International Business Strategy An international business strategy analysis report based on the assumption of the Avon company case Researched and Presented in UCI IBOM class

1. INTERNATIONAL BUSINESS OPERATIONS & MANAGMENT - WINTER 2016
CASE
INTERNATIONAL BUSINESS STRATEGY
JANUARY 2016

2. 1
AGENDA A- Context, market and products
B- Evolution on strategies
C- Our future

3. 2
GLOBAL MARKET OVERVIEW
SOURCE: L'Oréal Annual Report 2014, page 14

4. 3
The global market of cosmetics with all the categories
included is expected to reach at $390.07 billions by 2020.
MARKET OVERVIEW
SOURCE: Allied Market Reserach

5. 4
AVON HISTORY
David H. McConnell started selling perfumes in a SMALL OFFICE at NY.
Change COMPANY NAME.
D. Henderson joined the company and helped to SHAPE ITS POLICIES.
McConnell and Henderson signed an AGREEMENT OF CORPORATION.
AVON´S TRADEMARK was accepted by The California Perfume Company.
Entered the CHINESE MARKET.
DIRECT-SALES MODEL was banned in China.
1886
1892
1894
1909
1932
1990
1998

6. 5
AVON
“The company that supports 6 million
Representatives worldwide”
“This is the company that not only brings beauty
to doors, but also opens them”

7. 6
AVON COMMERCIAL IN 1970
SOURCE: https://www.youtube.com/watch?v=q7xwTiqijIY&list=PLA289013A36485B5D&index=3

8. 7
AVON MARKET
SOURCE: L'Oréal Annual Report 2014, page 14 https://www.alliedmarketresearch.com/cosmetics-market
$2.68
NYSE : AVP
As of January 21, 2016 12:13 PM Minimum 20 minute delay.
Drivers
- Changing Lifestyles
- Increasing disosable income of various countries.
- Rising need for skin care products.
- Increasing Demand for natural ingredients in
cosmetics products.
Restraints
- Advanced beauty treatments.
- Rising human health concerns.

9. 8
AVON SEGMENTATION
Avon segmented its market in the following Age groups:
Youngsters: From age of 16 to 24
Middle aged women: From age of 25 to 35
Old women: 35 above.
The company also follows the psychographic segmentation as it divides the
buyers into groups of teens and old age women to provide the products according
to their demands.

10. 9
AVON PRODUCT SEGMENT
MAKE UP: 4.0~16.0
SKIN CARE: 99¢~8.0
BATH AND BODY: 12.5~54.0
FRAGRANCE: 22.5~34.0
NEW PRODUCT DEVELOP
PRICE BY
CATEGORY
Source: https://prezi.com/xyk5qpc8q_fo/avon-strategic-plan/; http://www.scribd.com/doc/52292825/Competitive-Strategic-Management-Developing-Avon-In-A-Global-
Perspective#scribd; http://www.academia.edu/6861207/ANALYSIS_OF_MARKETING_MIX_ON_COSMETICS_PRODUCTS_CASE_STUDY_AVON_COMPANY

11. 10
AVON PRODUCT LINES
“Avon is a company that stands
beauty, innovation, optimism…
and above all for women”

12. 11
AVON COMMERCIAL NOWADAYS
SOURCE: https://www.youtube.com/watch?v=jE_7PcGEwXw&index=44&list=PLA289013A36485B5D

13. 12
AGENDA A- Context, market and products
B- Evolution on strategies
C- Our future

14. 13
HIGH
LOW
HIGHHIGH
HIGH HIGH
AVON’s Global STRATEGY
– 2005s 2005s – 2009s 2009s -
International
Expansion
Competitiveness and
Global Expansion
Economic Crisis
Local
Responsiveness
Costs
LOCALIZATION
SRATEGY
TRANSNATIONAL
SRATEGY
TRANSNATIONAL
SRATEGY

15. 14
AVON’s STRATEGY BEFORE 2005
Strength Weakness
1. AVON is good at door-to-door direct sale.
2. AVON expanded their market around the
world.
3. Customize goods to match preferences in
different national markets
1. Avon expanded mainly by copying its US
strategy and organization in other countries.
2. Avon had 15 layers of management
3. Avon didn’t make data-driven analysis of
new-product opportunities
Opportunity Threat
1. Consumer confidence is increasing because
of the world economic trend is getting better.
2. AVON started expanding their market to
the world
3. Avon had 5 million representatives around
the world. Avon gave country managers
considerable autonomy.
4. In 2001, Avon adopted new provisions, so
all the prior were restated to reflect shipping
and handling fees.
1. China government prohibit direct sales
2. Avon’s stock fell 45% in 2005.
3. There is lack of consistency in each Avon
regional centers which make Avon cost a lot
on each manufacturing operations and
supply chains in each countries.
→ LOCALIZATION SRATEGY

