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Avon

In: Business and Management

Submitted By iamaurea
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I. Introduction A. Company Background
Avon Products, Inc. is a US cosmetics, perfume and toy seller with markets in over 140 countries across the world and sales of $9.9 billion worldwide as of 2007.
Avon Product is a multi-level marketing company. The company's chairman and CEO is Andrea Jung, who was promoted to the position in 1999. She has completed a decade as CEO and is the longest tenured female CEO among Fortune 500 companies
Avon uses both door-to-door sales people ("Avon ladies," primarily and a growing number of men) and brochures to advertise its products. B. Research Design and Methodology

This paper is primarily to formulate and recommend general strategies for the Avon Company in terms of competition in cosmetic and beauty industry. This will determine the company’s situation in the market. II. External Analysis A. Economic Forces
Avon is the world's largest direct seller. Being an Avon Representative means you’re selling an iconic global brand while running your own local business. With Avon, you are in business for yourself but not by yourself. Avon's field management, as well as your fellow Representatives, provide mentoring, training and support every step of the way.
Powerful Brand

Avon Representatives around the world sell four lipsticks every second. Avon has 90% brand recognition in most major markets. In fact, two out of five women worldwide purchased an Avon product in the last year. And more beauty products carry the Avon name than any other brand in the world. As an Avon Representative, you will have the chance to sell beauty innovations that revolutionize the industry. You will have the opportunity to offer customers a broad range of products that appeal to a diverse consumer base.

Compelling Earnings Opportunity

You can earn money two ways: by simply selling products or, through the Sales Leadership program, by selling products while recruiting others at the same time. The higher your campaign (selling cycle) sales are, the greater the percentage you'll earn on those sales. Sales Leaders, Representatives who sell and recruit, earn money based on their personal sales plus their recruits' sales, with a similar progressive earnings structure applied.

B. Social Forces * Nearly a billion women worldwide are affected by violence. The mission of Avon’s domestic violence program, “Speak Out Against Domestic Violence,” is to end family and gender violence. As Avon is the company for women, dedicated to the empowerment of women globally, fighting domestic violence is a cause that’s front and center on Avon’s philanthropic radar. Launched in 2004, Speak out against Domestic Violence focuses on education, prevention and victim support programs.

Vital Partnerships * In 2008, Avon expanded it efforts to fight violence against women when it partnered with the United Nations Development Fund for Women (UNIFEM) to promote women’s empowerment and end violence against women. The partnership was announced at the United Nations during the “Global Summit for a Better Tomorrow,” an event co-sponsored by UNIFEM and Avon in celebration of International Women’s Day. A year later, Avon and the Avon Foundation for Women, the company’s philanthropic arm (which is based in the United States), partnered with the U.S. State Department and Vital Voices to launch “The Global Partnership to End Violence Against Women” to combat the most destructive types of violence against women, and to help ensure justice for women and girls worldwide.
Avon Global Believe Fund

* In honor of Avon's 125th anniversary, the $2 million Avon Global Believe Fund was created in 2011, with the goal to make grants to outstanding nonprofit organizations that provide critical life-saving services to victims of domestic violence and their families. Avon and the Avon Foundation for Women are awarding Fund grants to agencies in the 16 cities hosting the Avon Believe World Tour this year, as well as to shelters in other Avon markets around the world. * This global effort also aims to draw attention to the alarming lack of adequate services for women and children who are victims of domestic violence in communities everywhere. C. Cultural Forces
Codes of Conduct and Ethics
In February 2008, the board approved an updated version of our comprehensive Code of Business Conduct and Ethics, which governs our business behavior and ethical conduct and applies to each member of the board and to every associate in every country in which Avon does business. The Code describes Avon’s policies and practices, which, collectively, are intended to promote ethical and lawful behavior and deter wrongdoing and improper conduct. For instance, the Code’s policies address compliance with regulations in all countries in which we operate; fair dealing; conflicts of interest; improper payments and bribery; insider trading; equal opportunity and nondiscrimination; and safety and health. The Code also provides information about how to ask the right questions and appropriately report any possible noncompliance. We have published a handbook of the Code for of our associates, which has been translated into ten languages.
Avon continues to provide training on the Code and related policies for associates worldwide. Our training is designed to enhance associate awareness and understanding of the Code and to further promote lawful and ethical associate conduct and deter improper conduct. Because our associates are extensions of our company, our expectations for associate behavior apply not only in formal business conduct but also in personal interactions. Avon also utilizes a periodic survey of associates, including its executive officers, which asks specific questions regarding compliance with our Code, and requires certification of compliance with the Code.
All Avon associates are required to report any violation of the Code. They are encouraged to speak to their managers and/or report any possible violation directly and confidentially to the Avon compliance committee—which consists of senior financial, legal, and human resources management—via the Avon Integrity Helpline or other channel. It is Avon policy that failure to report a violation is itself a violation of the Code. Avon will not tolerate any retaliation whatsoever by any director, officer, or other associate, or by any outside vendor or contractor, for any report provided in good faith. Under the Code, any associate who commits a violation will be subject to disciplinary action, up to and including dismissal. D. Demographic Forces
An Iconic Global Brand and Game-Changing Technology
Avon is a leading global consumer beauty brand and the world’s largest direct seller. It’s a company that values forward thinking and reinvention while honoring its heritage. Time and again, Avon delivers first-to-market beauty technologies, revolutionizing various product categories in the industry. And the world knows Avon; the company is in more than 100 markets and has 90% brand recognition worldwide. Avon has more than 40,000 Associates worldwide and 6.2 million Representatives.
The Value of Potential

Avon Founder David H. McConnell believed strongly in the potential of people, and that in that potential lay the power of possibility and, eventually, success. This philosophy still guides Avon today. The company is committed to helping its employees reach their highest potential, devoting substantial resources to career development and management. The result is a highly engaged, highly motivated workforce.

Worldwide Opportunities

As a global beauty company, Avon has jobs around the world in everything from Research and Development, finance and marketing, to supply chain management and communications. With Avon’s continuing global expansion come new employment opportunities in new markets. To learn more about making an impact at Avon around the world.

E. Environmental Forces
Avon’s commitment to environmental stewardship extends across its worldwide operations, with a focus on areas and opportunities that will have the greatest impact. Avon is dedicated to reducing its global environmental footprint: clear and measurable goals are set in key areas such as energy use, water consumption, waste management and greenhouse gas emissions that impact climate change.
For Avon's Corporate Responsibility Report, with details on the company's environmental practices, goals and achievements, including extensive metrics.
Green Building Design
Avon has made a significant commitment to green building design across all new construction at its facilities around the world. So far, this has resulted in the achievement of LEED Gold, BREEAM and equivalent certifications for manufacturing, distribution and administrative facilities in Brazil, the U.S. and the U.K.
Avon Paper Promise
Because Avon is a significant consumer of paper products, it is in a position to influence supply and demand, and contribute to the development of solutions that conserve and restore forests, protect biodiversity, and result in long-term social and economic benefits to communities. To drive this mission, the company introduced the Avon Paper Promise in early 2010. The Paper Promise established guidelines and goals, including a pledge to acquire 100% of Avon product brochure paper from certified or recycled sources by 2020. Currently that number stands at 74%.
Hello Green Tomorrow
Leveraging Avon’s greatest strength – its ability to educate, engage and mobilize people worldwide - the award-winning "Hello Green Tomorrow" program empowers a global women's environmental movement to nurture nature, with a focus on reforestation. Hello Green Tomorrow raised funds for reforestation of the Atlantic Rainforest in South America, resulting in the planting of two million trees, and Avon is expanding the scope of Hello Green Tomorrow in 2011.

