Industry Strategy and Analysis I Assignment | Essay Help Services

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Option #1: Industry Strategy and Analysis I Choose a company owned outside of the United States that has been recognized recently as successful. Identify the industry of that chosen company and conduct an industry analysis. Begin with a one-paragraph introductory overview of your chosen company with facts and statistics. Be sure to present the firm’s mission and include sources for these facts and statistics. Introduce the industry and identify key elements of the industry’s structure—the producers, customers, suppliers, and producers of substitute goods. Note: Defining an industry structure includes describing the tie between the industry and the market. ‘Labeling’ your industry requires judgment; therefore, remain alert to external influences and support your position. Identify the key success factors for this industry. Insert the key success factors as Table 1 with a title and note, in proper APA format. Highlight the key points in Table 1 that you want your reader to notice and remember. Identify three possible segmentation variables and explain each in relation to your definition of the industry structure. The textbook is a useful source for a good understanding of segmentation variables. Specific to the company and industry you selected, provide a synthesis of information in response to the question: Is the market or the industry more important to strategy success? Your well-written paper should meet the following requirements: Be 4 to 6 pages in length. Be formatted according to the CSU-Global Guide to Writing & APA (Links to an external site.). Include at least five scholarly or peer-reviewed articles. The CSU-Global library (Links to an external site.) is a good place to find these resources. Include a title page, section headers, introduction, conclusion, and reference page

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Avon Products Incorporated

Avon Products Incorporated (Avon) is a cosmetic company, that has been competing in this industry for more than 130 years. David McConnell founded this company in 1886 in New York City, he wanted to create a company that would empower women. Not just by smelling better and looking better, but by bringing them into the workforce. During this time period women really did not have many rights, and their place was in the home, not out in the workforce. Avon’s direct-selling method did not just empower women to buy and wear our products, but to start selling them to make extra cash. Avon is now a global company operating in 56 countries and disturbing in another 19 countries. This paper will consist of a complete case analysis of the company, along with recommendations of what the company should do in regard to our strategy plan.

Currently Avon’s mission statement is to improve women’s lives globally. Our company does so by not only making products for women and employing them, but also by running two campaigns for women. Avon supports Breast Cancer Awareness, by making research and care options available to women and also by donating money to American Cancer society. They also support women that are exposed to violence, one in three women will be exposed to violence at some point in their lifetime. We support these victims by giving them access to where they can receive help, and also identifying the warning signs of violence. These are often two topics that get overlooked in our society, even known 330,000 women get diagnosed with breast cancer yearly, and around 10 million women report being violently hurt yearly. Avon’s goal to educate women of the signs and symptoms of cancer and abuse and to give them help they deserve.

Just like our mission statement our vision statement is to be the company wants to turn to worldwide, to be the company that bypasses our competitors in innovation, value, and quality. We make it our goal to be there for women, and we center our company around helping them in every way we possibly can. Avon has been there to support women, and to bring them into the workforce long before women had the right to vote, could have on the supreme court, or before a woman could travel into space. Avon will always place their values into helping women and improving their lives.

In order to be able to help women our companies need to have objectives, that we strive to meet. Currently Avon is focusing on ways to improve and strengthen our direct-selling method. Along with enter new markets, with a new range of products to sell. For the company to survive we also we need to focus on increasing sales and revenues, because they have decreased over the years. By achieving these objectives, this means our company is growing and expanding.

To get the company to grow to the extent that we need it too, we need a good strategy in place so we can beat our competitors. Avon is pursuing what they call “Open Avon” strategy plan, which focus on digitalizing the company. Times have changed dramatically since the start of the company, the direct-selling method is no longer an efficient way to solely run the company. Direct selling has always been a solid platform for the company, and it will remain a platform, but it will be improved by adding stronger e-commerce. By improving our e-commerce and turning representatives into influencers, the company is making a stronger online present. This will now help attract the younger generation to our products, because are target market mostly focuses on older women. Putting a good strategy in place can make a company very successful.

There are a lot of factors that play in the roll of your company success. Avon has been able to adapt and survive for over 100 years of consistent change, so this strategy plan is nothing that our company cannot achieve. Your vision and mission statements along with your strategy plan, are three areas of a company that consistently need to re-evaluate frequently, because your company bases their core values off of those three things. I personally do not have any recommendations for our company’s vision or mission statement, I think keeping the focus on women should be our goal. Often time women get overlooked in the workforce or at home, and they need to have that feeling of empowerment. By changing our strategy our company should appeal to younger women, and I think it is important for young women to get that feeling of empowerment, because they have a lot of struggles entering the workforce. This is the message is a company our company should continue to support.

Strategy Formulation

Forming a strategy that everyone agrees on can be difficult. A company wants a cutting edge, innovated, and smart strategy in place so that they can beat their competitors. It is important to keep a close eye on what your competitors are doing, so that they do not steal your customers away. Areas to keep an eye on are what product lines are they launching, and how are they connecting with their customers, and why do their customers prefer their brand over ours. Ulta Beauty and Mary Kay are two of Avon’s biggest competitors in the United States, but Natura & Co out of Brazil is a big threat to our company as well.

Ulta Beauty is a fairly new company to the market, but one that has gained popularity very fast. Mary Kay has been around much longer with a very similar way of selling; they use the direct- selling as well. There are plenty more companies in the cosmetic industry, but these two serve the largest threat to our company. Completely a Competitive Profile Matrix (CPM), can serve as a visual to see where our company stands with our competitors.

A CPM compares different factors from each company and weights them and rates each one, to see what factor is more important over another. These numbers allow for companies to see where their strengths and weaknesses lie compared to their direct competitors. Avon’s prices already beat Mary Kay and Ulta Beauty, along with their global expansion. The CPM will also compare things like technology, advertising, product image and quality, and organization structure. Once all of these factors are examined and weight, the numbers are then added up and those totals will tell us where our company stands with Ulta Beauty (Ulta) and May Kay. Ulta does have Avon beat when it comes to technology, product image and quality. Where Mary Kay has a strong advertising and a strong product imagine as well. These results can be found in Appendix A.

