Avon: More than Cosmetic Changes
Shannon V. Wilson
Case Analysis Assignment #13.2
Organizational Behavior 5590 Mr. Tyron A. Woodard
June 9, 2010
Avon: More Than Cosmetic Changes
After years of prosperity and growth under Avon CEO Andrea Jung, in 2005, the company suddenly experienced declining sales around the world. Now Andrea Jung had the challenging task of turning this downward spiral around. Jung’s new data-centric strategy would be more responsive to the market. Avon CEO Andrea Jung introduced a new organizational structure and made other changes that increased marketing, sales growth, and product development. These changes paid big dividends, by the fourth quarter in 2006, revenue rose 9%, to $2.6 billion. Avon encountered a number of organizational structure problems. For starters, its managers had too much authority without any supervision. Managers were making uninformed decisions based off gut feelings rather than factual information. CEO Andrea Jung established and instituted a data centric approach forcing managers to make managerial decisions based on fact rather than intuition. This strategy no doubt lead to globalization in marketing, advertising, and manufacturing. In addition, Andrea Jung stripped country managers of their power to make decisions without approval from the executive team. No longer would county managers make their own managerial decisions. Secondly, Andrea Jung had to make staff cuts needed to reorganized the company for success. Management was trimmed down from 15 to 8. Next, with the help of an executive team comprised of individuals previously employed by companies such as Gillette and Pepsi, Jung used the savings from centralized manufacturing and other initiatives toward advertising and product development research. Personnel hiring and budget spending directly relate to organizational structure. One possible reason for seven layers of management would be...
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