Avon: An Essay On Industry And Internal Environment.

1. What forces in the industry environment might affect Avon’s choice of strategy?

2. What does an internal analysis tell us about this?

3. What business-level strategy should Avon pursue?

4. What other options does CEO McCoy have to try and fix the company?

5. What corporate strategy of diversification are they using? Related or unrelated? Explain

Company profile

Beauty industry of the 21st century is on rise due to the rise in number of users and with rise in the number of the demand large number of firms has arisen over the time who are focused to provide world class service to the user. Among large number of brands, Avon is one of the most renowned one who are known as the powerhouse in the beauty industry sale and most interestingly arguably the firm is the largest within the beauty industry. During 1886 visionary entrepreneur David H. McConnell had the extraordinary idea of empowering women with the opportunity to earn money in order to gain financial independence and from there Avon came into existence, which is known a brand that has its presence in more than 100 countries and possess more than six million representatives (Chaudhri & Jain, 2014). As per the latest statistics it can be seen that Avon has more than 6.2 million independent representative all over the operational regions who are making the firm grow year on year (OnlineSelfAppointments, 2018). product line of Avon not only include beauty products in addition to this there is fashion and home products that come with the well-recognized brand name such as Anew, Avon colour, Avon Naturals, Mark, Advance Techniques, Skin-So-Soft and Ticker AVP. Though the firm was established during 1886 with a view to empower women, however, it gradually become one of the main source of women employment and in the New York. During initial days Avon was not the brand which it is now, rather the founder of the business was a simple door to door paper seller in the city (Sippel, 2015). He failed to entice the customers to buy papers from him and thus he came up with the idea to provide free gifts with the paper and it worked. McConnell used to provide perfumes to his daily customers and the plan become so successful that he had to hire 13 representative who used to serve paper and perfumes for the McConnell. This set the launching ground of the Avon as and later in 1920 the brand was actually introduced with the daily products (Ujhelyi et al., 2018). In this regard it is important to mention that the name Avon was not came from the blue rather it was the name of the country side from where McConnell belonged and where William Shakespeare’s house was also located. During the next 9 year from 1920, the brand become so popular that Avon came as the firm that used to sell low cost daily usage products ranging from beauty products to tooth paste (Moura, 2015). Over the years of expansion has enhanced the business of Avon and vie the end of 1929 the brand had a well-established service chain within the 48 stated of US (Mohammadzadeh, 2015).

Vision

This report is aimed to examine the business performance of the Avon products and check the external as well as the internal analysis of the business. While doing so, the report is aimed to trace the forces in the industry environment that may affect the strategy choice of the firm and check the issues present within the operational framework of the firm. Next to this, the report will provide options to the CEO McCoy in order to fix the issues and portray the corporate strategy diversification so as to provide better scope to the firm regarding the performance during future. In order to conclude the report it will provide a summarised overview of the finding and deliver strategic recommendation for overall growth of the business.

Avon Product Inc. founded in 1886 by the David H. McConnell is one of the largest beauty product seller in the world. Though as per the market research done by the brand, it is often argued that Avon is the largest in the market, however, there is considerate amount of doubt regarding the same. Presently Avon operates in more than 100 countries and there are more than 6.2 million of representatives who said the firm to operate smoothly with different region of the world market (Breidenbach & Mille, 2016). Avon focus to remain a world brand in order to entice more amount of consumers and direct sales is the main marketing channel of the brand, however, sales through the catalogue, electronic marketing and bundle selling are the other sales strategies utilized by the firm. As the product of sales the brand has various beauty products such as apparel, cosmetics, fragrance and grooming products. In addition to this, the brand is well known for the sales of furnishing products as well as home good that makes it stand out from the crowd. Large amount of product diversification is one of the unique selling proposition of the brand, however, door to door selling through the direct selling channel is one of the main strategy of the brand to enhance their revenue through getting more number of customers (Garrison et al., 2016). Apart from being a successful brand in the beauty products, Avon is popular due to its ability to employ more number of employers other than any brand and additionally women empowering motive of the brand has enabled it to become one of the widely accepted brand around the world (Duggan et al., 2016). Out of the total number of representatives, Avon has large share of women representative that makes it one of the women based firm. Apart from this as per the latest statistics, subsidiaries of Avon has almost 50000 employees and out of which 6000 are operational in US and the other in different countries (Ranade et al., 2015). As per the annual report of 2017 it can be seen that there have been employment of 25,000 employees in different center of Avon’s production line that makes it one of the largest employer in US as well as in different operational zone of the firm (Bansal et al., 2015).