It is very important for a company senior management to have an Internal Factor Evaluation Matrix conducted with the CPM, because this will tell the company their strengths and weaknesses within the company. This is critical to a company survival, knowing where your business needs improvement and doing so, can help your business grow instead of being a failure. Sometimes a certain project will work out great and sometimes the next one will be a completely failure, and these kinds of internal audits, will help a CEO see that.

Creating an External Factor Evaluation Matrix with your Internal Factor Evaluation Matrix is important, because this matrix will consist of factors that our outside of the company. An external factor evaluation consists of gathering information based on competitive intelligence, social, demographics, government/environment legal policies, current cultural trends, and technological advances. The cosmetic industry is a large and very competitive industry, and often times it can be hard to survive in. Even has large as company as what Avon is, they have even seen setbacks over the past few years. The purpose of using an EFE is to create a visual for your employees, so that they can see the current condition of the company. The EFE matrix makes it easier to identify threats and opportunities for the company.

Since Avon is rebranding their products and marketing strategy, they are forecasting an increase in demand. Part of their rebranding strategy plan is to take a platform on social media, by turning their representatives into influencers. By getting their brand seen on Facebook and Instagram the younger generation is now seeing the products. Seeing women wearing cheaper make- up and using beauty products that do not break the bank are key factors that could win over the Millennials.  By making matrix our employees can see for themselves what the company is thinking about doing, and the factors that play into those decisions. The Internal Factor Evaluation can be found in Appendix B, while meanwhile the External Factor Evaluation Matrix can be found in Appendix C.

Now that stage one is completed in the Strategy- Formulation Analytical Framework it is time to move onto stage two which is known as the matching stage. For this stage it makes sense to complete the SWOT Matrix, Grand Strategy Matrix, and the BCG Matrix. Comparing these three matrices allows employees to compare the factors that affect the company’s revenue and sales. This information allows management to formulate a strategy, and then implement it throughout the whole company.

Starting with SWOT, this is an abbreviation that stands for strengths, weaknesses, opportunities, and threats. All four of these sections are important, because our company can only be as strong as its’ weakest link. Some of the weaknesses that Avon possess is the fact that more women are enter the workforce, so there is less demand for women to earn extra cash as representatives. Another huge weakness the company is facing is their lack of technology, from completing the CPM, we can see that our competitors are ahead of us with the form of technology that they are using. Since our revenue has decreased over the years upgrading technology will be a difficult task, but one that must be completed. Our managers need to be able to identify our weaknesses, so we can improve them and turn them into strengths.

With strengths comes opportunities and take the right opportunities could really open a door up for the company. One of the largest opportunities the company has in entering new markets with free trade agreements. The company already operates in 56 countries, and we already operate in more countries than our competitors so why not expand into stronger markets.  Also, by turning our representatives into influencers that will continue to bring in the younger demographics to our company. The company has opportunities available, it is just making the right decision and deciding which one to take.

There are also threats the company needs to stay aware of, because one threat could turn into something horrible for the company and hurt us severely. Although improving e-commerce is a good thing, it could also cause the company to lose some of the clientele we have had for several decades. The older generation likes the direct-selling method, because it is easy a lot of them are not familiar with doing things online. So, some may see this as threat, but it is one the company can handle by keeping the direct-selling method available for those customers. Another threat the company faces is all the different environmental regulations and policies for all the different countries that we operate in. Avon is a very eco-friendly company, but all our products may not meet the environmental standards by certain countries, and that could stop our sales from taking place. Threats to the company will always exist, the key to handle each one as they come. The SWOT matrix can be found in appendix D.

Another Matrix that is a part of the matching stage is the Grand Strategy Matrix. This matrix is divided into four quadrants and these quadrants consist of strategies the company should take, based on the competitions and market growth. Quadrant one is during a rapid market growth with  a strong competitive position, quadrant two is during a rapid growth market with a weak competitive position, quadrant three is during slow market growth with a strong competitive positions, and last quadrant fours is during a slow market growth with a weak competition position. This matrix can be found in Appendix E. Depending where the company stands is what quadrant we would focus on and work out of.

Lastly the Boston Consulting Group Matrix, better known as the BCG Matrix. This matrix is used, “to help long-term strategic planning, to help a business consider growth opportunities by reviewing its portfolio of products to decide where to invest, to discontinue, or develop products” (Hanlon, 2019). Just like the Grand Strategy Matrix this one is broken up into four quadrants as well. The first quadrant are places with high growth in markets and with high market shares. For Avon this would be Asia Pacific area and China. The next quadrant is for areas with high growth in markers, but with low market shares; this would consist of Europe, Africa, and East Asia. The third quadrant consist of markets with low growth but with high market shares, this would the region of Latin America. Our last quadrant would be areas with both low market growth and low market shares, unfortunately this would be North America. This matrix shows where business is doing well and the areas where business suffers. All three of these tools give great insight to how the company is doing.

Now that stage two is completed in the Strategy- Formulation Analytical Framework it is time to move onto stage three, the decision stage. This is where the company really examines all the matrices and makes a defense towards decreasing internal weaknesses and avoiding threats. This matrix is called the QSPM, which can be found in Appendix F. This matrix gives us alternative strategies, while it focuses on the external opportunities the company has and the threats they face. This stages really allows for the company to see what strategy is the proper one to choose. Now that our strategy is formulated, it is time to move onto how our company is going to implement the strategy.

Strategy Implementation

When operating a company, it is essential to be able to make accurate projections, whether these are the results the company wants to see or not. Avon stock price has held pretty steady between $4 to $4.50, with that being said the company can project that for the next six months to a year our stock prices will remain the same. If something is not done about the declining sales in North America, our could take a large hit. Even know our projections do not show growth, they are remaining steady, showing there is not a decline.

