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Strategic management case study. Sylvia LaBrie, Ashley Cleary , Andrea Baril, and Marie-Michele Lachance. Overview. Company Overview: History Sustainability Growth 2009 events and issues Avon m arket locations Existing Vision & Mission Statement New Vision & Mission Statement

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strategic management case study
Strategic management case study

Sylvia LaBrie, Ashley Cleary, Andrea Baril, and Marie-Michele Lachance

overview
Overview
  • 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
  • Recommendations
  • Implementation
  • Financial assumptions
  • EPS/EBIT
  • Projected Income statement
  • Projected Balance Sheet
  • Projected Financial Ratios
  • Evaluations:
  • Balance Scorecard
  • Avon Update
  • Stock price History
  • Questions
  • Sources
history
History
  • Bookseller David H. McConnell
  • Founded Avon in1886
slide4

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 does it work
How doesitwork ?
  • How do representativesmake money?

• Eachpersonthatyourecruit, youearn $20

• If youwant to make money fromyour sales team's volume, you have to reach the position of whatiscalled a Unit Leader. The qualifyingfactors 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 yourrecruits, and also, 0.5 to 1% on the ordersfrom the people theyrecruit.

  • Advantages to be a representative:

1.    Flexible home based business

2.    Unlimitedearningspotential

3.    Lowcost to start a business.

growth
Growth

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

slide7

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
slide8

Ethically, Sustainability, and SociallyResponsible

Violence AgainstWomen

InternalEnvironmental

Management

The Business Ethics Magazine has rated Avon for 6 consecutive years as one of the “100 Best Corporate Citizens”

Breast Cancer

EmergencyRelief

External ‘’Green’’ Mobilization

Avon Foundation for Women

slide9
2009
  • 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.
vision
Vision
  • To be the companythat best understands and satisfies the product, service and self-fulfillmentneeds of women - globally.
mission
Mission
  • The Global Beauty Leader

Wewillbuild a unique portfolio of Beauty and related brands, striving to surpassourcompetitors in quality, innovation and value, and elevatingour image to become the Beauty companymostwomenturn to worldwide.

The Women'sChoice for Buying

Wewillbecome the destination store for women, offering the convenience of multiple brands and channels, and providing a personalhightouch shopping experiencethathelpscreatelifelongcustomerrelationships.

The Premier Direct Seller

Wewillexpandourpresence in direct selling and lead the reinvention of the channel, offering an entrepreneurial opportunitythatdeliverssuperiorearnings, recognition, service and support, makingiteasy and rewarding to beaffiliatedwith Avon and elevating the image of ourindustry.

mission cont
Mission Cont.
  • The Best Place to Work

Wewillbeknown for our leadership edge, throughour passion for high standards, our respect for diversity and ourcommitment to createexceptionalopportunities for professionalgrowthsothatassociatescanfulfilltheirhighestpotential.

The LargestWomen'sFoundation

Wewillbe a committed global champion for the health and well-being of womenthroughphilanthropic efforts thateliminatebreast cancer from the face of the earth, and thatempowerwomen to achieveeconomicindependence.

The Most AdmiredCompany

Wewilldeliversuperiorreturns to ourshareholders by tirelesslypursuing new growthopportunitieswhilecontinuallyimprovingourprofitability, a sociallyresponsible, ethicalcompanythatiswatched and emulated as a model of success.

proposed vision
Proposed Vision

Avon strive to be the best foundation for women by offeringa widevariety of productsthatappealsto anywomen’sneedand taste.

proposed mission
Proposed Mission

Our mission as a companyis to provide a unique portfolio of beauty, fashion, and home brands to satisfywomenworldwide. We encourage the personalrelationshipbetweenemployees and clients by providing a door-to-doorexperience. Weexpectouremployees to beprofessional, and in return weofferthem a flexible workschedule. We are constantlylooking to increaseour sales throughourrepresentatives as well as throughour online market, whichwould help maintainourgrowth and profitability to ourstockholders. As an expandingcompany, ourpurposeis not only to sellourproducts, but also to remainsociallyresponsible by contributing toour causes related to women.

strength s w eaknesses
StrengthsWeaknesses

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. 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

opportunities threats
Opportunities Threats

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

sales by competitors
Sales by Competitors

Avon: 10 billion

Mary Kay: 2.6 billion

Revlon: 1.3 billion

space matrix
Space Matrix

-Marketpenetration

-Marketdevelopment

-Productdevelopment

-Backwardintegration

-Forwardintegration

-Horizontalintegration

-Related diversification

-Unrelated Diversification

-Horizontal diversification

grand strategy matrix
Grand Strategy Matrix

-MarketDevelopment

-MarketPenetration

-ProductDevelopment

-ForwardIntegration

-BackwardIntegration

-HorizontalIntegration

-Related Diversification

bcg matrix
BCG Matrix

Avon: 6%

Mary Kay: 5%

Revelon: 4%

Mary Kay

Avon

Revelon

-Forwardintegration

-Backwardintegration

-Horizontalintegration

-Marketdevelopment

-Productdevelopment

ie matrix
IE Matrix
  • MarketPenetration
  • MarketDevelopment
  • Product Development
  • Backwardintegration
  • Forwardintegration
  • Horizontal integration
recommendations
Recommendations

- 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.
assumptions
Assumptions
  • 10 stores at $5 million each
  • Increase advertising of 10%
    • Increase of 10% in the net sales
sources
Sources
  • “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-network-marketing-mlm-opportunity »
  • Avon productsfinancials, Thompson Reuters, 2012, http://www.4-traders.com/AVON-PRODUCTS-INC-11723/financials/ »
  • Avon Home business opportunities, Alexandra Nowack, June 15th 2010, http://homebusinessopportunities.typepad.com/home-business-opportunities/2010/06/how-can-you-make-money-with-avon.html »
  • Avon stock price, investors, 2012, http://investor.avoncompany.com/phoenix.zhtml?c=90402&p=irol-stockquote »
  • 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/company-report/?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/key-ratios?symbol=AVP&page=FinancialCondition »