EXCEL BUSINESS ACADEMY

(India’s Premium Techno Management B-School)

AAA

Type Private.
Industry Direct selling.
Founded 1959
Rich DeVos
Founder(s)
Jay Van Andel
Headquarters Ada, Michigan, United States
Area served Worldwide

Steve Van Andel (Chairman)

Doug DeVos (President)
Key people
Al Koop (Chief Executive)
Russell Evan (CFO)

Revenue USD 8.4 billion (2009)

Employees 13,000
Alticor
Parent

Introduction:
Amway is the largest direct selling company and manufacturer in the world that uses
network marketing to sell a variety of products, primarily in the health, beauty, and home
care markets. Amway was founded in 1959 by Jay Van Andel and Richard DeVos. Based in
Ada, Michigan, the company and family of companies under Alticor reported sales growth of
2.3%, reaching US$8.4 billion for the year ending December 31, 2009.Its product lines
include home care products, personal care products, jewelry, electronics, Nutrilite dietary
supplements, water purifiers, air purifiers, insurance and cosmetics. In 2004, Health &
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AAA

Beauty products accounted for nearly 60% of worldwide sales. Amway conducts business
through a number of affiliated companies in more than ninety countries and territories around
the world. It is ranked by Forbes as one of the largest private companies in the United States
and by Deloitte as one of the largest retailers in the world.

Meaning and the History of Amway:

What does the word Amway mean? Amway is an abbreviation for "American Way".
Great companies start with great ideas, and Amway is no exception. The idea came when
two Nutralite® salesmen, Rich DeVos and Jay Van Andel were at the very top of a very
successful MLM at the time; Nutralite was sold door to door. This was the 1950s, Nutralite
was a single entity company, and by the end of the decade, Jay and Rich had built a
respectable business of their own - approximately five thousand distributors were in their
Both Mr. DeVos and Mr. Van Andel knew how to move product - build on relationships. But
what was needed was a way to expand. A way that would allow them to multiply the efforts
of what they alone could accomplish. In 1959, the American Way Association was formed.
This would be the chance to grow and set the direction of a new entity. Rich and Jay
immediately set out to find an initial product to add to the line. They purchased the rights to
Frisk, a household cleaner (which was later renamed Liquid Organic Concentrate or L.O.C.).

In 1960, the American Way Association, now Amway, bought a controlling share in
the manufacturing facility in Michigan where LOC was made. What this meant is that there
were 3 companies all using the Amway name. The Amway Sales handled product and
distribution, Amway Services did business related tasks (like insurance for distributors) and
Amway manufacturing, which produced LOC. By 1964, the three arms of Amway were all
merged into a single entity - Amway Corporation. The idea was by handling the
manufacturing and distribution of a product line, and then allowing a network of IBOs. This
seemed like the only way to offer what Jay and Rich originally envisioned - a solid
opportunity where anyone with motivation could excel, regardless of their background and
status. This is a main part of Amway's business philosophy. Not just products and not just
sales, but a way to a better life.

Amway continued to grow under the co-ownership of Van Andel and Devos. In 1972,
the pair purchased Nutralite outright - they now owned the company they had started as
employees with.

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AAA

Amway continued to expand, reaching past the borders of the US to offer the same
opportunities in other countries:

- Australia - 1971
- Europe and parts of Asia - 1974
- Japan - 1979
- Latin America - 1985
- China - 1995
- Africa - 1997
- India - 1998
- Russia - 2005
- Vietnam -- 2008

Critics argued that the model wasn't sustainable and that growth was mathematically
limited. They cried, "Pyramid scheme!" Fifty years of steady growth has shown this criticism
has no basis in fact.

In 2008, Amway (now technically, Amway Global) reported sales of 8 billion. The
company is in 58 markets worldwide and manufactures more than 450 products. Amway
Global does business in more than 98 countries.

Rich DeVos is still alive, although he has passed the Presidency of Amway to his son
Dick. DeVos was named one of the richest men in America by Forbes magazine, with an
estimated 4.2 billion dollars in personal wealth (2009). DeVos owns the Orlando Magic
basketball team among other assets.Jay Van Andel passed away at age 80 in 2004. Mr.
Andel's place at Amway Global is now held by his son Steve. At his death, Van Andel's net
worth was estimated to be 2.4 billion dollars.

