Avon Products, Inc.

– 2013
Forest R. David

A. Case Abstract

Headquartered in New York City, Avon Products is the world’s largest direct seller firm, and by far the
largest direct seller of cosmetics and beauty-related items. Avon is the fifth-largest cosmetics and
fragrance firm in the world. The company receives sales from catalogs and online, but the vast
majority of its sales come from about six million independent sales representatives in 110 countries.
Since 1892, Avon has empowered women to be their own boss and become leaders in communities
and business. Avon is struggling to recover from poor management and global bribery investigations.

Avon is pursuing a retrenchment strategy because the company has encountered severe challenges on
various fronts. Avon is trimming down costs and improving working capital. Avon has decreased its
quarterly dividend substantially and aims to slash costs by $400 million through 2016. The company is
closing operations in some underperforming markets mainly in Europe, the Middle East & Africa.

B. Vision Statement
Actual: To be the company that best understands and satisfies the product, service and self-fulfillment
needs of women—globally.

Proposed: To provide women quality fragrances, cosmetics, and jewelry at reasonable prices backed
by outstanding customer service.

C. Mission Statement (proposed)

To provide women (1) quality fragrances, cosmetics, and jewelry (2) at reasonable prices backed by
outstanding customer service (7) provided by our thousands of representatives (9) operating globally
(3). We use the latest technology (4) to profitably develop and market products desired by women all
over the world (5). Avon representatives put integrity first (6) in setting a good example in every
community (8) they operate in. We at Avon strive to make the world a more beautiful place (8).

1. Customers
2. Products or services
3. Markets
4. Technology
5. Concern for survival, growth, and profitability
6. Philosophy
7. Self-concept
8. Concern for public image
 9. Concern for employees

D. External Audit
Opportunities

1. The direct selling business model is still viable in developing nations.

2. In May 2012, perfume company Coty offered $24.75 a share for Avon, which at $10.7 billion was
nearly 20 percent above Avon’s stock price at the time.
3. There are many qualified COOs available in the USA.
4. The USA market remains one of the top markets in the world.
5. Sales in male grooming increased by 4% in 2012, which could help the sales in Avon’s men’s
products grow.
6. The increase of women's rights in other regions around the world.
7. People are becoming increasingly aware of the sun’s effects on skin and cancers associated with
being in the sun.
8. L’Oreal does not practice direct selling strategies in their marketing initiatives as compared to
competitors (Avon and Mary Kay).

Threats

1. The direct selling business model has waned in the USA.

2. Only a 1.2% growth in industrywide beauty sales in 2012 compared to 2011.
3. Avon's inability to be sold in department stores at the level many competitors’ products are sold.
4. Industry as a whole suffered a 5-year growth rate average of negative 7.5.
5. Competitors such as L’Oreal are doing much better financially.
6. L’Oreal has $930 million invested in R&D; 3,676 researchers throughout 19 research and 16
evaluation centers; filed 613 patents in 2011.
7. Consumption of cosmetic products per inhabitant is 10 to 20 times lower in immature countries
than in mature countries.
8. L’Oreal achieved 9.5% sales growth in New Markets.
9. Weaker economy customers have an increased tendency to purchase cheaper products from firms
such as Procter & Gamble.
Competitive Profile Matrix

Avon L'Oreal Revlon

Critical Success Factors Weight Rating Score Rating Score Rating Score
Perfume Product Selection 0.10 2 0.20 4 0.40 1 0.10
Makeup Product Selection 0.10 2 0.20 4 0.40 1 0.10
Net Income 0.13 2 0.26 4 0.52 1 0.13
Revenues 0.13 2 0.26 4 0.52 1 0.13
R&D 0.08 2 0.16 4 0.32 1 0.08
Employee Dedication 0.08 4 0.32 3 0.24 2 0.16
Product Quality 0.07 2 0.14 4 0.28 1 0.07
Latin America Presence 0.07 3 0.21 4 0.28 1 0.07
North American Presence 0.07 2 0.14 4 0.28 1 0.07
European Presence 0.07 2 0.14 4 0.28 1 0.07
Price Competitiveness 0.10 2 0.20 4 0.40 1 0.10
Totals 1.00 2.23 3.92 1.08

Avon is doing considerably better than Revlon, but L’Oreal dominates both Avon and Revlon with a
near perfect score of 3.92. Avon’s largest strength is also their largest weakness; the direct selling
model that works well in Latin America is waning in the USA. Avon is also plagued by massive debt
and poor sales from the USA.

