The chief purpose of this study is to look into an administration that is undergoing major strategic alteration. First the study will depict the alteration that has been adopted. It will so measure the effectivity of the alteration scheme in footings of the administration ‘s construction, civilization and political relations. Finally the study will urge and measure an incorporate alteration scheme based on the three facets.
2.0 A background of the administration
The administration that has been selected is Avon Cosmetics Limited. Avon is a planetary maker and seller of beauty and related merchandises. The company markets to adult females in more than 100 states through more than 5 million independent Avon gross revenues representatives. Product classs include: Beauty, which consists of cosmetics, aromas, skin care and toilet articless ; Beauty Plus, which consists of manner jewelry, tickers, etc and Beyond Beauty, which consists of place merchandises, gift and cosmetic merchandises, tapers and playthings. ( Avon, 2008 and Keynote, 2007 ) Avon ‘s company profile has been explored further in appendix 1
2.1 The significances and theories of strategic alteration
Harmonizing to Lynch ( 2000, p921 ) , “ Strategic alteration is the pro-active direction of alteration in administrations to accomplish clearly identified strategic aims. It may be undertaken utilizing either normative or emergent strategic attacks ” . On the other manus Mintzberg et Al. ( 2003 ) give five definitions of ‘strategy ‘ and they are: a program, a gambit, a form, a place and a position. It somehow agrees with Hayes ( 2002, p58 ) who states that “ a alteration scheme is basically a program to do things go on. It needs to turn to all the things that have to be done to convey about the alteration. ” However De Wit and Meyer ( 2004, cited in Hughes, 2006 ) emphasise that non all alteration is strategic and that much is operational. Operational alterations are necessary to keep the concern and organisational systems, whereas strategic alterations are directed at regenerating them.
2.2 Avon ‘s strategic alteration
Avon ‘s vision statement is to:
“ To be the company that best understands and satisfies the merchandise service and self-fulfilment demands of adult females – globally ”
Harmonizing to Mintel ( 2006 ) , the make-up market is turning fast in footings of manner tendencies and has attracted many new trade names over the past 10 old ages. The decorative industry is really moneymaking, advanced and fast paced industry. Therefore Avon has to watch the economic system and rely on their trade names. Bing a planetary maker and seller of beauty and related merchandises, Avon has been through several alterations since it was founded in 1886. For over 120 old ages, Avon has been devoted to authorising adult females by assisting them to look good and experience beautiful. The major strategic alteration is to:
a-? Commit on trade name fight by puting 1000000s in research and development on merchandise invention and increase advertisement ;
a-? Re-design the organisational construction to extinguish beds of direction in order to take full advantage of the planetary graduated table and size ; and
a-? Build a better tomorrow for adult females across the universe both through representative net incomes and assisting 1000000s of adult females to go enterprisers and run their ain concern. ( Avon, 2008 ) ( MultiChannel Marketing, 2007 )
It is suggested by Johnson and Scholes ( 2002 ) that we need to understand the magnitude of the challenge faced in seeking to consequence strategic alteration. In order to name the strategic alteration within Avon, it is utile to see the type of alteration that is required. In order to place the type of alteration that has been adopted within Avon, we will utilize the theoretical account from Balogun and Hailey ( 1999, cited in Johnson and Scholes, 2002, p536, exhibit 11.2 ) . Looking at Avon ‘s strategic alteration, it is rather clear that the nature of alteration will be incremental as it will construct on the accomplishments, modus operandis and beliefs of those in the organisation and the range of alteration will be realignment as it will happen within the organisational beliefs and premises. The type of strategic alteration here will be version as it will be accommodated within the current paradigm.
Johnson et Al. ( 2005 ) travel to state that we need to see the wider context in which alteration is to happen by understanding the organisational construction, civilization, political relations and the specific forces that will barricade and ease the alteration procedure. However there are other contextual features that besides need to be considered before shiping on a programme of alteration. They are: saving, diverseness, capableness, capacity, preparedness and power.
