Avon Products Case Study Analysis

This assignment requires a comprehensive analysis of Avon, a prominent global cosmetics company. Students must examine Avon's historical background, delve into its strategic brand positioning, identify its key competitive advantages, and provide an overview of its diverse product portfolio. The analysis should highlight Avon's unique business model and its impact on the cosmetics industry.

Running head: Global business environment
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Executive summary
The report focuses on the business activities and operations of the Avon. It explains that how the
company is selling cosmetics and beauty products across the world. The company was
incorporated in 1886. The company is selling its products in more than 42 countries across the
world. It explains that how the company is reducing key challenges that are faced by the
company in China. Further, it explains the long-term mission and vision of the company. Along
with this, the report explains that how the company is using marketing and corporate level
strategies to attain long-term goals and objectives within the organization. It also explains the
future strategies through which the company can overcome on its competitors across the world.
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Table of Contents
Executive summary.....................................................................................................................................2
Introduction.................................................................................................................................................4
Key issues of Avon in China.........................................................................................................................5
Desired outcomes........................................................................................................................................7
Recommendations.....................................................................................................................................10
Conclusion.................................................................................................................................................12
References.................................................................................................................................................13
Appendices................................................................................................................................................17
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Introduction
The report talks about the Avon Company. It explains that how the company is
expanding and flourishing its business activities and operations in China. It outlines the key
issues and obstacles which are faced by the Avon in China. It describes that how the company is
overcoming on these key issues and challenges. It explains that how the company is achieving its
goals and objectives in Chinese market. It describes the mission and vision of the Avon in
China. It also explains the desired outcomes and results of the company. It tells that how the
company is producing various types of beauty and cosmetics products around the world.
Avon Products Inc is known as Avon which founded in 1886 by David H.McConnell. It
is dealing with various beauty products, personal care products, and household products in
China. It is the fifth biggest beauty company around the world. It is the second largest selling
company across the world (Sutter et al, 2015). The company provides various types of beauty
and cosmetics products to the consumers in the global market. In today’s era, the company is
increasing its sales and revenue day by day. The firm is also expanding and exploring its
business activities and operations. The company manufactures and produces various cosmetics
and beauty products in China (Hunt, Fate and Dodds, 2011). The company maintains the strict
control over Avon’s china. It is one of the biggest beauty companies in the world which is
operating for 130 years. The company follows rules and legislation which have been made by the
government in China. Further, the company is focusing and collecting information related to the
safe and careful use of elements and ingredients (Azmi et al, 2016). The firm provides
employment opportunities to the women also. Avon products include cosmetics perfume, toys,
and clothing. The company is creating a good image in the minds of the women further; it
attracts more customers in the world. The female customers show more interest in the products
of the Avon Company (Ergin, Ozdemir and Parilti, 2011).
Avon products are divided into three products category such as beauty, beyond beauty
and beauty plus. The beauty products comprise cosmetics, skin care, fragrances, and toiletries
products, beyond beauty products, include gift and home products, toys, candles, and decorative
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products while beauty plus consists apparel, watches, jewelry, and accessories (Ramli, 2015).
The company also provides complementary services to increase the number of customers in the
global market. Now a day’s the company is making good image and reputation in China by
providing unique and attractive beauty products to the women as well as men. After the various
researchers, it has been analyzed that Avon is one of the biggest players in the cosmetic industry
around the world (Dayan and Kromidas, 2011).
Key issues of Avon in China
There are various issues are faced by the Avon in China due to inadequate government rules
and regulations. The company is using direct selling system to sale the cosmetics and beauty
products across the world. Therefore, various issues arise in China due to direct selling system.
The direct selling system has been banned by the government in China (Sheth, 2011). Thus, it
affects the business activities and operations of the Avon. Further, it also influences the
marketing mix especially in the aspects of the distribution of cosmetics and beauty products.
Along with this, the organizational structure, framework and business model of the Avon
Company was not fitted and well with the nation policies and rules which have been made by the
government of China. Here, some of the key issues have been discussed below which the Avon
company encountered in China (Jing, 2015).
 Although, cosmetics and beauty products are the part of the Chinese culture and values
the government imposed restrictions on the sale of these products in China. It is the major
issue which is faced by the Avon in China (Rosenbloom, Haefner and Lee, 2012). The
government did not allow to the company for the sale of the cosmetics and skin care
products in China. Further, the company cannot sale the beauty and cosmetics products
directly to the customers in China. It is another issue which affects the profit and revenue
of the Avon in that country. In this way, various key challenges are faced by the company
while operating and managing business activities and operations in China (Choudhary,
2013).