EFE Matrix

Opportunities Weight Rating Weighted Score

1. The direct selling business model is still viable in developing 0.08 4 0.32
nations.
2. In May 2012, perfume company Coty offered $24.75 a share for 0.08 1 0.08
Avon, which at $10.7 billion was nearly 20 percent above
Avon’s stock price at the time.
3. There are many qualified COOs available in the USA. 0.04 1 0.04
4. The USA market remains one of the top markets in the world. 0.08 2 0.16
5. Sales in male grooming increased by 4% in 2012, which could 0.02 2 0.04
help the sales in Avon’s men’s products grow
6. The increase of women's rights in other regions around the 0.02 2 0.04
world
7. People are becoming increasingly aware of the suns effects on 0.04 2 0.08
skin and cancers associated with being in the sun.
8. L’Oreal does not practice direct selling strategies in their 0.02 4 0.08
marketing initiatives as compared to competitors (Avon and
Mary Kay).
9. Boston Consulting Group reports the Chinese middle class is 0.04 1 0.04
expected to increase from 150 million to +400 million in 10 years.
340+ urban locations will increase to 550 million in 10 years.
 Threats Weight Rating Weighted Score
1. The direct selling business model has waned in the USA. 0.07 3 0.21
2. Only a 1.2% growth in industry wide beauty sales in 2012
0.08 2 0.16
compared to 2011.
3. Avon's inability to be sold in department stores to the level
0.07 2 0.14
many competitors products are sold.
4. Industry as a whole suffered a 5-year growth rate average of
0.10 2 0.20
negative 7.5.
5. Competitors such as L’Oreal are doing much better financially. 0.10 2 0.20
6. L’Oreal has $930 million invested in R&D; 3,676 researchers
throughout 19 research and 16 evaluation centers; filed 613 0.04 2 0.08
patents in 2011.
7. Consumption of cosmetic products per inhabitant is 10 to 20
0.05 3 0.15
times lower in immature countries than in mature countries.
8. L’Oreal achieved 9.5% sales growth in New Markets. 0.03 2 0.06
9. Weaker economy customers have an increased tendency to
purchase cheaper products from firms such as Procter & Gamble. 0.04 2 0.08

TOTALS 1.00 2.16

Avon is performing below average on external factors with a score of 2.16. The firm desperately
needs to improve its position in the USA. Rival firm, Mary Kay Cosmetics, does well in the USA
so perhaps a business model akin to that firm should be considered.

E. Internal Audit
Strengths

1. Avon is the world's largest direct seller of cosmetics and beauty-related items.
2. Avon is the world’s fifth largest cosmetics and fragrance firm.
3. Avon products include cosmetics, fragrances, toiletries, jewelry, apparel, home furnishings, watches,
footwear, children’s products, skin care, gift and decorative products, nutritional products, housewares,
and entertainment and leisure products.
4. The company receives sales from catalogs and a website, but the vast majority of its sales come from
its 6.4 million independent sales representatives in some 110 countries.
5. 85% of revenue is generated outside of the USA.
6. Avon training centers help women who want to become Avon representatives sell beauty products,
jewelry, accessories and clothing.
7. Avon markets Regenerist and Anew skin products to baby boomers.
8. By paying commission on sales, Avon has a large and cheap labor force that does not receive benefits.

