Analyze The Avon Product Inc

Analyze The Avon Product Inc The report has been designed to analyse the Avon Product Inc that has been undergone by major strategic change. Furthermore this report has been divided into two parts, first part of the report will explain the organisation back ground and the strategic change that has been adopted, further second part of the report will discuss the influence of external environmental forces, how they affect on the organisation performance. Avon Vision Statement : To be the company that best understands and satisfies the product service and self-fulfillment needs of women globally Organisation Background Avon is the largest seller, marketer and manufacturer of beauty related products around the world. Avon generates 98% of its revenue from cosmetics products. The company markets to women in more than 110 countries through more than Five millions independent sale representatives. Products categories are for instance skincare, fragrances, cosmetics, toiletries and also jewellery, watches, home products candles and toys. Moreover, 98% of the company sales are generated via direct sales. This sales approach had also been successful in the Asian and Latin America market. However, could not be for the American market. Strategic change According to Lynch (2006), define Strategic change is the pro-active management of change in organisations to achieve clearly identified strategic objectives. It may be undertaken using either prescriptive or emergent strategic approaches. Avons strategic change According to Johnson (2008) define in orders to diagnose the strategic change within organisation, it is important to consider the type of change that is required and also identify the type of change that has been adopted For over the last 124 years, being a global manufacturer and marketer of beauty related products, Avon has been adopted several changes and devoted to empower women by helping them to look beautiful. Avon major strategic changes are: Avon has invested the millions on research development to bring the innovative products and also focused on the increases advertisement for the sustainability of brand competitiveness. Avon eliminated the layers of Hierarchal management and redesigned the organisational structure to take the full advantage of Global sale Avon helped million of women across the world to build a better future for instance, provide the opportunities to become, entrepreneurs, representative or their own business owner. www.avon.com Organisational structure According to Carnall, (2007) ideal organisational structure is based on the right balance of information, resources and power to support the organisation objective. On geographically Avon operates business in six regions and has sales operation in 63 countries also products are distributed more than 52 countries in the world. Primarily Avon conducts business through direct selling and marketing by millions of Avon independent representative. Generally distributor purchased products directly from Avon on discounted price also Avon provide an opportunity to their representative to manage their business online including two way communication with Avon. Moreover in some countries for instance in USA, representatives can build their own web page for the sales of Avon Products. ORGANISATIONAL CULTURE According to Cameron, (2004), if current organisational culture does not support to achieve the organisation objectives or goals then organisation should involves themselves to change organisational cultural in order to achieve the organisational goals. However, since 1866 Avon organisational cultural is the most recognisable and considered the pioneered to sell the cosmetics products via using direct selling model and continue to maintain the same sales model since its foundation. Furthermore, 98% of revenue of the cosmetics product which is 6 billion dollar is come from direct selling model which impressed the other cosmetic companies to follow the direct sale model. Appendix 3 illustrates Avons organizational culture by using the cultural web model from Johnson and Scholes (2005). Stakeholder analysis According to Spicker (2008) state the stakeholder analysis will explain, how external and internal stakeholder influence on the organisation, and whats there needs and expectations, also what organisation need from each of them. Stakeholder analysis for Avon Stakeholder Interest Power Attitude Expectations/Needs Government Worldwide High High Mixed The acceptation to meet the all local, national and environmental laws of the country where they operate. Shareholders High High Positive Always take interest on maximization of shares value and dividend. Customers High Low Positive Take active interest in products and appearance. Communities Low Low Mixed Take interest in the respect of using natural resources, environmental issues and minimization of recycling and reuse practices. Suppliers Low Low Neutral Surety of contracts and payment. Take interest to add value to produce the products. Media Medium Medium Negative Always take interest to publish negative factors regarding harmful ingredients of cosmetics products. Executive team High High Positive Need to appreciate the whole organisation effort and give reward and reorganize the effort of representatives and employees worldwide. Employees High Low Positive Expect to achieve financial need and economical independence and support their happiness. The key environmental influences The PEST framework categories environmental influences into four main types: political, economic, social, technological. Political factors Avons products Inc business ranges cover many countries and it offers approaches to women who work in those countries to attained financial independence and good performance. In some countries, this move is regard as a way to advance the economic growth and create personal wealth. However, owing to the political differences among countries, it causes different influences on Avons corporate strategy. For instance, there is a Data Protection Act within the