In this part of our strategy it is important to project how your strategy will affect the company. By improving the e-commerce and adding influencers to our brand we should slowly improve our revenues and sales. After this takes place our stock prices should increase as well, making the company more stable. Right now, the company does have the option to liquidate and sale part of the company to Natura & CO, which there is a pending deal, but nothing is set in stone yet. By trying to lower our prices, this could appeal more to the American people who are in the middle of a trade war with China, causing prices of other products to increase. This trade war could actually help us save our operations in the United States, if our competitors’ products are getting extra tariffs put on. Keep in mind these projections could change within six months of implementing our new strategy, and hopefully it is for the better and our company can see some growth.

Of course, there are risks that the company could suffer from too from implementing a new strategy. The biggest is the fact that company is in the process of selling off some of their shares to Natura. The terms that are being negotiated currently are, “that Natura will hold 76% of the combined business with over $10 billion in annual revenue, according to a state from the Brazilian cosmetics firm” (Mello, 2019). Now this company will own a majority of the company, although they our biggest competitors this could be a very risky move for our company to make. Sometimes however a risk like this is one worth taking, because without this company could easily put us out of business.

Strategy Evaluation

A strategy can only work for so long, until times and plans for the company change forcing the strategy to change with it. For a company to be wise they need to consistently reevaluate their strategy and make recommendations of what can be done to improve the strategy. My recommendation would be not to let Natura buy our shares, but to merge instead. To seal that deal we would probably have to let them have 51% percent, allowing them to have the final decision. This way our company can expand and pick up the techniques this company using and see why they are so successful. By adopting their techniques into our business, we can become as successful as them in all the other countries that we operate in.

I would also make recommendation in creating an app for the company. One that would allow customers to purchase our products, create make overs on their own pictures, and blog where customers can connect and chat about our products. This allows customer to receive reviews about certain products, but it allows us to get honest feedback about our products. This feedback can help us improve our products, so they are more appealing to our customers. Digitizing the company is essential to our survival and I would make that the key focus in implementing this strategy.

When implementing a strategy, it is smart to keep in mind that there are risks involving cultural, operational systems, and financial. Clearly upgrading technology and e-commence the company is taking a financial risk, that may not work. Upgrading these things are not cheap, and the company does not have a lot of money to spend since our revenue has been decreasing. Another risk our company is when working globally we need to keep in mind we are working with different cultures. Like for instance Muslim women are not allowed to wear make-up and they are certainly not a loud to work, so that is a cultural that we would want to avoid. Knowing what cultures allow women to do what is important, because each culture sees women differently. Although the company stands at risk by implementing this new strategy, it is in the steps in the right direction to improve our revenues and sales.

Financial Projection and Goal Setting

Creating projected financial statement can allow your employees to see where the company will be within the next few years, and you can use this as budget. This statement is something that you calculate by estimating how much growth you expect see. For instance, when projecting the year 2020 the company is expected to only see a 5% growth. Whereas in 2021 the company will expect to see a growth of 7%. Lastly when projected the financials for 2020, the company is expected to only see a 4% growth. The reason that growth decreased, was because Avon has the history of growing strong for a few years, and then you start to see a slow decrease. When you start to see the decrease, this is an indicator that our strategy needs some revamping. This projected financial Statement can be found in appendix G.

While making this projected financial statement, the company can now use this as a budget. This allows management to see what our sales are projected to be, along with the cost of the goods and any other dedication our company makes from our revenue. This this allows to see how much revenue is generated, and how much money the company would have left to improve their strategy.

To meet the goals that are stated in the projected financial statement, the company has to find a way keep up with technology. Avon is known for lagging behind when it comes to technology, and their sales then begin to suffer because of this. Adding influencers to our brand is not enough, we need to do more advertising online, and cater to large events. Get stars to wear our products while they are doing events on the red carpet, or during Fashion Week in New York. Our product needs to be seen and using our representatives as influencers is a great idea, but the company needs some famous people to promote our brands. Not just online but on television as well.

The company should also focus on acting ethical and with integrity, because that will help win the public over. Being eco-friendly wins the public hearts as well, but we also should start offering organic products. Individuals who want to use organic products normally do not mind spending a little extra cash in order to use those products. This will allow the company to make more revenue on the sales of our organic products. If we can manufacture these products at a low cost, we have room in the margin to increase our sale price. By making these few recommendations, the company could see growth by taking these few steps.

 

 

Conclusion

Avon Products is no doubt a strong company, they would have to be to survive this business for over 100 years. The company has always been willing to make changes in order to survive, today is no different than in the past. Digitizing the company will allow for expansion, which will increase our sales allowing our company to generate revenue. If they can improve their technology performance, ecommerce, and their management this company could have another comeback. The strategy that is in place is strong and smart, and that is exactly what this company needs.

 

 

References

Aston, A. (2011, December 6). Avon’s CSR Report Gives Its Paper, Water & Energy Use a Makeover.            Retrieved from https://www.greenbiz.com/blog/2011/12/05/avons-csr-report-gives-its-paper -water-energy-use-makeover

Avon Products, Inc. (2018, September 21). Avon Products Launches Strategy To “Open Up         Avon” and Return To Growth. Retrieved July 29, 2019, from    https://www.prnewswire.com/news-releases/avon-products-launches-strategy-to-open    -up-avon-and-return-to-growth-300716791.html

Avon Products, Inc. (AVP) Forecast Earnings Growth. (2019). Retrieved August 20, 2019,            from https://www.nasdaq.com/symbol/avp/earnings-growth

Avon Products, Inc. (2017). Form 10-K 2017. Retrieved from http://www.annualreports.com/            HostedData/AnnualReportArchive/a/NYSE_AVP_2017.pdf

Avon Products, Inc. (AVP) Income Statement. (2019, August 22). Retrieved August 22, 2019,            from https://finance.yahoo.com/quote/AVP/financials

