Andrea Jung’s Makeover of Avon Products
...ales started to decline, its products had little appeal, diversification failed to produce the expected level of performance, and all of the companies businesses, other than cosmetics, were either abandoned or divested by 1999, so it was indeed a dire time for Avon to fundamentally renovate and change direction. 3. What is your assessment of the financial and strategic objectives Jung set for Avon? Do they contain too much stretch? Too little stretch? The Financial and Strategic objectives set by jung are very appropriate and essential with the environmental challenges and competitive challenges. They neither are too much nor too little stretched; rather very challenging and required very careful implementation and monitoring, which was efficiently managed by Jung. Ideally objectives ought to serve as a managerial tool for truly stretching an organization to reach its full potential and it was eminent to energize Avon and make it pave the path for the new strategy’s implementation. 4. What have the key elements of Avon’s strategy been under previous CEOs? What new and different strategy elements have been initiated by Andrea Jung? How well does Andrea Jung’s new strategy seem to match features of the global cosmetics industry and Avon’s resource strengths, competitive capabilities, and culture? The key elements under the previous management were, BRP, Avon’s Competitive strength in global CFT industry, promotion of e-commerce and market space, and incentives and bonuses to employees. Jung’s strategies were intended to turn company’s competitive liabilities into competitive strengths. The new and different elements were: o Developing products into global brands o Global image building o Innovative new lines of products o Diversification and new market penetration o Supply chain reconfiguration Under the new strategy Avon’s new advertising campaign attempted to portray avons as a lively, energetic, and fashionable brand, which was need of the time, and essential to deal with the highly competitive global FCT industries. This advertising campaign not only increased the market share but also put Avon from no.4 to no.3 position in the UK market. The cross functional product development reduced development cycles and enabled the production of highly innovative and breakthrough products which were able to respond to surging pace of the competitive markets and meet different geographical, demographical trends, perceptions and cultures. Which is quite evident as, in 2001, Avon achieved highest beauty brand image among global CFT Brands. 5. How well has Avon’s new strategy been implemented so far? What are Avon’s strategy successes so far? What problems or missteps do you see? How important has Susan Kropf been to Avon’s implementation efforts? Was she a good choice as chief operating officer? Why or why not? My Analysis tells that the new strategy has been implemented superbly.This is well marked by the series of successful transitions of the entire company like: o Avon’s sales growth increased from 1.5% to 6% o Sales force expanded to 15% o Operating profits expected growth by 7% o Operating profits reached highest level at 14%. o The BPR saved more than $400m of costs and resulted in operating margins by more than 350 po...