Amway
AMWAY- DISTRIBUTION PROCESSES
Introduction:
Amway is one of the most successful American corporations today. According to the corporation's founders, Richard DeVos, and Jay Van Andel; "The company will experience a flourishing growth through the nineties."(Klebnikov, Paul:241) The company is presently the world's largest door-to-door sales coperation, and one of the most extensive service organization. Amway has presently about 10000 employees in sixtythree countries all over the world. In 1993 the corporation had sales equal to nearly $3.9 billion, and forecasted net profits (after tax) of 300 million for 1993 (forecasted by Forbes Magazine).(Amway Annual report 1992) Please refer to graph #1. The company has a "unique sales force", that is so unique because the size of the sales force. It is "close to 500,000 in the United States, 500,000 in Japan, and several hundred thousand more in places like Germany, Mexico, Korea, and Malaysia."(Amway Business review) Although, Amway can be seen as one of the most successful merchandise and manufacturing firms today, the corporation is facing one major corporate problem that could easily lead to a negative financial position.
Amway's basic concept is Network marketing. This type of marketing involves more than six thousand different products and services and is thus very extensive, and it requires a well functioning distribution system. I believe that Amway is facing a problem concerning it's distribution network of the company's goods. I would like to demonstrate this problem, and propose three possible solutions.
The Problem:
Amway's organization is highly decentralized, and it's management functions are delegated to first line supervisors. These first line managers are called main distributors in the organization. A major part of the sales revenue is based on the performance of these distributors. For a few years ago, products were sent to distributors all over the USA and in sixty other countries all over the
Introduction:
Amway is one of the most successful American corporations today. According to the corporation's founders, Richard DeVos, and Jay Van Andel; "The company will experience a flourishing growth through the nineties."(Klebnikov, Paul:241) The company is presently the world's largest door-to-door sales coperation, and one of the most extensive service organization. Amway has presently about 10000 employees in sixtythree countries all over the world. In 1993 the corporation had sales equal to nearly $3.9 billion, and forecasted net profits (after tax) of 300 million for 1993 (forecasted by Forbes Magazine).(Amway Annual report 1992) Please refer to graph #1. The company has a "unique sales force", that is so unique because the size of the sales force. It is "close to 500,000 in the United States, 500,000 in Japan, and several hundred thousand more in places like Germany, Mexico, Korea, and Malaysia."(Amway Business review) Although, Amway can be seen as one of the most successful merchandise and manufacturing firms today, the corporation is facing one major corporate problem that could easily lead to a negative financial position.
Amway's basic concept is Network marketing. This type of marketing involves more than six thousand different products and services and is thus very extensive, and it requires a well functioning distribution system. I believe that Amway is facing a problem concerning it's distribution network of the company's goods. I would like to demonstrate this problem, and propose three possible solutions.
The Problem:
Amway's organization is highly decentralized, and it's management functions are delegated to first line supervisors. These first line managers are called main distributors in the organization. A major part of the sales revenue is based on the performance of these distributors. For a few years ago, products were sent to distributors all over the USA and in sixty other countries all over the