The company is still thriving and still offers opportunity to individuals who have the desire
to build their own business. MLM is a proven business model that produces massive success
for individuals.

• Alticor and Amway Sales Growth: 1960 to 2008:

February 5th, 2009 by ibofightback Posted in Amway News

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AAA

Amway global sales were reported at “estimated retail” until 2000 when the holding
company of Alticor was formed. This means they’re valued assuming that they were all sold
at the full retail price, not at the price they were sold to distributors/IBOs. Alticor reports
actual revenue – sales at the base IBO price

I’ve converted the figures so they can be properly compared. It’s important to be
aware of this as many critics of the business (including some former Diamonds who you
would think know about this) have in the past conveniently ignored the change in reporting
standards and tried to claim Amway’s sales peaked in 1998. Note however that Alticor sales
includes revenues from other sources such Access Business Group and Amway Grand Plaza.
In 2007 this was reported as around $100 million, so by far the majority of the sales are
through the Amway business opportunity.

Amway Sales Data:

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AAA

Estimated Estimated Estimated Estimated

Year Year Year Year
Retail Sales Retail Sales Retail Sales Retail Sales

1960 $0.5 million 1970 $120 million 1980 $1.1 billion 1990 $2.2 billion

1961 ? 1971 $165 million 1981 $1.4 billion 1991 $3.0 billion

1962 ? 1972 $180 million 1982 $1.5 billion 1992 $3.9 billion

1963 $21 million 1973 $210 million 1983 $1.13 billion 1993 $4.5 billion

1964 $25 million 1974 $230 million 1984 $1.2 billion 1994 $5.3 billion

1965 $38 million 1975 $250 million 1985 $1.2 billion 1995 $6.3 billion

1966 $40 million 1976 $300 million 1986 $1.3 billion 1996 $6.8 billion

1967 $50 million 1977 $375 million 1987 $1.5 billion 1997 $7.0 billion

1968 $65 million 1978 $500 million 1988 $1.8 billion 1998 $5.7 billion

1969 $85 million 1979 $800 million 1989 $1.9 billion 1999 $5.0 billion

Amway has grown fairly quickly since its inception. Its historic sales data at
estimated retail prices is provided below from 1959 to 2000 (in 2000 Amway switch over to
Alticor. At its peak in 1997 Amway estimated retail sales worldwide at 7 Billion USD. With
the founding of Alticor, the report methodology was changed and the actual sales to
distributors instead of estimated retail sales (ERS) have been reported since 2001. Taking the
sales data published in 2001 report into account, the ERS values are about 32% higher than
sales to distributors. The actual sales to distributors are marked with *.

Until 1999 sales were reported at Estimated Retail. This is approximately 32% higher than
actual sales revenues from sales made to Amway distributors.

VISION OF AMWAY:

• Helping people live better lives.

• Showing where the business wishes to be in the future.

MISSION OF AMWAY:

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AAA

• Through the partnering of Distributors, Employees, and the Founding Families and
the support of quality products and service, we offer all people the opportunity to
achieve their goals through the Amway Sales and Marketing Plan. Broad over riding
statement of purpose.

• To facilitate best business opportunities.

• To deliver high-quality products to semi-urban and urban homes in diverse areas of

insurance, home tech, home care, personal care, cosmetics and wellness.

GOAL OF AMWAY:

• The development of new business opportunities.

• To increase the company's role in relations to social responsibility.
• To provide excellent customer service.

Awards and Recognition:

• Presented the Millennium Outstanding Service Award 2000, by the Confederation

for the Blind (AICB), in recognition for work carried out for the visually
challenged.

• The Indian Red Cross Society, Orissa awarded AOF a memento & certificate for
conducting a mega-Blood Donation camp of 816 units on 4th May, 2003.

• The Surat Raktdaan Kendra felicitated Amway India at their annual function on 5th
Oct, 2003, for the largest number of donors at a Blood Donation Camp (BDC) held
by any financial and commercial institution and industry. The Mayor of Surat -
Snehlata Chouhan - presented a trophy and a certificate of appreciation.