16. 15
AVON’s STRATEGY IN 2005-2010
Strength Weakness
1. Avon had previously abandoned animal testing in
1989
2. Avon flattened the organization to improve
communication, performance visibility, and
accountability
3. Avon rationalized its manufacturing and supply
chain, it eliminated duplication and reduced cost by
more than 1 billion a year
1. The investment criteria became extremely strict to
evaluate product profitability.
2. New product decisions were controlled by Avon’s
headquarters, 25% of Avon’s products were
discontinued.
3. Avon faced the operational mistakes of its
information systems.
Opportunity Threat
1. Avon hired seasoned managers from well-known
global consumer products companies
2. In 2005, Jung emphasize its value proposition in
every national market
->as high quality at a low price.
3. Jung persuaded Chinese authorities to rescind the
ban on direct sales
-> allowed Avon to recruit 400,000 new
representatives in China.
4. Avon promoted the online social networking
sites as for marketing its product.
1. In many of Avon’s important emerging markets, the
sales performance usually affected from its
competitors, such as Procter & Gamble.
2. In 2008 and 2009 the global Financial Crisis hit.
The economic growth persistently slow.
3. The annual percentage of world GDP is
decreasing.
→ TRANSNATIONAL SRATEGY

17. 16
AVON’s STRATEGY IN 2010-NOW
Strength Weakness
1. AVON has a strong direct marketing program.
2. Avon is good at personalized sales experience.
-> 6 million representatives
3. Avon’s market share has been up to 11.6% in
2010, and keep in top 5 global direct sale market.
4. Avon has a stable business model
5. The digital marketing system expand the market
and easier to interact with consumers.
1. The main revenue is from its foreign market. Avon
had 4 divisions in the world-North America, Latin
America, Asia Pacific, and Europe, Russia, Middle
East.
2. Avon’s reorganization in 2013 caused a disruption
of its sales representatives.
3. Avon representatives are usually non-contractual
workers.
Opportunity Threat
1. People are getting used of shopping by the
smartphone which increasing the potential market
of AVON’s product.
2. Avon expansion focused on high growth,
emerging markets, especially Asia and Russia
markets.
3. Avon launched its consumer-centric e-commerce
platform avon.com in the U.S in 2014, and
intended to expand into other key markets in 2015.
1. The Foreign Corrupt Practices Act in China.
Avon was accused it gave bribe to local
government officials.
2. Compete with strong competitions like Mary Kay,
L'Oreal, and Revlon
3. Be aware of competitive advertising and distribution
network of competitors
→ TRANSNATIONAL SRATEGY

18. 17
Avon Markets Around the world
• More than 87 countries
• 6 million active Representatives globally
• The Largest Direct Selling organization in the world
• 90% brand recognition in most major markets.

19. 18
AGENDA A- Context, market and products
B- Evolution on strategies
C- Our future

20. 19
OUR FUTURE
KEEP
TRANSNATION-
AL STRATEGY
FOCUS ON
PROFIT GROWTH
CONSTANTLY
INCREASE PRODUCT
PERCEPTION/VALUE
TO DEAL WITH
COMPETITORS
GROWTH
INSTALL ANTI-
CORRUPTION
RULES
IMPLEMENT
PROJECT
MANAGEMENT
AREA

21. 20
CONCLUSION
• AVON should keep following continuous improvement:
● SYSTEMS CONTROLS
● AGRESSIVE PRICE STRATEGY
● ANTI-CORRUPTION RULES WORLDWIDE
● SUBSIDIARY MANAGEMENT
● GLOBAL MARKETING STRATEGY
● COST CONTROL
● MANUFACTURING OPPORTUNITIES
● MORE R&D INVESTMENT

22. 21
CONCLUSION
In all the strategies that we can
develop for the company we have to be
awareness and have stability in our
decisions about the future and the
changes that this bring.
WE CAN NOT PREDICT THE FUTURE, BUT WE CAN CREATE IT

23. 22
THANK YOU!ANY QUESTION?