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Republic of the Philippines

University of Rizal System

Binangonan, Rizal

College of Accountancy




Herbalife is a U.S. companyformally named Herbalife Internationalwhich sells

weight-loss, weight management, personal care, health, food/dietary, and nutritional
supplement products. The company uses network marketing, also called multi-level
marketing, which is a type of marketing plan that uses direct marketing along with
franchisers and/or independent contractors to sell its products.)


High-quality products that combine the best of science and nature for a lifetime of
good health. A proven business opportunity that empowers people to achieve their
dreams and financial freedom, and enjoy the rewards of helping others.

The tri-leaf symbol on the Herbalife logo is meant to symbolize at least two things
the naturistic origins and healing properties of the company and its products. The circle
is a symbol of infinity. The circle in which the leaves are encased is meant to suggest that
anybody trying Herbalife products is in for a lifetime of health. As for the leaves featured
in the Herbalife logo, they are meant to represent both nature and growth. Overall, the
shape of the logo is meant to inspire feelings of relaxation and trust in the company, as
well as expectations of healing, personal growth, and emotional stability.

To change peoples lives by providing the best Business opportunity in direct
selling and the best nutrition and weight-management products in the world.

Changing peoples lives


Our Distributors
We are driven by the needs of our distributors and inspired by their stories.

Our Stakeholders
We pursue profitability and growth to increase value for all our stakeholders
including distributors, customers, shareholders and employees.

Our Employees
We respect each other, succeed as a team and value a sense of humor.

Our Products
Our commitment to the highest scientific and safety standards in product
development and manufacturing is an integral part of our mission for nutrition. We are
products of the products.
Our Communities
We make our communities better places to live and work.

Our Work
We make decisions based on facts, not hearsay. We work hard and hold ourselves
accountable. We strive for excellence.

Our Ethics
We do the right honest and ethical thing. We take the high road.

Our Philosophy
We use it, wear it, talk it.

Our Attitude
We make it fun simple and magical.


The company was incorporated in 1979, but essentially started operations in

February 1980 when its first distributor, Mark Hughes began selling the original Herbalife
weight management product from the trunk of his car. His stated goal was to change the
nutritional habits of the world. As his customers tried and liked the products Hughes
business quickly grew. He rented an office and a warehouse in the Beverly Hills, California
area, and soon developed a network of distributors.

Within two years, the company had grown to over two million dollars in sales
through its distributorships in the United States and its sole distributor in Canada. Vehicles
all over the United States were seen with the companys slogan: Lose weight now, ask
me how!. At this time, the Herbalife plan recommended only one meal each day, which
was supplemented with protein powders and nutritional pills.

His first product was a protein shake designed to help people manage their weight.
He structured his company using a direct-selling, multi-level marketing model.

By 1985, Herbalife was listed on INC. magazines fastest growing private

companies. Its five-year profits from 1980 to 1985 went from $386,000 to $423 million.
More than 700,000 distributors in the United States, Canada, the United Kingdom, and
Australia had total gross sales of about $500 million.

In 1994, Hughes started the Herbalife Family Foundation in order to help children
worldwide. In 1996, Herbalife reached one billion dollars in sales. However, four years
later, Hughes died from an overdose of alcohol and doxepin (a psychoactive drug with
antidepressant and anti-anxiety properties).

Mark Hughes died at age 44 on May 20, 2000. The Los Angeles County Coroner
autopsy results ruled that the entrepreneur had died of an accidental overdose of alcohol
and doxepin, an anti-depressant. The company continued to grow after his death and in
2002 was acquired for US$685 million by J.H. Whitney & Company and Golden Gate
Capital, which took the company private again.

In April 2003, Michael O. Johnson joined Herbalife as CEO following a 17-year

career with The Walt Disney Company, most recently as president of Walt Disney
International. On December 16, 2004, the company had an initial public offering on the
NYSE of 14,500,000 common shares at $14 per share. 2004 net sales were reported as
$1.3 billion.

On April 9, 2013, the company's long-time auditor, KPMG, resigned after the
KPMG executive who oversaw Herbalife audits admitted to providing insider information
to a golfing friend about at least five companies, including Herbalife and Skechers. The
company hired PricewaterhouseCoopers as its auditor on May 21, 2013.

On May 7, 2014, the company announced that it entered into a deal with Bank of
America Merrill Lynch to repurchase $266 million of its stock.

The company announced in November 2016 that Chief Operating Officer Richard
Goudis would take over the position of CEO in June 2017 and Johnson would transition
to executive chairman.

Herbalife is a premier nutrition company. They make nutrition products with

protein, fiber and vitamins to complement a balanced diet and support a healthy, active
life. Herbalife is unique because of the one-on-one coaching and support that Herbalife
Independent Distributors provide to their customers. Herbalife customers receive much
more than a product, they get steady support and a plan to meet or exceed their personal
nutrition, weight-management and fitness goals.

Their growth is driven by millions of consumers who use our protein shakes,
snacks, energy and fitness drinks and personal care products. To meet the steadily
growing demand for our products, theyve built a network of company-owned
manufacturing facilities around the world.