2.3 Organizational construction
The effectivity of alteration attempts is mostly determined on how an organisation is structured. In a universe that is perpetually altering, an administration ‘s design must back up the thought that the execution and re-implementation of a scheme is a uninterrupted procedure. However, a figure of traditional organisational design characteristics tend to deter alteration. ( Lawler and Worley, 2006 ) Harmonizing to Carnall ( 1999 ) , an ideal organisation construction will supply the right balance of information, power and resources to back up the assorted activities within the organisation in accomplishing its aims.
Appendix 2 shows the organizational construction of Avon and depict how it influences the individuality and corporate image of the organisation. It is clearly apparent that Avon has been constructing bonds with adult females around the universe by offering them a dynamic net incomes chance to accomplish economic independency, carry through their fiscal ends and transform their lives. As a top planetary trade name and universe leader in beauty and related merchandises, Avon continues to revolutionise the beauty industry by establishing advanced, first-to-market merchandises utilizing Avon-patented engineering. It besides allows Avon a more direct response from consumers and allows them to sell their merchandises without the expensive and drawn-out procedure of acquiring it into traditional channels. Direct selling/marketing nowadayss many benefits to consumers including avoiding fusss of traffic congestion, parking, deficiency of clip, deficit of retail aid and waiting at check-out procedures. ( Wilkinson et al. 2007 ) Consumers can shop through Avon booklets in the comfort of their place.
2.4 Organizational civilization
Merely as the construction of Avon should suit the peculiar scheme it wishes to follow, so should its civilization. An administration ‘s civilization is its deeply rooted traditions, values and beliefs. ( Stacey, 2003 ) Bradt ( 2008 ) states that a winning company civilization is simple and emphasizes three countries: functioning the client, turning the concern, and developing employees. Whereas a losing civilization is confounding and complex, topographic points client demands behind those of the company, and emphasizes personal addition over squad accomplishment. Sopow ( 2007 ) goes on to state that there are high degrees of misgivings, hapless communicating and strong opposition if an administration ‘s civilization is unhealthy.
Appendix 3 illustrates Avon ‘s organisational civilization by utilizing the cultural web theoretical account from Johnson and Scholes ( 2002, p232, fig 5.8 ) . It is suggested by Cameron and Green ( 2004 ) that organisations should merely affect themselves in civilization alteration if the current civilization does non adequately back up the accomplishment of strategic aims. Avon ‘s organisational civilization in appendix 3 clearly indicates that the strategic alteration will be accommodated within the current paradigm and will happen within Avon ‘s beliefs and premises.
2.5 Organizational Politicss
In order to look into the strategic alteration, it might be utile to see corporations as political organisations and see scheme and alteration as portion of internal political relations within Avon. ( Diedenbach, 2007 ) Johnson et Al. ( 2005 ) states that there are two positions of political relations, one being healthy and the other one being unhealthy. While political relations ensures that alteration is questioned and assessed, it besides gets out of manus by demoing a deficiency of committedness to a common vision and aims. Morgan ( 1986, cited in Cameron and Green, 2004, p89 ) remarks that “ Many people hold the belief that concern and political relations should be kept apart ” . However he contradicts this belief and this has been explored further in appendix 4.
The most cardinal inquiry from appendix 4 is ‘whom should Avon be at that place for to function? ( Johnson et al. 2005 ) Harmonizing to Joyce ( 1999 ) , a stakeholder analysis requires you to place the stakeholders, how they influence the organisation, what the organisation needs from each stakeholder and the stakeholder ‘s demands and outlooks. Through the construct of organizational stakeholders, this inquiry has been addressed in appendix 5.
The analysis confirms the statement made by Andrea Jung, Avon ‘s Chairman and CEO
“ Avon ‘s faultless repute is built upon a proud heritage of making good by making right. For more than a century, we have been puting the really highest illustration of unity and moralss in all of our relationships — with our stockholders, associates and Representatives ; our providers and rivals ; authoritiess and the populace. Our values and rules are the bedrock non merely of Avon ‘s past – but of its future. “
Avon was the first company to publicize, “ non tested on animate beings ” back in 1989
3.0 Evaluation of the proposed scheme
The study has so far evaluated the effectivity of the alteration scheme in footings of Avon ‘s organisational construction, civilization and political relations. It was found that the major strategic alteration does associate to the aims of the organisation and matches the administrations ‘s capableness, including its construction, civilization and political relations.