F. Political Forces
Political Contribution and Lobbying
The Code prohibits political contributions by the company or in the name of Avon Products, Inc., without the prior approval of our global government affairs office. U.S. associates may make personal contributions to the Avon Fund for Responsible Government Political Action Committee for the support of federal candidates for public office in the United States.
It is important, however, for business leaders such as Avon to participate in the political process by helping legislators understand the complex issues that affect our business. Avon’s public policy participation includes areas such as labor laws, tariff and tax regulations and product formulation regulation.
While Avon does not make direct political contributions, the company does pay dues to trade associations, which provide information and assistance on issues of concern to the company. Beginning in 2009 (for calendar year 2008), Avon began reporting on its website the recipients and portion of Avon dues used for political contributions and expenditures by such U.S. trade associations and tax exempt organizations that receive in excess of $100,000 from Avon.

Political Contributions and Political Activity
Political contributions by the Company or in the name of Avon Products, Inc. are prohibited without the prior approval of Global Government Affairs in New York. “Political contributions” mean direct or indirect payments in support of political candidates, officeholders or political parties. In addition to cash payments, political contributions are deemed to include work performed by associates during paid working hours, the purchase of tickets to fund-raising events, the payment for advertisements, printing or other campaign expenses and product donations.
This policy applies solely to the use of Company assets and is not intended to discourage or prevent individual associates from making political contributions or engaging in political activities on their own behalf, so long as such contributions or activities are not linked in any way to Avon. In addition, U.S. associates may also make personal contributions to the Avon Fund for Responsible Government Political Action Committee for the support of federal candidates for public office in the United States. No associate may be reimbursed directly or indirectly by the Company for personal political contributions.

G. Legal Forces
Compliance with Laws
Avon is strongly committed to conducting its business in full compliance with all applicable laws, rules and regulations in every country in which it does business. Laws affecting the operation of Avon's business in every country have grown in number and complexity. It is expected that Associates will have a working knowledge of permissible activities involved in their work.
From time to time associates may come into contact with government officials responsible for enforcing the law. Associates must at all times deal honestly and truthfully with government officials. Associates must contact the Legal Department immediately of any request for information from any government agency not received in the ordinary course of business. Associates must also contact the
Legal Department immediately upon receipt of any legal claim, demand, cause of action, subpoena or order of any kind issued to Avon. In addition, associates should contact the Legal Department if they become aware of any other facts or circumstances that may lead to legal claims by or against Avon. No associate should threaten to initiate (or The Company may not participate in or support economic boycotts of countries when such boycotts are not sanctioned by the U.S. government initiate) legal claims on behalf of Avon without prior approval from the Legal Department.
Export Control Laws
Each associate must comply with all applicable export and import control laws. Under certain circumstances, “trading with the enemy” laws prohibit U.S. companies and their subsidiaries, including those located outside the United States, from dealing directly or indirectly with particular countries or businesses located in those countries. Associates involved in processing imports or exports must be familiar with these laws and applicable company procedures, particularly if your job involves processing, packaging, shipping and receiving packages. Consult your supervisor or manager or the Legal Department with questions. Further, the Company may not participate in or support economic boycotts of countries when such boycotts are not sanctioned by the U.S. government. You should inform the Office of the General Counsel of any request to participate in or support any such boycott and you must not comply, directly or indirectly, with any such boycott, including any request for information that may be related to such a boycott. Export shipment of products from any Avon location is permissible only to Avon affiliates or authorized licensees or distributors. Unauthorized export shipment of Avon products is strictly prohibited.

Internal Controls
Avon maintains a system of internal controls for financial reporting and control of its assets. The purpose of these internal controls is to ensure that Avon has processes designed to provide reasonable assurance that Avon’s transactions are properly authorized, its assets are safeguarded against unauthorized or improper use, its transactions are properly recorded and reported, and its assets are valued and monitored appropriately, all to permit the preparation of Avon’s financial statements in accordance with generally accepted accounting principles and other applicable legal requirements.

III. Industry Analysis A. Definition of the Industry

The cosmetic industry is a profitable business for most manufacturers of cosmetic products. By cosmetic products, we understand anything that is intended for personal care such as skin lotions or sun lotions, makeup and other such products meant to emphasize one's look. Given the technological development and the improvement of the manufacturing process of cosmetics and not least due to the constantly increasing demand of such products, this industry reported an important growth in terms of profit.

B. Marketing Mix 1. Products & Market Share As the world's largest direct seller, Avon markets to women in more than 100 countries through approximately 6.5 million active independent Avon Sales Representatives. Avon's product line includes beauty products, as well as fashion and home products, and features such well-recognized brand names as Avon Color, Anew, Skin-So-Soft, Advance Techniques, Avon Naturals, and mark. 2. Price & Pricing Terms As the world’s largest direct seller, Avon makes their prices very affordable to the consumer so that they will buy the products. 3. Promotions Avon uses some Hollywood celebrities to promote their products. During 2008, Avon made a monumental change in the marketing of its beauty products. Since its inception, the company had always concentrated on a homey image that catered more to suburban housewives than urban trendsetters. In their new promotions, the Avon Lady is being played by actress Reese Witherspoon, MTV star Lauren Conrad, and James Bond girl Gemma Arterton and represented by Patrick Dempsey of the hit TV drama Grey’s Anatomy. The company’s ad spending went from S136 million in 2005 to S249 million in 2006 and S368 million in 2007. Avon’s ad budget for 2008 was 14 percent higher than the year before. 4. Place / Channel of Distribution Avon believes its success has always rested on its channel of distribution---direct selling. The company is the world’s largest direct seller with 5.4 million Avon representatives in over 100 countries. Avon’s business model provides for the company to sell products to its representatives on credit so that for the most part, the representatives do not pay the company until they get paid by their customers. This makes the company the largest micro lender to woman. In 2007, the company increased its investment in representatives by over S120 million.

5. Competition * Porter’s Five Forces of Competition
To analyze the potential changes in the macro environment, we will use Porter’s Five Forces that drives competition. These five forces – threat of new entry, threat of rivalry among existing competitors, threat of substitutes, bargaining power of suppliers and buyers – are essential for us to be able to come up with potential threats and opportunities for the industry.

Rivalry within the industry: STRONG

Rivalry intensifies as the number of competitors increases and as competitors become more equal in size and capability: Unilever and Procter & Gamble dominate the world market in the CFT industry sales and they are highly competitive and mature corporations. Huge corporations who dominate the market make it more difficult for smaller companies in the same industry to gain market share and they are also able to mass produce at lower costs which in turn allows them to offer lower prices compared to competitors.
Rivalry is usually stronger when demand for the product is growing slowly: At the current time growth rates are low in the domestic population and household formations, because of this it will be harder for CFT companies to acquire substantial sales gains. The slower a demand for the product is growing the more companies have to compete with another for sales and market share.
Rivalry is stronger when customer's costs to switch brands are low: Switching costs in the CFT industry are very low, due to the endless amount of different brands of similar products. This cost is due to the higher number of competitors in the CFT industry and their tendency to mimic and copy new products in order to stay competitive. This minimizes the cost of switching to customers down to pennies.

