Vision & Mission Vision & Commitment | Values | Principles | Mission Avon maintains the same vision, mission,

values and principles today that have earned the company trust and respect over the past 125 years. Avon's Vision To be the company that best understands and satisfies the product, service and self-fulfillment needs of womenglobally. Avon's Commitment This is the company that puts mascara on lashes and food on tables. That fights wrinkles with one hand and breast cancer with the other. That knows the value of a perfect lip, but still opens its mouth and speaks out against domestic violence and for women's financial independence. This is the company that not only brings beauty to doors, but also opens them. The company that supports approximately 6.5 million Representatives in over 100 countries. This is Avon. The company that for more than 125 years has stood for beauty, innovation, optimism and, above all, for women. Top Avon's Values

Trust means we want to live and work in an environment where communications are open - where people feel free to take risks, to share their points of view and to speak the truth as they see it. Trust people to do the right thing - and help them to understand the underlying reasoning and philosophy - and they won't disappoint. Respect helps us to value differences, to appreciate each person for her or his unique qualities. Through respect, we help bring out the full potential of each person. Belief is the cornerstone of empowering Associates to assume responsibilities and be the very best they can be. Believe in someone - and show it - and that person will move mountains to prove you're right. Humility simply means we're not always right - we don't have all the answers - and we know it. We're no less human than the people who work for us, and we're not afraid to ask for help. Integrity should be the hallmark of every Avon Associate. In setting and observing the highest ethical standards and doing the right thing, we fulfill a duty of care, not only to our Representatives and customers in the communities we serve, but to our colleagues and ourselves. Top

Avon's Principles Established by founder David McConnell

To provide individuals an opportunity to earn in support of their well-being and happiness. To serve families throughout the world with products of the highest quality backed by a guarantee of satisfaction. To render a service to customers that is outstanding in its helpfulness and courtesy. To give full recognition to employees and Representatives, on whose contributions Avon depends. To share with others the rewards of growth and success. To meet the obligations of corporate citizenship by contributing to the well-being of society and the environment in which it functions. To maintain and cherish the friendly spirit of Avon. Top

Avon's Mission Avon's mission is focused on six core aspirations the company continually strives to achieve:

Leader in global beauty: Build a unique portfolio of beauty and related brands, striving to surpass competitors in quality, innovation, and value, and elevating Avon's image to become the world's most trusted beauty company. Learn more about Avon's brands. Women's choice for buying: Become the shopping destination for women, providing a personal, high-touch experience that helps create lifelong customer relationships. Learn more about customer engagement at Avon. Premier direct-selling company: Expand Avon's presence in direct selling, empowering women to achieve economic independence by offering a superior earnings opportunity as well as recognition, service and support, making it easy and rewarding to be affiliated with Avon. Learn more about how Avon empowers women. Most admired company: Deliver superior returns to shareholders by pursuing new growth opportunities while maintaining a commitment to be a responsible, ethical company and a global corporate citizen that is held as a model of success. Learn more about recognition Avon has received. Best place to work: Elevate the company's leadership, including its high standards, respect for diversity, and commitment to helping Associates achieve their highest potential in a positive work environment. Read about Associate engagement, workplace safety and diversity at Avon. To have the largest foundation dedicated to women's causes: Be a committed global champion for the health and wellbeing of women through philanthropic efforts, with a focus on breast cancer, domestic violence and women's empowerment. Read more about Avon's global philanthropy.

Avon Positions & Policies Avon Products, Inc. is committed to offering safe and effective products and operating as a responsible corporate citizen in the more than 100 markets in which it does business. The company is proud of its 125-year safety record and commitment to corporate responsibility. Avon has the same universal standards of quality and safety worldwide and is fully compliant with all regulations established by scientific bodies and government agencies that oversee product ingredients and safety. Only ingredients that can be used safely are used in Avon products. Consumers can be assured that any product that carries the Avon name has undergone the most rigorous and thorough safety evaluation and can be used with the utmost confidence. Across the business enterprise, Avon is committed to functioning in a responsible manner and to reducing its environmental impact. Policies have been developed in areas of sustainability that are especially material to the company's business. Below are position statements and policies on some key issues of interest to Avon customers, Sales Representatives, associates and other stakeholders.

Product Safety Aluminum Animal Welfare China Manufacturing Fragrance Green Buildings Jewelry Lipstick Nanotechnology Palm Oil Paper Parabens Phthalates Triclosan

If you have questions on topics not covered here please send an inquiry to avoncr@avon.com. Committed to Sustainability Avon is best known for its leadership in empowering women for 125 years and driving global philanthropy for decades. Avon's founding principles also address the company's role and impact in the world, driven by the promise, dating back to 1886, to "contribute to the well-being of society and the environment in which it functions." The two pathways of the Avon sustainability commitment are internal authenticity and external mobilization. Across these two core platforms, Avon's commitment to environmental stewardship is called Hello Green Tomorrow. Internal Environmental Management Avon has a longstanding commitment to managing its environmental footprint. The company addresses key impacts across its business enterprise and focuses on continuous improvement, with particular emphasis on the areas that are most material to the company and of importance to society and the planet. Global policies, processes and goals are supported by a worldwide network of Associates who are dedicated every day to environmental stewardship. This includes the global environmental management team and Associates across various disciplines who apply the principles of sustainability to their daily work. External "Green" Mobilization To expand the impact of its environmental commitment, Avon leverages its unique asset - the ability to educate, engage and mobilize its more than six million Sales Representatives and over 40,000 Associates to create a veritable global green army. The mobilization aspect of Hello Green Tomorrow launched internally among Avon's worldwide Associates in 2009, and in 2010 rolled out externally to engage Avon Sales Representatives and customers worldwide. The mission of Hello Green Tomorrow is to help end deforestation by empowering a global women's environmental movement to nurture nature, with programs in place to raise funds and awareness for reforestation efforts in critically endangered tropical forests.