However, being a planetary maker and seller of beauty and related merchandises and a direct merchandising administration, Avon is faced with several challenges. Harmonizing to Wilkinson et Al. ( 2007 ) , direct merchandising activities vary reasonably significantly from state to state. From appendix 1 and 2, we have established that Avon ‘s concerns are based on geographical operations in six parts and functioning consumers in good over 100 states. There are many factors to be considered and this involves understanding the market section, competition, consumer behavior, authorities regulations and ordinances, technological and societal background. All of this is really the external environment, which will either impel or hold the growing of concern and so important consideration demands to be given to them.
Some of the competitory force per unit areas that have been identified by Hill ( 2002 ) are cost decreases and local reactivity. In footings of local reactivity, force per unit areas arise from a figure of beginnings including: differences in consumer gustatory sensations and penchants, differences in substructure and traditional patterns, differences in distribution channels and host authorities demands. Goll et Al. ( 2007 ) travel on to state that organisations must expect and react to environmental alterations to guarantee fight and, finally, endurance. The basic premises underlying much of the strategic direction is that successful houses change their schemes to achieve a better tantrum with the environment.
3.1 The cardinal environmental influences
Plague analysis is a utile strategic tool for explicating concern schemes, selling planning, concern and merchandise development. It ensures that the organisation ‘s public presentation is aligned positively with the external forces of alteration that could impact concern environment. ( Report Buyer, 2008 ) Harmonizing to Strickland and Thompson ( 1996 ) , houses can non straight command these external factors. It is stated by Johnson and Scholes ( 2002 ) that environmental forces which will be particularly of import for one organisation may non be of import for another. For illustration a retail merchant may merely be concerned with local client gustatory sensations and behavior, whereas a planetary company such as Avon will be chiefly concerned with authorities dealingss and understanding future policies of single state authoritiess with different political systems. Other factors will be the ability to vie with transnational challengers
The PEST model categorises environmental influences into four chief types: political, economic, societal, technological. The PEST analysis for Avon is discussed farther in appendix 6. From the treatment, it is now possible to place a figure forces for alteration and forces against alteration. Carnall ( 1999 ) suggests that when major alterations are in readying, or are being implemented, it makes sense to fix for, and manage alteration in the more professional ways. Lewin ( 1951, cited in Hayes, 2002 ) developed one of the ways called Force Field Analysis. Harmonizing to Johnson et Al. ( 2005 ) , a force field analysis provides a position of alteration jobs that need to be tackled, by placing forces for and against alteration. Carnall ( 1999 ) suggests that Force Field analysis returns in four phases.
Avon ‘s major scheme alteration has been used to carry on a Force field analysis in four phases. See appendix 7 for phases 1 and 2. The cardinal points will now be used to continue to present 3 and 4.
3.2 Managing scheme alteration
Lewin ( 1951 ) argued that alteration can merely be efficaciously implemented when the forces driving alteration exceed the forces keeping alteration. Phase 3 underlines the forces that are the most of import, physiques on the alteration drivers and list actions to cut down the strengths of the restraining forces. In order to make up one’s mind how Avon ‘s strategic alteration can be implemented, the strengths of the forces will be analysed by cut downing the strengths of the forces opposing the alteration and increasing the forces forcing the alteration. A SWOT analysis will besides be helpful as Avon will be able to utilize the top rated chances, exploit the top-rated strengths, counter the top-rated menaces and rectify the top-rated failings. Wickham ( 2000 ) states that, a SWOT analysis is an audit of the impact of environmental tendencies on the concern and its external capablenesss in footings of reacting to them. Nutt and Backoff ( 1992, cited in Joyce, 1999 ) recommends uniting SWOT analysis with a strategic issue docket to place possible strategic actions. A SWOT analysis for Avon has been explored further in appendix 8.
It is stated by Mullins ( 2002 ) that an organisation can merely execute efficaciously through interactions with the broader external environment. The force field analysis from appendix 7 resulted in a impulsive alteration force of 17 and a keeping alteration force of 21. These figures indicate that despite there being many inducements for a major scheme alteration within Avon, there are somewhat more factors keeping the scheme alteration.