New Entrants: WEAK
Barriers of entry:
Economies of scale: This particular barrier is weak for new small companies wanting to enter the CFT industry because they would not have to enter on a scale larger than the amount of risk they can reasonably accept. New competitors will not be able to keep up with others in the industry in areas such as advertising, marketing and distribution, financing, research and development.
Cost and resource disadvantages independent of size: Existing firms in the CFT industry such as Avon will have a lot of resource and cost advantages over any potential entrant. Avon's advantages would include product innovation acquired by the big investment in the research and development division, a grade A credit history along with a strong cash flow, the high quality associated with Avon brand products, and the leverage created by larger market share will allow Avon to have lower borrowing rates. Avon has lots of experience with suppliers and know who has the best quality for the best price, something the competition may only acquire through research and experience. Learning and experience curve effects: New firms entering the CFT industry are way behind according to this barrier also. Avon would be able to produce products in the same product line for a lot less due to their acquired expertise and experience they have gained by being in the business for over a century.
Brand preferences and customer loyalty: This barrier would be another problem for new entrants because having a quality brand with a strong customer base and loyalty is always a crucial competitive advantage. Company's such as Avon that have a strong brand name will automatically receive higher market share and create opportunities for additional growth along with the ability to fluctuate prices on their products. A new entrant with no loyalty from consumers or name recognition will find it hard to compete with Avon as well as other big players in the CFT industry.
Capital Requirements: Entering the CFT industry may cost a pretty penny for new entry firms. Finding suppliers, research and development for products, finding a sales force and a marketing scheme to establish clientele all can add up to a significant amount of money. These costs are even excluding start up costs and losses that may be incurred. Access to distribution channels: New entry firms may see several problems here unless they have already dumped a substantial amount of money into marketing and are beginning to be recognized in the industry. Wholesalers may be reluctant to pick up a product with no buyer recognition. Retail distribution may have to be set up from scratch, or existing retailers may need convincing to give away shelf space to the new entry and allow it an ample amount of time to sell. In essence it may cost a new entry a lot of money just to convince someone to sell their product. Expectation reactions of incumbent firms to new entry:

Substitute products: WEAK
The only substitute products are similar products from another company within the industry. Basically you either buy from Avon or one of its competitors or you just do not use products from the CFT industry at all. Because there are no true substitute products from a different industry the threat of substitutes is extremely weak.
Suppliers: WEAK
We will have to say that supplier power is weak because of the accessibility of the Internet and the fact that Avon uses a huge variety of products and most of them are easily obtainable through multiple different means. This makes it hard for suppliers to exercise sufficient bargaining power to influence the terms and conditions of supply in their favor. The Internet now makes it possible for companies to find the best suppliers for the best prices and collaborate closely with them to obtain maximum efficiency. Avon can get supplies basically from anywhere in the world not only because of the Internet but because they have entered foreign markets and produce products in different countries as well. A lot of Avon’s supplies such as packaging and so forth may be easily substituted if a supplier raised prices substantially. I will also assume that supplier’s would enjoy being a supplier for Avon because of the size of the company and the fact that it is a well-established firm basically guaranteeing sales. Avon could possibly keep a supplier in business.
Customers: MODERATE
Customer buying power is moderate because switching costs are low and customers have the flexibility to fill their needs by switching brands. Buyers tend to be well informed about Avon’s product prices and costs largely due to the Internet and this puts customers at a position of higher bargaining power. Customers do not pose a threat of integrating backwards; I cannot imagine women actually making their own make-up, perfume or skin care products, or mass-producing plastic bottles or containers that Avon uses to package its products. There are also a large number of buyers, not to say that all of Avon’s customers are not important but losing one will not significantly impact the company’s market share or financial position. 6. Customers
Avon make sure that they satisfy the needs of their customers for both men and women. They valued the trust of every customer to their product. They give the assurance to every customer that they provide a high quality product. They respect the industry self-regulatory standards governing the advertising and promotion of their products and honor their obligations relating to the protection of consumer privacy. 7. Target Market Avon cosmetics are not just for women, though traditionally women have been the target market for Avon products. There are also Avon products that are geared toward men and their skin care needs. Avon has also been seeing profits from their children's products, including toys and basic toiletries such as shampoo and bubble bath. More recently, Avon came out with two new brands, "M" and "mark". M is an Avon catalogue and line of products for men. Mark is an Avon line targeted to younger, college aged women (18-25). The Mark product line has been very successful and features a monthly 'catalog' that showcases the latest and most popular Avon cosmetics and other products geared toward younger cosmetics shoppers. C. Operation 1. Process High quality and high technology define Avon. Scientists from around the world work to bring a global and regional perspective when to foundations, powders, nail, eye and lip products. 2. Inventory
Because Avon markets a number of products, it is necessary for them to maintain a relatively high inventory level. The nature of Avon’s business, including the number of campaigns conducted annually and the large number of products marketed makes this necessary. Avon’s operations are seasonal with the holiday sales causing peak in the fourth quarter, which results in a build-up of inventory at the end of the third quarter. Inventory levels are reduced by the end of the fourth quarter after the holiday season is over and sometimes a clearance or sale on items. It is Avon’s objective to continue focus on inventory management and get inventory turnover down to 8-10 days. 3. Quality Avon has a proven history of delivering first-to-market beauty technologies, making the company a perennial game-changer. Time and again, Avon and its global team of scientists have led the industry in giving consumers breakthrough products that marry beauty and innovation. Light-adjusting makeup, more durable mascara, better-hydrating lipstick, revolutionary anti-aging skincare products, and an at-home alternative to pricey in-salon smoothing treatments. The list goes on and on. Simply put, Avon gives women around the globe products that help them look and feel their best -- in fact, two out of five women worldwide purchased an Avon product in the last year. 4. Technology Avon is innovating the direct-selling industry, enabling Representatives to run their businesses and maximize their earnings as never before. The company leverages the most advanced digital tools – the Internet, social media and mobile technology - so your Avon business integrates seamlessly with the way people today connect, communicate, share and shop. This innovation enhances your experience as a Representative and your customer's experience shopping with you. Avon’s direct-selling innovations include: * Customized social media environments for Representatives to reach customers and other Representatives. * A personalized eBrochure widget to ensure that customers are never more than a few clicks away from ordering, sharing the eBrochure with friends and creating a viral sensation. * A new application for Sales Leaders to more effectively monitor their Representatives’ orders. * “Intelligent ordering” to help Representatives remind customers when it’s time to re-order particular products.
Avon is passionate about giving you technology that does not depersonalize your relationships with your customers, ensuring that the core element of our business is still at the heart of everything we do. The best way to describe selling for Avon? High tech, high touch, highly rewarding.

5. Research and Development The heart of Avon’s innovation is the Global R&D Center located in upstate New York. The state-of-the-art, 225,000-square-foot facility is where 350 scientists and technicians focus on creating products that are some of the most advanced in the world. These creators of beauty take a multi-disciplined approach in developing fragrances, makeup, skincare and hair-care products that are high-tech, high-quality and highly appealing to consumers around the world. Avon has seven global satellite R&D facilities, including the newly opened center in Shanghai, which is Avon’s largest R&D facility outside the United States. Industry Problem The cosmetics industry is one in which products tend to be countercyclical. Demand for such products normally constant and unaffected by economic distress. In terms of color cosmetics, Euromonitor International, Inc. predicts that many of these markets will see a slowdown in volume demand. However, they believe that the compound annual growth rate for eye makeup will be 1.31 percent compared to -0.26 percent for overall color cosmetics for the period 2009 to 2013.