Materiality: Key Impact, Risks & Opportunities To determine the most material topics for its 2010 Corporate Responsibility Report, Avon reviewed the items covered in its previous Corporate Responsibility reports to see which ones were still relevant to the company and its stakeholders. Avon also gathered input from various internal and external sources, which is a continual process, and then identified and prioritized its most material topics in 2010. The sources used in this process included:

Internal documents and plans that articulated the company's business objectives and strategies, policies, programs and risk factors

Communications prepared by the company for external release Feedback and insights from Associates, Sales Representatives and customers Shareholder communications Traditional media coverage Online and social media outlets Industry trade groups Trending and emerging issues of relevance Stakeholder engagement

After reviewing these sources, Avon compiled a matrix of items and prioritized each one based on the following criteria:

The importance of the topic to and potential impact on o the planet and people o the company o Avon's stakeholders

Corporate Governance Board of Directors & Committies | CG Guidelines | CR & Sustainability Management Avon believes good governance serves as a foundation for corporate responsibility and is committed to continually improving policies and practices to ensure transparency and accountability of the company's management. Avon takes a tailored and meaningful approach to corporate governance matters. We strive to:

Consider long-term strategic and business objectives Seek robust discussion, rather than a "one-size-fits-all" checklist approach Proactively monitor developments in corporate governance Engage in frequent communications with thought leaders and seek advice from outside experts for timely guidance and broad perspectives

Board of Directors and Committees Avon's Board of Directors is elected by shareholders to oversee management and protect shareholders' long-term interests in the Company. The Board of Directors oversees management development, including CEO performance, compensation and succession planning, among other items. The Board of Directors assesses the independence of its non-management members at least annually in accordance with the listing standards of the New York Stock Exchange, the Sarbanes-Oxley Act of 2002 and the regulations of the Securities and Exchange Commission, as well as Avon's Corporate Governance Guidelines. In accordance with these standards and guidelines, the Board has determined that each non-management director currently serving is independent. The Board presently consists of five men and five women and includes the following four standing committees:

Audit Committee Compensation Committee Finance Committee Nominating and Corporate Governance Committee

Each committee has a charter that sets forth its purpose, structure and operations, and responsibilities. The charters and current composition of each committee are available on Avon's corporate website. Top Corporate Governance Guidelines Avon's Corporate Governance Guidelines describe the Board of Directors' governance policies and practices, including, for example, standards for Board independence, qualifications for Board and Committee membership, and the process for evaluating Board and CEO performance. The Corporate Governance Guidelines are intended to set a proper "tone at the top," by promoting good corporate citizenship and responsible business practices, and to establish a common set of expectations to assist the Board in performing its duties in accordance with applicable requirements, and thereby build long-term value for the company's shareholders. Top Corporate Responsibility and Sustainability Management In 2009, the company created the role of Vice President, Sustainability and Corporate Responsibility, to enhance the management and coordination of the corporate responsibility and sustainability strategy and agenda. This position reports to the Senior Vice President, Human Resources and Corporate Responsibility, who is a member of Avon's Executive Committee, which reports directly to the CEO. The Vice President works in a matrix structure in partnership with many teams and executives to help create and drive strategies, policies and processes across the business.

The amount of reasonable control Avon has over a particular matter or action

Ethics & Compliance Code of Conduct | Global Anti-Corruption Policy Ethics and compliance are core priorities at Avon, and the company's Board of Directors and senior management team continually support the company's Global Ethics & Compliance Program. The Compliance Committee, which includes senior management, has a responsibility to ensure the effectiveness of the Global Ethics & Compliance program. The committee is continually focused on ensuring a risk-based approach to program enhancements, including-through oversight of policies and procedures designed to ensure that Associates comply with the law, Avon's Code of Business Conduct & Ethics (the "Code") and other policies. The Compliance Committee operates in accordance with a written charter, approved by the Audit Committee of the Board of Directors. Please see Corporate Governance for further information. In 2010, the company also established the Global Ethics & Compliance Council, with a Vice President-level nominee from each executive committee member. The Council is a visible, company-wide and multi-functional committee that helps drive the "Tone in the Middle." Each Council member supports his or her business unit's or function's commitment to further embed the program into our day-to-day operations. Workplace Avon is committed to its employees around the world, whether located in urban headquarters or rural manufacturing facilities. Associates are provided a safe and healthy workplace, competitive benefits and the opportunity to engage with management and peers, with the goal of supporting and representing the needs of Avon's diverse workforce.