Those single forces that scored highest ( with a mark of 5 ) will now be discussed in greater item below in order to better measure their impacts. The SWOT analysis in appendix 8 will assist to increase the forces forcing the alteration and cut down the strengths the forces opposing the alteration.
3.3 Key drive forces for alteration
The degree of authorities intercession worldwide
Having a presence in good over 100 states, Avon is capable to foreign Torahs, regulations, ordinances or policies such as limitations on trade, import and export licence demands, duties and revenue enhancements. ( Avon, 2008 ) For illustration in China, the authorities ‘s determination to censor door-to-door merchandising, as portion of an attempt to check down on pyramid strategies, presented a menace. ( Euromonitor, 2006 ) However in March 2006, the Chinese authorities granted a direct selling-selling license. Since so Avon has recruited 300,000 door-to-door representatives in China, therefore bettering the economic system of the state in footings of unemployment. Avon must go on to spread out in other developing states to turn out how influential the Avon direct gross revenues method can be and how it can transform the lives of adult females and accomplish economic independency.
Lucrative, advanced and fast paced industry
In the decorative industry, consumers ‘ demands and demands change overtime. In order to fulfill the consumers, cosmetics houses are forced to introduce a new merchandise, replace a merchandise, or upgrade its merchandises to run into the demands of consumers at all degrees. ( Akers and Porter, 1995 cited in Kumar et Al. 2006 ) Through their research and development squad in New York, Avon are developing new merchandises and concentrating on new engineering and merchandise invention to present first-to-market merchandises. ( Avon, 2008 ) Although Avon ‘s main selling tool is its booklet, it should now spread out its planetary advertisement presence and pass on a more incorporate trade name image throughout its international markets
3.4 Key restraining forces for alteration
Cultural differences worldwide
Although adult females all over the universe have similar aspirations when it comes to beauty merchandises and portion the same desire to look their best, the challenge is to convey out otherwise formulated merchandises to accommodate different teguments colorss and textures. Another factor, clime, should be considered when comparing regional penchants for cosmetics merchandises. For illustration talc is used in hot states to alleviate sweat, while in colder parts such as Russia and Eastern Europe it hardly gets a expression in. ( Matthews, 2006 ) .
Merchandise picks by state are besides determined by consumersA? ability to pay. Avon should still go on to work the enormous growing chances in other developing states. Matthews ( 2006 ) states that large transnational companies are utilizing consumer educational runs as a cardinal agencies of advancing growing in states characterized by low disposable income.
For Avon with operations in over 100 states a inquiry of considerable importance is “ how does a society ‘s civilization affect workplace values ” ? The most celebrated survey of how civilization relates to values in the workplace was undertaken by Geert Hofstede. He used four dimensions and one of them was maleness versus muliebrity. ( Hill, 2002 ) . This dimension looks at the relationship between gender and work functions. In the instance of Avon, feminine civilizations sex functions are aggressively differentiated and traditional feminine values, such as accomplishment and the exercising of power determined cultural ideals. Avon must see the civilizations of states that are male dominant.
Forging activity are Eastern Europe and China
“ A imitative point is every bit good as hard currency. Forgers are non merely a few cats in a caducous commixture pick and pouring them into a Sn. They are linked to organised offense, money laundering and in some instances, even panic groups. And they ever find the weakest path to the market ” . ( www.cosmeticsdesign-europe.com ) Harmonizing to keynote ( 2007 ) , the chief hubs of forging activity are Eastern Europe and China. As Avon operates in these two parts, these keeping forces can be reduced by establishing anti-counterfeit thrusts in both parts. It has besides been suggested by Eyre ( 2007 ) that heat-shrink labels with incorporate hologramsA could assist the cosmetics industry in the battle against forging and counterfeit.
This study offers an effort to understand the major strategic alteration undergone by Avon Cosmetics Limited. A figure of decisions are apparent.
First the study evaluated the effectivity of the alteration in relation to Avon ‘s construction, civilization and political relations. It was found that the major strategic alteration does associate to the aims of the organisation and matches the administrations ‘s capableness, including its construction, civilization and political relations.
However, being a planetary maker and seller of beauty and related merchandises and a direct merchandising administration, Avon was faced with several challenges in the external environment. The factors were: ferocious competitions from transnational companies, consumer behavior worldwide, authorities regulations and ordinances, technological and societal background.
