Makeover of Avon: Sheri McCoy's Challenges
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Case Code: BSTR453 Case Length: 17 Pages Period: - Pub Date: 2014 Teaching Note: Not Available |
Price: Rs.500 Organization: Avon Industry: Cosmetics Countries: USA, Global Themes: Direct Selling, Restructuring Initiatives, Turnaround |
Abstract Case Intro 1 Case Intro 2 Excerpts
Excerpts
Avon Under Andera Jung
When Jung became the CEO, the company's annual sales growth rate was less than 1.5% and its share price was declining though the general economy was booming. Immediately after being appointed, Jung took on the role of an Avon Lady, and spent a month as a direct sales representative. This process gave her an insight into Avon’s problems from the market’s perspective and helped her understand the challenges and limitations of being a direct sales representative. During her stint as an Avon Lady, she learnt that Avon’s reputation in the market was poor and that customers were complaining about lack of variety, poor quality, unattractive catalogues, and unavailability of popular items. She also understood the problems that the representatives faced in ordering the products......
Restructuring Plan - 2005
On November 15, 2005, Jung declared a multi-layer restructuring initiative intended to drive revenue growth and strengthen the organization's overall performance. These initiatives were expected to yield many benefits for the organization, like contributing toward increased consumer investment and improving its competitiveness in the direct selling market. Concluding the restructuring plans, Jung said,....
Restructuring Plan - 2009
In February 2009, in order to continue Avon's long-term transformation and increase the company's organizational efficiency and effectiveness across the world, Jung came up with another restructuring program. In July 2009, the details of the plans were announced. The company expected the cost of implementing these initiatives to be around US$ 165 million....
McCoy's Turnaround Plan
McCoy's strength, according to her former colleagues, lay in bringing about a stronger strategic focus. They said she had both strategic and operational skills besides a good turnaround track record, global experience, and leadership qualities.
McCoy wanted to go through every aspect of Avon's working. She even set the first and foremost objective of stabilizing the company's businesses. Just seven days after joining Avon, McCoy visited some of the company's important markets like, Brazil, China, Mexico, and Russia, followed by an internal assessment of its organizational skills and capabilities. She finally reviewed the operating model of the company....
Future Outlook
As of February 2013, Ross and McCoy had jointly taken initiatives for cost cutting, revitalizing the sales force, and talking with the US officials so as get the bribery probe 39 settled. Addressing the shareholders in the Annual Report 2012, McCoy talked about ensuring that consumers have right products, supporting the representatives, prioritizing energy and resources and optimizing geographic footprint.
In order to improve the supply chain processes and overall representative experience, Avon intended to invest an incremental US$ 150-200 million in information technology by 2016. Along with adopting and experimenting with new techniques, it committed itself to remaining true to its core values: Respect, Belief, Humility, Integrity, and Trust...
Exhibits
Exhibit I: Principles set by David H. McConnell
Exhibit II: Unit Leaders - Commission Structure
Exhibit III: AVON - Selected Financial Data
Exhibit IV: Various Growth Plans
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