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