Strategic management case study Sylvia LaBrie, Ashley Cleary, Andrea Baril, and Marie- Michele Lachance

Company Overview: History Sustainability Growth 2009 events and issues Avon market locations Existing Vision & Mission Statement New Vision & Mission Statement SWOT Analysis Internal Audit Organizational map Board of directors Financial trends IFE Matrix Balance Sheet Income Statement Financial Ratios External Audit Positioning map EFE Matrix CPM Matrix Strategic Formulations SWOT Matrix Space Matrix Grand Strategy Matrix BCG Matrix IE Matrix Matrix Analysis QSPM Recommendation s Implementation Financial assumptions EPS/EBIT Projected Income statement Projected Balance Sheet Projected Financial Ratios Evaluations: Balance Scorecard Avon Update Stock price History Questions Sources

Bookseller David H. McConnell Founded Avon in1886

1886  David H. McConnell founded Avon previously named “The California Perfume Company”  He founded Avon because he realized his female customers were far more interested in the free perfume samples he offered than in his books. He chose female sales representatives because:  They were lonely at home because there husband were gone to work  They had the natural ability to network with and market to other women, and a passion for his products.  Limited employment options for women and he wanted the Avon earnings opportunity was a revolutionary concept

 How do representatives make money? Each person that you recruit, you earn $20 If you want to make money from your sales team's volume, you have to reach the position of what is called a Unit Leader. The qualifying factors for Unit Leader are $250 in personal sales, and at least 5 recruits, whose sales total is $ You earn 3-7% on the orders made by your recruits, and also, 0.5 to 1% on the orders from the people they recruit.  Advantages to be a representative: 1. Flexible home based business 2. Unlimited earnings potential 3. Low cost to start a business.

1906 Already CPC had 10,000 representatives and Depot Managers in 117 different articles in 600 styles In October of that year, the company produced its first color brochure 1914 CPC opened its first office outside the country, in Montreal, Canada. When World War I broke out across Atlantic, 5 million units a year of CPC’s product were sold in North America By this time, 25,000 representatives in the United States. The company’s office moves to Fifth Avenue in New York City The first product was offered under the name of Avon

1937  David McConnell died, and his son, David Jr. became the new President on the company 1938  The company’s name officially changes to Avon 1946  The company became public 1954  Avon launched its very successful television advertising campaign entitled “Avon Calling”   Moved to Puerto Rico, Caracas, and Venezuela 1956  Avon enters Cuba 1970  First Asian Avon business

Ethically, Sustainability, and Socially Responsible

 5.4 million representatives in over 100 countries worldwide  Employed 42,000 people throughout the world  Avon’s customers are not only women now but they have emerged into a youth market and a men’s market as well as internationally.

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

 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 Women's 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 Women's 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.

Avon strive to be the best foundation for women by offering a wide variety of products that appeals to any women’s need and taste.

Our mission as a company is to provide a unique portfolio of beauty, fashion, and home brands to satisfy women worldwide. We encourage the personal relationship between employees and clients by providing a door-to-door experience. We expect our employees to be professional, and in return we offer them a flexible work schedule. We are constantly looking to increase our sales through our representatives as well as through our online market, which would help maintain our growth and profitability to our stockholders. As an expanding company, our purpose is not only to sell our products, but also to remain socially responsible by contributing to our causes related to women.

1. Strong brand 2. Avon is the market leader in its industry 3. Unique portfolio 4. The largest women’s foundation 5. Innovating brand 6. Socially responsible and ethical with strong values (trust, respect, belief, humility, and integrity) 7. World’s largest direct seller 8. Avon has a great adaptation to diverse culture 9. Strong and steady growth revenue 1. Home segment experiencing loss 2. No physical location 3. Avon has a poor brand loyalty 4. Advertising cost overly expensive 5. Expensive products reputation 6. Lack of control over representatives 7. Complicated process through representatives to have products 8. Representatives on credit (the representative do not pay the company until they get paid by their customers)

1.Buy out other smaller companies 2.Online markets becoming increasingly popular 3.Diversification of products 4.Offers employment opportunities 5.Intensify brand development overseas 6.Emphasize direct selling in emerging markets 7.Promoting the company by utilizing inexpensive outsourced marketing (social media, word of mouth, etc.) 1.Fierce competition 2.Economic recession 3.Easily substituted 4.Reputation smeared by investigations 5.Currency Fluctuations 6.Large market to compete in

CEO Andrea Jung Chairman Board of Directors & Executive Leasdership Audit Committee Compensation & Management Development Committee Finance Committee Nominating & Corporate Governance

Avon: 10 billion Mary Kay: 2.6 billion Revlon: 1.3 billion

-Market penetration -Market development -Product development -Backward integration -Forward integration -Horizontal integration -Related diversification -Unrelated Diversification -Horizontal diversification

-Market Development -Market Penetration -Product Development -Forward Integration -Backward Integration -Horizontal Integration -Related Diversification

Mary Kay Revelon Avon Avon: 6% Mary Kay: 5% Revelon: 4% -Forward integration -Backward integration -Horizontal integration -Market development -Product development

Market Penetration Market Development Product Development Backward integration Forward integration Horizontal integration

- To increase their customers range, Avon should start a new product line that would be less expensive. - Avon should build a minimum of 10 physical stores at $5 million each to be more accessible for customers, and also to generate more profit. - They should increase their marketing budget of 10%, to intensify advertising as well as employee training. - Avon should completely eliminate the home segment of their company, and concentrate on their successful beauty products.

- 10 stores at $5 million each - Increase advertising of 10% -Increase of 10% in the net sales

 “Avon Company, Corporate Citizenship “ April 2012, »  Avon Home parents, by Amanda, April 2012, »  Your Avon Representatives, April 2012,  Avon Finances, Forbes, April 2012, »  Founder of Avon, August 18th 2011, marketing-mlm-opportunity »  Avon products financials, Thompson Reuters, 2012, INC-11723/financials/ »  Avon Home business opportunities, Alexandra Nowack, June 15th 2010, you-make-money-with-avon.html »  Avon stock price, investors, 2012, stockquote »  Avon current vision and mission statements, July , »  Avon stock history, April 2012, report/?symbol=AVP » report/?symbol=AVP  Avon financial ratios informations, April 2012, »  Avon, financial information, April 2012, ratios?symbol=AVP&page=FinancialCondition » ratios?symbol=AVP&page=FinancialCondition