Mission

Avon is one of the largest beauty product producer in the world that has been operating since a century in the industry slowly transforming itself from cheap home products to the sophisticated beauty products. The brand is aimed to provide best in class products to their consumers so as to satisfy the demand of each consumers effectively (Rubinson, 2016). in addition to this it can be seen that the brand has well defined vision statement that define “To be the company that best understands and satisfies the product, service and self-fulfillment needs of women - globally.” it depicts that the brand wants to become the largest appeal producer in the coming years and develop such products that satisfy the demand of the each consumers with constant development of the production line.

Mission of a firm describes the necessity and the requirement of the existence of the firm and depicts the operation of the firm towards the society. As far as the mission statement of the Avon is concerned, it can be seen that it entails the beauty portfolio of the firm and the uniqueness within the operational framework of the firm. The brand depends upon the innovation, beauty and the value creation so as to entice as much customers as possible so as to enhance the revenue of the brand (Genh & Fang, 2016). Secondly it can be seen that the one of the main mission of Avon is to become the women’s favorite brand through the continuous exposure to the world market and development of products depending upon the market demand. Another mission of the brand is to become the premier direct selling brand so as to enhance the revenue while reduce the cost of operation. Without operating dedicated stores, it can be seen that the operational cost of the firm is low that enhance the firm’s profitability over the years (Azmi et al., 2016). In addition to this, it can be seen that the firm has largest numbers of representative after Amway and thus the firm wants to surpass the same within the coming decade making it one of the largest beauty product producing brand. Avon with a focus to become one of the best destination store of the women of different age group that offers convenience of multiple channel and brands and sourcing high quality shopping experience wants to make strong relationship with the customers. In addition to this, it can also been seen that Avon has mission to empower women around the world through employing them, producing product for them and serving them because the brand was initially developed with the view to empower women through providing them a scope to earn money (Nanda et al., 2016).

Objective and strategies of the brand

Original mission statement of the firm depicts that "We will build a unique portfolio of Beauty and related brands, striving to surpass our competitors in quality, innovation and value, and elevating our image to become the Beauty company most women turn to worldwide.” From this, it can be seen that the brand has aimed to develop their business over the coming years so as to provide better scope to enhance their performance and empower more number of women in different region of the world (Racolta-Paina & Luncasu, 2014). Through enhancement of the customer base and enhance of the direct sales channel the brand always focus on the operational performance enhancement of the same. Avon over the years has considered large number of strategies to entice different group of consumers and it has strengthen the brand’s mission statement that depicts it rely on the innovation, development and the change (Schueller & Romanowski, 2016). Thus from the mission point of view of the Avon, it can be seen that the firm has a well stablished mission statement that not only focus on the development of the revenue rather focus on the overall development of the operational and the structural and the substantial performance of the brand.  

As per the information 2011, it can be seen that the Avon Company has Sheri McCoy as its CEO and the other heads of the firm is operational under the same. Being the sub ordinate they operate under the CEO and answerable to them. Avon has Executive Vice President who is Chief Financial Officer and Chief Operating Officer (Annual reports, 2018). Next, there is Senior Vice President who are the Chief Ethics & Compliance Officer and General Counsel. There is a separate body within the Avon’s organizational structure for the Global President who looks after the business from the world perspective. Avon is well for their well-established Human Resources & Chief Human Resources Officer who looks after the human resources within the outside the firm in order to operate as per the local laws (People, 2018).