Weaknesses

1. Firm still relies heavily on direct sales from sales representatives in the USA.
2. Avon is struggling to recover from poor management strategies that led to a CEO changeover and
global bribery investigations.
3. Avon reported a loss of $38 million in 2012 in which every region of the world experienced worse
revenues and profits than in 2011.
4. All product categories also experienced lower revenues in 2012 than in 2011.
5. Avon rejected an offer from Coty that was 20% above the stock price at the time.
6. There has been no COO at Avon since 2006, a potential strategic mistake by CEO Jung (and McCoy).
7. North American sales trail both Latin American and European sales,
8. Focus almost exclusively on women’s products and likely too many products outside their niche area.
9. Company is loaded in debt with a debt/equity ratio of 2.4.
10. Avon only spends around $75 million on R&D.

Financial Ratio Analysis

Profit Margin Percent Avon Industry

Gross Margin 61.4 52
Pre-Tax Margin 2.44 14.95
Net Profit Margin -1.06 10.54

Liquidity Ratios
Debt/Equity Ratio 2.36 0.53
Current Ratio 1.59 0.88
Quick Ratio 0.72 0.53

Profitability Ratios
Return On Equity -8.85 22.21
Return On Assets -1.56 8.64
Return On Capital -4.15 12.93

Efficiency Ratios
Income/Employee Negative 48,902
Revenue/Employee 270,675 461,611
Receivable Turnover 15.06 10.06
Inventory Turnover 3.41 4.85
Asset Turnover 1.47 0.82

Avon is struggling financially as the profitability ratios clearly reveal. The company also has 4 times the
debt of the industry average.

Net Worth Analysis (in millions)

Avon Company Worth Analysis

Stockholders' Equity - (Goodwill + Intangibles) $776
Net Income x 5 -$215
(Share Price/EPS) x Net Income $3,303
Number of Shares Outstanding x Share Price $8,667
Method Average $3,133

Revlon Company Worth Analysis

Stockholders' Equity - (Goodwill + Intangibles) -$935
Net Income x 5 $255
(Share Price/EPS) x Net Income $1,413
Number of Shares Outstanding x Share Price $1,355
Method Average $522
 Avon is worth about $8.6 million using method four and was recently offered a 20% premium on this price
by another firm. Care should be taken when analyzing the third method as Avon has negative EPS and Net
Income. L’Oreal is worth about 10 times more than Avon.

IFE Matrix

Strengths Weight Rating Weighted Score

1. Avon is the world's largest direct seller of cosmetics and beauty-
0.05 4 0.20
related items.
2. Avon is the world’s fifth largest cosmetics and fragrance firm. 0.05 3 0.15
3. Avon products include cosmetics, fragrances, toiletries, jewelry,
apparel, home furnishings, watches, footwear, children’s
products, skin care, and gift and decorative products, nutritional 0.05 4 0.20
products, housewares, and entertainment and leisure products.
4. The company receives sales from catalogs and a website but the
vast majority of its sales come from its 6.4 million independent 0.05 4 0.20
sales representatives in some 110 countries.
5. 85% of revenue is generated outside of the USA. 0.08 3 0.24
6. Avon training centers help women who want to become Avon
representatives selling beauty products, jewelry, accessories 0.08 3 0.24
and clothing.
7. Avon markets Regenerist and Anew skin products to baby
0.02 3 0.06
boomers.
8. By paying commission on sales, Avon has a large and cheap
0.08 4 0.32
labor force that does not receive benefits.

Weaknesses Weight Rating Weighted Score

1. Firm still relies heavily on direct sales from sales representatives
0.07 1 0.07
in the USA.
2. Avon is struggling to recover from poor management strategies
0.07 1 0.07
that led to a CEO changeover and global bribery investigations.
3. Avon reported a loss of $38 million in 2012 in which every region
0.05 1 0.05
of the world experienced worse revenues and profits from 2011.
4. All product categories also experienced lower revenues in 2012
0.05 1 0.05
than in 2011.
5. Avon rejected an offer from Coty that was 20% above the stock
0.08 1 0.08
price at the time.
6. There has been no COO at Avon since 2006, a potential strategic
0.06 1 0.06
mistake by CEO Jung (and McCoy).
7. North American sales trail both Latin American and European
0.04 2 0.08
sales.
8. Focus almost exclusively on women’s products and likely too
0.02 2 0.04
many products outside their niche area.
9. Company is loaded in debt with a debt/equity ratio of 2.4. 0.08 1 0.08
10. Avon only spends around $75 million on R&D. 0.02 2 0.04
TOTALS 1.00 2.23

