SWOT Analysis Internal Assessment

Strengths

Avon Company is the leading company of global manufacturer of beauty products

and home improvement products around the globe.

The Worlds largest direct selling organization. It has approximately 42,000

employees worldwide.

Avon Company has massive operation throughout North America, Latin America

Europe and Asia Pacific Region.

Avon Company has emerged as one of the top company that permanently ban animal

testing on the product line.

The company has recorded total revenue of US $ 10,862 million last fiscal year of

2010. significant increase of 6.4% in its revenue compared to 2009 total income. and 6.7% increase over its operating profit in 2010. as well as the foreign exchange standing has contributed a lot to the companys revenue growth.

Avon Company play a prominent player in different products range from makeup to

home products, with its differentiated product in different field.

Avon Company successfully captivate the interest of the different level of consumer

providing them a number of range of products to purchase.

Its strong and attractive brand portfolio paves the way to attract tremendous number

of clients all over the world to try and use its products.

The product lines of the company not only focused on the beauty products. Avon

also doing its best effort to manufacture and distribute non-beauty product line such as

jewelries, watches, apparels and accessories.

Weaknesses Avon also incurring a

high advertising costs. Companies advertising spending went from $136 million in 2005 to $249 million in 2008 to $368 million in 2009 and 14% higher in 2010. Decrease in North American Sales Revenue by 129.4 million. The decline in sales

was due to a sharp decline in Brazil, driven by business disruptions and resulting investments in that market.

External Assessment
Opportunities

There are enormous growth opportunities existed in countries with huge populations

such as China, Indonesia and India. In 2004, the company also purchased 20 % of the shares in its two subsidiaries in China market. And, from then on, Avon-China has become the in-demand market not only for women but also for mens cosmetics. Avon has been able to expand and venture to other various product lines for women

such as Mark and Avon Platinum Visa Card, in partnership with Bank One. The company restructuring its initiatives for organizational effectiveness and

rebranding strategy to drive consumer demands.

Threats Mary Kay and Revlon are considered two major competitors of Avon Products Inc. in

the cosmetics industry. Majority of Avon's competitors distribute their products to resellers such as

department stores, drugstores, or cosmetic stores, Avon sells its products solely through its direct-selling channel of independently-contracted Active Sales Representatives and through its online website. The company's direct-selling business model is at risk for incurring more costs due to

Representative dissatisfaction and global legal restrictions.

Strengths

Avon Company is the leading company of global manufacturer of beauty products and home improvement products around the globe. The company has been operating its worldwide business through direct selling system. The headquarter of Avon Company is based in New York City, it has approximately 42,000 employees worldwide. In this connection, Avon Company has massive operation throughout North America, Latin America Europe and Asia Pacific Region. It also has 63 subsidiaries in different countries outside United States market. More than that, the company also present in 51 countries through distributors. During 1990, Avon Company has emerged as one of the top company that permanently ban animal testing on the product line. And, it also made its mark in Russia, China and other countries in Central Europe with excellent beauty products. The company has recorded total revenue of US $ 10,862 million last fiscal year of 2010. There was a significant increase of 6.4% in its revenue compared to 2009 total income. Additionally, the

operating profit of the company in 2010 fiscal year was around US $ 1,073.1 million. Relatively, there was 6.7% increase over its operating profit in 2009. But, Avon Company had acquired a net profit of US $606.3; it was reduced up to 3.1% from its net profit in 2009 fiscal year. The significant increase in the company in the companys revenue is attributed to the fact that it has growing teams of active representatives who promote the product massively in the international market. Similarly, there is also a remarkable increase of 15% in beauty product sales; as well as the foreign exchange standing has contributed a lot to the companys revenue growth.

As it can be seen, the highlighted strengths on Avon Company would be the differentiated business model as prominent player, steady revenue growth, leading position power to attract the growth of sales. Avon Company play a prominent player in different products range from makeup to home products, with its differentiated product in different field, Avon Company successfully captivate the interest of the different level of consumer providing them a number of range of products to purchase. Additionally, with its leading position in the market, Avon Company offer a lot of incentives and particularly recruit a large amount of sales assistant to go from doorstep to another doorstep targeting direct selling towards consumers. Subsequently, it resulted into a leap revenue growth from year to year. Furthermore, one of the greatest strengths that Avon Company has is being able to deliver a detailed strategic analysis of the entire organization. It enables to determine its performance level in the market and in the global economy as well. Subsequently, the market share data of the organization provides a deep financial view of the company. It conducts regular in dept qualitative and quantitative analysis in order to analyse and understand which is effective and efficient marketing strategy needed by each product brand. This marketing approach really helps the company to acquire more customers and numerous possible prospects of its product lines. The company has been able to share its beauty products by region and sector all