                                   

                                                  Figure 1: Organisational structure of Avon

                                                                 Source: (People, 2018)

Business environment around the world is becoming complex in nature over the years and it can be seen that large number of operating firm within the world arena has becoming it more complex. Apart from this ever changing customer demand has made the situation worse where the firms are trying hard to cope up with the customer demand with the effective business strategy (Sahota, 2014). Employees and the entrepreneur, both are required to make sure that the business must have well established customer service that can provide aid to the customers in case of any requirement arise. As it can be seen in case of the beautification industry, the market is highly competitive in nature where more than eight large firms operate. As the front line firms in the sector, Mary Kay, L’Oréal, Amway, P&G, Nivea can be considered against which Avon is competing in the market (Investor.avoncompany.com. 2018). However, being one of the larder beauty product producer in the market it need to have well established and effective market, business and supply chain strategy. Considering the case of the Avon, it can be seen that the firm during last one decade have been suffering from the strategic issues inside the operational framework of the firm as well from the external front as well. As it can be seen from the brand’s performance, there have been fall in the share price of the firm by 50% post the resignation of the Andrea Jung from the post of CEO during 2011 (Umemura & Slater, 2017). The firm is presently struggling to recover from the poor strategic management that has led it global bribery investigation and CEO changeover within a short span of time. Apart form this, it can be seen that frequent restricting of the brand has reduced the effectiveness of the brand. as it can be seen that the brand has gone through a restructuring during 2005, when 30% of managers were chopped resulting in 15 layers of management to chopped down to 8 that has resulted in fall in the efficiency of the management (Ismail, 2018). Post this, during 2009, the firm has went through another restructuring program that has cause demoralisation and uncertainty among the leadership of the firm. in other instance it can be seen that post the failed restrung program of 2009, the brand during next year brought in another ambitious five year plan with the name ‘Road to $20 billion’, however, surprising the firm failed here too causing cutting off fading for the plan in further instances (Ismail, 2018). Thus, from here it can be seen that the Avon has pure management misguidance and the issue is persistence since decades.

Avon is attempting to recoup from poor administration techniques that prompted a CEO changeover. Avon has been confronting heaps of issue because of the crisscross of position with the specialists. In December 2011, the Executive Chairman and CEO of Avon, Andrea June reported that she would advance down from her situation when her substitution was found. As indicated by the Fortune detailed that "The Company had amazed the Street, missing investigators' evaluations, and revealing that it would never again hit its income development and working edge focuses for 2011." (Howitt, 2012). Thus, the administration upset caused the beauty product producer’s image to decline. The offer cost had diminished by in excess of 50 percent and Avon confronted the risk of takeover by its rivals. A private held Coty, dominant part claimed by German holding organization Joh. A. Benckiser GmbH, made a spontaneous offer for Avon toward the finish of March 2012 for $10 billion (Ramli, 2017).

