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Amway's multi level marketing (MLM) as a definite solution for earning extra money
Submitted by:
YEVALKAR ANIKET ASHOK 2012PGP449
Contents
Case Background .................................................................................................................................... 3 Research Problem ................................................................................................................................... 3 Qualitative techniques for obtaining data ............................................................................................... 4 Rationale for choosing these methods .................................................................................................... 4 Profiles of the respondents for study....................................................................................................... 4 Questions in In-Depth Interview ......................................................................................................... 5 To Amway IBOs ............................................................................................................................. 5 To Diamond level IBO .................................................................................................................... 5 To Legal/Financial experts.............................................................................................................. 6 FGD Questions.................................................................................................................................... 6 Plan for carrying out analysis of data...................................................................................................... 6 Expectations from study ......................................................................................................................... 7
Case Background
The study is about Amways business structure and its impact on the stakeholders. Amway is $11-billion global network marketing company, also known as multi-level marketing (MLM), firm. India accounts for just 5 per cent of that. It sells a range of products from nutritional to personal care through a network of distributors. These distributors work independently but certain percentage of their sales commission goes to the distributor who is in upper level of distribution pyramid. Many people are attracted towards Amways business model and are becoming a part of it either by becoming a customer of Amways products or becoming a distributor under existing distributor. This type of distributor structure is called pyramid structure wherein higher the distributor under any particular distributor, higher is the chance of getting sales commission from their sales. Recently Indias Ministry of Corporate Affairs has started scrutinizing MLM firms on the basis of fraudulent transactions carried by some MLM firms in the finance sector. Ministry has drafted a law that will outlaw MLM firms; instead, they will need to adopt a single-level direct sale approach. Being an MLM firm, Amways business might get affected and distributors future income might be at risk. So we examine distributors perception about the business model through our qualitative research.
Research Problem
By conducting this qualitative research we try to determine whether Amways Independent Business Owner (IBO) perceive its multi level marketing (MLM) as a definite solution for earning extra money without any risk. We also seek to find the reasons if any behind their thinking.
FGD: An FGD would consist of mix of Amway distributors, financial and legal experts of business so it will give more confirming views about business. The financial and legal experts would come up with their understanding of business and issues that might lead to closure of business. Distributors in tern might give counter arguments supporting their business. This will definitely help us in finding out unknown facts.
Homemaker/Private/Government job doing person: We need to select respondents with different levels under Amways MLM pyramid. This would ensure representation/views from all the levels. Also homemaker and other professionals should be considered differently as they have different risk perceptions.
4 QMR: Individual Assignment
No Job: There also need people whose sole source of income is Amway and they are not doing any other job. This would be helpful in understanding risk perceptions from that persons point. Diamond Level IBO: In this level of Amways MLM, the distributor has very large number of fellow distributors. This person is responsible for growing network by conducting seminars and workshops and has really larger view about the entire business. It is therefore necessary to include this person in Qualitative research study to get his view into consideration. Legal/Financial experts: These experts would be aware of recent changes in laws governing MLM company processes. They would also be aware of Amway business model, so their interview can give us insights about legality and future problems the business might face.
1. Do you think Amways MLM business is a definite source for earning extra money without any risk? 2. What are the risks for IBOs at your level 3. If you do not increase your network now onwards would you still get perpetual income? 4. In your opinion how current MLM model of Amway is different from that of financial firms? 5. Will new law affect Amway business?
To Legal/Financial experts In-depth interview with these experts will be helpful to prepare questions for FGD. 1. 2. 3. 4. What are the risks in Amway business model to IBOs? How will new laws affect Amway business? How can Amway business model be tweaked to protect interests of IBOs? What are your views about Amway business as a source of money?
FGD Questions
An FGD would be conducted in a group of 8 persons involving 6 IBOs of Amway, 1 legal expert, 1 financial expert. The group would be presented with various cases of Amway business, some examples of similar MLM activities by other companies and some fraudulent activities. The group members then would be asked to give their individual opinion on issues. The IBOs would be asked to prove that their business is safe and they are able to fulfill their dreams through Amway business. Financial and legal experts then would be asked to find the loop holes in the system and counter argue with IBOs. The discussion would certainly reveal some concrete points regarding Amway business sustainability in Indian context with changing rules and regulations.
in category 1. Similarly less conforming responses and instances where IBOs are somewhat skeptic about business would be categorized differently. In second stage on data analysis we would refine categories to be more realistic. E.g. responses and keywords which are sighted by IBO, legal expert and diamond level distributor would be in the same category. In the last stage we would link the reasons for which IBOs think Amways business as safe/risky for earning extra money.