Global Safety Strategy Employee Benefits Associate Engagement & Training

Diversity & Inclusion Avon has a rich heritage of embracing diversity and inclusion, with a particular focus on its vision to be "the company for women." The company is committed to developing a workplace environment that attracts, develops, retains, and advances a culturally diverse workforce throughout its global operations. This commitment also extends to supporting and working with suppliers that are owned and operated by diverse groups. The company has reaffirmed this commitment by integrating diversity and inclusion as a core business strategy aligned with the company's values. In 2010, Avon established a global inclusion office as a center of excellence to oversee all aspects of this work across the company. The office focuses on driving business results through inclusion, empowerment and the advancement of top talent everywhere Avon operates using the four key strategies, outlined below:

Embedding diversity and inclusion into core talent processes at all levels Cultivating an inclusive environment to maximize Associate contributions Leveraging diversity and inclusion as a business growth accelerator Enhancing the Avon brand and reputation through a strong diversity and inclusion commitment

Avon's Associate Resource Groups (ARGs) are important enablers to advancing the company's diversity and inclusion commitment as well. ARGs serve as liaisons between Associates and management to share best practices, increase awareness about the business need for and impacts of a diverse workforce, and develop a more inclusive workplace.

Strengths, Weaknesses, Opportunities and Threats (SWOT) Location of Factor TYPE OF FACTOR Favorable Internal Strengths

Unfavorable Weaknesses

Differentiated business model to emerge as a prominent player Steady revenue growth Leading position gives power to attract new customers

Declining North American operations

External

Opportunities

Threats

Restructuring initiatives for organizational effectiveness Emerging markets Re-branding strategy to drive consumer demand Avon

Competitive environment Global macro-economic pressures Dependence on third party supplier

Logo

Parent Company Avon Products Category Personal Care Brands Sector FMCG Tagline/ Slogan The company for women USP Distribution network of Avon having less competitors from the common cosmetics market thus giving it exclusivity in its zone of distribution STP Segment Regular cosmetics buyers, housewives, people having less knowledge about various cosmetic brands and their differences but purchasing power to buy the products Target Group Housewives interested in cosmetics buying in the comforts of their home ready to spend money Positioning Easily available good quality products near your doorstep, regular innovation in products, exclusive products not available in the market SWOT Analysis Strength 1. Differentiated business model to emerge as a prominent player 2. Steady revenue growth 3. Leading position gives power to attract new customers 4. Support sales activities by understanding customers' businesses better Weakness 1.Declining North American operations 2.Low market share as compared to bigger brands Opportunity

1.Restructuring initiatives for effectivenesss of the organisation 2.Enter emerging markets 3.Re branding strategy to drive consumer demands Threats 1.Strong competition 2.Competitive advertising and distribution network of competitors 3. Dependence on third party suppliers Competition Competitors 1. Loreal 2.Lakme 3. Oriflame Executive Summary: Avon Products, Inc. (Avon) is based in New York. The firm engages in the manufacture and marketing of beauty and complimentary products primarily in North America, Latin America, Europe, and Asia Pacific . Avons products are classified into three product categories: Beauty, Beauty Plus, and Beyond Beauty. The Beauty category consists of cosmetics, fragrances, skin care, and toiletries; Beauty Plus includes fashion jewelry, watches, apparel, and accessories; and Beyond Beauty comprises home products, gift and decorative products, candles, and toys. The company sells and markets its products through a combination of direct selling, marketing by independent Avon representatives, and via its consumer Web site, avon.com. Avon was one of the prominent direct sales companies in the beauty products industry. Started in the late 1800s by David McConnell, the company sold a wide variety of beauty-related products to homemakers through its direct sales agents. However, by the 1980s, the company had lost its luster and performance began to falter. A failed diversification strategy made it the target of several takeover attempts. Turnaround efforts were initiated in the 1990s under then CEO James Preston and continued by his successor Charles Perrin, however, they failed to make a significant impact. Performance began to improve only after Andrea Jung became the CEO of the company in 1999. Andrea Jung became president and CEO of Avon in 1999 and has totally revamped the company. Under her leadership, the company has updated its product line, launched new advertising, and created a new image. Avons sales have increased by 30 %, profits 40%, and the stock price has dramatically improved. Jungs has been able to align the firms core capabilities with its strategic targets which has lead to phenomenal results. It appears that Jung has been able to establish a clear vision for the firm that has been incorporated in every aspect of the firms operating system. This vision is shared by all employees and representatives of Avon priming the company for continued success. Other strategies of Jung include cost cutting by reducing number of raw material suppliers, shifting production from smaller plants to larger ones, moving manufacturing from high cost nations like Great Britain to lower cost countries such as Poland. As mentioned in the Avon case study, the e-representative initiative also has helped Avon cut costs. The direct sellers are asked to fill in the order online. Avons brand has definitely resonated for women through the years. During the 1980s, the company began to diversify by investing in retirement properties and healthcare products, and launching catalogs for men and children. During the initial stages of this strategy, Avon started to remove itself from its core market of selling to women. The results were downward revenue trends and slow growth throughout the 1990s which resulted in several takeover bids. Unfortunately, Sears Roebuck and JC Penny do not really resonate well with being a carrier of womens beauty supplies. The name Sears have been associated with appliance and not beauty products. The move of aligning with this companies and trying to sell higher end beauty products will only push Avon in the opposite direction that it should be heading, which is to move back towards tailoring to women domestically and globally. Over the years, Avon has experienced several problems leveraging its brand in many of its product lines. As a result, positive net sales and earnings growth for the past five years have been in single digits and steadily declining year after year. Specific problem areas are stagnated sales, slow earnings growth, limited distribution capabilities and shift in personal care preferences and spending habits. Andrea Jungs proposal to expand into certain retail markets will only perpetuate Avons trend of declining net sales. The proposed plan will indeed create an additional distribution outlet and cater to this market segment. However, the question to examine is at what expense or cost will Avon endure making this decision? Avon has faced tremendous pitfalls marketing its product lines to effectively increase brand loyalty and recognition. Examples of this include the hair care product line. Avon did not effectively develop products for ethnic hair types. Additionally, Avon did not have a hair coloring product line. As a result, Avon suffered in building brand awareness and loyalty with the younger generation as well as the older generation that also demanded this product. Avon has lost loyalty and brand recognition as a result of its decision to diversify into different industries and different product lines. This has resulted in a loss of market share drastically affecting annual profit margins. To examine the previous question of what cost will Avon endure deciding to move into the retail markets? It is clear and evident; the cost will be a further extension of the existing internal problems that Avon faces. Deciding to move into the retail market to create a store inside a store is not in Avons best interest. This move would be a further expansion of Avons previous decisions to diversify into markets that do not