Social responsibilities performed by AMWAY:

• One by One Campaign for Children

• Amway Opportunity Foundation (AOF)
• National Project for the Blind:

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Project Sunrise: The objective is to identify one orphanage/institution at each location

where Amway has a modestly-large office (52 cities). On-going assistance to be provided in
education, healthcare and vocational training under the following heads:

· Health care
· Education and vocational training
· Safe drinking water
· Children’s Day and AOF Day celebration with Amway staff & Amway

Amway Products:
Amway offers a range of exclusive, competitive brands that meet proven customer
needs around the world. From nutritional supplements to water treatment, cosmetics to
cleaning products, these brands are the solid foundation for a successful, independent Retail
business.

Active Lifestyle • Artistry • Atmosphere • Beautycycle • Body Series • Boutique • Dish

Drops • Eddie Funkhouser • Emma Page • eSpring • L.O.C. • Gensona • Glister • Hymm •
iCook • LifeStyle Balanced Solutions • NAO Cosmetics • Moiskin Skin Care • Nutrilite •
Nutriway • XS Energy • Ocean Essentials • Personalized Health • Peter Island • Protique •
Positrim • Satinique • SA8 • Time Defiance • Tolsom • Trim

Amway Personal Care Products

Nutrilite® is the world’s leading brand of vitamin, mineral, and dietary supplements, grown
harvested and processed on its own certified organic farms.

Artistry® is one of the world’s top five largest-selling prestige brands of facial skin care and
colour cosmetics. Our scientists and formulators have developed the complete line of
cosmetics,

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AAA

All products of Attitude contain Skin Vitalising Complex that synergistically combine to
cleanse, Replenish & Moisturise the skin making it soft & supple.

Dynamite's range of male grooming products, formulated internationally is designed to

deliver the ultimate grooming experience.

Glister Toothpaste is a revolutionary Multi-Action Toothpaste with Sylodent that offers

seven benefits.

Persona Premium 3 in 1 Soap is a complete soap for the entire family promises refreshing
confidence.

Satinique Advanced Range with unique Ceramide Infusion System uses nature's own
renewing technology to rejuvenate, strengthen and protect your hair.

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 EXCEL BUSINESS ACADEMY
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AAA

SA8 Gelzyme is India's only 3-in-1 laundry detergent which pretreats, cleans and softens.

G&H Range enriched with the goodness of Glycerine and Honey, deeply nourishes and
hydrates the skin for a healthy glow.

LOC High Suds is a multipurpose household liquid cleaner.

Dish Drops is a concentrated hand dishwashing liquid with a powerful "Triadic Detergency
System".

Great Value Product Range offers you Great Quality, Great Performance, Great Price
and a Money Back Guarantee!

Amway’s competitors:
1) Direct competitors:
• AVON
• MARY KAY
• SUNRIDER
2) Indirect competitors:
• Local INDIAN companies.
• Changing Political & Economic Atmosphere
• Products used as samples to persuade relatives and friends to join Amway
• Focus shifted from selling products to recruiting
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AAA

• Popularity increases - distributors distorted the

Organizational structure of Amway:

Terms used in Amway:

• IBO/ABO/AIE-Independent Business Owner/Amway Business Owner/Amway
Independent Entrepreneur is a business partner of Amway who is authorized to
market and distribute products and services available from Amway. Different names
are used in different markets.

• Distributor - an older term for IBO

• PV — Point Value is a value assigned to each product or service sold by Amway.

An IBOs monthly performance bonus bracket depends on total PV in a month.

• BV — Business Volume is typically the wholesale cost of the product or service sold
by Amway. Performance bonuses are multiplied by the groups total BV.

• Performance bonus is the monthly bonus paid by Amway to IBO's. The higher the
PV, the greater the percentage earned. In North America the Performance bonus
ranges from 3% to 25%. In other markets it ranges from 3% to 21%. In India it ranges
from 6%-21%.

• Retail Profit is the markup earned by an IBO when they sell a product to a
consumer, either personally or through an Amway website. Recommended retail
markup ranges from 20%-35%.

• Sponsor is an IBO who refers (sponsors) a new IBO to Amway, although IBO's do
not get paid to sponsor.

• Upline is the term used to refer all the IBOs up in the line of sponsorship of an IBO.

• Downline is the term used to refer all the IBOs down in the line of sponsorship of an
IBO. They are collectively also known as group

• Leg refers to a personally sponsored IBO and all of their downline.

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AAA

• Silver Producer is an IBO who has reached the maximum bonus level for one
month.