 Competition is another key issue which exists in China and it also influences the business
operations of the cosmetics company in such country. There is rich competition in China
among the cosmetics and beauty companies (Jing, 2015). There are approx 2800
companies manufacture and produce cosmetics and skin products in that country to
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attract more customers in the world. Thus, it can become a major issue for the Avon
Company in China because people buy the local products at the reasonable and cheap
prices. Thus, Avon has to bear the loss in such country. Further, people do not want to
buy the costly products of such company. Mostly they prefer local company products in
China and they purchase local products at appropriate prices (Santos and Williamson,
2015).
 In addition, the Chinese government started to execute and implement strict rules,
legislation, and policies to reduce the direct selling business in China. It is not only
affected the Avon business but also affects the competitors such as Mary Kay. In this
way, various obstacles and problems are faced by the company in such country. The firm
cannot expand and explore its business in such country due to strict rules and regulations
imposed by the Chinese government (Ramli, 2015).
 The Chinese government banned direct selling in 1998 thus it also affects the marketing
activities of the Avon in China. It is one of the biggest issues in such country which
affects the revenue and profit of the cosmetics and Beauty Company (Kinkel, Kleine, and
Diekmann, 2014).
 The inadequate computer system is another key issue which is encountered by the Avon
in China. It affects the activities and operations of the cosmetics company adversely.
 The company cannot do advertisement and promotions of its beauty products due to
various strict rules imposed by the Chinese government. Hence, the company is not able
to increase and maximize its profit and revenue in such country. Advertisement and
promotion are one of the important strategies of the Avon to attract more customers in
such country. But the firm is not able to take benefits of this strategy in China (Yang,
Jayashree, and Marthandan, 2012).
 Research and development team is used by the company to evaluate and analyze the
choices, needs, requirements, and expectations of the Chinese in such country. Therefore,
huge investment is done by the company thus it affects the long-term revenue of the
Avon company (Raj et al, 2012).
 The company will have to provide training to the Chinese employees because the people
of China are less efficient and cooperative. Therefore, the company will have to do large
investment for providing training and development coaching to the workers in China. In
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addition, the company will have to make contacts with other companies and communities
to understand and evaluate the preferences and needs of the Chinese. It also provides help
to understand and measure the culture of the China. Further, the company needs to follow
strict rules and regulations which have been made by the Chinese government. Further,
the company has to pay double tax and import duties to the government thus it can affect
the success and growth of the Avon in China. It is the major issue in such country. Along
with this, the company is not able to maintain sustainability in such country, therefore, it
affects the goodwill of the company. The company will not able to provide good returns
to the shareholders in such country thus various challenges are faced by the company in
China (Coulson-Thomas, 2011).
 The macro environment is also another key challenge for the Avon Company. It affects
the long-term business activities and administration of the cosmetic company in China.
There are various factors exist in the external environment which affects the growth and
progress of the beauty and cosmetic company in such country. Therefore, the company
will have to evaluate and measure these factors to gain long-term competitive advantages
in the global market.
All these key issues are faced by the Avon Company in China. These issues must be controlled
and managed by the company to increase and maximize the long-term revenue and profit of the
company. It will also help to overcome on the competitors in the world (Pereira de Carvalho, and
Barbieri, 2012).
Desired outcomes
The main objective of the Avon is to increase and enhance the sales of the company to
attract more consumers in the China. The company is considered as a leader which provides
various cosmetics and skin products to the women. It is one of the biggest socially responsible
companies around the world. Further, the company wants to connect with women. In addition,
the company wants to improve the lives of the women globally (Harris and Dennis, 2011). The
other aim of the Avon in China is to accelerate and increase the progress and growth of the
company to beat the competitors in the market. Along with this, the company is improving the
outcomes and results of the company in such country. The company is producing innovative and
attractive beauty and cosmetics products to increase the revenue and profit of the Avon in China.
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It is the one biggest desired outcomes of the company. It focuses on the needs, desires,
expectations, choices, and requirements of the women to maximize the sales of the Avon in such
country (Twigg and Majima, 2014).