have synergy and thus will hurt the overall branding of the company. Finally, implementing Andrea Jungs proposal to enter the retail market would be detrimental to the already fragile state of Avons brand awareness, recognition and loyalty. Another factor for the underperformance of Avon in the late 1990s is its failure to develop the online business. For the fear of alienating its labor force, Avon downplayed the importance of developing the e-business. A company cannot ignore the environment and expect to be successful in the long run. Due to its internal struggle with the internet strategy, Avon fell behind other less established companies in taking advantage of the explosive growth of the internet Avons approach should build on original direction and implementations however expanding as necessary to fit current trends and environmental assessments. The focus should be on existing internal structures to build, create and advance current product lines. Avons focus should also exist in the field of technology to increase online selling opportunities, update internet technology and to re-brand themselves to be a leader of online sells. To accomplish this, strategy should focus on expanding kiosks globally and domestically. The expansion will leverage Avon by appealing to the market segment requesting additional distribution channels. This strategy will allow for trained beauty consultants to offer advice, education and samples thus increasing brand awareness and loyalty. Kiosks will have minimal start up cost and lower overheads. Focusing on product lines and catering to the needs and wants of each demographic group will prevent the previous pitfalls of lack of integration and decreased brand awareness and loyalty. Keeping Avons product offering separate and distinct will help existing challenges of branding. Focusing on technology improvements and online sales, Avon will have an opportunity to emerge as a leader in this area, thus adding additional channels of distribution and appealing to the overwhelming need. Under Andrea Jungs leadership, Avon has faced a number of challenges. Some of these challenges were addressed successfully and others were not. In the early part of 2000, the management team had the daunting task of choosing an appropriate strategy for the immediate and long-term future for the company. One setback was a decrease in the firms growth rate to single digits and stagnated earnings. Avons CEO, Andrea Jung, was presented with a multitude of options that ranged from distributing through other departments stores, establishing kiosks, to overhauling the firms e-business. Jung was right in acknowledging that Avons core competency is direct selling and its major strength is its brand name. By refocusing on the core competency, improving efficiencies, and adapting to the environment with new initiatives, Avon could overcome the hurdles of the past and turn the company in the new direction. This case discussed the revival of Avon under Andrea Jung. 1) What is your assessment of Andrea Jungs performance as chief strategist at Avon Products? What has she done well? What overall grade would you give Andrea Jung for the job she has done as CEO? Answer: My assessment of Andrea Jungs performance as chief strategists at Avon products is that she has done excellent job. Her first task was to hit the streets of her neighborhood, ringing doorbells, to better understand the desires of customers and needs of sales agents. She pushed for the addition of attractive new products to Avon and its sales representatives. Andrea listened to the customers and grew global beauty category sales by new product development, sampling and more up-to-date advertising. The company was in serious trouble with annual sale growth of less than 1.5 percent and a crashing stock price during the general economic boon in history. Jung took the role of Avon lady to better understand what customers thought about companys product and within field of direct sales model. . Avons grand strategy under the leadership of Andrea Jung has its merits and is the grand strategy is properly focused and directed. Andrea Jung has clearly directed the successful transformation of Avon Products Inc. by defining its vision as the company for women. With grand strategies in-place she is revitalizing Avons reputation as the worlds foremost direct seller of beauty products while leading the company into exciting new lines of businesses, launching a series of bold and image enhancing initiatives, and expanding career opportunities for people around the world. The strategic plan in place has its merits and the grand strategy is properly focused and directed. Currently, Avon is the worlds leading direct seller of beauty and related products, with $7.7 billion in annual revenues. Avon markets to women around the world through 4.9 million independent sales representatives. The evidence shows that Jungs grand strategies were sound. The argument that the grand strategies were not optimal and needed to be refocused was weak due to the overall improvement of company performance and increase in shareholder wealth. Andrea Jungs charismatic communication skills and management direction has catapulted Avon as a leader in the global beauty and cosmetic market. I would like to give Andrea Jung an A for the job as she has done her job well as CEO. She developed great strategy for Avon that helped to increase in sales. Andrea Jung outlined new vision and strategic plan for Avon that call for highly innovative new products, build new line of business, critical link as internet in direct selling model and update its direct sales model to better fit 21st century. At age 40 Jung become CEO and in 2001, at age 42 she listed fourth on Fortunes ranking of the 50 most powerful Women in American Business. 2) What is Andre Jungs strategic vision for Avon? Do you approve of the companys new strategic direction? Why was it time for Avon to fundamentally change direction? Answer: Andrea Jungs strategic vision for Avon was for them to be the company that understands and satisfies the product, service and self fulfillment needs for woman globally. I think their new strategic direction made sense. She knew products had to be made to fill the needs of different age group and races. It was time for Avon to become more modern and up-to-date.

