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Avon Case Study Analysis

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Avon Case Study Analysis
Avon Case Study Analysis
During the 1990s, Avon began to lose its appeal to the public. The number of new company sales representatives had begun to stall; and by 1999, the U.S. sales representatives had dropped 1% from the previous year (Pearce and Robinson, 2005, pg.423). It was at this critical time that Andrea Jung, an Avon saleslady herself, was hired as CEO to help take the company in a new direction. A turnaround grand strategy was envisioned in 2000 to help reenergize the flagging U.S. sales force, which was facing fierce competition from Mary Kay and L'Oreal and seeing profit margins declining. Jung's new strategy focused on the following:
1) "reinvigorating the brand—which had an aging-grandmother feel to it—with new products, new packaging, and a new ad campaign" (Pearce and Robinson, pg.423)
2) beauty-advisory training for representatives
3) expand Avon's online sales
4) expand the multilevel sales program
Given the facts of this case, this paper presents both sides of the debate—was Jung's turnaround grand strategy properly focused and directed? Jung's Grand Strategies Succeeded
According to Pearce and Robinson (2005), downsizing, restructuring, and reengineering reflect a "critical stage in strategy implementation wherein managers attempt to recast their organization" (pg. 15). This is exactly what Jung did using a turnaround grand strategy, which began with a form of retrenchment (pg.212). The turnaround strategy's success lies with a company's ability for management to be effective and efficient in the retrenchment process. A firm that has seen either a steep or gradual decline as Avon had, more than likely face a sharp cost reduction in order to stabilize their operations and restore their profitability (pg. 212). Jung focused on restructuring the company's sales force through cost reduction. The first thing Jung did to cut costs was consolidate the management. The company went from having 15 layers of management down to eight. This cut about 30%



References: Del Carro, G., Gartenfield, M.E., & Mockler, R.J. (2004). Case 28—Avon Products, Inc.: The Personal Care Industry. Retrieved June 22, 2007 from Pearce-Robinson: Strategic Management, Ninth Edition; The McGraw Hill Companies, 2004 (University of Phoenix rEsource eBook). Guo, C. (2003, November). EXPANSION IN CHINA. (Cover story). Global Cosmetic Industry, 171(11), 46-48. Retrieved June 29, 2007, from Business Source Complete database. Howell, Debbi. (Feb 7, 2000). JCPenney making shifts in structure to boost quality. Discount Store News, 39(3), p6. Retrieved June 29, 2007 from the University of Phoenix Library. Kratz, E. F. (2006, March). Avon looks ripe for a rebound. Fortune 153.5, 170. Retrieved June 26, 2007 from Thomson Gale PowerSearch Academic OneFile. Mike Troy (2000, December). Sears overview: Changes and challenges define current transition. DSN Retailing Today, 39(23), 27-29. Retrieved June 29, 2007 from ABI/INFORM Global database. (Document ID: 65526214). Pearce, J.A. & Robinson, R.B. (2005). Strategic Management (9th Edition). New York: McGraw-Hill/Irwin. Prior, M (2006, Feb 27). Avon to spend $500 M on revamp. WWD: Women 's Wear Daily, 191(42) pg.2. Electronically retrieved June 29, 2007 from Ebscohost. Setoodeh, R. (2005, Dec. 27/Jan.3). Calling Avon 's Lady. Newsweek. Retrieved June 26, 2007 from http://www.msnbc.msn.com/id/6733211/site/newsweek/ Deutsch, Claudia H. (2003, June 1). Business; In a Dull Economy, Avon Finds a Hidden Gloss. New York Times. Retrieved June 22, 2007 from ProQuest Historical Newspapers - The New York Times (1851 - 2003).

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