study the case for AVON provided, write up and present a case solution. You may use the case solution for Walt Mart provided to assist you in your approach.

Case Abstract

Vision Statement Analysis

Mission Statement Analysis

Competitive profile Matrix

External Factors Evaluation (EFE) Matrix

Grand Strategy Matrix

Internal Factor Evaluation (IFE) Matrix

SWOT Strategic

The Internal External (IE) Matrix

Financial Ratio Analysis (Use about 12 ratios, with at least 2 from each category)

Summary of Main Recommendation

Epilogue (Conclusion)

Grammar: spelling, punctuation, information flow in a logical and coherent manner

Table of content, appropriate headings, and format

Reference-Avon Products Inc - 2009 - [DOCX Document] (documents.pub)

Avon Products Inc. 2009 Rochelle R. Brunson and Marlene M. Reed Baylor University The January 20, 2009, issue of the Wall Street Journal under the headline "Consumers Scrimp on Beauty Items" reported the following: "Elizabeth Arden Inc. and Estee Lauder Co, cut their sales and earnings forecast Friday and watched their slocks take a beating, as consumersalready buying fewer sweaters and handbagsbegan to sacrifice their beauty regimens to the recession". In 1886. David H. McConnell founded a company named The California Perfume Company (CPC) when he was only 28 years old. The first company office was in New York, and the manufacturing and shipping office operated from a room that was 20 feet by 25 feet. The great San Francisco earthquake of 1906 destroyed CPC's California office: however, before long the company was able to reopen. By this time. CPC had 10,000 representatives and Depot Managers selling 117 different articles in 600 styles and package sizes. In October of that year, the company produced its Inst color brochure. In 1914, CPC opened its first office outside the United Slates in Montreal. Canada. When World War I broke out across the Atlantic. 5 million units a yeai of CPC's products were sold in North America. North America. As the Roaring Twenties reached its peak. CPC had more than doubled its sales to $2 million in the years since the end of the war. By this time, there were 25,000 representatives in the United States. The company's home office was now moved to Fifth Avenue in New York City. The first products were now offered under the brand name Avon. These products were a toothbrush, talcum, and a vanity set. In 1937, David McConnell died, and his son, David Jr.. became the president of the company. By this time, their products were guaranteed, and many of them bore the Good Housekeeping Seal of Approval. In September 1938. the company's name was changed to Avon Products inc. after the British town Stratfordupon-Avon. Over half of Avon's Suffern. New York, plant was relinquished to military support in 1944. However, their product sales continued to rise to nearly SI6 million. With the death of McConnell Jr., J. A. Ewald became the president: and he introduced mechanized billing and took the company public in 1946.In 1954, Avon launched its very successful television advertising campaign entitled "Avon Calling." Avon for the first time moved overseas to Puerto Rico and Caracas, Venezuela. Then in 195ft they entered Cuba. The company became a household name in the United States in the 1960s with its famous television advertisements with the catch phrase, "Ding dong, Avon calling." With U.S. sales topping $750 million in 1970 and an overseas business that was growing at an average of 25 percent annually, Avon was one of Wall Street's "Nifty Fifty" slocks. That year, the first Asian Avon business opened in Japan and throughout Western Europe. To close out this decade. Avon purchased the jeweler Tiffany's in 1979. James Preston, the CEO of Avon, fought in 1990 to preserve Avon's independence from a scries of takeover attempts (including Amway and Mary Kay). This year, Avon also announced a permanent end to animal testingbecoming the first major U.S. cosmetic manufacturer to do so. By 1997, there were 2.6 million independent representatives worldwide earning S2 billion in commissions for themselves and their families, Avon had now moved into the countries of the former Soviet Union bloc with its products. In addition, in only five years the Avon Worldwide Fund for Women's Health had raised $50 million. Avon has adopted the following mission statement: The Global Beauty LeaderWe will build a unique portfolio of Beauty and rclated brands. striving to surpass our competitors in quality, innovation and value, and elevating our image to become she Beauty company most women turn to worldwide. The Women's Choice for BuyingWe 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 SellerWe will expand our presence in direct selling and lead the reinvention of the channel, offering an enlrepieiiewia! opportunity lhal delivers superior earnings, recognition, service and support, making it easy and rewarding to be affiliated with Avon and elevjLing the image of our industry The Best Place to WorkWe 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 thai associates can fulfill their highest potential. The Largest Women's FoundationWe will be a committed global champion for the health and wellbeing of women through philanthropic