation Matrix (IFE)

INTERNAL ASSESSMENT

List of Competitors

1. Procter & Gamble 2. LOreal S.A.3. Unilever PLC4. Johnson & Johnson5. Kimberly-Clark Corporation 6. Colgate-Palmolive Company 7. Kao Corporation8. Estee Lauder Companies In 9. Mary Kay10. Revlon11. The Body Shop

EXTERNAL ASSESSMENT

Major Competitors

EXTERNAL ASSESSMENT

RevlonMary Kay

Revlon was founded in 1932, by Charles Revson

Revlon Sales to Wal-Mart accounts for 23% of the company's total sales

The company earned $1.3 billion in sales and $950K in net income in 2009

Revlon attributes the loss to the weak global economy and Sales fell by 3.8%

Revlon is the second largest color cosmetics company in the United States

In 1963 Mary Kay Cosmetics was founded in Dallas, Texas

In 2009 sales of Mary Kay products reached $2.6 billion

There are more than 37,000 women across the world who has become Independent Sales Directors

Mary Kay products are expensive versus Avon

Mary Kay seems to be targeting older women

90% of the companys revenue is now generated through online orders

It entered in Pakistan in 1984 while in India in 2007

EXTERNAL ASSESSMENT

AVONs Comparison with Closest Competitors

Avon is seven and half times larger than Mary Kay and approximately eight times larger than Revlon

Its Competitors distribute their products to resellers but Avon sells its products solely through its direct-selling channel

Avon brand products are now recognized all over the world due to the success of their international campaign

Avon also has a Representative development program that focuses on the professional training of Representatives

EXTERNAL ASSESSMENT

Pie Chart of Revenues 2008

EXTERNAL ASSESSMENT

AVONREVLONMarket Cap$ 9,710 M$ 242.84 MEmployees42,0005,600Revenues$ 10.37 B$ 1.34 BGross Margins63.03 %63.48 %EBIT% 1,440 M$ 171.40 MOperating Margin12.07 %11.42 %Net Income$ 807.9 M$ 28.5 MGrowth7.5 %5.6 %EPS$ 4.72$ 1.422Competitors Financial Strength 2008

EXTERNAL ASSESSMENT

OpportunitiesThreats

1.Agrowing trend in the cosmetics industry is the introduction of green products. More than sixteen percent of beauty products launched in 2008 were certified organic, ethical, or all natural.

2.Eye makeup market

3.The cosmetics industry tends to be countercyclical..

4.Aveda cosmetics found that sixty eight percent of consumers will remain loyal to a company that has a social and environmental commitment.

5.Urban Trendsetters markets

6.Geographic growth enormous growth opportunities existed in countries populations such as China, Indonesia and India and other Asian countries.

7.Demand for cosmetic products normally remains constant and unaffected by economic distress.

8.The baby boomers are aging and they are more conscious on their appearance, beauty and also improving their looks.

9.Emphasize direct selling in emerging and

1.Competition such as Mary Kay and Revlon and many others

2.Rejection of internet selling by sales representative

3.Global economic climate stifled new product development, innovation and sustainability programs in 2009.

4.In terms of color cosmetics, environmental International Inc. predicted that many of these markets will see slowdown in volume demand.

5.Inflation rate

6.Rising cost of commodities

7.Direct-selling becoming more popular -Amid the financial crisis Aussie mums are increasingly turning to direct selling and at-home product parties to supplement their household income.

8.They are a multilevel based company that sells inferior quality with a higher price tag than what it is worth.

9.Avon products outpaced by jazzier products to women who favored more exciting product lines

10.Decreased earning opportunities

markets. developing EXTERNAL ASSESSMENT

External Factor Evaluation Matrix (EFE)

EXTERNAL ASSESSMENT

COMPETITI VE PROFILE MATRIX CPM

EXTERNAL ASSESSMENT

#ForcesIntensity1Rivalry among competingHigh firms2Entry of New CompetitorLow3Development of SubstituteLow Products4Bargaining Powers ofLow Suppliers5Bargaining Power ofHigh ConsumersPorters Five Forces Model

EXTERNAL ASSESSMENT

I o E R n r x & t t De e r r n n a a l l

STRATEGY ANALYSIS

SWOT Matrix

STRATEGY ANALYSIS

STRATEGY ANALYSIS

Y axis=FS (4) +ES (-3.2) = .08 X axis=CA(-2.8) +IS (3.6) =1.2

SPACE Matrix

STRATEGY ANALYSIS

Beauty

BCG Matrix

AVON By Product Division

Fashion

STRATEGY

Home

ANALYSIS

BCG Matrix

By

Geographic Division

STRATEGY ANALYSIS

IEMatrixSTRATEGY ANALYSIS

Grand Strategy Matrix

STRATEGY ANALYSIS

MatrixAnalysisAlternative StrategiesSPACEBCGIE MatrixGSCountsNALAEUAPCForward IntegrationXXXXXX5Backward IntegrationX1Horizontal IntegrationXX2Market PenetrationXXXXXXX6Market DevelopmentXXXXXX5Product DevelopmentXXXXXXX6DiversificationXXXXXXX6Joint VentureX1RetrenchmentX1DivestitureX1Liquidation0Mergers & AcquisitionX1STRATEGY ANALYSIS

QSPM

Decision Stage

Balanced Score Card

STRATEGY AN

Balanced Score Card

Contd

STRATEGY ANALYSIS

Extension in the main products:

The sales of the personal care products are increasing in the main sectors because of the following reasons.

To become attractive in working area. Becoming more Health Conscious Due to change in fashion & Trends.

Expand In Asia and Africa:Asian countries like Pakistan, Bangladesh, Malaysia, Taiwan & Russia are a huge market because of the two reasons:1. Stability in economies 2. Population growth

Build a brand image in North Amer can and Generation Y inwhich are tailored to their specific needs:existing markets by promotions andiinnovation of new product

focused by Avon and due to the lack of a proportion Avon has not a goodthese markets.The Generation Y is the second largest population segment which is not image in North America. ButAvon has a competitive advantage to expand in

Possible Alternative Strategies

Expand the Market to South Asia, Central Asia and Africa Acquire the small competitors to gain more Advantage Invest more in R & D to develop more Green products Invest in departmental and online selling Expand the product line and also focus on men and children

Repositioning the brand image through attractive packaging, new brand logo and distinguishing its products

Enhance Brand Loyalty

Decision

David, Fred, R Strategic Management Concepts and Cases 10th and 13th Edition. Prentice Hall International 2009.

Avon Products Inc. Retrieved May 5, 2012 www.avoncompany.com Avon USA. Retrieved May 5, 2012 www.avon.com Avon Products UK. Retrieved May 5, 2012 http://www.avon.uk.com/PRSuite/home_page.page

Avon Products Retrieved May 5, 2012 http://en.wikipedia.org/wiki/Avon_Products

Retrieved May 5, 2012 www.wikinvest.com

Avon Calling for Help Business Month April, 2010.

Avon Calls At 50 Times Earnings, Business Month November, 2006 -2009. Avon Products, Inc.,Annual Report, New York, N.Y., 2010 Avon Products, Inc.,Annual Report, NewYork, N.Y., 2009

HowAvon Rings Their Chimes, Sales and Marketing Management, November, 2009

Avon Products, Inc.: DEVELOPING AGLOBALPERSPECTIVE Retrieved May 5, 2012 www.yahoo.com/images Retrieved May 5, 2012 http://www.google.com.pk/imghp?hl=en&tab=wi

References