Avon is performing below average on internal issues as indicated by a score of 2.23. The firm produces a
wide range of products and is the 5th largest cosmetic company in the world. A glaring weakness for Avon
is the negative profits coming from the USA market. Avon is in desperate need of a better strategy for its
 domestic market. Perhaps the firm could somehow switch from sales representatives to drugstores for
distribution in the USA.

F. SWOT
SO Strategies

1. Increase the direct selling business aspect of Avon by 25% in Latin America by 2015 (S1, S2, S4,
S5, S8, O1, O8).
2. Increase the direct selling business aspect of Avon by 100% in Asia by 2015 (S1, S2, S4, S5, S8,
O1, O8, O9).
3. Build 10 new training centers across Mexico and Brazil (S4, S6, S8, O1).
4. Develop a line of sunscreen under the Avon brand (S3, O7).

WO Strategies

1. Reconsider Coty’s offer; sell the firm (W3, W4, W5, O2).
2. Hire a COO for $2 million annually (W2, W6, O3).
3. Spend $10 million to develop a line of products for men (W8, O5).
4. Increase presence in USA drugstores and grocery stores by 20% (W1, W7, O4).

ST Strategies

1. Develop a line of sunscreen under the Avon brand (S3, T2, T3, T4).
2. Invest $10 million in R&D and marketing to develop a new line of personal care products (S1, S2,
S3, T9).
3. Increase presence in USA drug stores and grocery stores by 20% (S1, S2, T3).

WT Strategies

1. Increase R&D spending to $100 million per year (W2, T8, T10).
2. Cease all direct selling operations in the USA (W1, T1).
3. Divest all USA operations (W7, T4).
G. SPACE Matrix

FP
Conservative Aggressive
7

CP IP
-7 -6 -5 -4 -3 -2 -1 1 2 3 4 5 6 7
-1

-2
X = 0.6
-3 Y = -1.6

-4

-5

-6

-7
Defensive Competitive
SP

Internal Analysis: External Analysis:

Financial Position (FP) Stability Position (SP)
ROA 1 Rate of Inflation -2
Debt/Equity 1 Technological Changes -2
Net Income 1 Governmental Regulations -3
Revenues 3 Competitive Pressure -7
Company Worth 2 Barriers to Entry into Market -2
Financial Position (FP) Average 1.6 Stability Position (SP) Average -3.2

Internal Analysis: External Analysis:

Competitive Position (CP) Industry Position (IP)
Market Share -3 Growth Potential 5
Product Quality -3 Financial Stability 2
Customer Loyalty -3 Ease of Entry into Market 3
R&D -3 Resource Utilization 3
International Presence -3 Profit Potential 5
Competitive Position (CP) Average -3.0 Industry Position (IP) Average 3.6
Avon is in the competitive quadrant of the SPACE Matrix in large part due to heavy competition in the industry and
the firm’s poor financial condition. The industry is also weak, and could shift Avon into the Defensive quadrant.
Avon desperately needs to improve sales and reduce expenses in the USA; hiring a COO would be beneficial.