Avon Products Net Income 2006-2019: AVP. (2019). Retrieved August 20, 2019,            from https://www.macrotrends.net/stocks/charts/AVP/avon-products/net-income

Avon Products (AVP) Reports Next Week: Wall Street Expects Earnings Growth. (2019, July     25). Retrieved August 22, 2019, from https://finance.yahoo.com/news/avon-products   -avp-reports-next-143402393.html

AVP Stock Price: Avon Products Inc. Stock Quote (U.S.: NYSE). (2019). Retrieved July 30,      2019, from https://www.marketwatch.com/investing/Stock/AVP

Hanlon, A. (2019, July 16). How to Use the BCG Matrix Model. Retrieved from            https://www.smartinsights.com/marketing-planning/marketing-models/use-bcg-matrix

Khurana, A. (2019, June 25). Why E-commerce Is Taking the Retail World by Storm. Retrieved   July 30, 2019, from https://www.thebalancesmb.com/advantages-of-ecommerce-1141610

List of AVP’s Competitors and Stock Performance. (2019). Retrieved August 1, 2019, from            https://csimarket.com/stocks/competitionNO2.php?code=AVP

Mello, G. (2019, May 22). Natura Agrees to Buy Avon, Creating Cosmetics Powerhouse. Retrieved from https://www.reuters.com/article/us-avon-prdcts-m-a-natura                           -cosmetic/natura-agrees-to-buy-avon-creating-cosmetics-powerhouse-idUSKCN1SS0G4

Rogers, C. (2019, February 22). How Avon plans to take on direct-to-consumer rivals. Retrieved  from https://www.marketingweek.com/avon-marketing-strategy/

Stewart, R. (2018, November 27). Avon global marketing boss on how it’s rebranding for the       Instagram generation. Retrieved July 30, 2019, from     https://www.thedrum.com/news/2018/11/27/avon-global-marketing-boss-how-its                       -rebranding-the-instagram-generation

 

 

 

 

 

 

 

 

 

Appendix A

 

 

Factors Weight Rating Weighted

Score

Rating Weighted

Score

Technology 0.10 4.0 0.4 4.0 0.4
Market Share 0.06 2.0 0.12 3.0 0.18
Global Expansion 0.09 4.0 0.36 1.0 0.09
Price competitiveness 0.10 3.0 0.3 2.0 0.2
Product Image 0.04 3.0 0.12 2.0 0.08
Advertising 0.10 1.0 0.10 1.0 0.10
Product Quality 0.10 2.0 0.2 2.0 0.2
Total 0.49   1.6   1.25

 

 

 

 

Appendix B

Strengths Weight Rating Weighted Score
Avon global stock performance has increased more than any of Avon’s competitors. 0.7 2.0 1.4
Improving ecommerce 0.8 3.0 2.4
Improving price strategy 0.5 2.0 1.0
Rebranding products 0.9 4.0 3.6
Weaknesses   Total 8.4
Foreign currency fluctuations 0.3 1.0 0.3
No assurance that Avon can improve their net income, margins, or net income. 0.8 4.0 3.2
High Turnover in senior management 0.6 3.0 1.8
Hiring the wrong personnel 0.5 2.0 1.0
    Total 6.3

 

 

 

Appendix C

Opportunities Weight Ranking Weighted Score
While rebranding products and adding influencers, this should create our demand to increase. 0.9 4.0 3.6
There is innovation taking place in creating an eco-friendly company and products. 0.7 2.0 1.4
Entering new trade markets, based on free trade agreements that are in place. 0.8 3.0 2.4
Threats   Total 7.4
International Restrictions/ Legal/ Environment 0.8 4.0 3.2
Additional taxes to products being sold, or social taxes on the Representatives. 0.7 3.0 2.1
Privacy Regulations 0.5 2.0 1.0
Total 6.3

 

 

 

 

 

 

 

 

 

 

Appendix D

Strengths

·         Direct- Selling Method

·         Strong Target Market

·         High Brand Recognition

·         Customer Satisfaction is high

·         Skilled Representatives

·         Improving e-commerce

Weaknesses

·         More women in the workforce= less representatives working for extra cash

·         Needs to invest in technology but revenue has declined.

·         Revenue and sales have decreased

·         International polices with the environment

Opportunities

·         New Market with free trade agreements

·         Gaining new customers with new improved ecommerce

·         Being eco-friendlier can attract more customers

·         Decrease in employees can mean a decrease in product prices

Threats

·         Improving e-commerce could mean a decrease in sales from the older generation.

·         Competitors are more technological advance

·         Environment regulations can stop certain products from being sold

·         Competitors stealing business with products of higher quality.

 

 

Appendix E

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Appendix F

Quantitative Strategy Planning Matrix
       Strategic Alternatives      
  Improving pricing by adding coupons,
promo, & other
online & catalog
discounts
Start
introducing more products
that are “green”
products
Train representatives
more about the development
of our products, & how to
sell them
 
Opportunities Weight AS TAS AS TAS AS TAS  
Increase in Eye Makeup 0.14 1 0.14 4 0.56 1 0.14  
Increase E-commence 0.15 4 0.6 3 0.45 3 0.45  
Organic Products 0.11 2 0.22 4 0.44 2 0.22  
Increase in Influencers 0.13 3 0.39 2 0.26 4 0.52  
Threats  
Economic Crisis 0.1 1 0.1 1 0.1 1 0.1  
Competitors 0.12 4 0.48 4 0.48 3 0.36  
Rising cost of goods 0.12 3 0.36 3 0.36 2 0.24  
Representatives sales
decrease due to internet
sales increasing
0.13 2 0.26 2 0.26 4 0.52  
Total 1 1.03 2.19 2.55  

 

 

 

 

 

 

 

 

 

 

 