• Gold Producer is an IBO who has reached the maximum bonus level for three
months.

• Platinum or direct is an IBO who has reached the maximum bonus level for six
months. In North America a Platinum is generating a minimum of approximately
$30,000 in sales volume per month.

• Emerald a distributor with at least three legs generating Silver Producer volume for
at least 6 months of a year.

• Diamond a distributor with at least six legs generating Silver Producer volume for at
least 6 months of a year.

• Q-12 is a Platinum or higher IBO that qualifies every month for 12 months of a year.

• Independent Business Owner (IBO):

An IBO is, literally, an Independent Business Owner: an individual or individuals

who own and operate their own business, which is powered by Amway North America,
formerly Quixtar. IBOs are the CEOs of their own businesses, and they make many of the
same daily business decisions other business executives make. As independent business men
and women, IBOs decide how active to be in their business, what products to sell and at what
prices, who to sponsor, what hours to keep, and other important decisions. IBOs are
independent contractors; they are not employees of Amway North America or Amway
Corporation. As independent business owners, IBOs are free to make decisions many others
in business are not free to make.

• Independent Business Owners Association International (IBOAI) :

The IBOAI (IBOA International or Independent Business Owners Association International)

is a trade association representing Independent Business Owners affiliated with Amway
North America, formerly Quixtar. It is the primary advocacy organization for IBOs in North
America. A trade association is an organization of business people who share common
interests or concerns, and who educate and represent their members. The IBOAI (or IBOA
International) is one example.

Role of the IBOAI Board:

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AAA

The IBOAI Board is the representative body of the Association acting on behalf of all
IBOs. With IBO input, support, and participation, the IBOAI Board listens to ideas, proposes
improvements, and advises Amway on the best way to move the business forward. Working
closely with Corporate staff, the Board advises Amway on every facet of the business, from
products and promotions to operations and business guidelines, as it has for 50 years.
Together, they bring positive change to this business, to keep it moving forward and make
certain the business is better for every generation.

2010 IBOAI Board and Governance & Oversight Committee:

• Steve Woods, Chairman
• Brad Duncan, Vice Chairman
• Bob Andrews, Past Chairman

Other important directors:

1. Alberto Aguilera
2. Glen Baker
3. Mike Bundy
4. John Crowe
5. Howie Danzik
6. Jim Dornan
7. Jody Dutt
8. Kanti Gala
9. Bert Gulick
10. Leif Johnson
11. Shivaram Kumar
12. Pedro Lizardi
13. Doug Weir
14. Doyle Yager
15. Dan Yuen

IBOs are never alone. They have a sponsor, a line of sponsorship, and the IBOAI – their
primary advocacy organization – behind them all the way.

Organization type and Business Opportunity:

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AAA

The Amway is private co operative organization. The Amway Sales and Marketing
Plan put you in control, allowing you the flexibility to work where and when you want,
giving you time for family and friends as well as the opportunity to earn a good income. It
adapts easily to your needs and ambitions, and grows with them, offering you all the personal
support and assistance you require to become the Business Owner you want to be. With
Amway you are Connected to the global leader in multilevel marketing, with over 40 years
of experience, Supported by great products and people who will help you succeed, and
finally In Control of your life.

Sales and Marketing Plan:

The Amway Sales and Marketing Plan is a low risk, low start-up cost business
opportunity that is open to everyone. It allows you to build your business through retailing
products and sponsoring other people who, in turn, can retail products and offer the business
opportunity to others. By passing your sales and marketing knowledge to your developing
team, you not only build your own business network but also enable others to build one of
their own.

Marketing strategy:

A strategy is a plan of action designed to achieve the goals of the organisation. In

creating a marketing strategy for the Super Concentrated Cleaning System, Amway needed
to set out the key objectives it wanted to achieve. The following objectives for the brand
were set:

• To increase distribute or profitability and productivity by providing a new and

exciting business opportunity
• To optimize consumer convenience and value through enhanced product
differentiation with this exclusive and revolutionary cleaning system
• To provide innovative and unique products to enhance the image of Amway Home
Care.