throughout the globe. Its strong and attractive brand portfolio paves the way to attract tremendous number of clients all over the world to try and use its products. In the same manner, the people also have great opportunities to earn remarkable income by sharing or testifying the effectiveness of the products to other people. As a result, they are able to sell also the same products that they are using to their friends and relatives with all ease. Aside from that, the products have been proven effective and best beauty enhancer to many Avon products users. Moreover, there are new and innovative product developments made by Avon experts and specialists, which enables to help to spread its marketing and distribution strategies into the world market. Surprisingly, Avon Company maintains its various delivery controls in direct selling and marketing, beauty centers, beauty boutiques, retail outlets and online portals. The excellent companys sales promotion and sales development strategies are being directed and assisted by leading representatives by distributing sales kits, brochures, product samples and product demonstrations. The product lines of the company not only focused on the beauty products. As a matter of fact, it goes beyond beauty. While beauty division is busy in engaging in the manufacturing and distributing of beauty products like cosmetics, fragrances, skin care and toiletries; the beauty plus division, on the other hand, is also doing its best effort to manufacture and distribute non-beauty product line such as jewelries, watches, apparels and accessories. In the same way, beyond beauty Avon Division is also involved in the manufacturing and distribution of home improvement products and gift items, as well as decorative items.

Weaknesses

In the other hand, the unfavorable internal weakness would be the declining North America sales. Latin America's third-quarter revenue was up 11% year over year, or up 6% in constant dollars, as the region's results were pressured by disruptions in Brazil associated

with the Enterprise Resource Planning ("ERP") implementation. Brazil was up 5%, or down 3% in constant dollars. Strong growth continued in other large markets within Latin America. Mexico was up 17%, or 12% in constant dollars, driven by balanced growth in Active Representatives and average order. Venezuela was up 22% on both a reported and constantdollar basis. The region's Active Representatives grew 3% and units sold were down 4%. Third-quarter operating profit was down 10%. Operating margin was 12.6%, or down 280 basis points from the third quarter of 2000s. On an adjusted basis, Latin America's thirdquarter operating profit was down 15% and the operating margin was 12.4%. The decline in operating margin was due to a sharp decline in Brazil, driven by business disruptions and resulting investments in that market. The results of the quarter reflect a challenging ERP implementation in Brazil which caused greater disruptions than anyone anticipated. This significantly impacted the top and bottom line results. In addition, consumer uncertainty amidst a volatile macroeconomic environment across several markets further pressured revenue growth. Given the current operating environment, the company no longer expects to achieve the stated targets of mid-single digit revenue growth and 50 to 70 basis points of operating margin improvement. Besides, Avon also incurring a to

high advertising costs. Companies advertising spending went from $136 millions in2005 $249 million in 2008 to $368 million in 2009 and 14% higher in 2010.

Opportunities

There are enormous growth opportunities existed in countries with huge populations such as China, Indonesia and India. In Eastern Europe, management was excited about the potential in Poland, Czechoslovakia, and Hungary. In the Pacific Rim area, countries like Vietnam, Cambodia, and Laos were targeted as market opportunities. In 2004, the company also purchased 20 % of the shares in its two subsidiaries in China market. And, from then on,

Avon-China has become the in-demand market not only for women but also for mens cosmetics. Also, Avon has been able to expand and venture to other various product lines for women such as Mark and Avon Platinum Visa Card, in partnership with Bank One. On the other perspective point of view, theres opportunities arise externally for Avon Company such as the company restructuring its initiatives for organizational effectiveness and rebranding strategy to drive consumer demands. As we can see, Avon Company has started empowering women by offering them a unique earnings opportunity, through what is arguably the original social network: direct selling. Direct selling at Avon is about Representatives constantly connecting to and building personal relationships with new customers as well as other Representatives. This has created an opportunity for women to become Representatives to supplement the family income. One of the most attractive features of direct selling with Avon is that it doesnt require any special experience, education or other credentials. Starting a direct-selling business simply depends on the power of you. Avon Company is smart by directing the business into a whole new direction, creating initiatives and opportunities for everyone to be their own boss besides boosting up the sales for the company.

Threats

The threats that could be observed in Avon Company definitely would be the competitors in the industries. Avon makes beauty and personal care products, including various types of cosmetics - lipstick, eyeliner, mascara, and etc, apparel and accessories, and home and decorative products. Avon's products face intense competition, from companies like Mary Kay and Revlon (REV), in all of its markets from both global and regional mid-end brand personal care products. In contrast to Revlons marketing strategy of selling through cosmetic counters in department stores and pharmacies, Mary Kay rivals with Avon Inc. as

they both use direct marketing approach. While the majority of Avon's competitors distribute their products to resellers such as department stores, drugstores, or cosmetic stores, Avon sells its products solely through its direct-selling channel of independently-contracted Active Sales Representatives and through its online website. However, the company's direct-selling business model is at risk for incurring more costs due to Representative dissatisfaction and global legal restrictions. Due to the company's reliance on its direct-selling business model, earning potential and satisfaction of its Representatives and maintaining its business model are essential for the company's success in global markets.

In conclusion, due to the company's reliance on its direct-selling business model, earning potential and satisfaction of its Representatives, Avon Company has to maintain its business model which is essential for the company's success in global markets.