They support the Herbalife Family Foundation (HFF) and its Casa Herbalife
programs to help bring good nutrition to children in need. Herbalife also sponsor more
than 190 world-class athletes, teams and events around the globe, including Cristiano
Ronaldo, the LA Galaxy and champions in many other sports.

The company has over 8,200 employees worldwide, and its shares are traded on
the New York Stock Exchange (NYSE: HLF) with net sales of $4.5 billion in 2015.


How will Herbalife International reduce the declining number of stockholders that leads to
a deficit of shareholders equity within 5 years?

1. Increase number of shareholders by 20% per year.

2. Improve the activities that involves promotion of the company.
3. Expanding the market range of the company by entering into other countries.
4. Increase the demand of the existing products.


1. Outstanding product offerings of high quality, utility and brand image.
2. The company has put in a place a sound network marketing approach that is
reaping higher sales.
3. Product portfolio decided by scientific, data backed analysis of past purchase
patterns, consumer preferences etc.
4. Geographically diverse business with its footprint in many countries.

1. Skepticism in the minds of the consumers about side effects of herbal or other
drugs claiming weight-loss and heath management.
2. Insufficient popularity in many countries.

1. The opportunity for accreditation or certification of its whole business or individual
products by medical rating agencies.
2. Introducing useful customer loyalty schemes.
3. Training the workforce better.

1. Threats from increasing competition in this segment by big players.
2. Rising cost of R&D in drug discovery and development.
3. Governmental legislations and limitations related to health care.
SWOT (TOWS) Matrix


1. Outstanding product
offerings of high quality, 1. Skepticism in the minds
INTERNAL utility and brand image. of the consumers about
FACTORS side effects of herbal or
2. A place a sound network
marketing approach that other drugs.
is reaping higher sales.
3. Product portfolio decided
EXTERNAL by scientific, data backed
FACTORS analysis of past purchase
patterns, consumer 2. Insufficient popularity in
preferences etc. many countries.
4. Geographically diverse
business with its footprint
in many countries.
OPPORTUNITIES (O) SO Strategies WO Strategies
1. Accreditation or 1. Hire a medical
certification of its whole 1. Provide product representative that will
business or individual giveaways. supports the products
products by medical credibility.
rating agencies. 2. Offer a customer referral
2. Introducing useful awards. 2. Online advertisement of
customer loyalty products healthy
schemes. 3. Implements an innovative benefits.
3. Training the workforce performance incentives.
THREATS (T) ST Strategies WT Strategies
1. Threats from increasing 1. Improve promotional 1. Analyze the strength and
competition in this strategies of the product. weaknesses of the
segment by big players. competitors.
2. Rising cost of R&D in 2. Assess and reduce
drug discovery and product portfolio. 2. Adhere to a strict
development. regulatory compliance on
3. Governmental 3. Ensure the governmental safety standards and
legislations and limitations requirements and quality control.
related to health care. limitation of different
countries were met.

1. Provide product giveaways.

2. Offer a customer referral awards.
3. Implements an innovative performance incentives.


Provide product giveaways.

a. This strategy will grab the attention and loyalty of the companys target consumers;
b. Will develop brand recognition;
c. Will let the customers to have an actual insights about the products specifications.
a. This may cause the company to increase the production;
b. May lead to higher costs;
c. May result to negative feedbacks regarding the product given.

Offer customer referral awards.

a. This approach will encourage existing users to attract others who will also
patronize the Herbalife;
b. It builds brand awareness;
c. Will allow to escalate good relationship with the current customers.
a. The referrer may make use of false or misleading marketing techniques to bring
customers to the program;
b. It may exposed prospective customers to a multi-faceted marketing
communication that could confuse and repel them.
c. It will be time intensive to current consumers.

Implements an innovative performance incentives

a. It will create positive and productive working environment;
b. Improve employer-employee relationship inside the company;
c. Employees will learn new skills and pursue advancement opportunities.
a. It can create sense of inequality among the employees;
b. It involves lots of time to structure a fair monetary incentive plan;
c. It might breed resentment and discord among teams and employees

Herbalife International were known for their network marketing that largely relies
on distributors to sell their products. Based on their Consolidated Statements of Changes
in Shareholders (Deficit) Equity for the year 2012, 2013 and 2014 there was a deficit in
the shareholders equity. In which it implies over the long run the Herbalife made a huge
load of debt, paid out more dividends than earned profits and ended in a huge amount of
foreign exchange translation loss. And as a result, it affects the image of their company
brand prompting for the current stockholders to drop their share.

In application of these proposed different strategies it will elevate the Herbalife

financial performance for the long run and build a good relationship with customer in
which, because of these factors it will help the company to gain the trust of their current
and future potential stockholders.


Therefore, it is highly recommended for Herbalife International to focus on these

promotional strategies such as offering product giveaways, having customer referral
awards and adapting an innovative performance incentives for employees. And it also
suggested for the company to further expand their target market globally.

These strategies will enhance the image of the products performance and will
result to a positive impact on the image of the organization that will help generate to an
increase in demand of their products. Which in turn will lead to a good financial
performance that will attract potential stockholders for the company.

Regarding in implementing these different promotional strategies, it is important to

consider the quality and safety of the products and to research the action of the
competitors. The company must also take into account that they are strictly following the
government legislation and limitation on health care of different countries under their
global market expansion.