H. Grand Strategy Matrix

Rapid Market Growth

Quadrant II Quadrant I

Weak Strong
Competitive Competitive
Position Position

Quadrant III Quadrant IV

Slow Market Growth

With a five-year industry growth rate average of -7.5% and excessive debt, Avon is located in Quadrant III
of the Grand Strategy Matrix. Avon should consider selling the entire firm, possibly to Coty, who offered a
20% premium on the stock price. Or Avon should divest its USA based sales and focus on Latin America,
Europe, and Asia.
I. The Internal-External (IE) Matrix
The Total IFE Weighted Scores
Strong Average Weak
4.0 to 3.0 2.99 to 2.0 1.99 to 1.0
4.0 I II III

High

Latin America

3.0 IV V VI

The
EFE
Total Medium
Weighted
Scores Asia Pacific
Europe, Middle East & Africa

2.0 VII VIII IX

North America

Low

1.0

Segment Total Sales (in millions) Profits

Latin America 4,993 444
Europe, Middle East, Africa 2,914 313
North America 1,907 (215)
Asia Pacific 902 5
Total 10,717 547
 The pie slices represent only industries that obtained a profit in 2012. Avon should move away for its
direct selling market in the USA and invest resources into making products more available in grocery and
drugstores.

J. QSPM

Increase Increase
Direct Presence in
Marketing in Grocery
Latin Stores in the
America USA
Opportunities Weight AS TAS AS TAS
1. The direct selling business model is still viable in developing
0.08 4 0.32 1 0.08
nations.
2. In May 2012, perfume company Coty offered $24.75 a share for
Avon, which at $10.7 billion was nearly 20 percent above 0.08 0 0.00 0 0.00
Avon’s stock price at the time.
3. There are many qualified COOs available in the USA. 0.04 0 0.00 0 0.00
4. The USA market remains one of the top markets in the world. 0.08 1 0.08 4 0.32
5. Sales in male grooming increased by 4% in 2012, which could
0.02 0 0.00 0 0.00
help the sales in Avon’s men’s products grow
6. The increase of women's rights in other regions around the
0.02 3 0.06 1 0.02
world
7. People are becoming increasingly aware of the suns effects on
0.04 0 0.00 0 0.00
skin and cancers associated with being in the sun.
8. L’Oreal does not practice direct selling strategies in their
marketing initiatives as compared to competitors (Avon and 0.02 3 0.06 1 0.02
Mary Kay).
9. Boston Consulting Group reports the Chinese middle class is
expected to increase from 150 million to +400 million in 10 years.
0.04 0 0.00 0 0.00
340+ urban locations will increase to 550 million in 10 years.

Threats Weight AS TAS AS TAS

1. The direct selling business model has waned in the USA. 0.07 2 0.14 4 0.28
2. Only a 1.2% growth in industry wide beauty sales in 2012
0.08 0 0.00 0 0.00
compared to 2011.
3. Avon's inability to be sold in department stores to the level
0.07 1 0.07 4 0.28
many competitors products are sold.
4. Industry as a whole suffered a 5-year growth rate average of
0.10 0 0.00 0 0.00
negative 7.5.
5. Competitors such as L’Oreal are doing much better financially. 0.10 0 0.00 0 0.00
6. L’Oreal has $930 million invested in R&D; 3,676 researchers
throughout 19 research and 16 evaluation centers; filed 613 0.04 0 0.00 0 0.00
patents in 2011.
7. Consumption of cosmetic products per inhabitant is 10 to 20
0.05 2 0.10 1 0.05
times lower in immature countries than in mature countries.
8. L’Oreal achieved 9.5% sales growth in New Markets. 0.03 0 0.00 0 0.00
9. Weaker economy customers have an increased tendency to
0.04 0 0.00 0 0.00
purchase cheaper products from firms such as Procter & Gamble.
 Increase Increase
Direct Presence in
Marketing in Grocery
Latin Stores in the
America USA
Strengths Weight AS TAS AS TAS
1. Avon is the world's largest direct seller of cosmetics and beauty-
0.05 3 0.15 1 0.05
related items.
2. Avon is the world’s fifth largest cosmetics and fragrance firm. 0.05 3 0.15 2 0.10
3. Avon products include cosmetics, fragrances, toiletries, jewelry,
apparel, home furnishings, watches, footwear, children’s
0.05 0 0.00 0 0.00
products, skin care, and gift and decorative products, nutritional
products, housewares, and entertainment and leisure products.
4. The company receives sales from catalogs and a website but the
vast majority of its sales come from its 6.4 million independent 0.05 4 0.20 2 0.10
sales representatives in some 110 countries.
5. 85% of revenue is generated outside of the USA. 0.08 4 0.32 3 0.24
6. Avon training centers help women who want to become Avon
representatives selling beauty products, jewelry, accessories 0.08 3 0.24 1 0.08
and clothing.
7. Avon markets Regenerist and Anew skin products to baby
0.02 0 0.00 0 0.00
boomers.
8. By paying commission on sales, Avon has a large and cheap
0.08 3 0.24 1 0.08
labor force that does not receive benefits.

