Case Study of Avon Products Inc
Avon Products is one of the giant companies in the US dealing in the field of cosmetics and beauty products. The company started its operations in 1866 and was founded by David McConnell as a perfume company. In 1980, the company changed its name to Avon Products Inc. It focused on China as the focal area of optimizing its sales in broader Asia. It is believed that the present woes that Avon is experiencing can be dated back to the decisions taken by the company management’s way back in 1998. The company had considered China as its focal point of operations in the broader Asian market. It had relied on direct sales since China had a high population that would sustain the high labor-intensive approach to sales. However, over time the Chinese market for Avon products declined and posed a challenge to the company to look for alternative markets.
The critical facts from the case include:
Avon is the world’s largest seller of cosmetics and other beauty products that are also leading in the production and sales of skincare products. It also markets several lies of products. It operates in one of the most competitive consumer product markets. The primary target consumers are women from diverse age groups and categories. Lastly, Avon has been able to produce top quality products because of its consistent research and innovation that enables it to lead its competing firms in developing new formulae for new products.
The major issues facing the company are:
Competition from the local brands that are appealing to the older women; overlying on direct sales that made it challenging for the company to stray into other sales avenues; and globalization issues like lines of products and legalities.
The alternative courses of action that the company would exploit include takeovers/acquisitions, mergers, online retail businesses, and construction of their plants within the areas of operations. In light of the present context, the best approach is to the acquisition of already existing companies since the management already has roots in China.