AVON

PRODUCTION, Inc.
1997
EXTERNAL AUDIT
[Opportunities]
1. There is consumer standardization
2. There is high population growth in China, India and
Indonesia
3. There is high Avon demand in Pacific Rim, Eastern
Europe and South America
4. Web Advertising and ordering presents and opportunity
5. There is increased discretionary income in developing
coutries
6. Foreign retail infrastructures are underdeveloped
7. There is potential for third-party product sales
8. 42,1 million women will be over 50 in the next five years
9. There are cosmetic company mergers and acquistions
EXTERNAL AUDIT
[Threats]
1. There are cosmetic company mergers and acquistions
2. There are more women in the work force
3. Foreign exchange rates fluctuate
4. Interest rate change
5. Yhere is instability in foreign governments
6. China has political/legal risk
7. Industrialized nations market are saturated
8. Revlon/maybelline merger has combined 21,6% market
share
9. Retail cosmetics are readily acessible
10. Western cosmetic companies are competing in foreign
markets
Internal Audit
[Strengths]
1. Avon has superior product reputation
2. Consumers have brand loyalty
3. Avon has moderate pricing
4. Direct sales mean personal attention
5. Avon products have high brand recognition (worldwide)
6. Avon has a strong financial position
7. There is improved Anew line of skin care products
8. High R & D; Avon is the leading skin care innovation
9. There are new designer label fashions
10. Avons global business council launches brands and
communicates Avons image

Internal Audit
[Weaknesses]
1. Direct sales mean poor product accessibility
2. There is high representative turnover
3. Jewelry/accessory sales droped 9%
4. Avos has failed to meet demand in China
5. Advertising is less than hal of competition
6. Only there women wotk in upper management
7. Foreign management turnover is high
8. There are catalog limitations
9. Image is old-fashioned

Critical Succes Factors Weight Rating Score
Opportunities
1 There is consumer standardization 0,1 4 0,4
2 There is high population growth in China, India and Indonesia 0,04 4 0,16
3 There is high Avon demand in Pacific Rim, Eastern Europe and South America 0,05 4 0,2
4 Web Advertising and ordering presents and opportunity 0,025 3 0,075
5 There is increased discretionary income in developing coutries 0,1 4 0,4
6 Foreign retail infrastructures are underdeveloped 0,05 4 0,2
7 There is potential for third-party product sales 0,04 4 0,16
8 42,1 million women will be over 50 in the next five years 0,05 4 0,2
9 There are cosmetic company mergers and acquistions 0,05 3 0,15
Threats
1 There are cosmetic company mergers and acquistions 0,08 2 0,16
2 There are more women in the work force 0,1 1 0,1
3 Foreign exchange rates fluctuate 0,025 3 0,075
4 Interest rate change 0,025 2 0,05
5 Yhere is instability in foreign governments 0,025 2 0,05
6 China has political/legal risk 0,025 1 0,025
7 Industrialized nations market are saturated 0,05 1 0,05
8 Revlon/maybelline merger has combined 21,6% market share 0,025 3 0,075
9 Retail cosmetics are readily acessible 0,1 1 0,1
10 Western cosmetic companies are competing in foreign markets 0,04 2 0,08
Total 1,00 2,71
EFE MATRIX
IFE MATRIX
Critical Succes Factors Weight Rating Score
Strengths
1 Avon has superior product reputation 0,1 4 0,4
2 Consumers have brand loyalty 0,05 4 0,2
3 Avon has moderate pricing 0,025 3 0,075
4 Direct sales mean personal attention 0,05 4 0,2
5 Avon products have high brand recognition (worldwide) 0,1 4 0,4
6 Avon has a strong financial position 0,125 4 0,5
7 There is improved Anew line of skin care products 0,025 3 0,075
8 High R & D; Avon is the leading skin care innovation 0,05 3 0,15
9 There are new designer label fashions 0,025 2 0,05
