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AVON

PRODUCTION, Inc.
1997

EXTERNAL AUDIT
[Opportunities]
1.
2.
3.

4.
5.
6.
7.
8.
9.

There is consumer standardization


There is high population growth in China, India and
Indonesia
There is high Avon demand in Pacific Rim, Eastern
Europe and South America
Web Advertising and ordering presents and opportunity
There is increased discretionary income in developing
coutries
Foreign retail infrastructures are underdeveloped
There is potential for third-party product sales
42,1 million women will be over 50 in the next five years
There are cosmetic company mergers and acquistions

EXTERNAL AUDIT
[Threats]
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

There are cosmetic company mergers and acquistions


There are more women in the work force
Foreign exchange rates fluctuate
Interest rate change
Yhere is instability in foreign governments
China has political/legal risk
Industrialized nations market are saturated
Revlon/maybelline merger has combined 21,6% market
share
Retail cosmetics are readily acessible
Western cosmetic companies are competing in foreign
markets

Internal Audit
[Strengths]
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.

Avon has superior product reputation


Consumers have brand loyalty
Avon has moderate pricing
Direct sales mean personal attention
Avon products have high brand recognition (worldwide)
Avon has a strong financial position
There is improved Anew line of skin care products
High R & D; Avon is the leading skin care innovation
There are new designer label fashions
Avons global business council launches brands and
communicates Avons image

Internal Audit
[Weaknesses]
1.
2.
3.
4.
5.
6.
7.
8.
9.

Direct sales mean poor product accessibility


There is high representative turnover
Jewelry/accessory sales droped 9%
Avos has failed to meet demand in China
Advertising is less than hal of competition
Only there women wotk in upper management
Foreign management turnover is high
There are catalog limitations
Image is old-fashioned

EFE MATRIX
Critical Succes Factors

Weight

Rating

Score

1 There is consum er standardization

0,1

0,4

2 There is high population grow th in China, India and Indonesia

0,04

0,16

3 There is high Avon dem and in Pacific Rim , Eastern Europe and South Am erica
0,05

0,2

4 Web Advertising and ordering presents and opportunity

0,025

0,075

5 There is increased discretionary incom e in developing coutries

0,1

0,4

6 Foreign retail infrastructures are underdeveloped

0,05

0,2

7 There is potential for third-party product sales

0,04

0,16

8 42,1 m illion w om en w ill be over 50 in the next five years

0,05

0,2

9 There are cosm etic com pany m ergers and acquistions

0,05

0,15

1 There are cosm etic com pany m ergers and acquistions

0,08

0,16

2 There are m ore w om en in the w ork force

0,1

0,1

3 Foreign exchange rates fluctuate

0,025

0,075

4 Interest rate change

0,025

0,05

5 Yhere is instability in foreign governm ents

0,025

0,05

6 China has political/legal risk

0,025

0,025

7 Industrialized nations m arket are saturated

0,05

0,05

8 Revlon/m aybelline m erger has com bined 21,6% m arket share

0,025

0,075

0,1

0,1

10 Western cosm etic com panies are com peting in foreign m arkets

0,04

0,08

Total

1,00

Opportunities

Threats

9 Retail cosm etics are readily acessible

2,71

IFE MATRIX
Critical Succes Factors

Weight

Rating

Score

Strengths
1 Avon has superior product reputation

0,1

0,4

0,05

0,2

0,025

0,075

0,05

0,2

0,1

0,4

6 Avon has a strong financial position

0,125

0,5

7 There is im proved Anew line of skin care products

0,025

0,075

0,05

0,15

0,025

0,05

0,15

0,1

0,1

2 There is high representative turnover

0,025

0,05

3 Jew elry/accessory sales droped 9%

0,025

0,05

4 Avos has failed to m eet dem and in China

0,025

0,025

0,05

0,05

0,025

0,05

7 Foreign m anagem ent turnover is high

0,05

0,1

8 There are catalog lim itations

0,05

0,1

9 Im age is old-fashioned

0,05

0,05

2 Consum ers have brand loyalty


3 Avon has m oderate pricing
4 Direct sales m ean personal attention
5 Avon products have high brand recognition (w orldw ide)

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 com m unicates Avons im
0,05
age
Weaknesses
1 Direct sales m ean poor product accessibility

5 Advertising is less than hal of com petition


6 Only there w om en w otk in upper m anagem ent

Total

1,00

2,78

Stre ngths

TOWS MATRIX

Avon has s upe rior product re putation

Dire ct s ale s m e an poor product acce s s ibility

Cons um e rs have brand loyalty

The re is high re pre s e ntative turnove r

Avon has m ode rate pricing

Je w e lry/acce s s ory s ale s drope d 9%

Dire ct s ale s m e an pe rs onal atte ntion

Avos has faile d to m e e t de m and in China

Avon products have high brand re cognition


(w orldw ide )