Ownership
David H. McConnell founded “The California Perfume Company (CPC) in 1886 with the first office located in New York. In 1906 the San Francisco earthquake destroyed CPC’s California office however, before long the company reopened. CPC’s first office outside United State was opened in 1914 in Montreal, Canada. In the 1920’s CPC sales doubled to $2 million during this time there were more than 25,000 representatives in the United States. The Company’s name was change to Avon Products Inc. after the British town Stratford-upon-Avon in 1938.
Organizational Structure

Vision Statement
To be the company that best understands and satisfies the product, service, and self-fulfillment needs of women globally.
Mission statement * The Global Beauty Leader—We will build a unique portfolio of Beauty and related brands, striving to surpass our competitors in quality, innovation and value, and elevating our image to become the Beauty company most women turn to worldwide. (1, 2) * The Women’s Choice for Buying— We will become the destination store for women, offering the convenience of multiple brands and channels, and providing a personal high touch shopping experience that helps create lifelong customer relationships. * The Premier Direct Seller— We will expand our presence in direct selling and lead the reinvention of the channel, offering an entrepreneurial opportunity that delivers superior earnings, recognition, service and support, making it easy and rewarding to be affiliated with Avon and elevating the image of our industry. (3) * The Best Place to Work— We will be known for our leadership edge, through our passion for high standards, our respect for diversity and our commitment to create exceptional opportunities for professional growth so that associates can fulfill their highest potential. (9)

* The Largest Women’s Foundation— We will be a committed global champion for the health and well-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—We will deliver superior returns to our shareholders by tirelessly pursuing new growth opportunities while continually improving our profitability, a socially responsible, ethical company that is watched and emulated as a model of success. (5, 7)

V. STRATEGY FORMULATION

A. Input Tools

1. External Factor Evaluation Matrix (EFE)

KEY INTERNAL FACTOR | Weight | Rating | Score | * Opportunities | | | | 1. Organic (Green) Products | 0.09 | 4 | 0.36 | 2. Eye Make-Up Market | 0.07 | 3 | 0.21 | 3. Increase Internet Presence | 0.08 | 4 | 0.32 | 4. Urban Trendsetters Market | 0.09 | 4 | 0.36 | 5. Cosmetic Industry tends to be countercyclical | 0.07 | 3 | 0.21 | 6. Geographic Growth | 0.09 | 4 | 0.36 | 7. Demand for cosmetic product normally remains constant and unaffected by economic distress | 0.05 | 3 | 0.15 | * Threats | | | | 8. Competitors | 0.08 | 2 | 0.16 | 9. Rejection of Internet Selling | 0.07 | 3 | 0.21 | 10. Economic Downturn | 0.09 | 2 | 0.18 | 11. Market Slowdown | 0.08 | 3 | 0.24 | 12. Inflation Rate | 0.07 | 3 | 0.21 | 13. Rising cost of commodities | 0.07 | 2 | 0.14 | * TOTAL | 1 | | 3.11 |

Ratings: 1-Poor, 2-Average, 3-Above Average, 4-Superior

1. Competitive Profile Matrix(CPM)

| | AVON | REVLON | MARY KAY | CRITICAL SUCCESS FACTORS | WEIGHT | RATING | SCORE | RATING | SCORE | RATING | SCORE | Price Competitiveness | 0.10 | 3 | 0.30 | 4 | 0.40 | 2 | 0.20 | Global Expansion | 0.09 | 3 | 0.27 | 4 | 0.36 | 2 | 0.18 | Organizational Structure | 0.04 | 2 | 0.08 | 4 | 0.16 | 3 | 0.12 | Employee Morale | 0.07 | 2 | 0.14 | 4 | 0.28 | 1 | 0.07 | Technology | 0.10 | 4 | 0.40 | 2 | 0.20 | 3 | 0.30 | Product Safety | 0.10 | 4 | 0.40 | 3 | 0.30 | 2 | 0.20 | Customer Loyalty | 0.10 | 2 | 0.20 | 4 | 0.40 | 3 | 0.30 | Market Share | 0.07 | 2 | 0.14 | 4 | 0.28 | 3 | 0.21 | Advertising | 0.10 | 2 | 0.20 | 4 | 0.40 | 1 | 0.10 | Product Quality | 0.10 | 2 | 0.20 | 3 | 0.30 | 1 | 0.10 | Product Image | 0.05 | 3 | 0.15 | 4 | 0.20 | 2 | 0.10 | Financial Position | 0.08 | 4 | 0.32 | 3 | 0.24 | 2 | 0.16 | TOTAL | 1.00 | | 2.80 | | 3.52 | | 2.04 |

Ratings: 1-Poor, 2-Average, 3-Above Average, 4-Superior The table above shows the various area of organizations competitive edge in the industry. 2. Internal Factor Evaluation(IFE)

* KEY INTERNAL FACTORS | * Weight | * Rating | * Score | Strengths | | | | 1. Global Market Leaders | 0.09 | 4 | 0.36 | 2. Committed and Dedicated workforce | 0.08 | 3 | 0.24 | 3. Revenues increased 7.5% from year 2007 to 2008 | 0.06 | 4 | 0.24 | 4. Channel Distribution – World’s Largest Direct Seller | 0.05 | 4 | 0.20 | 5. Award Winning Company Worldwide | 0.05 | 3 | 0.15 | 6. World’s Largest Micro Lender for Women | 0.06 | 3 | 0.18 | 7. World’s Top Global Brands – 90% recognition worldwide | 0.06 | 3 | 0.18 | 8. Excellent Promotional Strategies | 0.08 | 4 | 0.32 | 9. Manufacturing operation match ISO 14001 standards | 0.08 | 3 | 0.24 | 10. Announced permanent ending to animal testing | 0.07 | 4 | 0.28 | * Weakness | | | | 1. Brand Image | 0.06 | 1 | 0.06 | 2. High Advertising Cost | 0.05 | 2 | 0.10 | 3. Misleads Representatives | 0.03 | 2 | 0.06 | 4. Avon seems like to be a commodity | 0.05 | 2 | 0.10 | 5. Avon lagged behind seven of their cosmetic companies in customer loyalty | 0.09 | 2 | 0.18 | 6. Revenue decreased in North America by 129.4 million | 0.04 | 2 | 0.08 | TOTAL | 1.00 | | 2.97 | Ratings: 1-Major Weakness, 2-Minor Weakness, 3-Minor Strength, 4-Major Strength * Matching Tools