10 Avons global business council launches brands and communicates Avons image 0,05 3 0,15
Weaknesses
1 Direct sales mean poor product accessibility 0,1 1 0,1
2 There is high representative turnover 0,025 2 0,05
3 Jewelry/accessory sales droped 9% 0,025 2 0,05
4 Avos has failed to meet demand in China 0,025 1 0,025
5 Advertising is less than hal of competition 0,05 1 0,05
6 Only there women wotk in upper management 0,025 2 0,05
7 Foreign management turnover is high 0,05 2 0,1
8 There are catalog limitations 0,05 2 0,1
9 Image is old-fashioned 0,05 1 0,05
Total 1,00 2,78
Strengths Weaknesses
1 Avon has superior product reputation 1 Direct sales mean poor product accessibility
2 Consumers have brand loyalty 2 There is high representative turnover
3 Avon has moderate pricing 3 Jewelry/accessory sales droped 9%
4 Direct sales mean personal attention 4 Avos has failed to meet demand in China
5
Avon products have high brand recognition
(worldwide)
5 Advertising is less than hal of competition
6 Avon has a strong financial position 6
Only there women wotk in upper
management
7
There is improved Anew line of skin care
products
7 Foreign management turnover is high
8
High R & D; Avon is the leading skin care
innovation
8 There are catalog limitations
9 There are new designer label fashions 9 Image is old-fashioned
10
Avons global business council launches
brands and communicates Avons image
Opportunities S-O Strategies W-O Strategies
1 There is consumer standardization 1 Create global Brand (S1,S2,S6,O1-3,O5) 1
Promote Elizabeth taylor jewelry line
(W2,W3,O1,O8)
2
There is high population growth in China,
India and Indonesia
2
market "Anew" to aging population (S1,S4,
S7,O8)
2
Recruit women for management
(W2,W6,W8,O1,O8)
3
There is high Avon demand in Pacific Rim,
Eastern Europe and South America
3
Increase Eastern Europe Russia distributin
(S5,S10,O1,O3,O5-7)
3
Acquire additional retail cosmetic
companies (W1,O9)
4
Web Advertising and ordering presents and
opportunity
4 Increase in Brasil (S5,S6,O3,O5-7) 4
Implement web advertising and shopping
(W1,W9,O4)
5
There is increased discretionary income in
developing coutries
5
Acquire additional retail cosmetic
companies (S6,O9)
5
Increase advertising targeted at older
women (W5,O8)
6
Foreign retail infrastructures are
underdeveloped
7
There is potential for third-party product
sales
8
42,1 million women will be over 50 in the
next five years
9
There are cosmetic company mergers and
acquistions
Threats S-T Strategies W-T Strategies
1
There are cosmetic company mergers and
acquistions
1
Develop "real model" campaign
(S1,S5,S6,S8,T1,T2,T8)
1
Develop mall sales for representatives
(W1,W2,W5,W7,T3,T10)
2 There are more women in the work force 2
Develop home beauty product
(S1,S2,S4,T3,T7)
2
Develop home party sales for
representatives (W1-3,W5,W7,W8,T3)
3 Foreign exchange rates fluctuate 3
Begin Eastern Europe Russia Third Party
product sales (S4,S10,T7,T10)
3
Develop a creative idea award program
(W2,W5,W8,T1,T2,T9)
4 Interest rate change 4
Market genemus "frequent-buyer" discount
(S1-6,T8,T9)
4
Increase TV ads during early morning show
(W1-3,W5,W8,W9.T1,T2)
5 Yhere is instability in foreign governments 5
Increase market share through acquistions
(S6,T1,T7,T8
5
Offer to match ad spending by individual
representatives (W5,T7)
6 China has political/legal risk 6
Develop a new line of retail cosmetics under
a different brand name (W1,W8,T7,T9)
7 Industrialized nations market are saturated 7
Offer Avon products through retail outlets
(W1,W2,T2,T9)
8
Revlon/maybelline merger has combined
21,6% market share
9 Retail cosmetics are readily acessible
10
Western cosmetic companies are
competing in foreign markets
TOWS MATRIX
SPACE MATRIX
+1 +2 +3 +4 +5 +6 -6 -5 -4 -3 -2 -1
+
1