Appendix G

Avon Products Inc. Projected Financial Statement
2018 Projected 2019 Projected 2020 Projected 2021
Sales 5,571,300 5,877,21.5 6,289,162.05 6,540,728.48
Cost of Goods 2,272,500 2,386,125 2,553,153.75 2,563,367.90
Gross Margin 3,298,800 3,491,596.50 3,736,008.30 3,987,359.58
Selling & Administrative 2,877,000 3,020,850 3,232,309.50 3,361,601.88
Other Operating —— —— —— ——
EBIT 421,800 442,890 473,892.30 492,847.99
Other Income 235,200 246,960 264,247.20 274,817.08
Taxes 129,900 136,395 145,942.65 151,780.35
Net Income -19,500 -18,525 -17,288.25 -16,539.13
Dividends —— —— —— ——
Retained Earnings 2,234,300 2,346,015 2,510,236.05 2,610,645.49

 

 

 

 

 

 

Avon Products Incorporated

Avon Products Incorporated (Avon) is a cosmetic company, that has been competing in this industry for more than 130 years. David McConnell founded this company in 1886 in New York City, he wanted to create a company that would empower women. Not just by smelling better and looking better, but by bringing them into the workforce. During this time period women really did not have many rights, and their place was in the home, not out in the workforce. Avon’s direct-selling method did not just empower women to buy and wear our products, but to start selling them to make extra cash. Avon is now a global company operating in 56 countries and disturbing in another 19 countries. This paper will consist of a complete case analysis of the company, along with recommendations of what the company should do in regard to our strategy plan.

Currently Avon’s mission statement is to improve women’s lives globally. Our company does so by not only making products for women and employing them, but also by running two campaigns for women. Avon supports Breast Cancer Awareness, by making research and care options available to women and also by donating money to American Cancer society. They also support women that are exposed to violence, one in three women will be exposed to violence at some point in their lifetime. We support these victims by giving them access to where they can receive help, and also identifying the warning signs of violence. These are often two topics that get overlooked in our society, even known 330,000 women get diagnosed with breast cancer yearly, and around 10 million women report being violently hurt yearly. Avon’s goal to educate women of the signs and symptoms of cancer and abuse and to give them help they deserve.

Just like our mission statement our vision statement is to be the company wants to turn to worldwide, to be the company that bypasses our competitors in innovation, value, and quality. We make it our goal to be there for women, and we center our company around helping them in every way we possibly can. Avon has been there to support women, and to bring them into the workforce long before women had the right to vote, could have on the supreme court, or before a woman could travel into space. Avon will always place their values into helping women and improving their lives.

In order to be able to help women our companies need to have objectives, that we strive to meet. Currently Avon is focusing on ways to improve and strengthen our direct-selling method. Along with enter new markets, with a new range of products to sell. For the company to survive we also we need to focus on increasing sales and revenues, because they have decreased over the years. By achieving these objectives, this means our company is growing and expanding.

To get the company to grow to the extent that we need it too, we need a good strategy in place so we can beat our competitors. Avon is pursuing what they call “Open Avon” strategy plan, which focus on digitalizing the company. Times have changed dramatically since the start of the company, the direct-selling method is no longer an efficient way to solely run the company. Direct selling has always been a solid platform for the company, and it will remain a platform, but it will be improved by adding stronger e-commerce. By improving our e-commerce and turning representatives into influencers, the company is making a stronger online present. This will now help attract the younger generation to our products, because are target market mostly focuses on older women. Putting a good strategy in place can make a company very successful.

There are a lot of factors that play in the roll of your company success. Avon has been able to adapt and survive for over 100 years of consistent change, so this strategy plan is nothing that our company cannot achieve. Your vision and mission statements along with your strategy plan, are three areas of a company that consistently need to re-evaluate frequently, because your company bases their core values off of those three things. I personally do not have any recommendations for our company’s vision or mission statement, I think keeping the focus on women should be our goal. Often time women get overlooked in the workforce or at home, and they need to have that feeling of empowerment. By changing our strategy our company should appeal to younger women, and I think it is important for young women to get that feeling of empowerment, because they have a lot of struggles entering the workforce. This is the message is a company our company should continue to support.

Strategy Formulation

Forming a strategy that everyone agrees on can be difficult. A company wants a cutting edge, innovated, and smart strategy in place so that they can beat their competitors. It is important to keep a close eye on what your competitors are doing, so that they do not steal your customers away. Areas to keep an eye on are what product lines are they launching, and how are they connecting with their customers, and why do their customers prefer their brand over ours. Ulta Beauty and Mary Kay are two of Avon’s biggest competitors in the United States, but Natura & Co out of Brazil is a big threat to our company as well.

Ulta Beauty is a fairly new company to the market, but one that has gained popularity very fast. Mary Kay has been around much longer with a very similar way of selling; they use the direct- selling as well. There are plenty more companies in the cosmetic industry, but these two serve the largest threat to our company. Completely a Competitive Profile Matrix (CPM), can serve as a visual to see where our company stands with our competitors.

A CPM compares different factors from each company and weights them and rates each one, to see what factor is more important over another. These numbers allow for companies to see where their strengths and weaknesses lie compared to their direct competitors. Avon’s prices already beat Mary Kay and Ulta Beauty, along with their global expansion. The CPM will also compare things like technology, advertising, product image and quality, and organization structure. Once all of these factors are examined and weight, the numbers are then added up and those totals will tell us where our company stands with Ulta Beauty (Ulta) and May Kay. Ulta does have Avon beat when it comes to technology, product image and quality. Where Mary Kay has a strong advertising and a strong product imagine as well. These results can be found in Appendix A.

It is very important for a company senior management to have an Internal Factor Evaluation Matrix conducted with the CPM, because this will tell the company their strengths and weaknesses within the company. This is critical to a company survival, knowing where your business needs improvement and doing so, can help your business grow instead of being a failure. Sometimes a certain project will work out great and sometimes the next one will be a completely failure, and these kinds of internal audits, will help a CEO see that.