1. Strengths, Weakness, Opportunities and Threats(SWOT)

| STRENGTHS (S) | WEAKNESSES (W) | | 1. Global Market Leaders 2. Largest sales force 3. World’s largest micro lender to women 4. World’s largest direct seller 5. ISO 14001 certification for largest manufacturing plans 6. Avon own its major manufacturing and distribution centers 7. Increase in revenue in most geographic area due to increase in internet presence 8. First cosmetic manufacturer to end animal testing | 1. Decrease in North American Sales Revenue 2. Weak Brand Image 3. High advertising/budget cost 4. Poor brand loyalty 5. Does not target urban trendsetters 6. Beauty sales in the first quarter of 2009 were 12% lower compared to sales revenue in 2008 | OPPORTUNITIES (O) | S-O Strategies | W-O Strategies | 1. Organic (Green) Products 2. Eye make-up market 3. Increase internet process 4. Urban trendsetters market 5. The cosmetic industry tends to be countercyclical 6. Geographic Growth 7. Demand for cosmetic product normally remains constant and unaffected by economic distress | 1. Increase sales by increasing internet presence (S7, O3) 2. Maximize on the revenues in the make-up market through advertising and the sales force ( S2,O2) 3. Manufacture and distribute more products that are eco-friendly (S6,S4,S2,O1) | 1. Increase awareness of efforts to protect the environment (W2,O1) 2. Increase market share by positioning products to attract urban trendsetters (W5,O4) | THREATS (T) | S-T Strategies | W-T Strategies | 1. Competitors such as Revlon and Mary Kay 2. Rejection of internet selling by sales representatives 3. Economic downturn 4. Rising cost of commodities | 1. Educate employees on the benefits of increasing internet presence 2. Improve marketing strategies to new and existing customers by repositioning the brand, coupons, billboards, new packaging ( S4,S6,S7,T1,T3) | 1. Discount products that are not earning substantial revenue and then faze them off the market in a timely manner (W6,T3) |

Based on the analysis of the SWOT Matrix of Avon, we have come to realize that the brand positioning in the form of packaging is necessary, in order for us to create a stronger brand image and improve customer loyalty. We also realize that through aggressive market penetration we will further be able to increase revenue, further strength our competitive edge and increase profitability in the North American Region. 2. Strategic Position and Action Evaluation (SPACE) Matrix
-This matrix tells a strategist whether to pursue aggressive, conservative, defensive or competitive strategies
Value of ranging * +1(worst) to +6 (best) for Internal Strategic Position and Industry Strengths * -6(worst) to -1 (best) for external strategic position and competitive advantage

Competitive Advantage: -2.80 Industry Strengths: 3.60 x=-0.8
Internal Strategic Position: 4 External Strategic Position: -3.20 y=1.2

Internal Strategic Position | External Strategic Position | Financial Strength (FS)1. Return on Investment 32. Leverage 23. Liquidity 54. Working Capital 55. Cash Flow 4FS AVERAGE 4 | Environmental Stability (ES)1.Competitive Pressure -42. Unemployment -43. Technological Changes -34. Barriers to Entry -45. Price Elasticity on Demand -1ES AVERAGE -3.20 | Competitive Advantage | Industry Strengths | 1.Product Quality -32.Customer Loyalty -23.Control over supplier and distributor -34.Technological Know-How -3CA AVERAGE -2.80 | 1.Market Share Growth Potential 52.Profit Potential 43.Financial Stability 44.Product Capacity Utilization 35.Resource Utilization 2IS AVERAGE 3.60 |

| | | | | | FS | Y | | | | | | | | | | | | | 6 | | | | | | | | | | | | | | | | | | | | | | | | | Conservative | 5 | | | | | Aggressive | | | | | | | | | | | | | | | | | | | | | 4 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 3 | | | | | | | | | | | | | | | | | | | | | | | | | | | | 2 | | | | | | | | | | | | | | | | | | | | | | | | | | | 1 | | | | | | | | CA | | | | | | | | | | | | IS | | -6 | -5 | -4 | -3 | -2 | -1 | 1 | 2 | 3 | 4 | 5 | 6 | | | | | | | | | | | | | | | X | | | | | | | -2 | | | | | | | | | | | | | | | | | | | | | | | | | | | | -3 | | | | | | | | | | | | | | | | | | | | | | | | | | | | -4 | | | | | | | | | | | | | | | | | | | | | | | | | | | | -5 | | | | | | | | | | | Defensive | | | | | | | Competitive | | | | | | | -6 | | | | | | | | | | | | | | | | | | | | | | | | | | | | ES | | | | | | | | | | | | | | | | | | | | | | | Strategic - aggressive | | | | | | | | | | | (0.8)-y | | | | | | | | | | | | | (1.20)x | | | | | | | | | | | |

3. Internal External Matrix(IE) Weighted IFE Scores Strong Average Weak 3.0 to 3.99 2.0 to 2.99 1.0 to 1.99 I | II | III | IV Grow and Build | V Hold and Maintain | VI | VII | VIII | IX Harvest or Divest | High 3.0 to 3.99

Medium 3.0 to 2.99

Low 2.0 to 1.99

Avon can pursue its market penetration and product innovation. It can also consider developing new products to penetrate market further.

Grand Strategy Matrix

Rapid Market Growth | Weak Competitive Position | Quadrant II | Quadrant I (AVON) | Strong Competitive Position | | Quadrant III | Quadrant IV | | Slow Market Growth |

Avon is currently the leading provider of cosmetics products in the market. Industry growth, however, has been slow following the recent economic downturn. As such, appropriate strategies for Avon include related and unrelated diversification as well as engaging in joint ventures.

The Quantitative Strategic Planning Matrix (QSPM) for Avon Products Inc. | | STRATEGIC ALTERNATIVES | | 1 | 2 | 3 | | Improved Marketing Strategies (packaging, coupons, online billboards, discounts) | Improve R&D to introduce more “green” product | Improve employee empowerment through regional training and development | KEY INTERNAL FACTORS | | | | | | | Opportunities | | | | | | | 1. Organic (Green) Products | 0.16 | 1 | 0.16 | 4 | 0.64 | 2 | 0.32 | 2. Eye make-up market | 0.09 | 4 | 0.36 | 3 | 0.27 | 3 | 0.27 | 3. Increase internet process | 0.1 | 3 | 0.3 | 1 | 0.1 | 2 | 0.2 | 4. Urban trendsetters market | 0.05 | 3 | 0.15 | 3 | 0.15 | 2 | 0.1 | 5. The cosmetic industry tends to be countercyclical | 0.1 | 3 | 0.3 | 3 | 0.3 | 3 | 0.3 | 6. Demand for cosmetic product normally remains constant and unaffected by economic distress | 0.11 | 3 | 0.33 | 2 | 0.33 | 1 | 0.1 | Threats | | | | | | | | 1. Competitors such as Revlon and Mary Kay | 0.1 | 3 | 0.3 | 3 | 0.3 | 1 | 0.1 | 2. Rejection of internet selling by sales representatives | 0.1 | 2 | 0.2 | 1 | 0.2 | 1 | 0.1 | 3. Economic downturn | 0.1 | 2 | 0.2 | 1 | 0.1 | 3 | 0.3 | 4. Rising cost of commodities | 0.09 | - | - | - | - | - | - | Grand Total | 1 | | 2.30 | | 2.18 | | 1.69 |