Under Jung administration, Avon had encountered awesome development and extension in the early long stretches of her execution. As in June 2004, Avon's stock cost rose to $46 per share and the benefit expanded from $287 million of every 1999 to $846 million of every 2004 (Aoun & Tournois, 2015). Also, Avon grasped global markets and non-US which contributed up to 70% of offers. The satisfaction was not long last because of the administration blunder of Jung and rising of potential contenders which seeking after Avon's client, for example, P&G. Numerous examiners censured that Jung was removing Avon from what it used to be (Sun, 2016). The organization did not have clear characterizes of vital vision which befuddled the representative of the organization's destinations. Amid Jung initiative years, Avon received a motto "The Company for Women," which blurred far from its long haul advertisement crusade "Ding Dong, Avon calling." The old slogan stressed the immediate offering procedure however Jung did not grasp the immediate offering system as she was taking Avon to new field which is retail. Avon came to the best and actualized a half-billion-dollar rebuilding, scaling down 30% of supervisors and chopping its 15 layers down to 8 (Wang, 2015). This rebuilding made a spinning entryway at Avon that left representatives unsettled and perplexity around Avon's key course. Further, Jung began taking a gander at acquisitions as an approach to restart development. Avon had gained Silda, a silver adornments coordinate merchant for $650 million (Griffin et al., 2016). It was a terrible move to get Silda and Avon needed to record add up to $263 million due to dove in the silver cost in the product advertise in 2011 (Olavarrieta et al., 2015). Additionally, Avon items in global markets, Brazil was likewise attempting to contend with a solid provincial brand, Natura. The issue happened because of poor administration in items bundling and conveyance. The items were conveyed late, arrange went unfilled and shipment to the agent postponed. This issue hauled Avon's deal to drop around 8 percent. The circumstance turns out to be more terrible in China when Avon was observed to be accountable for infringement of the Foreign Corrupt Practices Act (FCPA) (Sutter et al., 2015).

To sum up, obviously every one of those issues rise in light of administration stumble under the authority of Andrea Jung. Avon endured enormous misfortunes in both nearby and global markets and item mark declined. Number of investors weight Avon to have fast restoration of the organization. At last, Avon's board reported in December 2011 that Jung would venture down as CEO with two years contract to remain as official executive.

Avon went into China advertise in 1990 and the organization adequately sold its splendour items because of appeal in the mass market. Sadly, the Chinese government restricted the immediate offering in 1998 which constrained Avon to open the Beauty Boutique as required. Avon got a permit to proceed coordinate offering in China in 2006 and it ran its task by means of cross breed mode specifically keeping up offering in boutique in addition to coordinate offering through delegates. As indicated by Wahhabi (2014), a senior essayist of Fortune revealed that Jung had cozy association with the Chinese government officer which humors her business, Avon to offer the beauty items effectively in the confined commercial center (Mendini et al., 2018). In 2008 Jung got an informant that revealed her mystery influence to the Chinese government with a specific end goal to seek after an immediate offering in China. The assertion of infringement of Foreign Corrupt Practice Act (FCPA) which drove Avon to start an inward examination by SEC that cost extensive measure to the store. It was accounted that Avon spent more than $225 million on lawful expense and expert charge identified with the FCPA request and consistence surveys (OnlineSelfAppointments, 2018). The income dove from 35% to 145% in China activity and the notoriety of the Avon left at look down (Howitt, 2012). At last, Jung left Avon at wounded as it endured extraordinary budgetary lost to experience the interior examination and furthermore caused the organization items' image at awful notoriety. Concurring Avon yearly report 2012, organization's income diminished by 1% as the final quarter of 2012. In addition, Avon misfortune from proceeding with activity in the final quarter of 2012 was sum up to $160 million (Kamarohim et al., 2016).

At the point when Seri McCoy, the new CEO of Avon, assumed control over the position, numerous public perspectives emerged as though she is the correct counterpart for the test? Indeed, the organization Avon had endured serious misfortunes under the initiative of previous CEO, Andrea Jung, subsequently Seri McCoy came to settle the organization is an awesome test for her. McCoy was really attempting to turnaround the business by cutting back and forsaking some of outside business sectors to cut the expenses. The rebuilding design activity with new corporate procedure which is transnational system to keep up the institutionalization of items and to upgrade the nearby responsiveness would assist Avon with enhancing deals and execution. At this brief timeframe Avon would not have the capacity to recuperate promptly since the cost-cutting activity by McCoy would have numerous things to be re-established. For moment, organization promotion crusade and taking part in internet business caused spending for $125 million to overhaul the product (Investir.avoncompany.com, 2018). Thus, McCoy is experiencing serious difficulties to re-establish the organization maintainability. Hrebiniak included that McCoy needs a few times to turnaround the business since she has no involvement in coordinate offering and it could be enormous test after the chaos made by Jung's dubious vital administration of the organization. Absolutely, McCoy is confronting the overwhelming arrangements of difficulties keeping in mind the end goal to re-establish Avon to what it used to be (Sippel, 2015).