European Union which is aimed at protecting the privacy and safety of personal information. Different implementation dynamics of this policy in Europe countries will have different effects on Avons representatives calling door to door. Economic factors The key dominant factors that influence on customers for buying Avon products are their economical condition, inflation and interest rates. Simultaneously, Avon is also affected by currency fluctuations rates. Avon has employed about 5.3 million representatives and this leads to the free and actively cosmetics market to sell and buy Avons products. Social factors Consumers preferences and buying powers has changed by time to time and they are related to the local culture and personal working conditions. Countries in different climates and environmental circumstances would commend different cosmetic products for their citizens and this is a big concern for Avon to reach the goal that not only value and contain the similarities among different customers but also respect and create the differences of their needs. The top objective of Avon is to serve women all over the world with its products to reach their identical aspiration look their best at all places at all time. Technological factors The revolution and innovation of technology can influence the behavior of peoples. In the process of researching and product developing, cosmetic industry always put new products into a position of consequence. Avons strategy is to enhance the brand competitiveness through investing millions on the research and development of its products and increasing the advertisement of its products on media. . Managing change According to Mullins (2010) External environment can affect the organisational performance and organisation effective performance will depends on the interaction of its external environment. SWOT analysis Strength Avon products are sold in 110 countries around the world by five millions representatives. The products are sold in comparatively moderate prices. Additionally, features of personalization in customer service, creation in products design and satisfaction guarantee are the key factors which provide Avon a competitive advantage among the cosmetic industry. Furthermore Avon uses variety of electronic order systems to help representatives to increase the accuracy of business process and efficient business operations. The cost-effective sales strategies and the diversity of business model give Avon the ability to be the superior in cosmetic market. -Revenue growth stable From the companys record, it shows there was a stable and forceful growth in recent years which successful outstripped its key competitors. Avons revenue grew at a compounded annual growth rate (GAGR) of 10% during FY2006-2008 and this result a stable operation of the company. Dominant position provides more opportunities to attract new consumers Avon is one of four top brand leaders in cosmetic industry with brand value about $5,264 million in the top 100 global customer companies. The pioneered anti-aging skincare and perfume category induced Avon with wide business presence and leading position to attract new Opportunities Weakness Declining North American operation The declining trend of Avons North America business has slowed down in FY2008, but compared with FY2007, the total revenue of North America has still decreased 4.9 %, and Avons North America operation has contributed 23.3% to the total revenue of the company at last. Obviously, the top line was affected by the weak performance of this geographic segment. Opportunity Emerging markets The importance of emerging market such as Brazil with an annual growth of 20%, china which has valued approx $10,200 million with the enormous increase of population in future and the sudden growth of economy will offer a huge potential market for cosmetic industry .Furthermore The increasingly fierce competitions among cosmetic market, in order to capture the Brazilian market Avon has announced its plan to build the new distribution centre in brazil. Threats, In order to achieve the global recommendation in cosmetics business and gain the market share from emerging market, Avon has faced strong competition from its competitors for instance, LOreal, Unilever and Estee Lauder, Revlon and Procter Gamble. Conclusion This report offers an attempt to understand the major strategic change undergone by Avon Cosmetics Limited. Furthermore, report evaluated the effectiveness of the change in relation to Avons structure, culture. Being a global manufacturer and marketer of beauty and related products and a direct selling organisation, Avon was faced with several challenges in the external environment. The factors were: fierce competitions from multinational companies, consumer behaviour worldwide, government rules and regulations, technological and social background. It was found that the major strategic change does relate to the objectives of the organization and matches the organisations capability, including its structure, culture and politics. . References Cameron, Esther (2004) Making Sense of Change Management, London (UK), Kogan Page Limited Carnall, C A. (2007) Managing Change in Organisations. Harlow (UK), Financial Times Prentice Hall Johnson, G., Scholes, K., and Whittington, R. (2005) Exploring Corporate Strategy. ion. Harlow (UK): Financial Times Prentice Hall Johnson, Gerry (2008) Exploring Corporate Strategy, Harlow (UK), Financial Times Prentice Hall Lynch, Richard L (2006), corporate strategy, Harlow, England, FT/Prentice Hall Mullins, Laurie J (2010), Management and Organisational Behaviour, Harlow (UK), Financial Times Prentice Hall Spicker, Paul (2008) Social policy: themes and approaches, Bristol (UK), Financial Times Prentice Hall (2009).Avon Products, Inc. SWOT Analysis, Avon Products, Inc. SWOT Analysis,1. Retrieved from Business Source Premier Database Title: Change Management: A Critical Perspective Author(s): Simon Shurville Journal: International Journal of Managing Projects in Business Year: 2008 Volume: 1 Issue: 3 Start Page: 447