The Avon core values include belief, integrity, trust, and humility. The core values play a
vital and integral role in Avon. The other objective of the company is to provide effective and
unique cosmetics and beauty products with high quality in the global market. Further, the
company wants to maintain friendly spirit at the workplace to gain sustainability within the
organization. Further, the company wants to build and develop a unique and effective portfolio
of beauty brands in the China (Julia and Li, 2011). It also wants to beat the competitors in China
to gain the long-term benefits around the world. Apart from this, Avon wants to become a unique
and attractive destination store for the female customers by providing a unique quality of
cosmetics products to them. Further, the company wants to give personal high shopping
experience to the customers which will help to create lifelong reciprocal customers relationship
around the world. Along with this, Avon is trying to use direct selling in China to gain various
competitors opportunities in that country. In addition, it wants to maintain a good working
environment for the employees to provide job satisfaction and job security in China. It wants to
achieve highest satisfaction level of the female consumers in China by fulfilling their needs and
requirements. These are the desired outcomes of the Avon that the company wants to achieve in
China. Further, the company is trying to make a good image and goodwill in China by rendering
unique and attractive cosmetics and skin products to the women in China (Kim and Ko, 2012).
Apart from this, the company is developing unique and effective strategies which could
help to increase and maximize the revenue and profit of the Avon in China. It is trying to
maintain a reciprocal relationship with other local cosmetics companies in China to evaluate and
measure the plans, policies, and strategies of the competitors (Butler, 2013). Further, it wants to
use effective and unique advertisement and promotional strategies to promote and enhance the
beauty and skin products in China. Apart from this, the company wants to reduce the inventory
level while improving and enhancing the services of the company. The CEO of the company is
trying to use effective and unique marketing strategies and policies to attract and retain more
consumers in China with maintaining sustainability in the organization as well as the
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environment. The company uses social media channels to increase and promote the products and
services of the Avon in China (de Melo et al, 2013).
The company also wants to provide satisfaction to the stakeholders by increasing and enhancing
the net worth of the shareholders. Apart from this, the company wants to improve the financial
position to gain long-term sustainability in China. It will also help to increase the number of
buyers in such country (Lundqvist et al, 2013).
SMART goals of the Avon in China: SMART goals of the Avon in China have been discussed
below.
Specific: The Company has set specific goals and objectives to attain the long-term mission and
vision of the firm in China. The firm wants to earn a profit in such country by providing
attractive skin and cosmetics products to the consumers in China.
Measurable: Further, the company set and establishes the criteria for measuring the success and
growth of the firm to attain each goal and objective of the firm. The company also measure and
evaluate the performance and efficiency of the Chinese employees to accomplish the mission and
vision of the firm (Brown and Gillespie, 2016).
Attainable: After identifying the goals and objectives, the company needs to figure out the way
through which the Avon can attain these goals and objectives. For this purpose, the firm needs to
develop and build attitudes, skills, abilities, and capacity of the workers to reach the target
market in the China.
Realistic: A goal and objective can be realistic and high, the company should decide whether the
goal and objective high or realistic and it should develop effective and unique strategies in order
to attain these goals and objectives. In this way, the company can expand and flourish its
business activities and operations in China.
Timely: The Company must complete these goals and objective on timely. It will also help to
build and develop a good image in the eyes of Chinese in that country. Through SMART goals,
Avon can enhance and increase its business activities and processes in other countries also
(Usha, 2016).
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Recommendations
Sherilyn S. McCoy is the CEO and Douglas R. Conant is the chairman of the Avon.
Various suggestions have been given by the CEO to expand and flourish business activities and
operations of the company in China. The company should establish a retail business in China to
increase the profit in such country. The company must negotiate with the Chinese government to
provide a license to operate and manage direct selling in such country. It will also help to expand
and increase its business globally. The company should stop its business activities and operations
in China to reduce these key issues in such country. Along with this, the company must negotiate
with the US government to resolve these key issues and challenges. China is one of the biggest
markets around the world to gain revenue and profit. It should focus on the plans, policies, and
strategies of the competitors in the China. Further, the firm must evaluate and focus on the
manufacturing plant in China to improve and enhance the productivity and efficiency in China
(Brown and Gillespie, 2016).
In addition, the company must provide training and development coaching to the Chinese
employees to measure and evaluate the performance and efficiency of the workers. It will also
help to meet its long-term targets and goals within the organization. Avon must analyze and
evaluate the needs, requirements, and desires of the Chinese because they are different from
other countries people (Lundqvist et al, 2013). Therefore, the company needs to take care the
choices of the Chinese. It should use effective and unique promotional and advertisement
strategies to attract more female consumers in China. It is the good source to increase and raise
revenue and profit in such country. Along with this, the company launches and conducts some
seminars and programs to increase the number of consumers in such country. In addition, it
should also use loyalty programs to attain success and growth in the global market. Avon should
also use a business level and corporate level strategies to maximize and increase the profit of the
firm (Issa, Maguid and AlMazroua, 2016).
