Hussin, Al-kharidz

Ilimin, Anthony Lloyd

Jallores, Harvey Dale
Puri, Josef Paolo
Mgt220-B
March 08, 2019
Case Analysis: Amway in China

I. Main Issue:

With the changing market environment, Amway in China is forced to change its current
business model.

II. Objectives:

1. To maximize the investment opportunity made in China

2. To maitain the business vision of expanding the American Way around the globe

3. To maintain its business operation in China

III. Area of Consideration

 Strengths  Weaknesses
- Large Market coverage - Aggressive Independent business
- High number of independent Sales owners
distributors - Loose control and monitoring of
- Strong and Loyal market connections business structure

 Opportunity
- Low competitive pressure  Threats
- Adaptable environment
- Strong interference of the Chinese
- Wide geography
government
- China’s large population
- Bad international governement image

IV. Alternative Courses of Action

1. Fundamentally change the current business model

Advantage: Acceptable for the Chinese government

 Hussin, Al-kharidz
Ilimin, Anthony Lloyd
Jallores, Harvey Dale
Puri, Josef Paolo
Mgt220-B
March 08, 2019
Disadvantage: Opposes the business movement and could entirely affect the system of
the company.

2. Protest the blunt of the interference of the Chinese Government

Advantage: Maintain its current business model that had been successful for the past
years

Disadvantage: Strong government opposition

3. Leave China to escape challenging environment

Advantage: Able to avoid the problematic issue arising

Disadvantage: Great business invesment opportunity loss

4. Stregthen the monitoring of independent business owners with systemized connections

and facilitate the business operation.

Advantage: Maintain its internally renowned sale system

Disadvantage: Increase investemnt cost

V.i Recommendation with Action Plan

Option three (4). Stregthen the monitoring of independent business owners with
systemized connections and facilitate the business operation. This option is more appealling
because the company needs to maintain its current business model because of the image it has to
maintain to its loyal and passionate members of the organization, the Indepenten business
owners, who for the past years were contributing largely to the company’s success. Changing it
could affect the loyalty of the members and would negatively affect the market connection of the
company in China. Since China has one of the largest population and widest geographic area
around the world, it is a great opportunity loss for the expansion of the business of the company.
Also, the problem was only with the misbehavior of the members for going beyond of what is
ethincal by playing with the system of direct selling which force the government to take into
opposing actions to banned the operations of Amway because of how it affected the large loss of
 Hussin, Al-kharidz
Ilimin, Anthony Lloyd
Jallores, Harvey Dale
Puri, Josef Paolo
Mgt220-B
March 08, 2019
savings of China. The company strengten its monitoring of business operation of the IBOs to
avoid that issue from arising again which had was the reason that triggered the Chinese
government to go against Amway.

V.ii Action Plan

Tasks Person-In-Charge Time

Gather all the head IBOs of Main company officers Year end
each region in China for a
meeting regarding the Ethical
code and the adminestering a
strict monitoring system.
Adminstering of the Main company officers and Start of the year operation
monitoring system Head IBOs in China
Regular evalutaion of the Assigned main company End of every month check
system. officers

VI. Potential Problem Analysis

Due to the increase of IBOs of AMWAY in China, it will become hard to keep in check
the actions of each one of them which could cause future problems. But what the management
can do is to increase the scope and strength of its monitoring sytem. Also with the changing
market environment, the current business model might need modifications to adapt to the change
that is occuring. But since it is still a trend, the company will have to deal with it in the future
when the time comes, and at that time, the current business model will either be reorganize or be
changed entirely.