In order to perform an external environment analysis of the Avon, in this section of the report Porter’s Five Force analysis will be used. Though this model, the report will be able to portray the bargaining power of the firm in the market with their product and the control of the buyers on the purchasing of the same will be analysed.

Determining the threats from the new entrants is essential factor because it can threaten the existence of the present market player. New entrants are threat for the existing compactors because the new entrant may have potential to become the market leader if it is allowed to enter into the market and capture substantial amount of market share from the existing firms. Moreover, it can force the existing firm to exit the market through effective pricing strategy and good strategic management. Contrary to this, if the threat from the new entrant can be judged, then it will allow the producers to focus on their performance and enhance the same leading to better productivity of the firm (Breidenbach & Mille, 2016).

Beauty product and cosmetic market is one of the highly competitive market where limited number of firms operate and entrance of one new firm will lead to fall in the market share of the present market players. Any such industry is vulnerable in front of the entrant and when it comes to the cosmetics and beauty product market, then the level of threat for the same become aggravated by a large scale. well stablished market players has well developed retail establishment and the it help them to achieve economies of scale, however, this market has lucrative profit preposition and the well established customer demand that attract a lot of new entrant to enter the market.

Though the entrance of the new market player in the beauty and cosmetic product market brings in innovation, development of the present products, yet it put a large amount of pressure on the production line of the present market. Thus, in case of the Avon, if there is new entrant in the market, then it will reduce the market share of the Avon and lead it to lose revenue (Bansal et al., 2016). On the other hand, it will force the firm to enhance their product development and bring in new innovative product line that can entice the customers positively. It is true that, new product will not only bring in new customers for the Avon, additionally it will aid the firm to retain their customer rather than losing it to the new entrant.  

Substitution of the product is one of the main reason for the failure of the firms and in case of the firms, it can be seen that a shift in the demand of the product from the customer can cause a high amount of impact on the performance, profitability of the firm. This force is threating for the brands like Avon, where the buyers can swiftly and easily shift from one product to another one in case of attractive product specification, prices or in case of better quality too (Ranade et al., 2015). Brand loyalty, brand preference in the market of the cosmetics is very limited that makes the market one of the highly volatile market. substitute of the products in the cosmetics and beauty product market can come in the form of the product specification, price, product quality, variety of products available from the brand and the allied services and this determine the scope and probable magnitude of the product substitution in case of the beauty and cosmetic product.

Considering the scale and the probability of the product change in the market where Avon operate, it can be state that threat of the product substitute is very high and the wide availability of the alternative products in the market had made it more prominent in nature. Competitors like Olay, Mary Kay, P&G and others possess a high threat of substitution in front of the Avon because these firms also have well developed product line that can serve for the different requirement of different age group of user. On the other hand, price being one of the main instrument to entice the market demand, it can be seen that firm present in the market has the potential to snatch consumers from the Avon making the threat of substitution high in front of the brand high. However, it is also true that Avon also possess threat to the other brand as well with the effective market range of products and innovative and efficient product line.

Bargaining power of the supplier determines the market control of a brand and if it’s considerably high, then it can be said that the market is under control of the said brand. There are various factors that determine the bargaining power of the suppliers and when it comes to the beauty and cosmetic product, then number of market players is one of the crucial factors that alter the market power of the brands. In presence of the less number of suppliers, it can be seen that bargaining power of the suppliers is higher and if the large number is comparatively higher, then the bargaining power of the same become lower (Parsi, 2016). In case of the beauty and the cosmetic products, it can be seen that the market is oligopoly in nature and the price rivalry is high among the market players making the bargaining power low. Almost all the firms of the cosmetic and beauty product are dependent upon the large number of suppliers and market product is diverse in nature that depicts less amount of bargaining power of the brand in the market.