Apart from this, the company must evaluate the strengths and opportunities of the
competitors to fulfill the mission and objectives in near future. Avon should focus and evaluate
the macro environment to control and manage the risks of the markets around the world. It must
measure and evaluate the external environmental factors to beat and overcome on the
competitors in China (Daniluk, 2016). The company should start online marketing to promote
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the cosmetics and skin products in such country. In this way, the company can provide
satisfaction and morale to consumers around the world. Along with this, it must maintain a
reciprocal and cordial relationship with customers to increase the demand for the cosmetics and
beauty products around the world. It should use the natural raw material to produce new and
innovative cosmetic products in China. Along with this, SWOT analysis must be done by the
company to evaluate and measure the threats and opportunities of the competitors in China.
Marketing plays a vital and integral role to promote the cosmetics and fashion products in China.
PESTLE and porter five forces analysis should be done to measure the competitive strengths and
weaknesses in China. In addition, if the company wants to expand its business activities in China
then it should provide free beauty classes to the customers. It will also help to attract more
consumers in the market. Further, loyalty programs also help to develop and build a reciprocal
relationship with their consumers in the world. In addition, the company must produce
innovative and new cosmetics and skin products (Issa, Maguid and AlMazroua, 2016).
The company must appoint marketing team to increase the revenue of the company in
China. In addition, Avon must use intensive growth strategy to maximize the growth in the
Chinese market. Further, the company must focus on the complementary services to the Avon.
Apart from this, the company must focus on the online advertisement to enhance the products
and services of the company (Maurino et al, 2017). The company must monitor the women
beauty products to attract more female in China. Women are the foremost and important
consumers of the Avon beauty and cosmetic company. In addition, the company must maintain a
sustainable human resource management to make the effective and unique policies and rules of
the company in such country. In this way, the company can carry the business activities
smoothly in such country. In addition, Avon should use effective and unique distribution
strategies and processes to differentiate its products and services from the competitor’s products
and services. Further, the firm must hire female employees to provide information to the female
customers in China because they can easily understand and evaluate the needs and requirements
of the female consumers in such country (Issa, Maguid and AlMazroua, 2016).
Avon must promote the potential and skilled employees for doing work effectively and
efficiently in China. The company should test the cosmetics and skin products before selling it to
the consumers in the market. It will help to reduce and prevent the harmful effect of these
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products and services (Jaiswal and Gupta, 2015). In this way, the company can also become an
effective and unique identity in China. CEO must make effective and excellent rules, policies
and processes to increase the revenue and profit in the China. The company must monitor and
measure on the risks and challenges of the future to secure and protect the business of the
company in China. In this way, the company can improve its process and procedure to gain long-
term advantages in the global market. In addition, the company should focus on the rules and
regulation which have been made the Chinese government expand its business in such country.
Furthermore, the company must focus on the middle level of consumers to attract more female in
that country (Jaiswal and Gupta, 2015). Avon must set the reasonable and appropriate prices to
overcome on the local competitors in China. Along with this, the company should focus on the
key issues which have been faced by the Avon in China. The company should use 7Ps
components to accomplish the long-term targets of the firm in such country. In addition, the
company should provide reasonable remuneration and incentives to the potential and efficient
employees (Cervellon and Carey, 2011). The company must focus on the market to introduce
new products and services in the China. It should use social media channels to reach its target
audience in such country. It should focus on the culture and values of the China to produce the
cosmetics and beauty products. Apart from this, Avon should focus on the market penetration
and market development strategies to increase the women customers globally.
Conclusion
The report is based on the business activities and operations of the Avon. Avon is
producing wide range of cosmetics and personal care products for women as well as men around
the world. On the above discussion, it has been concluded that Avon is one of the biggest players
in cosmetics and beauty products industry. Various key issues and challenges are faced by the
Avon in China while operating and managing business activities and operations in China due to
strict rules and regulations are imposed by the government. Furthermore, various
recommendations have been given to the Avon to run the business activities and operations
successfully in such country. Porter five forces model should be used by the company to evaluate
and measure the position of the competitors in China.
In addition, SMART goals and objectives should be set by the company to attain and
meet long-term mission and vision of the firm. It should focus on the marketing mix strategies to
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attain success and growth in the market. It must focus on the market segmentation, targeting and
positioning strategies to divide its products into different segments in the Chinese market. Along
with this, effective and unique models must be developed by the Avon to attract and retain more
female consumers globally. Avon must maintain sustainability in the environment as well as the
organization. It will also help to provide social, environmental and economic benefits to the
stakeholders. In this way, the company can increase and expand its business smoothly in China.
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Appendices
1. Avon products
2. Business portfolio of Avon
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3. Competitive advantages
4. Background of Avon
19