efforts that eliminate breast cancer from the lace of ihe earth, and (bat empower women to achieve economic independence The Most Admired CompanyWc will deliver superior returns to our shareholders by tirelessly pursuing new growth opportunities while continually improving our profitability, a socially responsible, ethical company lhal is watched and emulated as a model of success.The five values of Avon are: Trust, respect, belief, humility, and integrity. The Business Ethics Magazine has rated Avon for six consecutive years as one of the "100 Best Corporate Channel of Distribution Avon believes its success has always rested on its channel of distributiondirect selling. The company is the world's largest direct seller with 5.4 million Avon representatives in over 100 countries. Avon's business model provides for the company to sell products to its representatives on credit, so that for the most part, the representatives do not pay the company until they get paid by their customers. This makes the company the largest micro-lender to women. In addition, there tire minimal startup costs for an Avon business. The brand has been found to have 90 percent recognition worldwide and is listed as one of the world's top global brands. Since 2006, Avon has expended a great deal of time and money improving its representatives' earnings and selling experiences. In 2007, the company increased its investment in representatives by over $120 million. This amount funded a number of initiatives including the rollout of a new sales leadership opportunity, improved training, and changes in the commission structure. The company also funded new Web-based and mobile-technology tools.Marketing Avon distributes three product categoriesbeauty, fashion, and home. Each of these product categories accounts for 10 percent or more of consolidated net sales as indicated in Exhihil I. Exhibit 2 provides a revenue breakdown by product category. Note that Avon's Home segment had a 3.2 percent decline in revenues in 2008 whereas the Beauty division had a 9.6 percent increase in revenues. Exhibit 3 provides a revenue breakdown by geographic area. Note that Latin America contributes more revenue and profit for Auon than any other area. During 2008, Avon made a monumental change in the marketing of its beauty products. Since its inception, the company had always concentrated on a homey image that catered more to suburban housewives than urban trendsetters. Avon's president, Geralyn R. Breig. suggests that one ofthe company's global challenges is generating buzz. "In market after market, we found that we were meeting women's needs in quality, variety, and innovation. Where we fell shod was in the image of the brand."In their new promotions, the Avon lady is being played by actress Reese Witherspoon, MTV star Lauren Conrad, and James Bond girl Gemma Arterton and represented by Patrick Dempsey of the hit TV drama Grey's Anatomy, Creating a new glamorous image for Avon does not come cheap. The company's ad spending went from $136 million in 2005 to S249 million in 2006 and $368 million in 2007. Avon's ad budget for 2008 was 14 percent higher than the year before. Reese Witherspoon is now appearing in ads for Avon makeup, skin care products, and fragrances. In addition, she is also traveling worldwide as the Avon Foundation's first global ambassador and honorary chairwoman. In December 2008. as a part of the company's strategy to continue growing its universe of celebrity and designer beauty alliances, Avon announced a celebrity deal with Courtency Cox to be the face of the brand's new women's fragrance. Spotlight, launched in April 2009. The April introduction was followed by a global launch in summer via Avon's 600,000 sales representatives in the United States and avon.com. Spotlight was described as a "fresh, oriental scent" by the company (Edgar, Michelle, December 5, 2008).The new campaigns may be coming at a good lime. In a study of mass-market cosmetic brands, the research firm Brand Keys found that Avon lagged behind seven of their cosmetic companies in customer loyally. Mary Kay Cosmetics (another direct marketer) was at the top of the list. Robert Passikoff, CEO of Brand Keys, suggested, "Avon's problem is that it isn't associated with anything in particular. It's almost like a commodity."Manufacturing As of 2008, Avon's largest manufacturing plantsin Brazil, China, and Poland-received ISO 1-1001 certification. This designate is the international standard for environmental management practices. The company's plant in the Philippines has also received ISO 14001 certification. Avon's manufacturing plant in Mexico received the Clean Industry Certificate from the federal Environmental Protection Agency in 2008. By the end of2008. 