Creating an External Factor Evaluation Matrix with your Internal Factor Evaluation Matrix is important, because this matrix will consist of factors that our outside of the company. An external factor evaluation consists of gathering information based on competitive intelligence, social, demographics, government/environment legal policies, current cultural trends, and technological advances. The cosmetic industry is a large and very competitive industry, and often times it can be hard to survive in. Even has large as company as what Avon is, they have even seen setbacks over the past few years. The purpose of using an EFE is to create a visual for your employees, so that they can see the current condition of the company. The EFE matrix makes it easier to identify threats and opportunities for the company.

Since Avon is rebranding their products and marketing strategy, they are forecasting an increase in demand. Part of their rebranding strategy plan is to take a platform on social media, by turning their representatives into influencers. By getting their brand seen on Facebook and Instagram the younger generation is now seeing the products. Seeing women wearing cheaper make- up and using beauty products that do not break the bank are key factors that could win over the Millennials.  By making matrix our employees can see for themselves what the company is thinking about doing, and the factors that play into those decisions. The Internal Factor Evaluation can be found in Appendix B, while meanwhile the External Factor Evaluation Matrix can be found in Appendix C.

Now that stage one is completed in the Strategy- Formulation Analytical Framework it is time to move onto stage two which is known as the matching stage. For this stage it makes sense to complete the SWOT Matrix, Grand Strategy Matrix, and the BCG Matrix. Comparing these three matrices allows employees to compare the factors that affect the company’s revenue and sales. This information allows management to formulate a strategy, and then implement it throughout the whole company.

Starting with SWOT, this is an abbreviation that stands for strengths, weaknesses, opportunities, and threats. All four of these sections are important, because our company can only be as strong as its’ weakest link. Some of the weaknesses that Avon possess is the fact that more women are enter the workforce, so there is less demand for women to earn extra cash as representatives. Another huge weakness the company is facing is their lack of technology, from completing the CPM, we can see that our competitors are ahead of us with the form of technology that they are using. Since our revenue has decreased over the years upgrading technology will be a difficult task, but one that must be completed. Our managers need to be able to identify our weaknesses, so we can improve them and turn them into strengths.

With strengths comes opportunities and take the right opportunities could really open a door up for the company. One of the largest opportunities the company has in entering new markets with free trade agreements. The company already operates in 56 countries, and we already operate in more countries than our competitors so why not expand into stronger markets.  Also, by turning our representatives into influencers that will continue to bring in the younger demographics to our company. The company has opportunities available, it is just making the right decision and deciding which one to take.

There are also threats the company needs to stay aware of, because one threat could turn into something horrible for the company and hurt us severely. Although improving e-commerce is a good thing, it could also cause the company to lose some of the clientele we have had for several decades. The older generation likes the direct-selling method, because it is easy a lot of them are not familiar with doing things online. So, some may see this as threat, but it is one the company can handle by keeping the direct-selling method available for those customers. Another threat the company faces is all the different environmental regulations and policies for all the different countries that we operate in. Avon is a very eco-friendly company, but all our products may not meet the environmental standards by certain countries, and that could stop our sales from taking place. Threats to the company will always exist, the key to handle each one as they come. The SWOT matrix can be found in appendix D.

Another Matrix that is a part of the matching stage is the Grand Strategy Matrix. This matrix is divided into four quadrants and these quadrants consist of strategies the company should take, based on the competitions and market growth. Quadrant one is during a rapid market growth with  a strong competitive position, quadrant two is during a rapid growth market with a weak competitive position, quadrant three is during slow market growth with a strong competitive positions, and last quadrant fours is during a slow market growth with a weak competition position. This matrix can be found in Appendix E. Depending where the company stands is what quadrant we would focus on and work out of.

Lastly the Boston Consulting Group Matrix, better known as the BCG Matrix. This matrix is used, “to help long-term strategic planning, to help a business consider growth opportunities by reviewing its portfolio of products to decide where to invest, to discontinue, or develop products” (Hanlon, 2019). Just like the Grand Strategy Matrix this one is broken up into four quadrants as well. The first quadrant are places with high growth in markets and with high market shares. For Avon this would be Asia Pacific area and China. The next quadrant is for areas with high growth in markers, but with low market shares; this would consist of Europe, Africa, and East Asia. The third quadrant consist of markets with low growth but with high market shares, this would the region of Latin America. Our last quadrant would be areas with both low market growth and low market shares, unfortunately this would be North America. This matrix shows where business is doing well and the areas where business suffers. All three of these tools give great insight to how the company is doing.

Now that stage two is completed in the Strategy- Formulation Analytical Framework it is time to move onto stage three, the decision stage. This is where the company really examines all the matrices and makes a defense towards decreasing internal weaknesses and avoiding threats. This matrix is called the QSPM, which can be found in Appendix F. This matrix gives us alternative strategies, while it focuses on the external opportunities the company has and the threats they face. This stages really allows for the company to see what strategy is the proper one to choose. Now that our strategy is formulated, it is time to move onto how our company is going to implement the strategy.

Strategy Implementation

When operating a company, it is essential to be able to make accurate projections, whether these are the results the company wants to see or not. Avon stock price has held pretty steady between $4 to $4.50, with that being said the company can project that for the next six months to a year our stock prices will remain the same. If something is not done about the declining sales in North America, our could take a large hit. Even know our projections do not show growth, they are remaining steady, showing there is not a decline.

In this part of our strategy it is important to project how your strategy will affect the company. By improving the e-commerce and adding influencers to our brand we should slowly improve our revenues and sales. After this takes place our stock prices should increase as well, making the company more stable. Right now, the company does have the option to liquidate and sale part of the company to Natura & CO, which there is a pending deal, but nothing is set in stone yet. By trying to lower our prices, this could appeal more to the American people who are in the middle of a trade war with China, causing prices of other products to increase. This trade war could actually help us save our operations in the United States, if our competitors’ products are getting extra tariffs put on. Keep in mind these projections could change within six months of implementing our new strategy, and hopefully it is for the better and our company can see some growth.