The Quantitative Strategic Planning Matrix (QSPM) for Avon Products Inc. | | STRATEGIC ALTERNATIVES | | 1 | 2 | 3 | | Improved Marketing Strategies (packaging, coupons, online billboards, discounts) | Improve R&D to introduce more “green” product | Improve employee empowerment through regional training and development | KEY INTERNAL FACTORS | | | | | | | Strengths | | | | | | | 1. Global Market Leader | 0.12 | 3 | 0.36 | 3 | 0.36 | 3 | 0.36 | 2. Largest sales force | 0.11 | 4 | 0.44 | 3 | 0.33 | 4 | 0.44 | 3. World’s Largest Micro Lender for Women | 0.1 | 4 | 0.4 | 4 | 0.4 | 4 | 0.4 | 4. World’s Largest Direct Seller | 0.15 | 4 | 0.6 | 4 | 0.6 | 4 | 0.6 | 5. Manufacturing operation match ISO 14001 standards | 0.05 | 3 | 0.15 | 3 | 0.15 | 3 | 0.15 | 6. Avon own its major manufacturing and distribution centers | 0.06 | 4 | 0.24 | 4 | 0.24 | 3 | 0.18 | 7. Increase in revenue in most geographic area due to increase in internet presence | 0.05 | 4 | 0.2 | 3 | 0.2 | 4 | 0.2 | 8. First cosmetic manufacturer to end animal testing | 0.05 | 4 | 0.2 | 3 | 0.02 | 3 | 0.15 | Weaknesses | | | | | | | | 1. Decrease in North American Sales Revenue | 0.05 | 3 | 0.15 | 3 | 0.15 | 3 | 0.15 | 2. Weak Brand Image | 0.08 | 2 | 0.16 | 2 | 0.16 | 4 | 0.32 | 3. High advertising/budget cost | 0.05 | - | | - | - | - | | 4. Poor brand loyalty | 0.05 | - | | - | - | - | | 5. Does not target urban trendsetters | 0.05 | 4 | 0.2 | 3 | 0.15 | 4 | 0.2 | 6. Beauty sales in the first quarter of 2009 were 12% lower compared to sales revenue in 2008 | 0.03 | - | | - | - | | | Grand Total | 1 | | 5.40 | | 4.87 | | 4.69 |

1. To increase revenue total revenue by 10% all market segments - This will be achieved through improved marketing strategies (product placement, mail in discounts, coupons, online and billboards) to benefit both new and existing customers.

2. To increase and further develop the “green” product line by 10% - This will be done through investment research and development in order to develop such products.

3. To improve brand image and brand loyalty
- Through repositioning the Avon brand in terms of product packaging to differentiate the product from being just being another commodity.

Existing Strategies 1. Direct Selling/ Network Marketing 2. Increase Internet presence 3. Employee Empowerment

Improved market strategies (market penetration), this is an excellent way to boost sales and promote the brand. Avon is already the market leader and people are aware of the brand. However, through more aggressive advertisement campaigns, sales promotions, mail-in discounts/coupons, increase internet presence and bill boards. We will be able to further heighten brand awareness, build customer loyalty and create appeal for our products by new and existing customers. We look to achieve this over the first two years with an estimated amount of 10 million dollars
. With 5 million dedicated to further increase internet presence and the remaining 5 million to cover the other activities.

Improve research and development to introduce more “green” products; this will be achieved through investment in research and development; to develop these eco-friendly products through means which are more environmentally friendly. The demand for “green” products appears to be a very viable market as consumers and distributors are becoming more conscious about protecting the environment. Thus creating a demand for these products, this also presents the opportunity to increase brand loyalty. This will be done over the next three years at an estimated cost of 10 million dollars.

To improve brand image and brand loyalty- being that Avon lagged behind its major competitors in terms of brand loyalty; and the assertion by CEO of Brand Key Robert Passikoff that Avon is not associated with anything and Avon seems to be more like a commodity. We have decided to reposition the brand in terms of packaging and labeling of Avon products. We will seek to make the Avon logo more pronounced on the products. It is believed that consumers will support and be loyal to brands that they can be identified with. We will actively pursue this over the next three years at an estimated cost of 10 million dollars.

Total estimated cost of $ 30 million
These recommendations can be implanted on a phase basis over the next three years.
Department Objective
Marketing
Avon’s success is founded on Five Powerful Truths that distinguish the company and make it a great place to make an impact:
Powerful Channel
Avon Representatives are the economic engine of our business, and when active Representatives grow, Avon grows.
Powerful Brand
Avon is one of the world’s best-known beauty brands, and we can win market share even in competitive markets with the right levels of innovation and investment.
Powerful Portfolio
Avon sells in more than 100 countries and has leading market shares in many, and we aim to drive broad-based growth across our geographies and categories.
Powerful People
Avon Associates have extraordinary talent and entrepreneurial spirit, and we are working to drive alignment and leverage Avon’s global size and scale.
Powerful Purpose
As the company for women, Avon’s mission is to improve the lives of women globally, and we play a privileged leadership role in the battles against breast cancer and domestic violence.

Operation/Manufacturing and Production
As a leading global manufacturer and marketer of consumer products, Avon recognizes that responsible supplier conduct is critical to our business. It impacts our ability to attract and retain a loyal customer base, dedicated employees and enthusiastic Sales Representatives, and helps us to maintain the reputation and trust that we have earned for the past 125 years. As standards evolve and as monitoring becomes more effective and efficient, Avon will continue to focus on its performance in this critical area.
For our beauty and beauty-related products, Avon utilizes both company-owned manufacturing facilities and third-party suppliers to source its products for consumers around the world. In all, Avon’s suppliers currently number approximately 16,000 and hail from 50 countries.
Our cosmetics, fragrances, and toiletries products — also known as beauty products — are the core of our business and comprise approximately 70 percent of our net sales. Eighty-nine percent of our beauty products are manufactured in Avon-owned facilities. Third-party manufacturers supply the remaining 11 percent of our beauty products.
All of our non-beauty products are sourced through third-party manufacturers in 25 countries across five continents.
Finance
The Finance Committee is appointed by the Board of Directors to assist the Board in fulfilling its responsibility to oversee: (1) the financial management of the Company, including oversight of the Company’s capital structure and financial strategies, investment strategies, banking relationships and funding of the Company’s employee benefit plans; and (2) the deployment and management of capital of the Company, including the oversight of certain of the Company’s key business initiatives.
Committee Membership
The Committee shall be comprised of three or more members of the Board of Directors, each of whom is determined by the Board of Directors to be “independent” under the rules of the New York Stock Exchange. Additionally, none of the members of the
Committee shall be a current or former employee of the Company.
The members and Chair of the Committee shall be appointed annually by the Board upon the recommendation of the Nominating and Corporate Governance Committee and shall serve until the member’s successor is duly appointed or until the member’s earlier resignation or removal. A member may be removed at any time by the Board, with or without cause.
Committee Structure and Operations
The Committee shall meet at least four times annually or more frequently as circumstances dictate, and shall meet periodically in executive session. It has at all times direct access to any officer or employee of the Company and to the Company’s investment advisors and other advisors. The Committee may at any time retain such outside advisors as the Committee deems appropriate to fulfill its responsibilities.
The Committee may delegate responsibilities to a subcommittee comprised of one or more members of the Committee, provided that any action taken shall be reported to the full Committee as soon as practicable, but in no event later than at the Committee’s next meeting. The Committee may also allocate some or all of its responsibilities to another committee, provided that the other committee is composed entirely of independent directors and has a published charter. The Committee shall review and evaluate annually the performance of the Committee and its members, including review of the compliance by the Committee with this Charter.
The Committee shall also review and assess annually the adequacy of this Charter and recommend to the Nominating and Corporate Governance Committee and the Board any changes to the Charter deemed advisable by the Committee.
Committee Responsibilities
In performing its responsibilities, the Committee shall:
1. Review with management on a timely basis significant financial matters of the
Company and its subsidiaries, including matters relating to the Company’s capitalization, dividend policy and practices, credit ratings, cash flows, borrowing activities, debt management, and investment of surplus funds.
2. As part of the foregoing responsibility, the Committee has the authority and responsibility to:
(a) Review the Company’s annual and long-term financial objectives and related performance goals.
(b) Review and make recommendations to the Board with respect to:
• Any offering of the Company’s debt or equity securities, excluding commercial paper and other short-term notes;
• Any program or plan relating to the purchase or disposal of the
Company’s stock, including Treasury shares but excluding the reacquisition of shares in connection with authorized and approved employee benefit plans;
• Any stock split or reclassification of shares;
• Any filing of a registration statement;
• Any dividend declaration; and
• Any other matters with respect to the capital stock and other securities of the Company.
(c) Review and approve, or make recommendations to the Board with respect to, financial transactions or other matters as required by the Company’s
Delegation of Authority policy, as adopted by the Board of Directors and in effect from time to time, which establishes required authorization levels for all actions by the Company.
3. Review periodically the deployment and management of the Company’s capital, including certain of the Company’s key business initiatives. 2 3
4. Review periodically acquisitions, divestitures and investments in new businesses.
5. Review periodically capital expenditures (such as technology, distribution and manufacturing investments) and performance against previously approved budgeted amounts.
6. Review relationships with the Company’s principal lending institutions and investment advisors.
7. Review the funding for, and receive reports regarding the asset investment strategy of, the Company’s employee benefit plans.