A New Strategy of Amway:

• Agreement with the government and company

• resumed operations
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AAA

• Goods will be sold in retail outlets and through

• sales representatives
• Income of sales distributors will be based on direct selling done by them
• Same Distribution centers served as retail outlets for the company
• Localization of employees
• Localization of production and Raw Material
• Localization of research and development
• Transparency and Credibility of company’s management

Functional pattern of Amway:

Following are the main departments of Amway:
1. Finance and accounts.
2. Marketing and Sales.
3. Human resource and administration.

Amway Global provides you with support like:

• Customer care: If you have a question about anything - like registration, renewal,
Business, or product information - our Customer Care Associates can help you.
• Business management: You can manage your business, check customer Volume,
order products, and renew your business, all at Amway Global.com.
• Order management: You sell the products, and we'll do the rest, like process the
order, manages your customer accounts, and handles the shipping details.
• Training: Online, video, and instructor-led training are some of the ways we can
share with you the knowledge to grow a successful independent business.
• Marketing: We support your sales efforts with DVDs, online sites, Magazines,
brochures, and free websites you can personalize. And we help Build awareness of
your products and brands with national advertising, promotions, and event
sponsorship.

Amway believe that quality improvement happens when people come together. This
core belief is what all AOF initiatives are based upon and it holds true time and again. With a
passionate and vigorous workforce ready to contribute their bit to the well-being of society,
volunteering becomes a way of life in Amway. The 550,000 Amway distributors and 450
full-time employees are all considered AOF volunteers. At 56 Amway offices across India,
AOF has formed a team of 6 or more distributors and employees to form a Local
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AAA

Implementation Committee (LIC). LIC takes ownership of being the face of Amway’s CSR
at the location. They identify potential partners, form a project, and implement this with
other volunteers. The LIC also plays a lead role in raising funds they wish to utilize. The
beauty of this system is that the LIC raises the funds, and then decides how best to utilize this
in their town or city.

Strategic analysis to overcome problems:

Today it is a global business that, along with its parent and sister companies, directly
employs 10,000 people worldwide. The business also operates strategically at a Global,
European and National level. Amway (UK) began operations in 1973 and has its own
distribution and Product Selection Centers.

Amway has helped millions of people around the world to start their own
independent business, through which they engage in person-to-person marketing. This type
of direct selling involves matching a consumer's needs with the goods and services on offer.
The better the match, the more lasting the relationship between the seller and the buyer.

Ownership of Amway:

• IBOs and Customers:

Amway services the needs of both Independent Business Owners and customers.
IBOs build businesses that allow them to earn income based on sales made resulting from
their efforts. To launch an Amway-powered business, individuals must register with an
existing IBO. Customers pay no fee to shop from a large selection of products and learn from
expert advice on health, beauty, home care, and other topics. Products are shipped to their
homes and covered by Amway's Customer Satisfaction Guarantee. Customers must register
with the identification number of their servicing IBO. If a new registrant Does not have a
servicing IBO, Amway will assign them one..

• Personal Referrals:
Unlike most other companies, Amway's sales are not the result of advertising. The
biggest chunk of Amway's marketing budget goes directly to rewarding IBOs for sales
volume resulting from their efforts. Those efforts include registration of new Ibos, Members,
and Clients, resulting in product sales. Amway's tiered compensation plan rewards the
movement of product through an IBO's sales organization and their ability to train others to
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AAA

create their own successful organizations. When people visit Amway's site, it is the result of
a personal referral by an IBO -not as a result of some advertisement they saw on TV.
Personal referrals have proven to be much more effective. Only 8% of respondents in the
Edelman 2005Annual Trust Barometer study indicated that information obtained in
advertising was credible, while 42% trusted information obtained from family, friends, and
colleagues.

• Buzz Marketing:
Alticor pioneered buzz marketing through its person-to-person referral model. Some
companies spend millions on strategies intended to get people to spread the word about their
products. Through its Independent Business Ownership Plan, Am-way does the same by
rewarding IBOs for spreading the word about the business opportunity and the exclusive
products available through Amway. This is a much targeted market spend, since IBOs are
rewarded only when their efforts actually result in product sales.

• Business Systems:
IBOs employ many different approaches to build their businesses, typically involving
training systems, motivational meetings and tools, and time-tested tactics to approach people
and interest them in the business opportunity and products. When a person registers with
Amway, it typically is the result of having been approached by an IBO already involved in
one of several large organizations that provide training and support to IBOs. Often, a new
IBO also will choose to attend optional and voluntary training sessions or purchase
professional development materials provided by that organization - all covered by a money-
back guarantee.