Finally, in order to pull off the strategic alteration efficaciously, the study attempted to increase the two chief forces forcing the alteration and cut down the strengths of the two chief forces opposing the alteration.
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Appendix 1- Avon ‘s History
Avon began life as the California Perfume Company in America in 1886, giving adult females an chance to gain by selling aroma and cosmetics door to door. Mrs P.F.E Albee was the really first agent taken on by the company ‘s laminitis David H McConnell, who started life as a door to door book salesman giving off little bottles of aroma which proved to be more popular than the books themselves.
In 1939, the company name was changed to Avon and twenty old ages subsequently, began merchandising in the UK. Avon Cosmetics Ltd is one of the top 3 beauty trade names in the state with turning market portion in the UK beauty market. Since so Avon has established itself as a planetary leader in the beauty industry, functioning to clients in over 100 states around the universe.
Avon is now largest direct merchandising cosmetics administration in the universe and their merchandise lines include the well-known trade names Anew, Skin So Soft, Avon Colour, Advance Techniques and Today. The merchandise classs include: cosmetics, aroma, skin care.toiletries, manner jewelry, tickers, place merchandises, gifts, tapers, playthings, intimate apparel, wellness, fittingness and well-being merchandises.
Bing a direct merchandising administration, Avon ‘s store window is its booklet. The booklet offers a broad choice of beauty and related merchandises at low-cost monetary values. Customers have entree to these booklets either at place, work, societal or leisure activities.
Avon is committed to excellence- every beauty merchandise that carries the Avon name carries with it the highest criterions of merchandise safety and unity. Avon merchandises are enjoyed by 1000000s of adult females around the Earth in over 100 states through over 5 million independent gross revenues Representatives – frequently known as the Avon lady.
Avon ‘s vision statement is to:
“ To be the company that best understands and satisfies the merchandise service and self-fulfilment demands of adult females – globally ”
( Avon, 2008 ) ( Keynote, 2007 )
Appendix 2 – Avon ‘s organizational construction
Avon ‘s concern is conducted world-wide chiefly in one channel, direct merchandising. They are based on geographical operations in six parts. See below:
Avon has gross revenues operations in 63 states, including America and Avon merchandises are distributed in 51 more states through distributorships. Gross saless of merchandises are made through a combination of direct merchandising and selling by 5.3 million Avon representatives worldwide. Representatives by and large purchase merchandises at a price reduction from a published booklet monetary value straight from Avon and sell them to their clients. In many states, representatives can utilize the cyberspace to pull off their ain concern online, including order entry, order trailing, payment, and a two manner communicating with Avon. In the US, representatives can construct their ain Avon concern through personalised web pages.
The research and development installation is located in New York. A squad of research workers and technicians apply the subjects of scientific discipline to the practical facets of conveying merchandises to market around the universe. Relationships with skin doctors and other specializers enhance the ability to present new expressions and ingredients to market. Satellite research installations are besides located in Brazil, China, Japan, Mexico and Poland
( Avon, 2008 ) .
Avon ‘s cultural web utilizing theoretical account from Johnson and Scholes ( 2002, p232, fig 5.8 )
Constructing bonds with adult females worldwide since 1886 to accomplish economic independency and transform their lives
Ding-Dong Avon naming. World ‘s taking direct selling company of beauty and related merchandises
Chairman and CEO
Executive Vice Presidents
Senior Vice Presidents for each of the six parts
Avon rep presenting booklets to have vicinity, client chooses merchandises, orders collected by rep & A ; merchandises delivered back to clients ( worldwide )
To be the beauty company most adult females turn to worldwide and making womb-to-tomb client relationships
High criterions of merchandise safety and unity, strict quality controls on every merchandise batch and no carnal testing
A flatter construction, equal chance employer where endowment & A ; dedication are rewarded & amp ; a whole scope of preparation chances is available
( Brooker, 2001 ) ( Pellet, 2000 ) ( Rose, 2000 ) ( Avon, 2008 )
The cardinal beliefs of administrations as political systems are:
a-? You can non remain out of organizational political relations as you are already in it ;
a-? Building support for your attack is indispensable if you want to do anything happen ;
a-? You need to cognize who is powerful, and who they are close to ;
a-? There is an of import political map which overrides the organizational construction ;
a-? Alliances between persons are more of import than work squads ;
a-? The most of import determinations in an administration is the allotment of resources, that is, who gets what, and these are reached through bargaining and negotiating.