Of course, there are risks that the company could suffer from too from implementing a new strategy. The biggest is the fact that company is in the process of selling off some of their shares to Natura. The terms that are being negotiated currently are, “that Natura will hold 76% of the combined business with over $10 billion in annual revenue, according to a state from the Brazilian cosmetics firm” (Mello, 2019). Now this company will own a majority of the company, although they our biggest competitors this could be a very risky move for our company to make. Sometimes however a risk like this is one worth taking, because without this company could easily put us out of business.

Strategy Evaluation

A strategy can only work for so long, until times and plans for the company change forcing the strategy to change with it. For a company to be wise they need to consistently reevaluate their strategy and make recommendations of what can be done to improve the strategy. My recommendation would be not to let Natura buy our shares, but to merge instead. To seal that deal we would probably have to let them have 51% percent, allowing them to have the final decision. This way our company can expand and pick up the techniques this company using and see why they are so successful. By adopting their techniques into our business, we can become as successful as them in all the other countries that we operate in.

I would also make recommendation in creating an app for the company. One that would allow customers to purchase our products, create make overs on their own pictures, and blog where customers can connect and chat about our products. This allows customer to receive reviews about certain products, but it allows us to get honest feedback about our products. This feedback can help us improve our products, so they are more appealing to our customers. Digitizing the company is essential to our survival and I would make that the key focus in implementing this strategy.

When implementing a strategy, it is smart to keep in mind that there are risks involving cultural, operational systems, and financial. Clearly upgrading technology and e-commence the company is taking a financial risk, that may not work. Upgrading these things are not cheap, and the company does not have a lot of money to spend since our revenue has been decreasing. Another risk our company is when working globally we need to keep in mind we are working with different cultures. Like for instance Muslim women are not allowed to wear make-up and they are certainly not a loud to work, so that is a cultural that we would want to avoid. Knowing what cultures allow women to do what is important, because each culture sees women differently. Although the company stands at risk by implementing this new strategy, it is in the steps in the right direction to improve our revenues and sales.

Financial Projection and Goal Setting

Creating projected financial statement can allow your employees to see where the company will be within the next few years, and you can use this as budget. This statement is something that you calculate by estimating how much growth you expect see. For instance, when projecting the year 2020 the company is expected to only see a 5% growth. Whereas in 2021 the company will expect to see a growth of 7%. Lastly when projected the financials for 2020, the company is expected to only see a 4% growth. The reason that growth decreased, was because Avon has the history of growing strong for a few years, and then you start to see a slow decrease. When you start to see the decrease, this is an indicator that our strategy needs some revamping. This projected financial Statement can be found in appendix G.

While making this projected financial statement, the company can now use this as a budget. This allows management to see what our sales are projected to be, along with the cost of the goods and any other dedication our company makes from our revenue. This this allows to see how much revenue is generated, and how much money the company would have left to improve their strategy.

To meet the goals that are stated in the projected financial statement, the company has to find a way keep up with technology. Avon is known for lagging behind when it comes to technology, and their sales then begin to suffer because of this. Adding influencers to our brand is not enough, we need to do more advertising online, and cater to large events. Get stars to wear our products while they are doing events on the red carpet, or during Fashion Week in New York. Our product needs to be seen and using our representatives as influencers is a great idea, but the company needs some famous people to promote our brands. Not just online but on television as well.

The company should also focus on acting ethical and with integrity, because that will help win the public over. Being eco-friendly wins the public hearts as well, but we also should start offering organic products. Individuals who want to use organic products normally do not mind spending a little extra cash in order to use those products. This will allow the company to make more revenue on the sales of our organic products. If we can manufacture these products at a low cost, we have room in the margin to increase our sale price. By making these few recommendations, the company could see growth by taking these few steps.

 

 

Conclusion

Avon Products is no doubt a strong company, they would have to be to survive this business for over 100 years. The company has always been willing to make changes in order to survive, today is no different than in the past. Digitizing the company will allow for expansion, which will increase our sales allowing our company to generate revenue. If they can improve their technology performance, ecommerce, and their management this company could have another comeback. The strategy that is in place is strong and smart, and that is exactly what this company needs.

 

 

References

Aston, A. (2011, December 6). Avon’s CSR Report Gives Its Paper, Water & Energy Use a Makeover.            Retrieved from https://www.greenbiz.com/blog/2011/12/05/avons-csr-report-gives-its-paper -water-energy-use-makeover

Avon Products, Inc. (2018, September 21). Avon Products Launches Strategy To “Open Up         Avon” and Return To Growth. Retrieved July 29, 2019, from    https://www.prnewswire.com/news-releases/avon-products-launches-strategy-to-open    -up-avon-and-return-to-growth-300716791.html

Avon Products, Inc. (AVP) Forecast Earnings Growth. (2019). Retrieved August 20, 2019,            from https://www.nasdaq.com/symbol/avp/earnings-growth

Avon Products, Inc. (2017). Form 10-K 2017. Retrieved from http://www.annualreports.com/            HostedData/AnnualReportArchive/a/NYSE_AVP_2017.pdf

Avon Products, Inc. (AVP) Income Statement. (2019, August 22). Retrieved August 22, 2019,            from https://finance.yahoo.com/quote/AVP/financials

Avon Products Net Income 2006-2019: AVP. (2019). Retrieved August 20, 2019,            from https://www.macrotrends.net/stocks/charts/AVP/avon-products/net-income

Avon Products (AVP) Reports Next Week: Wall Street Expects Earnings Growth. (2019, July     25). Retrieved August 22, 2019, from https://finance.yahoo.com/news/avon-products   -avp-reports-next-143402393.html

AVP Stock Price: Avon Products Inc. Stock Quote (U.S.: NYSE). (2019). Retrieved July 30,      2019, from https://www.marketwatch.com/investing/Stock/AVP

Hanlon, A. (2019, July 16). How to Use the BCG Matrix Model. Retrieved from            https://www.smartinsights.com/marketing-planning/marketing-models/use-bcg-matrix

