Assignment 2 Avon Products

Avon Products, Inc. was a leading global cosmetics company, with over $8 billion in annual revenue in 2005. As the world’s largest direct seller, the company marketed to women in 143 countries via five (5) million independent Avon Sales Representatives. Avon product lines included numerous popular brand names, and an extensive line of costume jewelry and clothing. Although revenues increased in 2003, 2004 and 2005, Avon’s net income was $848 million in 2005. The company met with stiff competition in the US market from other cosmetic companies. In order to maintain its market share in the US while targeting other countries, especially China, the company drastically changed its global operating structure. This brought senior management closer to its key business geographies, strengthened global integration, accelerated information flow and positioned the company for sustainable growth. Avon expected to incur costs to implement these initiatives over the next several years, with a significant portion of the total costs to be incurred during 2006. Benefits from restructuring helped to fund a notable increase in consumer investment and improved the competitiveness of its direct selling opportunity. Additionally, the company increased investment in advertising, marketing intelligence, consumer research and product innovation. The cosmetics mogul has grown from revenues of $8 billion in 2005 to nearly $11 billion in projected 2009 revenues while delivering strong single-digit earnings growth. The company projected achievement of annualized savings of approximately $430 million once all initiatives are fully implemented for 2011-2012.Second-Quarter Operating Profit is $127 million and Second-Quarter Revenues are down 9 %.( media.avoncompany.com). |
1. Provide a brief description of the status of the company that led to its determination that a change was necessary. Early in 2006, Avon was faced with declining revenues and operating profits. The company’s talent and

References: filecache.drivetheweb.com media.avoncompany.com ranjitmalayath.wordpress.com (Strategy Driven Talent Management, Rob Silzer and Ben E. Dowell, Jossey-Bass Publishing Co., San Francisco,CA. , 2010). (Best Practices in Talent Management, M. Goldsmith and L. Carter, Pfeiffer Publishing Co., a Francisco, CA. 2010). www.nasdaq.com