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Strategic management case
study
Sylvia LaBrie, Ashley Cleary, Andrea Baril, and MarieMichele 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 $1200.00. 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.
1920
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”
 http://avon.thedigitalcenter.com/assets/show/9581-ding-dong-avon-calling-1956
 Moved to Puerto Rico, Caracas, and Venezuela
1956
 Avon enters Cuba
1970
 First Asian Avon business
Ethically, Sustainability, and Socially Responsible
Violence Against Women
Internal Environmental
Management
Breast Cancer
External ‘’Green’’ Mobilizati
Emergency Relief
Avon Foundation for Women

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 selffulfillment 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
Audit Committee
CEO
Andrea Jung Chairman
Board of Directors
Compensation &
Management
Development Committee
&
Executive Leasdership
Finance Committee
Nominating & Corporate
Governance
2009
11%
Beauty
17%
Fashion
Home
72%
Avon: 10 billion
Mary Kay: 2.6 billion
Revlon: 1.3 billion
9%
18%
Avon
Mary Kay
Revelon
73%
-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
Avon: 6%
Mary Kay: 5%
Revelon: 4%
Mary Kay
Avon
Revelon
-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
-
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“Avon Company, Corporate Citizenship “ April 2012,
http://www.avoncompany.com/corporatecitizenship/index.html »
Avon Home parents, by Amanda, April 2012,
http://homeparents.about.com/cs/homebusiness/a/avon.htm »
Your Avon Representatives, April 2012,
http://www.youravon.com/REPSuite/become_a_rep.page?p=PSBRGGL&c=iProspect&s=PSBRGGL
Avon Finances, Forbes, April 2012,
http://finapps.forbes.com/finapps/jsp/finance/compinfo/CIAtAGlance.jsp?tkr=AVP »
Founder of Avon, August 18th 2011, http://yahsuccessblog.com/avon-review-a-legitimate-networkmarketing-mlm-opportunity »
Avon products financials, Thompson Reuters, 2012, http://www.4-traders.com/AVON-PRODUCTSINC-11723/financials/ »
Avon Home business opportunities, Alexandra Nowack, June 15th 2010,
http://homebusinessopportunities.typepad.com/home-business-opportunities/2010/06/how-canyou-make-money-with-avon.html »
Avon stock price, investors, 2012, http://investor.avoncompany.com/phoenix.zhtml?c=90402&p=irolstockquote »
Avon current vision and mission statements, July 10 2005,
http://manonamission.blogspot.com/2005/07/avons-avp-mission-statement.html »
Avon stock history, April 2012, http://investing.money.msn.com/investments/companyreport/?symbol=AVP »
Avon financial ratios informations, April 2012,
http://investor.avoncompany.com/phoenix.zhtml?c=90402&p=irol-fundRatios »
Avon, financial information, April 2012, http://investing.money.msn.com/investments/keyratios?symbol=AVP&page=FinancialCondition »