60 percent of Avon's production volume was being produced at sites where ISO 14001 certification has been achieved. Avon Brazil received an environmental award in 2008 from the Brazilian Benchmarking Environmental Program. Since 2003, this award has recognized environmental best practices among Brazilian businesses. The winning project involved a reduction ofgreenhouse gas (GI1G) emissions in the company's logistics operations. By optimizing the-truck routes within the region, Avon was able to cut costs, reduce the distance traveled, and lower GHG emissions. The project will be fully implemented by July 2009, will save 4,1 million kilometers traveled, and cut GHG emissions by 12,707 tons annually.By 2008. Avon owned the following properties outside the United States measuring 50.000 square feet or more which were used for manufacturing and logistics purposes: Two distribution centers for primary use in North American operations (other than in the United States). Five manufacturing facilities, ten distribution centers in Latin America. Four manufacturing facilities in Europe, primarily serving Western Europe, the Middle East and Africa, and Central and Eastern Europe.Financials Avon's income statements and balance sheets are provided in Exhibits 4 and 5 respectively Note that for 2008. Avon's revenues increased 7.5 percent and their net income increased 65 percent. Avon does have, however, $224 million in goodwill, which is not good; nor is their S1.4 billion in Ions-term debt Avon to meet the 2008 downturn in the economy, began cutting jobs, closing unprofitable operations, simplifying its product line, and moving work to countries with low labor costs. The company also raised prices to help offset rising costs for commodities such as oil ("Sales Abroad Lift Profit for Avon," New York Times. October 31. 2008).The Cosmetic Industry The cosmetics industry is one in which products tend to be countercyclical. Demand for such products normally remains constant and unaffected by economic distress. In terms of color cosmetics, Ettromonitor International, Inc. predicts that many of these markets will see a slowdown in volume demand. However, they also believe that (he compound annual growth rate for eye makeup will be 1.31 percent compared to -0.26 percent for overall color cosmetics for the period 2009 to 2113. A growing trend in'the cosmetics industry is the introduction of "green" products. In fact, more than one in seven (16 percent) of global beauty products launched in 2008 were certified organic, ethical, or all natural. There are concerns, however, that the global economic climate will stifle new product development, innovation, and sustainability programs in 2009. An economic slowdown usually curbs companies from investing in research and development, and it is that research that has brought forth a wealth of green cosmetics. However, retailers such as Wal-Mart are increasingly requiring more eco-friendly supply chains. In addition. Amarjit Sahota of Organic Monitor forecaststhat consumers are unlikely to give up their commitments to organic products just to save a few pennies. Aveda Cosmetics found that 68 percent ofconsumers will remain loyal to a company that has a social and environmental commitment. Many consumers are now "voting with dollars" for organic products and supporting brands that support values similar to their own:Competitor Avon Products Inc. considers its two closest competitors to be Mary Kay, Inc. and Revlon, Inc. Exhibit 6 provides a financial comparison of Avon versus Revlon. Note that Avon is nearly eight times larger than Revlon. In terms of channel of distribution, Mary Kay. Inc. most closely resembles Avon because both use a direct marketing approach. Revlon. In contrast, sells its products through cosmetic counters in department stores and pharmacies. Avon has 42.000 employees worldwide, and Mary Kay has 5,000 and Revlon has 5.600. The large difference in company representatives is attributable to the necessity of employing more people to sell directly to customers than selling products through a store-front. The revenues of Avon also far exceed those of its closest competitors, with Mary Kay selling $2.40 billion and Revlon selling $1.35 billion in 2008 as compared to Avon's $10,37 billion.Conclusion On May 5, 2009, Avon Products Inc. reported first quarter 2009 total revenue of $2.2 billion, which was 13 percent lower than that of 2008's first quarter. However, this was up 3 percent on a local currency basis as foreign exchange pressured growth. Beauty sales in the first quarter 2009 were 12 percent lower versus the prior year period but increased 5 percent on a local currency basis. Beauty units increased 2 percent. On May 7. 2009, Avon declared a regular quarterly dividend on its common stock of $.21 per share. For the second quarter of 2009. Avon's revenues increased 5 percent in local currency, after the 3 percent increase in the first quarter. Beauty revenues in local currencies were up 5 percent. Pressuring these strong performances, however, was the continuing negative impact from currency exchange. Overall revenues and beauty revenues both declined 10percent Avon is implementing a 2009 restructuring program that includes closure of two manufacturing facilities. The company continues to invest heavily in online search engines and Internet carrier sites. For that second quarter, Avon's revenues were up 13 percent in Latin America, 4 percent in North America, 8 percent in Western Europe, 6 percent in Central and Eastern Europe, 10 percent in Asia Pacific and 52 percent in China. Avon's executive team, as provided in Exhibit 7, needs a clear strategic plan for the future. Help the executives out in this regard.