The above key beliefs lead to the undermentioned premises about organizational alteration:
a-? The alteration will non work unless it is supported by a powerful individual ;
a-? The wider the support for this alteration the better ;
a-? It is of import to understand the political map, and to understand who will be victors and also-rans as a consequence of this alteration ; and
a-? Positive schemes include making new alliances and renegociating issues
Morgan ( 1986, cited in Cameron and Green, 2004 )
Appendix 5- Avon ‘s stakeholder analysis
Bohret ( 1993, cited in Joyce 1999 ) suggests that pulling up tabular arraies of values to research the ends and outlooks of different societal groups. See below for the stakeholder analysis for Avon.
Avon to run into or transcend all environmental Torahs of the states and communities they operate
To give full acknowledgment to employees and representatives worldwide, on whose parts Avon depends and to portion with others the wagess of growing and success
All other employees
To accomplish economic independency and an chance to gain in support of their wellbeing and felicity
Active involvement in cosmetics and aromas and lament to look after their visual aspect
Secure contracts and fast payment of measures. Suppliers in bend to add value to the procurance of the stuffs to bring forth Avon merchandises
Show regard to the environment through the efficient usage of natural resources, waste minimisation, reuse and recycling patterns
The safety of ingredients in toilet articless and cosmetics and no carnal testing
Always looking out for negative promotion on harmful ingredients in mundane cosmetics and associating it to assorted wellness jobs
Dividends, portion monetary value growing
( Avon, 2008 ) ( Keynote, 2007 )
Appendix 6- PEST analysis for Avon
Political factors – Political factors consist of Torahs, ordinances and governmental policies that facilitate or hinder direct merchandising organisations. In all the states where Avon operates, it offers adult females a agencies to accomplish fiscal independency and calling self-government. Although in some states, it is considered as an economic growing and prosperity of its citizens, it besides threatens the power of states which is run by autocratic governments. Besides states worldwide have different statute law on revenue enhancement and employment jurisprudence.
Some states have different positions on the issue of privateness and this will hold an impact on Avon representatives naming door to door. The information protection act within the European Union is designed to protect the privateness of its citizens.
Potentially harmful ingredients in mundane cosmetics including chemicals linked to malignant neoplastic diseases, endocrine jobs and skin annoyance have been a political issue for many decennaries.
Economic factors – Consumer disbursement on Avon merchandises is by and large affected by a figure of factors, including economic conditions, rising prices and involvement rates. Avon is besides capable to currency fluctuations and currency rates.
Avon has recruited about 5.3 million representatives all over the universe. This means they have a disposable income and money to pass on cosmetics and beauty related merchandises.
In many states, older adult females are acute to look after their visual aspect and such adult females often have high disposable incomes and are willing to pay premium monetary value for merchandises.
Appendix 6- PEST analysis for Avon ( continued )
Social factors – In the cosmetics industry, consumer penchants, consumer disbursement forms and penchants can non be predicted with certainty and can alter quickly.
Avon is besides affected by differences in civilization and the manner of life in other states. Women all over the universe have similar aspirations when it comes to beauty merchandises and portion the same desire to look their best. However the greatest challenge in making beauty merchandises for different cultural groups is happening the right balance between encompassing their similarities while esteeming and observing their differences
Hot and cold parts will necessitate otherwise formulated merchandises to accommodate the clime alteration.
Different states have different civilizations, and these civilizations result in different work-related issues.
Technological factors – The nature of engineering can act upon the behavior of people in work organisation. In footings of research and merchandise development activities, new merchandises are indispensable to growing in the extremely competitory decorative industry.
( Avon, 2008 ) ( Mullins, 2002 ) ( Kumar et al. 2006 ) ( Dereski, 2000 ) ( Hill, 2002 ) ( Keynote ( 2007 ) & A ; ( Matthews ( 2006 )