Research and Development
Avon Products, Inc. (NYSE: AVP) announced that it plans to open a state-of-the-art regional Research and Development center in Shanghai in the People's Republic of China. The new regional R&D center in Shanghai will be Avon's largest R&D facility outside of the U.S. Located in the Jinqiao Hi-Tech Park, the stand-alone 40,000 sq.-ft building will span six floors and have additional capacity to expand Avon's overall scientific capabilities in China and Asia.
Avon said that the new regional R&D center will house scientific experts in the areas of product development, safety and quality testing, microbiology, chemical engineering and consumer research. In addition, the new center will enable Avon to grow and leverage its R&D alliances in China as well as hire and retain world-class scientists. The center is expected to open in late 2010.
Avon said that the new R&D center will primarily serve China but also support other markets in the Asia Pacific region, while reporting directly to the Global R&D Center located in Suffern, N.Y., (near New York City).
Avon's Chairman and Chief Executive Officer, Andrea Jung, said, "We're delighted to be opening our new R&D center in Shanghai. This reflects our continuing commitment to the China market, which remains a significant long-term growth opportunity. We believe that our expanded R&D presence in China will enable us to be closer to consumers’ andensure that we leverage our scientific talent effectively to meet the needs of Chinese women."
Avon's Chief Scientific Officer, Janice Teal, PhD., said, "We're very pleased that this beautifully designed regional R&D center in Shanghai will allow us to continue our heritage of offering Chinese women first-to-market, breakthrough beauty technologies, including our highly successful line of Anew anti-aging skin care and Avon Color cosmetics products. In addition, it will enable us to build upon our innovation leadership position in China, particularly in the whitening category, and a cross the Asia Pacific region, well into the future."
Dr. Teal continued, "This new facility will also create a close integration and synergy with our regional brand marketing center in Shanghai, consumer research function in Asia and China, and our China marketing operations."
Avon also has regional research and development facilities located in Argentina, Brazil, China, Japan, Mexico, Poland and South Africa.
In China, Avon currently has a regional R&D facility in Guangzhou which conducts research activities for cosmetics and nutritional supplements. The research capability for cosmetics will move to the new regional R&D center in Shanghai, while research for nutritional supplements will remain in Guangzhou.
Avon said that new regional R&D center in Shanghai will feature state-of-the-art meeting rooms and laboratory spaces specially designed to create an environment of collaboration, team work, and creativity.
"We've learned through our experiences at our state-of-the-art R&D center in Suffern which opened in 2003, that a well-designed working environment stimulates scientific inquiry and helps generate the best and most innovative ideas in leveraging breakthrough technology for the benefit of consumers," said Dr. Teal.
Avon, the company for women, is a leading global beauty company, with over $10 billion in annual revenue. As the world's largest direct seller, Avon markets to women in more than 100 countries through approximately 6.2 million active independent Avon Sales Representatives. Avon's product line includes beauty products, as well as fashion and home products, and features such well-recognized brand names as Avon Color, Anew, Skin-So-Soft, Advance Techniques, Avon Naturals, and Mark.

RECOMMENDED STRATEGIES
Given Avon’s current situation and the current state of the economy and cosmetics market, appropriate strategies for Avon include hold and maintain strategies such as market penetration and product development. These strategies must be in line with the company’s thrust to be identified as a glamour brand. As such, product development, product improvement and marketing strategies must be done with this goal in mind. Product development must include research so that new products are comparable to competitor products in its targeted market segment.