• Independence:
The beauty of Amway's business model is that there can be as many ways of pursuing
the business as there are IBOs. If you're into health, you can focus on Nutrilit supplements
and XS Energy Drinks.

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AAA

SWOT analysis of Amway:

STRENGTH:

• Based on direct selling operations. Hence it can be A home based business. Every can
participate in business. It’s easy to get admission in Amway with easy rout like
intent.

• Training to staff.

• Functions are performed by IBOs.

• Organize meetings and events time to time.
• Have good customer service system.
• Backed by a 100% Customer Product Refund Policy produce faith and reselling
attitude in customers.
• Quality Products that Inspire Confidence. Almost no risk of money as world class
quality Minimal start up costs gives strong base to the initiation of business. So
everyone can participate in business. The person who wants do something can be
make profit with investment of low cost.
Products are easy to sell.
• A business with national and international scope gives more opportunity to the
costumers.
• The possibility of financial security and freedom of time to enjoy life.

WEAKNESS:
• More power to IBOs gives critical structure to organization.
• Initially high entry cost leads to somewhat restrictions for business development.
• Rumors for direct selling operations.
• Focus shifted from selling products to recruiting.

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AAA

OPPURTUNITIES:
• Setup a manufacturing plant in all countries leads to better platform for company.
• Population of INDIA gives better opportunity to company to receive more profit.
• As the company name itself gives reliance and faith for the customer and buyer
produce greater opportunity for marketing which leads to decrease in total
expenditure of company.

THREATS:
• Too much freedom to IBOs.
• Change in government policy may affect to the profit and freedom of company.
• Competitors like AVON, MARY KAY; SUNRIDER creates lot of competition in
market which leads to strong marketing competition in market.

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 EXCEL BUSINESS ACADEMY
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AAA

Finding:
I’ve written about Amway based entirely on factual, confirmable sources. If you’re
researching Amway, especially on the Internet, chances are you’ve encountered people who
claim Amway is some kind of scam business, it’s illegal, the products are poor quality, or
some other information that has made you think twice about being involved.

Skim through these finding and decide for yourself whether those kinds of opinions
really have a lot of credibility in the face of all of these facts. Have all these major companies
and organizations that have recognized Amway for excellence been conned? For fifty years?
Or perhaps the opinions you read on the internet have been formed from limited or even no
experience – from encountering some new or inexperienced Amway rep that never bothered
to learn how to act professionally or properly explain the concept, and probably never did
much more than dabble for a few months. Or perhaps the experience was with just one of
dozens and dozens of different Amway affiliated organizations, each with different ways of
doing things that may not all appeal to everyone? Or perhaps their opinions driven by
business interests working or being paid by competitors or potential competitors to Amway?

CONCLUSION:

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AAA

Amway is which is one of the largest direct selling company in the world. The main
objectives of Amway are to profit there distributers by eliminating the middlemen and
provide the products to the distributers in cheaper price. The products of Amway are world
class product quality. They are made up of natural a thing that’s why they are good for health
and environment. Amway covers a wide range of products from beauty care. Health care, to
clothing, and daily use products etc. the products are costly as compared to other branded
products available in market but if we compare the quantity while using the products require
less amount and thus can be used for longer time. Successful business today depends upon a
company's ability to quickly adapt to changes in the marketplace. At Amway, they pride it
selves on knowledge of the dynamic networking market that is quickly becoming central to
modern business. This knowledge, and its willingness to act upon it, has enabled us to
become one of the industry's technological leaders. Through they continued pursuit of new
product ideas, and by consistently refining our existing product line, they have become one
of the top providers of cutting-edge networking products in the global market. If you're
looking for high quality products and solid customer support at rock-bottom prices, then
choosing Amway really does make sense.

SUGGESTIONS:

• Trial packs should be used because customer must have to introduce the product.
Once customer gets idea about product he comes to know advantages of products.
• The products should be cheap the home delivery system takes at least two days to
deliver the products so the delivery should be instant.

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• There must be multiple options for purchasing the products for distributers like
online, tale and instant purchasing.
• In every city, the Amway office should be situated in such a location so that it is in
reach of all distributers.

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