ARAB ACADEMY FOR SCIENCE AND TECHNOLGY

GRADUATE SCHOOL OF BUSINESS

Avon Products Inc. 2009

Strategic Management Case Study
Prepared By: Mohamed Gaber Eldamati 3/30/2012

Submitted to: Prof. Tarek Abdeen

Table of Contents
Avon Vision and Mission Statements .............................................................................................. 3 Avon Vision Statement ................................................................................................................ 3 Avon Mission Statement ............................................................................................................. 3 Current Mission Statement: .................................................................................................... 3 Comments: .............................................................................................................................. 3 Avon External Assessment .............................................................................................................. 4 Avon Opportunities ..................................................................................................................... 4 Avon Threats ............................................................................................................................... 4 Competitive Profile Matrix (CPM) ............................................................................................... 5 Comments: .............................................................................................................................. 5 External Factor Evaluation (EFE).................................................................................................. 6 Comments: .............................................................................................................................. 6 Avon Internal Assessment ............................................................................................................... 7 Avon Strengths ............................................................................................................................ 7 Avon Threats ............................................................................................................................... 7 Internal Factor Evaluation (IFE) ................................................................................................... 8 Comments: .............................................................................................................................. 8

Avon Vision and Mission Statements

Avon Vision and Mission Statements

Avon Vision Statement
Not Available

Avon Mission Statement

Current Mission Statement: The Global Beauty LeaderWe will build a unique portfolio of Beauty and related brands (2), striving to surpass our competitors in quality, innovation and value (7), and elevating our image to become the Beauty company most women (1) turn to worldwide (3). The Womens Choice for Buying We will become the destination store (5) for women, offering the convenience of multiple brands and channels, and providing a personal high touch shopping experience that helps create lifelong customer relationships (6). 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 (5), 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 (9). 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.(8) The Most Admired CompanyWe will deliver superior returns to our shareholders by tirelessly pursuing new growth opportunities while continually improving our profitability (5), a socially responsible, ethical company(8) that is watched and emulated as a model of success. Comments: As per our model the Mission Statement should include the following Components
1. Customerswho are the firms customers? 2. Products or serviceswhat are the firms major products or services? 3. Marketsgeographically, where does the firm compete?

Avon Vision and Mission Statements

4. Technologyis the firm technologically current? 5. Concern for survival, growth, and profitabilityis the firm committed to growth and financial soundness? 6. Philosophywhat are the basic beliefs, values, aspirations, and ethical priorities of the firm? 7. Self-conceptwhat is the firms distinctive competence or major competitive advantage? 8. Concern for public imageis the firm responsive to social, community, and environmental concerns? 9. Concern for employeesAre employees a valuable asset of the firm?

As we see Avon mission statement covers almost complete it only missed mention the technology.

Avon External Assessment

Avon Opportunities
The introduction of green products. Eye makeup market 68% of consumers will remain loyal to a company that has a social and environmental commitment. Urban Trendsetters markets Geographic growth enormous growth opportunities existed in countries with huge populations such as China, Indonesia and India. Demand for cosmetic products normally remains constant and unaffected by economic distress The baby boomers are aging and they are more conscious on their appearance, beauty and also improving their looks. Emphasize direct selling in emerging and developing markets

Avon Threats
Competition such as Mary Kay and Revlon Rejection of internet selling by sales representative Market slowdown in volume demand. Rising cost of commodities Direct-selling becoming more popular. Inflation Rate

Avon External Assessment

Competitive Profile Matrix (CPM)

Critical Success Factors Price competitiveness Global Expansion Product Safety Customer Loyalty Market Share Advertising Product Quality Product Image Financial Position Total Weight 0.15 0.10 0.08 0.12 0.08 0.10 0.15 0.10 0.12 1 Avon Revlon Mary Kay Rating Score Rating Score Rating Score 4 0.60 3 0.45 2 0.20 3 0.30 2 0.20 2 0.20 2 0.16 3 0.24 2 0.16 2 0.24 2 0.24 3 0.36 2 0.16 4 0.32 4 0.32 2 0.20 2 0.20 2 0.20 2 0.30 3 0.45 3 0.45 3 0.30 3 0.30 4 0.40 3 0.36 2 0.24 4 0.48 2.62 2.64 2.87

Note: The ratings values are as follows: 1 = major weakness, 2 = minor weakness, 3 = minor strength, 4 = major strength.

Comments: Avon total weighted score of 2.62 is above the average so it is doing partly well. Avon is the strongest on price competitiveness compared to its competitors

Avon External Assessment

External Factor Evaluation (EFE)

Key External Factors Weight Rating Weighted Score

Opportunities
1. The introduction of green products. 2. Eye makeup market 3. 68% of consumers will remain loyal to a company that has a social and environmental commitment. 4. Urban Trendsetters markets 5. Enormous growth opportunities existed in countries with huge populations such as China, Indonesia and India. 6. Demand for cosmetic products normally remains constant and unaffected by economic distress 7. The baby boomers are aging and they are more conscious on their appearance, beauty and also improving their looks. 8. Emphasize direct selling in emerging and developing markets 0.15 0.07 0.1 0.1 0.1 0.06 0.06 0.04 0.04 0.08 0.04 0.05 0.05 0.06 1 3 4 4 3 3 3 3 3 1 1 2 2 2 1 0.45 0.28 0.4 0.3 0.3 0.18 0.18 0.12 0.04 0.08 0.08 0.1 0.1 0.06 2.67

Threats
1. 2. 3. 4. 5. 6. Competition such as Mary Kay and Revlon Rejection of internet selling by sales representative Market slowdown in volume demand Rising cost of commodities Direct-selling becoming more popular Inflation Rate Total

Note: The ratings values are as follows: 1 = the response is poor, 2 = the response is average, 3 = the response is above average, 4 = the response is superior.