AVON'S PROJECTED INCOME STATEMENT FOR 2011-2013 IN MILLIONS | | 2009 | 2010 | 2011 | 2012 | Revenue | 10,284.70 | 11,313.17 | 12,444.49 | 13,688.94 | Other revenue Total | 98.10 | 113.17 | 124.45 | 136.90 | Total Revenue | 10,382.80 | 11,426.27 | 12568.94 | 13,825.84 | | | | | | Cost of Revenue total | 3,888.30 | 4,227.72 | 4,650.51 | 5,115.56 | Gross Profit | 6,396.40 | 7,198.55 | 7,918.43 | 8,710.28 | | | | | | Cost and Expenses | | | | | Selling/General/Administration/advertising | 5,389.80 | 5,347.50 | 5,907.40 | 6,433.80 | Research and Development | 66.70 | 71.70 | 74.70 | 76.70 | Depreciation/Amortization | - | - | - | - | Interest Expense (Income) | - | - | - | - | Unusual Expense (Income) | 561.00 | 21.71 | 23.90 | 26.27 | Other Operating Expenses, Total | - | - | - | - | Operating Income | 1018.2 | 1,757.64 | 1,912.43 | 2,173.51 | | | | | | Interest Income (Expense), Net Non Operating | - | - | - | - | Gain (Loss) on Sale of assets | - | - | - | - | Other Net | (7.10) | (9.00) | (8.00) | (7.40) | Income before Tax | 926.50 | 1,058.80 | 1,131.20 | 1,244.30 | | | | | | Income tax total | 298.30 | 297.00 | 260.40 | 170.40 | | | | | | Income after tax | 628.90 | 761.80 | 870.80 | 1,073.90 | Minority Interest | (2.40) | (2.00) | (2.00) | (1.60) | Equity Interest | 0 | 0 | - | - | US GAAP Adjustment | $0.00 | $0.00 | $0.00 | - | Net Income before Extra. Items | 625.8 | 759.8 | 868.80 | 1,072.30 | | | | | | Total extraordinary items | 0 | 0 | - | - | Net Income | 625.8 | 759.8 | 868.80 | 1,072.30 | AVON'S PROJECTED BALANCE SHEET FOR 2010-2012 IN MILLIONS | | 2009 | 2010 | 2011 | 2012 | ASSETS | | | | | Cash and short term investment | 1338.4 | 1356.4 | 1364.44 | 1368.4 | Total Receivables net | 1219.9 | 1119.9 | 1169.9 | 1219.9 | Total Inventory | 1067.5 | 1174.25 | 1291.68 | 1420.85 | Prepaid Expense | 122.8 | 120.5 | 110.7 | 122.8 | Other Current Asset | 440.7 | 443 | 390.7 | 440.7 | Total Current Asset | 4189.3 | 4214.05 | 4228.38 | 4572.65 | | | | | | Property/Plant/Equipment total net | 1529.6 | 1529.6 | 1529.6 | 1529.6 | Goodwill, net | 224.8 | 231.8 | 233.8 | 234.8 | Intangible, Net | 125.8 | 131.8 | 134.8 | 135.8 | Long term investment' | 49.8 | 49.8 | 49.8 | 49.8 | Note Receivables-Long term | 0 | 0 | 0 | 0 | Other Long Term Assets, total | 713.4 | 713.4 | 713.4 | 713.4 | other Assets total | 0 | 0 | 0 | 0 | Total Assets | 6832.7 | 6870.45 | 6889.78 | 7236.05 | | | | | | LIABILITIES AND SHAREHOLDERS EQUITY | | | | | Accounts Payable | 754.7 | 754.7 | 754.7 | 754.7 | Payable Accrued | 0 | 0 | 0 | 0 | accrued Expenses | 1247.3 | 1247.3 | 1247.3 | 1247.3 | Notes Payable/short term debt | 0 | 0 | 0 | 0 | Capital Leases | 138.1 | 138.1 | 138.1 | 138.1 | Other current liabilities total | 134.7 | 241.9 | 358.88 | 488.05 | Total current liabilities | 2274.8 | 2382 | 2498.98 | 2628.15 | | | | | | Total long term debt | 2307.8 | 2357.8 | 2360.8 | 2360.8 | Deferred Income Tax | 173.8 | 173.8 | 173.8 | 173.8 | Minority interest | 40 | 40 | 40 | 40 | Other liabilities, total | 763.7 | 713.7 | 710.7 | 710.7 | Total Liabilities | 5560.1 | 5667.3 | 5784.28 | 5913.45 | | | | | | Redeemable Preferred stock | 0 | 0 | 0 | 0 | Preferred stock - non redeemable, net | 0 | 0 | 0 | 0 | Common Sock | 186.1 | 204.1 | 212.1 | 216.1 | Additional Paid in capital | 1941 | 1941 | 1941 | 1941 | Retained Earnings (Accumulated Deficit) | 4383.9 | 4383.9 | 4383.9 | 4383.9 | Treasury - Common | -4545.8 | -4587.45 | -4733 | -4525.8 | Other Equity | -692.6 | -738.4 | -698.5 | -692.6 | Total Equity | 1272.6 | 1203.15 | 1105.5 | 1322.6 | | | | | | Total liabilities & shareholders Equity | 6832.7 | 6870.45 | 6889.78 | 7236.05 |

Balance Scorecard
EVALUATION
| Objectives | Measure/Target | Time Expectation | Primary Responsibility | Financial | | | | Chief Financial Officer | To succeed financially, | Lower customer acquisition costs. | Shareholders value | Continuous | | how we appear to | Double digit sales growth | Growth in revenue | | | our shareholders | Increase market share for on-line products | Increase profitability | | | | Target 10% return on investment. | Market share | | | | Achieve at least 10% on net profit in 1st year of new product | Net profit on percentage sales | | | Customers | | | | Operations | How to achieve our | Ensure on-time delivery always | Percentage of on- time delivery. | Continuous | | vision, the importance of | Increase customer retention | Number of customers, email addresses, time duration between purchases | | | satisfying our customers | Reward customer loyalty | Percentage on returnConversion rate | | | | | | | | | | | | | Internal Business | | | | Operations | To analyze operations and see how products and services achieve | Supply chain excellence in order confirmation | quick turnaround on the delivery of orders | Continuous | | total shareholder and customer satisfaction, | Adoption of some social services | Incorporating and engaging quality, talented skills | | | What business process must we excel at? | Generating revenue | | | | | | Operations - | | | | | measures of quality, products and costs | | | Learning & Growth | | | | Human Resource | To achieve continuous training and upgrading | Ensure managers are exposed to | People - employee retention, training and skills | Continuous | | of employees skills and abilities. | market changes | Successful penetration of new markets | | | Always keeping abreast | Online service | Continuous improvement in | | | of new technology | innovation | CRM | | | Advancing change and | Implement a succession plan | Increase value in Knowledge management | | | self- improvement | | system | | |

In the final analysis our main aim of the BSC is to enable us to meet our strategic objectives by identifying the various means of improving workforce productivity. This is an effective tool in maximizing our company’s resources and building capacity in a structured and planned way. These plans not only look at the strategic and operational components for our company to succeed, but also consider the people factor in developing and delivering our business.

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Avon

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Avon

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...MERT CAN ODABAŞ Avon Company Overview The first Avon lady book salesman was David McConell. He launched Avon Calling in 1886 as offering women cosmetics in the comfort of their own homes, however, perfumes and hand cream were not McConnell’s products. When he was sixteen, he started selling books door to door. In his travels as a book salesman, McConnell made two important discoveries. Firstly, he noticed that his female customers were more interested in the free perfume samples he offered than they were in his books. He made these fragrances himself to serve as door openers when he traveled from home to home. Secondly, McConnell saw women struggling to make ends meet and recognized in many of them natural salespeople who would easily relate to other women and passionately market the products his new company would first sell perfumes. Then, the choices of customers affected McConnell and he established the California Perfume Company in the NY. Today Avon, the company for women, is a leading global beauty company, with over $10 billion in annual revenue. As the world's largest direct seller, Avon markets to women in more than 100 countries through approximately 6.5 million active independent Avon Sales Representatives. Avon's product line includes beauty products, as well as fashion and home products, and features such well-recognized brand names as Avon Color, Anew, Skin-So-Soft, Advance Techniques, Avon Naturals, and mark. Each representative distributes a product catalog...

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...from the Japanese market. Avon has withdrawn from the Japanese market in order to focus on the Chinese market. This is should be supported. Avon regarded China as a potential gold mine and China has enormous customers. If can build a successful strong market in China, then gains will in a rising trend. Although Avon in Japan is profitable but compared with China it is too small. Avon's global board of directors passed an agreement of layoffs and closes some manufacturing. This is also involved in the decision to withdraw from the Japanese market in order to focus on China in 2010. In the same year, Avon invested in Shanghai in its R&D facilities, develop new products to better meet the needs of consumers in Asia.(Janice Teal, 2010)Avon is confident in the Chinese market; it believes that only re-select full direct selling model then will turn deficits to profit on sale performance in China.   Why Avon is failing in China? As the first of the five largest direct selling companies in the world, Avon was the inventor of the global direct sales model and entered China in 1990. It is the first large-scale foreign direct selling companies there.  In order to adapted and opened Chinese Market. From 1998, it had to change the market model under the legal restriction in China. They begin to take the traditional retail model. Avon is selling its products in stores until 2006 when it got a license for direct sales from the government. Since 2006, Avon switch sales model from retail...

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