When it comes to the Avon, then it can be seen that the firm tackle with the bargaining power of the supplier through dedicated suppliers and the effective pricing policy that deepens the trust and the performance of the firm. One of the main lesson learnt by the firm from the brands like Walmart that product diversification is important for the brand in order to have better bargaining power because it brings in different customers to the brand allowing the overall revenue to go higher. In addition to this with the implementation of the Strategic Sourcing Initiative (SSI) from the brand has aided it to shift from its dependence from the domestic supplier to the foreign supplier who can supply low price products to the brand which are same in quality. Through this type of the effective and innovative ideas, it can be seen that the brand could have enjoyed large amount bargaining power, however it is low due to the present market structure of the beauty and cosmetic industry.

Buyers are the end user of the product developed by the different brand and it can be seen that bargaining power of the buyers is one of the determinant force of the business. If there is higher number of buyers, then the bargaining power will be less, however, if the number of buyer is low, then it will showcase higher bargaining power. Considering the beauty and the cosmetic market, it can be seen that the market has large number of population who are willing to purchase these products that reduce the bargaining power of the same (Ashraf et al., 2015). However, in this regard it is also important to remember that, availability of the product substation, price discrimination, and product variation playas crucial role to determine the overall level of the buyers bargaining power.

as it can be seen from the case of Avon there are large number of buyers, however, there is high production substitution, threat from new entrant is moderate and the price of the product like on the higher side, this the bargaining power of the firm is higher.

Considering the number of firms operating in the beauty and cosmetic product line, there is large amount of players and the market is highly competitive in nature. Every firm wants to enjoy market share of the other. Numerous contenders existing in the beauty product business causes the contention high and this contention exhibit both in the local as well as the foreign markets. Aggressive competition increments when a firm is tested by a contender's activities or when an organization perceives a chance to enhance its market position (Parsi, 2016). The grouping of organizations making beauty products is solid particularly in nations where there is a high conflict among existing firms. Commonly, firms look for to separate their items from rival's contributions in ways in which the organizations have an upper hand, for example, item separation. Avon Products, Inc. works in an exceptionally aggressive Personal Products industry.

Avon business development rate is low. This is expected to the various contenders, for example, Argonne and Mary Kay to enjoy large amount of market share; Thus, as far as the external analysis is concerned, it can be seen that there is large amount of threat in front of the firm from the product substitution, low bargaining power, where as consumers possess moderate amount of bargaining power.

In order to trace the internal environmental analysis of the Avon group this report will utilise the SWOT analysis that will showcase the Strength, Weakness, Opportunity and Threat of the firm (Ogasavara et al., 2016). In order trace the suitable strategy mix that Avon should pursue can be strafed through the value chain analysis of the firm. It will depict the effective strategies that the firm need to consider for the future growth.

Avon being one of the oldest cosmetics and beauty product producer is well known among the population. In order to have exposure the brand has maintained strong brand image and it is still one of the largest direct selling firm in the world that has provided it callas operational strategy. Board of Directors of the Avon are experienced as well that has enabled the firm to operate as per the requirement of the customer.

Lack of innovative technologies is one of the main weakness of the firm. As it can be seen from the operational strategy of the firm for the last two decades, it is focused on the high end beauty products which are not consumable for all reducing the revenue of the firm by a large amount. Poor focusing on the product line has impacted on the performance of the firm and now it has revenue figure just above 5 billion dollars (Engvall, 2015).

There is ample scope in front of the Avon group to enhance their performance in the coming years mitigating the strategic issues faced by the branch during the recent years. One of the main opportunity in front of the firm is to embrace technological advantage that will keep Avon one step ahead of its rivals. New product innovation is another great opportunity in front of the firm and it would be better if the firm goes for the green products which are organic in nature and free of chemical providing boost to the Unique Selling Proposition of the firm.