Comments: Avon total weighted score of 2.67 is above the average so it is doing partly well in terms of responding towards appropriate threats and opportunities.

Avon External Assessment

Avon Internal Assessment

Avon Strengths
Avon is a Global Market Leader Committed and dedicated workforce - 5.4 million Avon representative in over 100 countries making Avon the largest sales force Worlds Largest Micro lender for women - extending some $1 billion in product and credit each year to help women start their own entrepreneurial businesses Channel of distribution worlds largest direct seller Manufacturing operations match ISO 14001 standards Avon owns its major manufacturing and distribution centers Increased in revenue in most geographic area. Due to increase in internet presence. (Revenues increased 7.5% from year 2007 to 2008) 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. First cosmetic to permanently end to animal testing

Avon Weakness
Decrease in North American Sales Revenue by 129.4 million Weak Brand Image Poor brand loyalty Does not target urban trendsetters Beauty Sales in the first quarter 2009 were 12% lower compared to sales revenue in previous year 2008 Avon lagged behind seven of their cosmetic companies in customer loyalty

Avon Internal Assessment

Internal Factor Evaluation (IFE)

Key Internal Factors Weight Rating Weighted Score

Strengths
1. Avon is a Global Market Leader 2. Committed and dedicated workforce - 5.4 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 with 90% recognition worldwide 9. First cosmetic to permanently end to animal testing 0.07 0.08 4 3 0.28 0.24

0.09

0.36

0.07 0.06 0.06 0.06

3 3 3 4

0.21 0.18 0.18 0.24

0.09 0.08 0.07 0.09 0.05 0.08 0.05 1

3 4 2 2 2 2 1

0.27 0.32 0.14 0.18 0.10 0.16 0.05 2.91

Weaknesses
1. 2. 3. 4. Decrease in North American Sales Revenue by 129.4 million Weak Brand Image Does not target urban trendsetters Beauty Sales in the first quarter 2009 were 12% lower compared to sales revenue in previous year 2008 5. Avon lagged behind seven of their cosmetic companies in customer loyalty Total

Note: The ratings values are as follows: 1 = major weakness, 2 = minor weakness, 3 = minor strength, 4 = major strength.

Comments: Avon total weighted score of 2.91 is above the average which indicated that the internal functions/roles are strong at Avon Products Inc.

Avon Internal Assessment

A SWOT Matrix for Avon

Strengths 1. Avon is a Global Market Leader Weakness 1. Decrease in North American Sales Revenue by 129.4 million 2. Weak Brand Image

2. Committed and dedicated workforce - 5.4 million Avon representative in over 100 countries making Avon the largest sales force 3. Worlds Largest Micro lender for women 3. High advertising costs Companies extending some $1 billion in product and advertising spending went from $136 million credit each year to help women start their in 2005 to $249 millions in 2006 to $368 own entrepreneurial businesses millions in 2007 and 14% higher in 2008 4. Channel of distribution worlds largest 4. Does not target urban trendsetters direct seller 5. Manufacturing operations match ISO 14001 5. Beauty Sales in the first quarter 2009 were standards 12% lower compared to sales revenue in previous year 2008 6. Avon owns its major manufacturing and 6. Avon lagged behind seven of their cosmetic distribution centers companies in customer loyalty 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 with 90% recognition worldwide 9. First cosmetic to permanently end to animal testing

Opportunities 1. The introduction of green products. 2. Eye makeup market 3. 68% of consumers will remain loyal to a company that has a social and environmental commitment. 4. Urban Trendsetters markets 5. Enormous growth opportunities existed in countries with huge populations such as China, Indonesia and India. 6. Demand for cosmetic products normally remains constant and unaffected by economic distress 7. The baby boomers are aging and they are more conscious on their appearance, beauty and also improving their looks. Threats 1. Decrease in North American Sales Revenue by 129.4 million 2. Weak Brand Image 3. Does not target urban trendsetters 4. Beauty Sales in the first quarter 2009 were 12% lower 5. Avon lagged behind seven of their cosmetic companies in customer loyalty

SO Strategies WO Strategies 1. Increase sales by increasing internet 1. Increase awareness of efforts to protect the presence. (S7, O4) environment. (W2, O1) 2. Maximize on revenues in the makeup market 2. Increase market share by positioning through advertising and the sales force. (S2, products to attract urban trendsetters O2) (W5,O4) 3. Manufacture and distribute more products that are eco-friendly.(S2,S4,S6,O1)

ST Strategies 1. Improve marketing strategies to new and existing customers by repositioning the brand, coupons, billboards, new packaging. (S4,S6,S7, T1, T3)

WT Strategies 1. Discount products that are not earning substantial revenue and then faze them off the market in a timely manner. (W5,T3)

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A SWOT Matrix for Avon