Jungs view of new Avon was that of a company beyond selling cosmetics as trusted product which is needed by any women. She was in customer convenient strategy in beauty and financial services. She insisted that supporting women touches not only beauty, but health, fitness, self empowerment and most important financial independence. Yes, Avons new strategic direction would launch an entirely new line of business, the development of innovative products, new packaging, new channels to the distribution, a new approach to supply chain management, new sales models and new approaches to image building. When Andrea Jung became Avons new CEO in November 1999, the companys annual sales growth had slowed to less than 1.5 percent and its stock price had fallen from a high of $55 to a three year low $25. The strategies initiated by Charles Perrin had resulted in some improvement in 1998 with modest sales growth, but in late 1999 Avon was in need of bold direction. When Perrin resigned because of his lack in direct sales limitation, Andrea Jung need a fundamental change in direction. Jung understood the desires of customers and needs of sales agents. She heard the customer grips over product colors, mishandled orders, unattractive packaging, lack of innovative products and confusing promotions. Ultimately she discovered the structural obstacles to achieve in success. Policies for placing orders made difficult for sales agents to increase sales volume and commissions. When Andrea Jung stepped in as CEO of Avon, she brought with her many new, fresh ideas that helped make Avon what it is today. Her strategy didnt agree with what consultants thought, but she willingly took risks to enforce what she believed to be the best strategy for Avon. We believe that her strategy was good, solid foundation that will continue to keep Avon at the top as Americas number one selling Cosmetic and Beauty Company. 3) What is your assessment to the financial and strategic objectives Jung has set for Avon? Do they contain too much stretch? Too little stretch? Answer: Several things happened once Andrea Jung was named CEO of Avon. First, she decided to reverse the current trend of losing sales. She did this by creating a strategy that would turn the company around. Jungs suggested strategy to partner with Sears and JC Penney department stores was an idea that would help to promote the strategy she had come up with. It would introduce a new, upscale product line, thus increasing profits, sales and nationwide exposure to the baby boomer segment. Retail selling increased with in-store customer traffic and expected growth of spending power to 16 percent within five years. Face-to-face selling comprised 79.7 percent of direct selling, preferred among senior citizens. The marketing budget would be increased to target customer traffic at Sears and JC Penney. Investment costs were limited to $15 20 million to launch retail products, with a bulk of expenses being absorbed by the department store. Avons strengths would help increase global recognition of brand name and image. Jung suggested promoting certified Beauty Advisors in department stores and increased incentives for sales representatives. In addition, having department stores sell via the Internet would increase the channels of distribution, thus increasing consumer loyalty. Reduce inventory level while improving service to representatives which increase the forecasting accuracy and order fill rate in supply chain management. Strategy provides opportunity for sales representatives to increase their income and greater career opportunities through sales leadership. Develop E- commerce opportunity for Avon and sales representatives, improving operating margins 50-100 basis points though business process redesign. Another strategy is growing global beauty category sales through in new product development, advertising and sampling. All these factors would affect Avons long-term goals by forcing Jung to find new, creative ways to stay fresh in the market. Jung had created a strategic plan that met the vision of Avon; she had created goals that were measurable and geared toward future company growth. The goals seemed to be obtainable in the current business market. In addition, Jungs idea that technology may be the answer was in response to a changing business environment which included movement toward e-business. This ideal would be synergistic and build upon their present success. It is too little stretch because the objectives were not set boldly and aggressively high. These goals were not impossible targets. 4) What have been the key elements of Avons strategy been under previous CEOs? What new and different strategy elements have been initiated by Andrea Jung? How well does Andrea Jungs new strategy seem to match features of the global cosmetics industry and Avons resource strength, competitive capabilities, and culture? Answer: Key elements to Avons strategy under previous CEO were set to sell directly to consumers via independent sales representatives working on commission. Avon catered to mostly upper middle income females and focused almost exclusively on US cosmetic market. Andrea Jung initiated expansion into markets outside US making Avon products available online, and began selling Avon products through retail channels. She also instituted a more upscale packaging to match the look of prestige cosmetic brands. She focused on a low cost/ low price strategy and focus to sale to low and middle income families. Andreas new strategy was likely to improve Avons financial performance and help build a competitive advantage. Her approach is sensible in light of what competitors are doing and the position they hold in the market place. Avon is highly backward integrated, self-manufacturing many of the items that they sell. This causes the competitive pressures of suppliers to be weak. Avon can get supplies from many parts of the world because they have entered foreign markets and produce products in different countries. A lot of Avons supplies such as packaging, may be easily substituted if a supplier raised prices.