Adve rtis ing is le s s than hal of com pe tition

Avon has a s trong financial pos ition

Only the re w om e n w otk in uppe r


m anage m e nt

Fore ign m anage m e nt turnove r is high

The re are catalog lim itations

Im age is old-fas hione d

The re is im prove d Ane w line of s k in care


products
High R & D; Avon is the le ading s k in care
8
innovation
9 The re are ne w de s igne r labe l fas hions
Avons global bus ine s s council launche s
10
brands and com m unicate s Avons im age
7

Opportunitie s
1
2
3
4
5
6
7
8
9

The re is cons um e r s tandardization


The re is high population grow th in China,
India and Indone s ia
The re is high Avon de m and in Pacific Rim ,
Eas te rn Europe and South Am e rica
We b Adve rtis ing and orde ring pre s e nts and
opportunity
The re is incre as e d dis cre tionary incom e in
de ve loping coutrie s
Fore ign re tail infras tructure s are
unde rde ve lope d
The re is pote ntial for third-party product
s ale s
42,1 m illion w om e n w ill be ove r 50 in the
ne xt five ye ars
The re are cos m e tic com pany m e rge rs and
acquis tions

Thre ats

We ak ne s s e s

S-O Strate gie s


1
2
3

Cre ate global Brand (S1,S2,S6,O1-3,O5)


m ark e t "Ane w " to aging population (S1,S4,
S7,O8)
Incre as e Eas te rn Europe Rus s ia dis tributin
(S5,S10,O1,O3,O5-7)

W-O Strate gie s


1
2
3

Incre as e in Bras il (S5,S6,O3,O5-7)

Acquire additional re tail cos m e tic


com panie s (S6,O9)

S-T Strate gie s

W-T Strate gie s

The re are cos m e tic com pany m e rge rs and


acquis tions

The re are m ore w om e n in the w ork force

Fore ign e xchange rate s fluctuate

Inte re s t rate change

Yhe re is ins tability in fore ign gove rnm e nts

China has political/le gal ris k

De ve lop a ne w line of re tail cos m e tics unde r


a diffe re nt brand nam e (W1,W8,T7,T9)

Indus trialize d nations m ark e t are s aturate d

Offe r Avon products through re tail outle ts


(W1,W2,T2,T9)

8
9
10

Re vlon/m aybe lline m e rge r has com bine d


21,6% m ark e t s hare
Re tail cos m e tics are re adily ace s s ible
We s te rn cos m e tic com panie s are
com pe ting in fore ign m ark e ts

De ve lop "re al m ode l" cam paign


(S1,S5,S6,S8,T1,T2,T8)
De ve lop hom e be auty product
(S1,S2,S4,T3,T7)
Be gin Eas te rn Europe Rus s ia Third Party
product s ale s (S4,S10,T7,T10)
M ark e t ge ne m us "fre que nt-buye r" dis count
(S1-6,T8,T9)
Incre as e m ark e t s hare through acquis tions
(S6,T1,T7,T8

Prom ote Elizabe th taylor je w e lry line


(W2,W3,O1,O8)
Re cruit w om e n for m anage m e nt
(W2,W6,W8,O1,O8)
Acquire additional re tail cos m e tic
com panie s (W1,O9)
Im ple m e nt w e b adve rtis ing and s hopping
(W1,W9,O4)
Incre as e adve rtis ing targe te d at olde r
w om e n (W5,O8)

1
2
3
4
5

De ve lop m all s ale s for re pre s e ntative s


(W1,W2,W5,W7,T3,T10)
De ve lop hom e party s ale s for
re pre s e ntative s (W1-3,W5,W7,W8,T3)
De ve lop a cre ative ide a aw ard program
(W2,W5,W8,T1,T2,T9)
Incre as e TV ads during e arly m orning s how
(W1-3,W5,W8,W9.T1,T2)
Offe r to m atch ad s pe nding by individual
re pre s e ntative s (W5,T7)

SPACE MATRIX
AGGRESSIVE

+2

+3

+4

+5

+6

CONSERVATIVE

+1

AVON PRODUCT, Inc 1997

-5

-4

-3

-2

-1

+1

+2

+3

+4

+5

+6

-6

-5

-4

-3

-2

-1

-6

DEFENSIVE

COMPETITIVE

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
M arke t
Growth
Quadrant I

+2

+3

+4

+5

+6

Quadrant II

+1

AVON PRODUCT, Inc 1997

-6

-5

-4

-3

-2

-1

+1

+2

+3

+4

+5

+6

1.
2.
3.
4.
5.
6.
7.