+
2








+
3







+
4





+
5






+
6


-
6








-
5









-
4







-
3







-
2






-
1
CONSERVATIVE AGGRESSIVE
COMPETITIVE DEFENSIVE
AVON PRODUCT, Inc 1997
A firm in the Aggressive quadrant should use its internal strength to (1) take advantage of
external opportunities, (2) overcome internal weaknesses, and (3) avoid external threats.
Therefore, market penetration, market development, product development, backward
integration, forward integration, horizontal integration, conglomerate diversification,
concentric devoirsification, horizontal diversiication, or a combination strategy can all be
feasible
GRAND MATRIX
Rapid
Market
Growth
+1 +2 +3 +4 +5 +6 -6 -5 -4 -3 -2 -1
+
1








+
2








+
3







+
4





+
5






+
6


-
6








-
5









-
4







-
3







-
2






-
1
Quadrant II Quadrant I
Quadrant IV Quadrant III
AVON PRODUCT, Inc 1997
Slow
Market
Growth
Weak
Competit
ion
Position
Strong
Competit
ion
Position
1. Market development
2. Market penetration
3. Product development
4. Forward integration
5. Backward integration
6. Horizontal integration
7. Concentric
diversification
IE MARIX
Strong Average Weak
3,0 to 4,0 2,0 to 2,99 1,0 to 1,99
High 3,0 to 4,0
I II III
Medium 2,0 to 2,99
IV V VI
Low 1,0 to 1,99
VII VIII IX
HOLD AND MAINTAIN
THE IFE TOTAL WEIGHTE SCORE
The EFE Total Weighted Score AVON PRODUCT, Inc 1997
MATRIX AND TOWS SUMMARY
Alternative strategis IE SPACE GRAND COUNT
Forward integration X X 2
Backward integration X X 2
Horizontal integration X X 2
Market penetration X X X 2
Market development X X 2
Product Development X X X 3
Concentric diversification - X X 2
Conglemrate diversification - X 1
Horizontal diversification - X 1
Joint venture - 0
Rtrenchement 0
Diverstiture 0
Liquidation 0
S-O Strategies
1 Create global Brand (S1,S2,S6,O1-3,O5)
2 market "Anew" to aging population (S1,S4, S7,O8)
3 Increase Eastern Europe Russia distributin (S5,S10,O1,O3,O5-7)
4 Increase in Brasil (S5,S6,O3,O5-7)
5 Acquire additional retail cosmetic companies (S6,O9)
W-O Strategies
1 Promote Elizabeth taylor jewelry line (W2,W3,O1,O8)
2 Recruit women for management (W2,W6,W8,O1,O8)
3 Acquire additional retail cosmetic companies (W1,O9)
4 Implement web advertising and shopping (W1,W9,O4)
5 Increase advertising targeted at older women (W5,O8)
S-T Strategies
1 Develop "real model" campaign (S1,S5,S6,S8,T1,T2,T8)
2 Develop home beauty product (S1,S2,S4,T3,T7)
3 Begin Eastern Europe Russia Third Party product sales (S4,S10,T7,T10)
4 Market genemus "frequent-buyer" discount (S1-6,T8,T9)
5 Increase market share through acquistions (S6,T1,T7,T8
W-T Strategies
1 Develop mall sales for representatives (W1,W2,W5,W7,T3,T10)
2 Develop home party sales for representatives (W1-3,W5,W7,W8,T3)
3 Develop a creative idea award program (W2,W5,W8,T1,T2,T9)
4 Increase TV ads during early morning show (W1-3,W5,W8,W9.T1,T2)
5 Offer to match ad spending by individual representatives (W5,T7)
6 Develop a new line of retail cosmetics under a different brand name (W1,W8,T7,T9)
7 Offer Avon products through retail outlets (W1,W2,T2,T9)
QSPM
Critical Succes Factors Weight AS TAS AS TAS
Strengths
1 Avon has superior product reputation 0,1 4 0,4 3 0,3
2 Consumers have brand loyalty 0,05 - - - -
3 Avon has moderate pricing 0,025 - - - -
4 Direct sales mean personal attention 0,05 4 0,2 1 0,05
5 Avon products have high brand recognition (worldwide) 0,1 4 0,4 3 0,3
6 Avon has a strong f inancial position 0,125 - - - -
7 There is improved Anew line of skin care products 0,025 4 0,1 2 0,05
8 High R & D; Avon is the leading skin care innovation 0,05 - - - -
9 There are new designer label f ashions 0,025 3 0,075 1 0,025
10 Avons global business council launches brands and communicates Avons image 0,05 1 0,05 4 0,2
Weaknesses
1 Direct sales mean poor product accessibility 0,1 3 0,3 4 0,4
2 There is high representative turnover 0,025 3 0,075 1 0,025
3 Jewelry/accessory sales droped 9% 0,025 - - - -
4 Avos has f ailed to meet demand in China 0,025 1 0,025 2 0,05
5 Advertising is less than hal of competition 0,05 4 0,2 1 0,05
6 Only there women wotk in upper management 0,025 - - - -
7 Foreign management turnover is high 0,05 - - - -
8 There are catalog limitations 0,05 3 0,15 1 0,05
9 Image is old-f ashioned 0,05 4 0,2 1 0,05
Total 1,00 2,18 1,55
Strategic A;ternative
Alternative Method U.S. Promotion Plas
QSPM
Critical Succes Factors Weight AS TAS AS TAS
Opportunities
1 There is consumer standardization 0,1 0 0 0 0
2 There is high population growth in China, India and Indonesia 0,04 1 0,04 2 0,08
3 There is high Avon demand in Pacif ic Rim, Eastern Europe and South America 0,05 1 0,05 2 0,1
4 Web Advertising and ordering presents and opportunity 0,025 2 0,05 1 0,025
5 There is increased discretionary income in developing coutries 0,1 1 0,1 3 0,3
6 Foreign retail inf rastructures are underdeveloped 0,05 1 0,05 3 0,15
7 There is potential f or third-party product sales 0,04 1 0,04 4 0,16
8 42,1 million women will be over 50 in the next f ive years 0,05 4 0,2 1 0,05
9 There are cosmetic company mergers and acquistions 0,05 2 0,1 3 0,15
Threats
1 There are cosmetic company mergers and acquistions 0,08 3 0,24 1 0,08
2 There are more women in the work f orce 0,1 3 0,3 4 0,4
3 Foreign exchange rates f luctuate 0,025 4 0,1 1 0,025
4 Interest rate change 0,025 3 0,075 1 0,025
5 Yhere is instability in f oreign governments 0,025 4 0,1 1 0,025
6 China has political/legal risk 0,025 4 0,1 1 0,025
7 Industrialized nations market are saturated 0,05 3 0,15 1 0,05
8 Revlon/maybelline merger has combined 21,6% market share 0,025 2 0,05 1 0,025
9 Retail cosmetics are readily acessible 0,1 2 0,2 4 0,4
10 Western cosmetic companies are competing in f oreign markets 0,04 1 0,04 4 0,16
Sub Total 1,00 1,985 2,23
Sum total attractiveness score 4,16 3,78
Strategic Alternative
U.S. Promotion Plas Alternative Method