Under Andrea Jungs direction, Avon is focusing on developing nations especially China. Many developing countries are more receptive to direct selling by women since jobs with Avon are opportunities for women who want to be independent in the male dominated cultures. Avon has also recognized that the demographics has changed and recruiting younger women to sell to the younger customer base. Competitive pressures stemming from customer buying power is moderate because switching costs are low and customers have the ability to fulfill their needs by switching brands. Buyers tend to be well informed about Avons product prices and costs largely due to the Internet and this put customers at a position of higher bargaining power. Customers do not pose a threat of integrating backwards, because it would not be easy for women to develop their own make-up, perfume or skin care products. Due to the direct selling business model, there is an extremely large number of buyers. Another Avon objective that aims to alleviate pressures coming from competing sellers includes consists of reinventing their antiquated image. Realizing this, Jung endorsed the Williams sisters. Venus and Serena Williams were popular teen icons that portrayed the image where Jung hoped to achieve for Avon; young, powerful, and ambitious. 5) How well has Avons new strategy been implemented so far? What are Avons strategy successes so far? What problems or missteps do you see? How important has Susan Kropf been to Avons implementation efforts? Was she a good choice as chief operating officer? Why or why not? Answer: Andrea Jungs highly successful career would not be possible without effective and insightful management.Throughout Jungs ambitious expansion, her management style was to emphasize open communication, goal orientation, and feedback from her sales force. Avon routinely brings in the top performing sales reps from across the globe to Avons headquarters in New York City in order to gather first hand feedback from the employees in the field. Ms. Jung herself even attempted to sale Avons products as a traditional Avon lady. An attempt she acknowledges was not one of her more successful endeavors. The attempt however, showed Ms. Jungs commitment to understanding all aspects of the Avon business. A common theme in Ms. Jungs leadership speeches encourage women empowerment and promote a belief that more women will continue to hold key executive roles. Under Ms. Jungs leadership, Avon management supports flexible work schedules and encourages employees to create a healthy balance between work and family responsibilities. There are a number of missteps that Avon has taken under Andrea Jungs leadership. They include partnering with companies that image does not adequately match Avons and the companys problems with launching its online business segment. Recently, Avon announced plans to partner with Sears and JC Penneys. One of the potential negative aspects for Avon partnering with JC Penny and Sears would be the possible lowering of brand name for Avon. The company ran the risk of possible further reduction of its brand name. Since its inception Avon has worked very hard in tailoring its niche market towards women. Ms. Kropfs most recent responsibilities included certain global staff functions. She retained responsibility for global marketing as well as the companywide Business Process Redesign efforts that have freed up nearly $400 million in the past three years for reinvestment in consumer brand building and other growth initiatives. Yes, Susan Kropf was a good choice as a chief operating officer of Avon Products Inc. with full profit-and-loss responsibility for all of Avons worldwide operations, including global marketing and supply chain. Susan has played a critical role in Avons success by sharing her insights on Avons rich history and the companys successful strategies for sustaining brand power for over a century. Susan Kropf reconfigured the value chain thereby cutting costs of non-value adding areas. 6) Has Andrea Jung been effective in evaluating the companys performances, monitoring new developments, and initiating corrective adjustments? Does Andrea Jung appear to have Personal traits well suited to refining and fine-tuning the companys strategy and implementation efforts? Are her strengths better suited to instituting sweeping changes and quickly moving to a new project? Answer: Andrea Jung represents a great strength to Avon Products Inc. Regardless of gender, any CEO who can take a company with a 50 percent drop in share price and raise company stock by 164 percent in five short years shows insightful leadership and effective management. In addition to the financial success, Ms. Jung has also played a vital role in Avons public relations arena. She shows an amazing ability to connect with a variety of shareholders and the public. Her ability to communicate with all levels of an internationally diverse Avon staff and public contribute to Avons ability to successfully implement strategic changes in direction. Yes, Andrea Jungs vision of what she wanted to accomplish as CEO of Avon included a strategy to; improve brand image, introduce new products, increase use of the internet as a channel of distribution, provide greater incentives and opportunities for the sales force, reduce unnecessary costs in the value chain, and continue to expand into global markets. Product innovation was a large part of Jungs strategy for Avon. In fact, in 1999 she challenged Avons R&D team to develop a new product within two years. In less than one year Avon introduced Anew Retroactive, an anti-aging skin cream. It achieved record sales for Avon and led to the development of other successful lines of business. In less than one year Avon introduced Anew Retroactive, an anti-aging skin cream. It achieved record sales for Avon and led to the development of other successful lines of business. For example, Avon Wellness products exceeded sales estimates by 300%. One problem that Avon faces is the strong competition within fields they are trying to expand into. Avon is marketing a nutritional product line called Wellness, which includes vitamins, supplements, bars, etc. This market is competitively strong. Being ahead of the industry in introducing new products combined with the companys already strong market position could further improve Avons brand equity and therefore revenues. In particular, Avon should continue to integrate sales representative into all aspects of sales. This is Avons own key success factor and what sets them apart from their competitors. With the growing popularity of the internet as an outlet of commerce, Jung was compelled to implement internet sales into her strategy, realizing that the Avon Lady is the distinctive core competency for Avon in new projects.