Market development
Market penetration
Product development
Forward integration
Backward integration
Horizontal integration
Concentric
diversification

-6

-5

-4

-3

-2

-1

Weak
Competit
ion
Position

Quadrant III

Quadrant IV
Slow
M arke t
Growth

Strong
Competit
ion
Position

IE MARIX
THE IFE TOTAL WEIGHTE SCORE

Strong
3,0 to 4,0
I

Average
2,0 to 2,99
II

Weak
1,0 to 1,99
III

IV

VI

High 3,0 to 4,0

The EFE Total Weighted Score Medium 2,0 to 2,99

AVON PRODUCT, Inc 1997

VII
Low 1,0 to 1,99

HOLD AND MAINTAIN

VIII

IX

MATRIX AND TOWS SUMMARY


Alternative strategis
Forward integration
Backward integration
Horizontal integration
Market penetration
Market development
Product Development
Concentric diversification
Conglemrate diversification
Horizontal diversification
Joint venture
Rtrenchement
Diverstiture
Liquidation

IE

X
X
-

SPACE
X
X
X
X
X
X
X
X
X

GRAND
X
X
X
X
X
X
X

COUNT
2
2
2
2
2
3
2
1
1
0
0
0
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
1
2
3
4
5

Strategies
Promote Elizabeth taylor jewelry line (W2,W3,O1,O8)
Recruit women for management (W2,W6,W8,O1,O8)
Acquire additional retail cosmetic companies (W1,O9)
Implement web advertising and shopping (W1,W9,O4)
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
1
2
3
4
5
6
7

Strategies
Develop mall sales for representatives (W1,W2,W5,W7,T3,T10)
Develop home party sales for representatives (W1-3,W5,W7,W8,T3)
Develop a creative idea award program (W2,W5,W8,T1,T2,T9)
Increase TV ads during early morning show (W1-3,W5,W8,W9.T1,T2)
Offer to match ad spending by individual representatives (W5,T7)
Develop a new line of retail cosmetics under a different brand name (W1,W8,T7,T9)
Offer Avon products through retail outlets (W1,W2,T2,T9)

QSPM
Critical Succes Factors

Weight

Strategic A;ternative
U.S. Promotion Plas Alternative Method
AS
TAS
AS
TAS

Strengths
1 Avon has superior product reputation

0,1

0,4

0,3

2 Consumers have brand loyalty

0,05

3 Avon has moderate pricing

0,025

4 Direct sales mean personal attention

0,05

0,2

0,05

5 Avon products have high brand recognition (w orldw ide)

0,1

0,4

0,3

6 Avon has a strong financial position

0,125

7 There is improved Anew line of skin care products

0,025

0,1

0,05

8 High R & D; Avon is the leading skin care innovation

0,05

9 There are new designer label fashions

0,025

0,075

0,025

10 Avons global business council launches brands and communicates Avons image 0,05

0,05

0,2

0,1

0,3

0,4

2 There is high representative turnover

0,025

0,075

0,025

3 Jew elry/accessory sales droped 9%

0,025

4 Avos has failed to meet demand in China

0,025

0,025

0,05

5 Advertising is less than hal of competition

0,05

0,2

0,05

6 Only there w omen w otk in upper management

0,025

7 Foreign management turnover is high

0,05

8 There are catalog limitations

0,05

0,15

0,05

9 Image is old-fashioned

0,05

0,2

0,05

Weaknesses
1 Direct sales mean poor product accessibility

Total

1,00

2,18

1,55

QSPM
Critical Succes Factors

Weight

Strategic Alternative
U.S. Promotion Plas Alternative Method
AS
TAS
AS
TAS

Opportunities
1 There is consumer standardization

0,1

2 There is high population grow th in China, India and Indonesia

0,04

0,04

0,08

3 There is high Avon demand in Pacific Rim, Eastern Europe and South America

0,05

0,05

0,1

4 Web Advertising and ordering presents and opportunity

0,025

0,05

0,025

5 There is increased discretionary income in developing coutries

0,1

0,1

0,3

6 Foreign retail infrastructures are underdeveloped

0,05

0,05

0,15

7 There is potential for third-party product sales

0,04

0,04

0,16

8 42,1 million w omen w ill be over 50 in the next five years

0,05

0,2

0,05

9 There are cosmetic company mergers and acquistions

0,05

0,1

0,15

1 There are cosmetic company mergers and acquistions

0,08

0,24

0,08

2 There are more w omen in the w ork force

0,1

0,3

0,4

3 Foreign exchange rates fluctuate

0,025

0,1

0,025

4 Interest rate change

0,025

0,075

0,025

5 Yhere is instability in foreign governments

0,025

0,1

0,025

6 China has political/legal risk

0,025

0,1

0,025

7 Industrialized nations market are saturated

0,05

0,15

0,05

8 Revlon/maybelline merger has combined 21,6% market share

0,025

0,05

0,025

0,1

0,2

0,4

0,04

0,04

0,16

Threats

9 Retail cosmetics are readily acessible


10 Western cosmetic companies are competing in foreign markets
Sub Total
Sum total attractiveness score

1,00

1,985

2,23

4,16

3,78

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