Khurana, A. (2019, June 25). Why E-commerce Is Taking the Retail World by Storm. Retrieved   July 30, 2019, from https://www.thebalancesmb.com/advantages-of-ecommerce-1141610

List of AVP’s Competitors and Stock Performance. (2019). Retrieved August 1, 2019, from            https://csimarket.com/stocks/competitionNO2.php?code=AVP

Mello, G. (2019, May 22). Natura Agrees to Buy Avon, Creating Cosmetics Powerhouse. Retrieved from https://www.reuters.com/article/us-avon-prdcts-m-a-natura                           -cosmetic/natura-agrees-to-buy-avon-creating-cosmetics-powerhouse-idUSKCN1SS0G4

Rogers, C. (2019, February 22). How Avon plans to take on direct-to-consumer rivals. Retrieved  from https://www.marketingweek.com/avon-marketing-strategy/

Stewart, R. (2018, November 27). Avon global marketing boss on how it’s rebranding for the       Instagram generation. Retrieved July 30, 2019, from     https://www.thedrum.com/news/2018/11/27/avon-global-marketing-boss-how-its                       -rebranding-the-instagram-generation

 

 

 

 

 

 

 

 

 

Appendix A

 

 

Factors Weight Rating Weighted

Score

Rating Weighted

Score

Technology 0.10 4.0 0.4 4.0 0.4
Market Share 0.06 2.0 0.12 3.0 0.18
Global Expansion 0.09 4.0 0.36 1.0 0.09
Price competitiveness 0.10 3.0 0.3 2.0 0.2
Product Image 0.04 3.0 0.12 2.0 0.08
Advertising 0.10 1.0 0.10 1.0 0.10
Product Quality 0.10 2.0 0.2 2.0 0.2
Total 0.49   1.6   1.25

 

 

 

 

Appendix B

Strengths Weight Rating Weighted Score
Avon global stock performance has increased more than any of Avon’s competitors. 0.7 2.0 1.4
Improving ecommerce 0.8 3.0 2.4
Improving price strategy 0.5 2.0 1.0
Rebranding products 0.9 4.0 3.6
Weaknesses   Total 8.4
Foreign currency fluctuations 0.3 1.0 0.3
No assurance that Avon can improve their net income, margins, or net income. 0.8 4.0 3.2
High Turnover in senior management 0.6 3.0 1.8
Hiring the wrong personnel 0.5 2.0 1.0
    Total 6.3

 

 

 

Appendix C

Opportunities Weight Ranking Weighted Score
While rebranding products and adding influencers, this should create our demand to increase. 0.9 4.0 3.6
There is innovation taking place in creating an eco-friendly company and products. 0.7 2.0 1.4
Entering new trade markets, based on free trade agreements that are in place. 0.8 3.0 2.4
Threats   Total 7.4
International Restrictions/ Legal/ Environment 0.8 4.0 3.2
Additional taxes to products being sold, or social taxes on the Representatives. 0.7 3.0 2.1
Privacy Regulations 0.5 2.0 1.0
Total 6.3

 

 

 

 

 

 

 

 

 

 

Appendix D

Strengths

·         Direct- Selling Method

·         Strong Target Market

·         High Brand Recognition

·         Customer Satisfaction is high

·         Skilled Representatives

·         Improving e-commerce

Weaknesses

·         More women in the workforce= less representatives working for extra cash

·         Needs to invest in technology but revenue has declined.

·         Revenue and sales have decreased

·         International polices with the environment

Opportunities

·         New Market with free trade agreements

·         Gaining new customers with new improved ecommerce

·         Being eco-friendlier can attract more customers

·         Decrease in employees can mean a decrease in product prices

Threats

·         Improving e-commerce could mean a decrease in sales from the older generation.

·         Competitors are more technological advance

·         Environment regulations can stop certain products from being sold

·         Competitors stealing business with products of higher quality.

 

 

Appendix E

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Appendix F

Quantitative Strategy Planning Matrix
       Strategic Alternatives      
  Improving pricing by adding coupons,
promo, & other
online & catalog
discounts
Start
introducing more products
that are “green”
products
Train representatives
more about the development
of our products, & how to
sell them
 
Opportunities Weight AS TAS AS TAS AS TAS  
Increase in Eye Makeup 0.14 1 0.14 4 0.56 1 0.14  
Increase E-commence 0.15 4 0.6 3 0.45 3 0.45  
Organic Products 0.11 2 0.22 4 0.44 2 0.22  
Increase in Influencers 0.13 3 0.39 2 0.26 4 0.52  
Threats  
Economic Crisis 0.1 1 0.1 1 0.1 1 0.1  
Competitors 0.12 4 0.48 4 0.48 3 0.36  
Rising cost of goods 0.12 3 0.36 3 0.36 2 0.24  
Representatives sales
decrease due to internet
sales increasing
0.13 2 0.26 2 0.26 4 0.52  
Total 1 1.03 2.19 2.55  

 

 

 

 

 

 

 

 

 

 

 

Appendix G

Avon Products Inc. Projected Financial Statement
2018 Projected 2019 Projected 2020 Projected 2021
Sales 5,571,300 5,877,21.5 6,289,162.05 6,540,728.48
Cost of Goods 2,272,500 2,386,125 2,553,153.75 2,563,367.90
Gross Margin 3,298,800 3,491,596.50 3,736,008.30 3,987,359.58
Selling & Administrative 2,877,000 3,020,850 3,232,309.50 3,361,601.88
Other Operating —— —— —— ——
EBIT 421,800 442,890 473,892.30 492,847.99
Other Income 235,200 246,960 264,247.20 274,817.08
Taxes 129,900 136,395 145,942.65 151,780.35
Net Income -19,500 -18,525 -17,288.25 -16,539.13
Dividends —— —— —— ——
Retained Earnings 2,234,300 2,346,015 2,510,236.05 2,610,645.49

 

 

 

 

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