7) What additional actions would you recommend Andrea Jung take to help the company to achieve its long term strategic and financial objectives? Are any changes needed in the companys vision? Its objectives? Its strategy? Its implementation efforts? What challenges might the new strategy present to Avons top management team? What risks do you see? Answer: Based on demographic data, China holds 20% of the worlds population. This represents a vast market of which Avon has only begun to cover. Avon should continue to focus on the expansion of retail outlet sales in China. Also, because the only sales in China are generated through retail outlets, Avon should further develop their Beauty Advisors training. Europe should also be a continued focus for Avon. Industry leader, LOreals attributes 50% of their total sales to the European market. Avon had a successful growth rate in Europe but only 23% of the total 2003 sales came from Europe. There is still room to expand in this market. Based on one of the industrys key success factors, product innovation, Avon should focus even more resources on R&D especially in the areas of anti-aging products and teen products. Because 23 million teenagers have an average weekly disposable income of $85, Avon should continue with innovative teen marketing such as the current mark brand but also work on products for problem teen skin. Avon Products Inc under the leadership of CEO Andrea Jung is at a point where there are opportunities for growth for the organization. However Ms. Jung appears to be indisposed towards taking steps to take advantage of Avons position. Also her approach is flawed. Lets take a look at her approach and then also look at viable alternatives. Andrea advocates: partnering with Sears and JC Penny department stores so as to create a store-within-a-store, downsize direct selling The review board criticized Andreas approach and pointed out that: Brand name erosion and sending mixed messages to consumers is a risk when going into partnership with low-end department stores. If Avon goes retail then one might assume that retail products sold in stores being exclusive, then brochure products were of inferior quality. Sears and JC Penny stores have a low end image and are recognized as being on the weakest end of the retail market. These stores also lack cosmetic customers. The direct sales personnel would resent being transferred to retail sales positions and also would feel their job security threatened if Andreas plan were implemented. After the review, Andrea hired an outside consulting group to get up a strategic plan for Avon. These were their recommendations: o o o Three-step retail approach Distribution of high end spa products in specialty stores. Sell a more affordable product line in discount stores Extend unique kiosks in the domestic market

This strategy said the consultants would benefit Avon by: Specialty stores are growing 4% per year and are attracting affluent baby-boomers which are ever growing segment of the population Full line discount stores have high customer traffic, pointing towards high volume sales of the more affordable Avon products. Based on this, the board of directors felt that Jungs original options did not provide the same amount of increased sales and revenues, attraction to increased clientele base, motivation and acceptance by current sales representatives, or increase shareholder wealth as the consultants options did. The consultants options provided a means to Avon Products, Inc. to become a household name to those whom were not attracted by limited previous distribution channels, and Jungs choices of reinvigorating the brand, instituting beauty advisory training, expanding multilevel sales programs or partnering with department stores. Kiosks were admittedly a risk. At $6,000 per kiosk and lack of information on kiosk performance, Andrea indicated these would be too expensive. Perhaps a trial run of a low number of kiosks in the environment would settle this question. In conclusion, the Avon CEO strategy did not impress as very well thought out and it was a good thing she went to the review board first. Avon should stick with their bread and butter the sales representatives as it is the channel where they were recognized and where they became one of the largest beauty products in the world. The website should be a complement to the services that Avon offers. Recommendations:

For promoting direct-sales through consumer and the business; one is to offer incentives to its customers and second is to motivate the business to promoting its products by advertisements, establishing sales competition for employees, participating in conventions, and by endorsing franchise of its products to retail stores. Promoting Avons products and high chance of increasing direct-sales is to offer incentives to its consumers. Incentives provide a positive motivational influence to encourage and excite buyers to buy the products. Such incentives, appropriate for this situation, are coupons, rebates, product samples and awards. Coupons can be attached in mail, beauty magazines, newspapers, and advertisements on mail or on the internet companys official website. Rebates can be offered also to attract more buyers to buy the products. Rebates can be advertised also on coupons through mail or the internet. Another successful way of attracting consumers is by offering samples of Avons cosmetic products, which can be done door-to-door or attached on an advertisement through mail. Finally, awards through prizes, contests or sweepstakes can offer consumers the chance to win something small or big like cash or free-trips. Also, prizes can be offering a free gift whenever a consumers purchase one of Avons products. This last incentive option attracts more attention from consumers than the three other options. Motivate the Avon business to reach its goals of promoting its products and gaining sales through advertisements, sales competition, participating in conventions and endorsing franchise. Advertising is the key to attracting consumers and the outcome is high sales. Such advertisement is done through media (television), mail, or the internet. The more awareness from the public of the company likely to attract more buyers and the outcome is high sales. The next option is to encourage Avons sales representatives with awards/prizes that reached their sales goals within a period of time. Another is participating in conventions and this is more likely to increase sales through direct contact with customers. Last is to endorse franchise of Avons products with small and big cosmetic-related retail stores, such as Macy, JC Penny, etc. This option can be most likely increase sales and in turn profit which is any companys ultimate aim. AVON PRODUCTS INC.Introduction David H. McConnell founded The California Perfume Company (CPC) in 1886 with thefirst office located in New York. In 1906 the San Francisco earthquake destroyed CPCsCalifornia office however, before long the company reopened. CPCs first office outside UnitedState was opened in 1914 in Montreal, Canada. In the 1920s CPC sales doubled to $2 millionduring this time there were more than 25,000 representatives in the United States. TheCompanys name was change to Avon Products Inc. after the British town Stratford-upon-Avonin 1938. Avons sales increased to about $16 million and in 1946 the company was announcedpublicly with advertising campaign such as Avon Calling. Avon expanded overseas tocountries such as Puerto Rico, Cuba and Venezuela. In the 1970s U.S sales top $750 millionsand the first Avon Asian business was opened in Japan. Avon also acquired the Jeweler Tiffanysduring this period of growth. It was the first major U.S. cosmetics manufacturer to permanentlyend animal testing.Avon adopted five core values which are Trust, Respect, Belief, Humility and Integritywhich are evident in the mission statement to be a Global Beauty Leader, womens choice of buying, premier direct seller, the best place to work, largest women foundation and the mostadmired company.Avon success lies within it channel of distribution, it is the worlds largest direct seller with 5.4 million Avon representatives in over 100 countries. Additionally, it is the largest microlender to women and it among the world top global brands. The company increased itsinvestment in 2007 by over $120 million which aided in the development of new sales leadershipopportunity, improved training, technology tools and changes in commission structure.There are three product categories which Avon distributes, they are beauty, fashion andhome. In 2008, Avon changed its marketing approach of concentrating mostly on a homey imageand is now including celebrities as a part of their promotions. The company advertising costincreased from $136 million in 2005 to $249 million in 2006 and $368 million in 2007. ReeseWitherspoon is the Avon Foundation first global ambassador and honorary chairwoman who appear in advertisement for Avon make up, skin care products and fragrances. Spotlight thenew fragrance was launched in 2009 with celebrity Courtenay Cox as the face of the brand.Avons largest manufacturing plants, Brazil, China and Poland received the ISO 14001certifications in 2008. Various awards were granted during this period such as the Clean IndustryCertificate to the manufacturing plant in Mexico. During the same period Avons revenuesincreased 7.5 percent and net income increased by 65 percent.Avon Products Inc. closest competitors are Revlon, Inc and Mary Kay Inc. Mary Kay Incuses the same approach as Avon which is direct marketing approach which Revlon sells itsproducts through cosmetics counters in department stores are pharmacies. Avon revenues far exceed that of its competitors in 2008 Avons revenue was $10.37 billion compared to Mary Kay$2.40 billion and Revlon $1.35 billion.Avon implemented reconstructing programs in 2009 which included closing twomanufacturing facilities. In addition, there is heavy investment in online search engines andinternet carrier sites to help increase Avons revenue. Andrea Jung is the Chief Executive Officewho is leading the management team of thirteen to achieve its goal. Vision Statement (Actual) To be the company that best understands and satisfies the product, service, and self-fulfillmentneeds of women globally. Mission Statement (Actual) The Global Beauty Leader - Avon build a unique portfolio of Beauty and related brands,striving to surpass their competitors in quality, innovation and value, and elevating the image tobecome the Beauty company most women turn to worldwide. The Womens Choice for Buying - Avon become the destination store for women, offering theconvenience of multiple brands and channels, and providing a personal high touch shoppingexperience that helps create lifelong customer relationships. The Premier Direct Seller - Avon expand the presence in direct selling and lead the reinventionof the channel, offering an entrepreneurial opportunity that delivers superior earnings, recognition, service and support, making it easy and rewarding to be affiliated with Avon andelevating the image of beauty industry. The Best Place to Work