Avon operate in the beauty and cosmetics industry where large amount of threat lie within the both internal as well as the external environment of the firm. As it can be seen that brand operates depending upon the direct selling strategy and during the 21^st century it is becoming obsolete. People is running out of time and they simply do not care to listen about the features of a beauty products (Ostapenko, 2015). Thus, there is a threat for the firm if it continues with the same principal.

	STRENGTH	WEAKNESS
	· Good brand image · One of the largest firm with direct selling strategy · Experience Board of Directors	· There is lack of innovation within firm from the technological front · Product line is not efficient · Focus is constraint to producing high end beauty product only
OPPORTUNITIES	SO	WO
· Embrace technology and allow the firm to grow · Eco friendly and new product innovation	· Producing a strong image of the brand with the help of innovative line of product · Maximising direct selling by the mean of intendent and other modern technologies so as to enhance the revenue of the firm	· Enhance innovative product through utilising technological advancement · Enhance awareness of efforts in order to enhance the revenue of the firm
THREATS	ST	WT
1. Competitive environment of operation 2. Product substitution	· Producing competitive advantage in the market with strong brand image and prioritising on direct selling · Experienced board of directs need to take effective decision with the help of technological tools	· Produce unique and innovative product with the help of competitive advantage · Introducing new line of product while overlooking the problem within the present line of production

                               

Avon though stores all of its outputs in firms, yet it do not possess retail outlasts and depends upon the direct selling rather. Warehouse and the distribution centre are there only to act as the distribution centre of the products which will be dispatched to the agents or to the retail shops. Thus, in case of infrastructure, the firm suffers a lot and newly emerged case of bribery has forced the brand to close its operation in china (Yang et al., 2017).

Though Avon was introduced century ago with the aim to empower woman, however, during the recent days, it has been observed that the firm has failed to do the same. Over the last two decade, due to the bribery and the fall in revenue, there has been considerable amount of debate regarding the maintenance of the human rights. More than 1500 employee swore reduced to adjust the cost expenditure and 3 top executives were dismissed in order to overcome the shortcoming of the firm (Emmett & Jones, 2015).

Though Avon is one of the oldest operating firm in the beauty and cosmetics production industry, yet, it can be seen that the firm sufficiently lags in case of the technological development. It is highly recommended for the firm to move from the present direct selling strategy to e-marketing strategy so as to bring in efficiency in sales as well as enhance sales figure too by the means of higher exposure.

Being alleged by the bribery during the recent years in china so as to allow the firm to operate in that region, it can be argued that the firm is nowhere to procure other firms and enhance its business different regions of operations.

In this section primary activities of Avon will be depicted which are divided into distinct activities on the particular industry.

With the effective position of the store housed Avon focus on minimising the shipping time of products and in addition to this Just-in-time (JIT) has been developed so as to enhance the perform the inbound logistics (Johnson et al., 2008).

Avon is based on the direct sales strategy and it does not have any dedicated stores. Thus, it focus on effective plant operation in order to minimise the cost of operation by efficient workflow design and efficient plant layout.

In order to make the delivery quick and effective towards the store and the representative, outbound logistics is focused to transport goods at lowest time while minimising the damage. In addition to this, goods are distributed in lot sizes so as to minimise the cost of transportation from the warehouse to stores and representative (Luthans & Doh, 2018).

One of the strategic sector where Avon excel is marketing and sales. Depending upon the direct sales strategy and extensive advertising, the brand reach to most of its customers and generate prospect buyers. Through proper identification of the targeted audience the brand entice the overall market demand through effective advertising strategies and sales representative are trained in such a way that they can influence the consumers so as to the buy beauty products from Avon (Baker, 2014). Not only through media marketing, in addition to this, Avon is slowly utilising the social network as well as the online marketing to reach large number of buyers around the world.

Avon is focused to provide their customers best in class because it is one of the ways to stand out from the crowd. In addition to this, it can also been seen that experienced team of executive is available 24 x 7 to provide support service to the end user as well as the retailers and direct sales agent.