Structures and Maximizing Profits

Market structures play an important role in the economy today. The strategic and profit maximizing concepts are determined by the type of market structure. â€Å"Market structure is best defined as the organizational and other characteristics of a market. † (Riley, 2006) Competitive markets, monopolies, and oligopolies three of the four market structures in the economy. A competitive market or perfect competitive market is a market that has many buyers and sellers that do not influence prices. An example of a competitive market would be the street vendors selling bottled water along the sidewalk of a tourist attracted city.There are likely to be many vendors and buyers alike. Most notably the influence of each vendors input on price is low. The opposite of a competitive market is a monopoly. Monopolies affect the economy with considerable control over supply and price. The definition of monopoly is when the single seller of a product controls its market and does not allow comp etition. Local telephone, cable, and water, which are a natural monopoly, are examples of monopolies. Each of the companies has complete control for the distribution of their products or services in regards to supply and prices.Oligopolies are types of imperfect competition in the market structure. An oligopoly is where only a few sellers offer similar or identical products. Consider watching a basketball game at any level of competition. The athletic wear, footwear, and accessories worn by players are more than likely Nike, Addidas, or Reebok. These companies sell products that are similar and are for the same purpose, yet they are not identical. This type of market structure is also known as monopolistic competition. Oligopolies have considerable control over some of the prices of the products they sell.The characteristic of each market structure are important to understand the role of each structure. The determination of price in terms of maximizing profits is best understood by following the rules of production in a given market. Profit maximizing for a company or firm is utilized by using the company’s profit maximizing output level. This is when the marginal cost is the same as the product price. When a company offers products in new locations the marginal cost of the products of the new locations is a part of the marginal cost. That would be an example of a company opting to profit maximizes their production ased on change of total cost to accomplish more profit. Another consideration of a profit maximizing rule is when marginal cost equals price. A company attempting to profit will manage this rule closely to determine profitability. The average total cost of a good is the deciding factor in profit maximizing where marginal cost equals price and marginal cost increases. Monopolist market companies maximize profits by following the rule marginal revenue equals marginal cost. Marginal revenue is the change in total revenue that results from a chan ge in output.Companies that are the single producer of a product will want to maximize their total revenue. Costs of production are low therefore marginal revenue will equal cost. Competitive markets, monopolies, and oligopolies have profit maximizing rules that compare price to marginal revenue, marginal cost, and average total cost to determine profit gain. Each market consists of barriers of entry. One of the reasons for entry is the encouragement of successful gain of profits from other companies. Consider the local and national fast food hamburger restaurants.McDonalds began as one of the first restaurants of its type followed by chains such as Wendy’s and Burger King. That is an example of monopolist competition at its best. A discouragement or barrier for entry into certain market structures is through law and regulations. Creating anti-trust laws are detrimental to the formation of monopolies and their continued growth. There are three examples of business practices t hat present a dilemma for business entry. Resale price maintenance is the setting of a product price is contracted by the wholesaler for the retailer to sell at that given price.If the price is set from the wholesaler competition is suspended because of the price being uncontrolled by the retailer. The next business practice involves market power. A company that possesses market power has control of setting and changing prices without losing customers or altering the entire market. These companies are also referred to as price setters. â€Å"Firms with market power normally use that power to raise prices above the competition level. † (Mankiw) Predatory pricing is a debatable topic in terms of entry into a market and regulated policies. The third type of a business entry barrier is tying.Tying forces smaller businesses to strategize products based on the market power and price discrimination practices of manufacturers. There are four other barrier entry provisions for various markets. First, there is the denial of entry into a market or the lack of possible competition. Next, a company may own a key resource that provides exclusive rights to that market. Another point is when the government allows a single seller the right to produce or provide certain goods. Finally, the cost of production equals a single producer being more efficient versus the cost of production via a large number of producers.The characteristics, price determinations, and barriers of entry into competitive markets play essential roles in the economy. The characteristic of each market provides buyers and sellers to understand and make business decisions for the success of the economy. The economy as a whole benefits from how market structures abide by the rules and regulations of profit maximizing. References Mankiw, N. G. (2007). Principles of economics (4th Ed. ) Mason, OH: South-Western Cengage Learning. Riley, Geoff. September. 2006. A2 markets & Market systems. Market structures . Retrieved on January 22nd, 2012 from http://tutor2u. net/economics

