In 2005, Avon Products, Inc. was a prominent cosmetics company that earned more than $8 billion in yearly revenue. It held the title of the largest worldwide direct seller and catered to women in 143 countries through a network of five (5) million independent Avon Sales Representatives. Avon provided various product lines, including well-known brand names, as well as an extensive range of costume jewelry and clothing options. Despite enjoying revenue growth in 2003, 2004, and 2005, its net income for 2005 amounted to $848 million. The company faced tough competition from other cosmetic companies within the US market.
In order to maintain its market share in the US while targeting other countries, especially China, Avon underwent a significant global operating structure change. These changes brought senior management closer to key business geographies, enhanced global integration, sped up information flow, and positioned the company for sustainable growth. Avon projected costs related to implementing these initiatives within the next few years, with a considerable portion of the total expenses expected to arise in 2006.
The company’s restructuring had multiple advantages. It provided funding for increased consumer investment and improved the competitiveness of its direct selling opportunity. Additionally, more resources were allocated towards advertising, marketing intelligence, consumer research, and product innovation. Consequently, the cosmetics mogul’s revenues have experienced significant growth, going from $8 billion in 2005 to an estimated $11 billion in 2009 with strong single-digit earnings growth. Furthermore, the company anticipates annual savings of approximately $430 million by fully implementing all initiatives for 2011-2012.
Media.panorama.com reported that the company’s Second-Quarter Operating Profit amounted to $127 million, showing a 9% decrease in revenues. Avon experienced a decline in both revenues and operating profits at the beginning of 2006, leading to the realization that changes were necessary. It became clear that the company’s rapid growth was not being supported by its talent pool and overall infrastructure. As a result, a comprehensive restructuring program was launched with the goal of significantly transforming the company’s cost base and enhancing organizational effectiveness (M. Goldsmith & L. Carter, 2010).
This restructuring program was a crucial pillar of Van’s turnaround plan. CEO Andrea Jung and a team of company executives initiated the restructuring of Avon in January of 2006. Included in the restructuring was the implementation of a Matrix Structure that replaced a Regional Structure, the development of a management-reduction process called Delivering, a significant increase in Executive Talent, and the production of New Capabilities with Brand Management, Marketing Analytics, and Supply Chains? ((M. Goldsmith & L. Carter, 2010). Identify the model for change theory typified in the case study of your choice. Discuss what led you to identify the model that you did. McCauley and Haziest presented a very expansive approach to individual change by combining five (5) general elements: consenting concerning ways an individual needs to change, assisting the individual in recognizing their need for change, sharing in activities that build skills, examining individuals’ responses to skill building activities, and acknowledging that individual growth and development produces positive results.
This is a common approach used in executive coaching. (Silver & Dowel, 2010). I came across McCauley and Hostlers model for change while researching teaching in the workplace, which mostly focuses on planning teaching and assessing individual learning programs (McCauley, Haziest, 2001). Research consistently highlights the importance of learning as a continuous process. Therefore, it is crucial for individuals to actively manage their own development by regularly updating and expanding their skills, in order to achieve and sustain optimal job performance.
Personal development is often seen as an ongoing and unintentional result of work experience (McCauley, Haziest, 2001). However, human resource development includes different elements, including the self-directed acquisition of knowledge. The individual’s self-directed learning can be linked to various factors and analyzed from various angles. This type of learning can happen in different settings like the family, workplace, or community. In the context of human resource development (HARD), self-directed learning occurs at both individual and organizational levels.
Self-directed learning occurs at both the individual and organizational levels. At the individual level, it involves a learner’s autonomy, readiness for self-directed learning, personalized learning approach, and desired learning outcomes. At the organizational level, self-directed learning is closely connected to leadership and the culture of the organization. The model developed by McCauley and Hostel can be used to compare behavior change, adult development, and self-directed learning (Silver & Dowel, 2010). The company will demonstrate how different types of evaluation are collected and utilized to its advantage.
Avon implemented various evaluation techniques to gather valuable information for its turnaround efforts. This shift in leadership style included a transition from opacity to transparency. Leaders became well-versed in monitoring and adjusting both current and future performance ratings. Additionally, Avon implemented a system to distinguish and enhance talent at all levels. High-performing leaders recognize their value within the company, while lower-performing leaders receive the necessary support to improve in areas of weakness.
Avon’s turnaround has led to increased discipline within the organization. The company now operates in a more methodical manner, with synchronized processes that consistently adhere to schedules worldwide. When it comes to decisions regarding talent, Avon gathers both qualitative and quantitative data from various leaders’ experiences. This information is used to develop a standardized approach to talent development, guaranteeing success in both the short and long term.
Avon has seen many benefits from the compass turnaround. Immediate Managers’ ratings have increased by up to 17%, with an approval rating close to 90%. HRS and Talent practices have also experienced an increase in ratings, up to 16%. The improved transparency has allowed Talent to enter major markets more quickly, and simplified promotional processes have sped up leader development. Leaders are now held more accountable, resulting in a better work experience for Associates. Additionally, all expense savings goals have been achieved. Van’s revenues grew from $8 billion in 2005 to nearly $11 billion in 2009. It is expected that approximately $430 million in savings will be achieved by 2011-2012 (source: www.NASDAQ.com).
In order to evaluate the potential success of the changes and make necessary adjustments, it is crucial to assess the outcomes within the next five (5) years. Taking into account demographic data, it should be noted that China makes up around 20% of the global population. Hence, Avon should prioritize expanding retail outlet sales in China. Moreover, Europe remains an important market for Avon. Despite experiencing significant growth in Europe, only 23% of total sales in 2003 came from this particular region.
There is potential for growth in this market. Avon should prioritize investing more resources in research and development, particularly in the areas of anti-aging and teen products, as product innovation is a key driver of success in the industry. To promote direct-sales to consumers and businesses, Avon can offer incentives to customers and motivate its business partners through advertising, sales competitions, participation in conventions, and endorsement of its products by retail stores.
Promoting Van’s products and increasing direct sales can be achieved by offering incentives to consumers. These incentives serve as positive motivational factors that encourage and excite buyers to make purchases. Some examples of incentives include coupons, rebates, product samples, and awards. Coupons can be distributed through various channels such as mail, beauty magazines, newspapers, and advertisements on the company’s official website. Additionally, rebates can be used to attract more buyers and can also be advertised through coupons sent via mail or on the internet.
By providing samples of Van’s cosmetic products, such as through door hangers or attached to mail advertisements, consumers can be encouraged to make purchases. Consumers have the opportunity to win cash or free trips through award programs, prizes, contests, or sweepstakes. Additionally, a free gift can be given to consumers who purchase Van’s products, which can be more appealing compared to other options. Participating in conventions can also lead to increased sales by directly engaging with customers.