As per the Porter’s finding, there are three generic business strategy that a firm can utilise in order to overcome the advantages of the rivals through gaining competitive advantage. These strategies are gaining industry wide product differentiation, cost leadership within the industry, Focus on particular segment where the firm lags compared to its peers.

                                   

                                                            Source: (Dess et al., 2014)

From the porter’s five force model and the SWOT analysis, it can be seen that Avon has limited amount of product differentiation which is only focused to the high end users who are agreed to pay premium price for the premium quality product produced by the firm. Contrary to this, peers firm of Avon has established wide range of products for different consumers. Thus, it is primary objective of the Avon to establish differentiated product line that attract different consumers (Stewart et al., 2018). In addition to this, establishing green line of products which are organic in nature is required to bring in that can enhance the performance of the brand.

Gaining cost leadership is essential for a brand to success in its business endeavour. It will enhance the acceptance of the brand to wide range of consumer around the different operating zone. Moreover, it will guide the firm to gain sustainability to enhance revenue and higher number of sales. As the strategy to gain cost leadership, the firm need to look into the cost burden of the firm and reduce the price of the factors where it induce much amount of cost.

Segment focus is required for the firm in order have better economic performance as well as financial performance. As of now, the firm need to bring in transparency in its operation a supply chain in order to overcome the issues of bribery (Ginter et al., 2018). Moreover, it is required by the firm need to focus on its technological front so as to bring in up gradation of specification of the products and in corporate green line of product for better environmental sustainability as well as future operational sustainability of the firm.

Considering the given scenario of the firm and the CEO McCoy following options need to be fixed:

Enhanced market penetration in different areas of the world is the ultimate option in front of the Avon CEO McCoy because it can enhance the deteriorating performance of the firm. as it can be seen from the given case study is that the revenue figures of the firm is deteriorating since the last decades, higher market penetration will allow the firm to operate with better exposure leading to rise in the revenue for the firm. on the other, exposure through market penetration will allow the firm to have better scope to enhance the share price because, post China bribery case, share price of the firm has been slashed to half causing fall in the earning of the stakeholders as well as the relation between the firm and stakeholder has also got reduced.

Most of the competitive brands of the Avon has introduced their line of eco friendly and organic product. Thus, it is of high importance to bring in eco friendly product and the organic line of product that will allow the firm to gain much amount of market share who are concerned about the products being used. Demand for the green products from the Avon is very viable because distributors as well as consumers are becoming more focused about the protection of the environment through creating demand for the products which are developed by the green theme of the brand that force the CEO of the brand to provide on the same with immediate effect. These are effective, free of chemicals and organic in nature thus could aid the firm to enhance their operation through higher number of sales.

As the corporate strategy of diversification of the Avon it can be seen from the case study that the brand depends upon the three strategic diversification which are direct selling, women empowerment and expansion of the firm in other industries. First two of the strategies of the firm represent the concentric diversification strategy, where as the next on represent the conglomerate diversification (Yang, 2017). Through the direct sales channel and women empowerment model it has enhanced the employment as well as scaled up the sales value of the brand. Thus bundling has allowed the firm to operate as per the requirement of the market and lead to rise in the revenue of the same.

On the other hand, with the rise in the expansion in different region around the world, the brand has tried to focus on the product enhancement and the rise in their revenue through capturing foreign market and controlling the cosmetic industry on the foreign land. Additionally, it also has controlled the market by the purchasing out the foreign firms who are comparably small and has limited market share in order to diversify their business strategy.

Conclusion:

From the above discussion it has been found that Avon is one of the oldest cosmetics and fashion products producer in the world. The firm has recently faced various slugs in its operation due to the strategic management issues, however, presently the firm is trying hard to become where it was three decade ago. From the external and internal environmental analysis of the firm, it can be seen that it has large scope to enhance its business in future and with effective strategic management it can earn much higher than as of now.

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