Purchasing Power Parity

Ever wondered why the value of 1 American dollar is different from 1 Euro? The economic theory of  purchasing power parity (PPP) will help you understand why different currencies have different purchasing powers and how exchange rates are set.   What Purchasing Power Parity Is The Dictionary of Economics  defines purchasing power parity  (PPP) as a theory which states that the exchange rate between one currency and another is in equilibrium when their domestic purchasing powers at that rate of exchange are equivalent. Example of 1 for 1 Exchange Rate How does inflation in 2 countries affect the exchange rates between the 2  countries? Using this definition of purchasing power parity, we can show the link between inflation and exchange rates. To illustrate the link, lets imagine 2 fictional countries: Mikeland and Coffeeville. Suppose that on January 1st, 2004, the prices for every good in each country is identical. Thus, a football that costs 20 Mikeland Dollars in Mikeland costs 20 Coffeeville Pesos in Coffeeville. If purchasing  power parity holds, then 1 Mikeland Dollar must be worth 1 Coffeeville Peso. Otherwise, there is the chance of making a risk-free profit by buying footballs in one market and selling in the other. So here PPP requires a 1 for 1 exchange rate. Example of Different Exchange Rates Now lets suppose Coffeyville has a 50% inflation rate whereas Mikeland has no inflation whatsoever. If the inflation in Coffeeville impacts every good equally, then the price of footballs in Coffeeville will be 30 Coffeeville Pesos on January 1, 2005. Since there is zero inflation in Mikeland, the price of footballs will still be 20 Mikeland Dollars on Jan 1, 2005. If purchasing power parity holds and one cannot make money from buying footballs in one country and selling them in the other, then 30 Coffeeville Pesos must now be worth 20 Mikeland Dollars. If 30 Pesos 20 Dollars, then 1.5 Pesos must equal 1 Dollar. Thus the Peso-to-Dollar exchange rate is 1.5, meaning that it costs 1.5 Coffeeville Pesos to purchase 1 Mikeland Dollar on foreign exchange markets. Rates of Inflation and Currency Value If 2 countries have different rates of inflation, then the relative prices of goods in the 2 countries, such as footballs, will change. The relative price of goods is linked to the exchange rate through the theory of purchasing  power parity. As illustrated,  PPP tells us that if a country has a relatively high inflation rate, then the value of its currency should decline.

The Impact Of Federal Protection Services Staffing On...

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