- Avon is known for leadership edge, through the passion for highstandards, respect for diversity and commitment to create exceptional opportunities for professional growth so that associates can fulfill their highest potential. The Largest Womens Foundation - Avon committed a global champion for the health andwell-being of women through philanthropic efforts that eliminate breast cancer from the face of the earth, and that empower women to achieve economic independence. The Most Admired Company Avon deliver superior returns to their shareholders by tirelesslypursuing new growth opportunities while continually improving their profitability, a sociallyresponsible, ethical company that is watched and emulated as a model of success.The five values of Avon are: Trust, respect, belief, humility, and integrity. Slogan (Actual) Avon is the company for women Proposed Vision Statement To be the leading provider of home, fashion and beauty products that will satisfy customerswhile preserving the environment. Proposed Mission Statement Avon is committed to being the leading global provider of home, fashion and beauty productsthat will enhance the lives of customers. Avon will utilize latest technology and will pursue newgrowth opportunities that will bring about wealth for all stakeholders. At Avon they firmlybelieve in respect: respect for people and respect for the environment. Proposed Slogan Avon: the company for everyone committed to the enrichment of lives NOR NAZERANAH OMAR DINKLCP101003 Page 6 Analysis: The vision statement was improved to include customers instead of women, since thecompany is now offering products for women, men and children. Additionally, in light of thefact that the world is going green, it was prudent to include the environment to emphasize theresponsibility to society as we all work towards a sustainable future.The proposed mission statement incorporates all nine components that are essential to agood mission statement. The essential elements are customers, products and service, markets,technology, concern for survival, growth and profitability, philosophy, self-concept, concern for public image, and concern for employees. The proposed mission statement also speaks to thecompanys core values of trust, respect, belief, humility, and integrity.The old slogan for Avon states the company for women we have decided to change thisslogan to Avon: the company for everyone committed to the enrichment of lives INTERNAL ASSESSMENT Financial Ratios Analysis Ratio 2008 2009 2010 Current Ratio 0.75 1.15 1.22Quick Ratio 1.1 0.93 0.88Operating Profit Margin 0.09 0.09 1.25Net Profit Margin 0.05 0.05 0.08Return on Stockholders Equity 0.60 0.75 1.29Total Asset Turnover 1.67 1.73 1.76Debt / Equity Ratio 5.62% 7.03% 7.99%Earnings Per Share 2.60 2.87 4.72Avon Product Inc. Current ratios have increased from 2008 to 20010 which states that they maynot face complications in liquidating its assets, if needed in the short term.Profitability ratioshave seen an increase which is a clear indication that Avon Products Inc. is much more well interms of profitability in 2010 than in previous years. Additionally, more operating income means