Weaknesses Weight AS TAS AS TAS

1. Firm still relies heavily on direct sales from sales representatives
0.07 1 0.07 3 0.21
in the USA.
2. Avon is struggling to recover from poor management strategies
0.07 0 0.00 0 0.00
that led to a CEO changeover and global bribery investigations.
3. Avon reported a loss of $38 million in 2012 in which every region
0.05 0 0.00 0 0.00
of the world experienced worse revenues and profits from 2011.
4. All product categories also experienced lower revenues in 2012
0.05 0 0.00 0 0.00
than in 2011.
5. Avon rejected an offer from Coty that was 20% above the stock
0.08 0 0.00 0 0.00
price at the time.
6. There has been no COO at Avon since 2006, a potential strategic
0.06 0 0.00 0 0.00
mistake by CEO Jung (and McCoy).
7. North American sales trail both Latin American and European
0.04 2 0.08 4 0.16
sales.
8. Focus almost exclusively on women’s products and likely too
0.02 0 0.00 0 0.00
many products outside their niche area.
9. Company is loaded in debt with a debt/equity ratio of 2.4. 0.08 0 0.00 0 0.00
10. Avon only spends around $75 million on R&D. 0.02 0 0.00 0 0.00
TOTALS 2.28 2.07
 Increasing direct marketing in Latin America is a slightly better strategic alternative than focusing on
moving away from direct marketing and into retail grocery and drug stores in the USA. However, both
strategies can and probably should be undertaken simultaneously.

K. Recommendations
1. Increase the direct selling business aspect of Avon by 25% in Latin America by 2015 for $20
million.
2. Increase the direct selling business aspect of Avon by 100% in Asia by 2015 for $10 million.
3. Build 10 new training centers across Mexico and Brazil for $5 million.
5. Develop a line of sun screen under the Avon brand for $5 million.
6. Spend $10 million to develop a line of products for men.
7. Increase presence in USA drug stores and grocery stores by 20% for cost of $30 million.
8. Cease all direct selling operations in the USA for a cost of $3 million.

L. EPS/EBIT Analysis (in millions expect for EPS and Share Price)
Amount Needed: $83
Stock Price: $19.97
Shares Outstanding: 434
Interest Rate: 10%
Tax Rate: 28%

Common Stock Financing Debt Financing

Recession Normal Boom Recession Normal Boom
EBIT $300 $800 $1,200 $300 $800 $1,200
Interest 0 0 0 8 8 8
EBT 300 800 1,200 292 792 1,192
Taxes 84 224 336 82 222 334
EAT 216 576 864 210 570 858
# Shares 438 438 438 434 434 434
EPS 0.49 1.31 1.97 0.48 1.31 1.98

30 Percent Stock 70 Percent Stock

Recession Normal Boom Recession Normal Boom
EBIT $300 $800 $1,200 $300 $800 $1,200
Interest 6 6 6 2 2 2
EBT 294 794 1,194 298 798 1,198
Taxes 82 222 334 83 223 335
EAT 212 572 860 214 574 862
# Shares 435 435 435 437 437 437
EPS 0.49 1.31 1.98 0.49 1.31 1.97
 As economic conditions improve, debt financing becomes slightly more attractive for Avon. However,
with a debt/equity ratio over 2.5, it is assumed debt financing would be difficult to obtain, possibly even
impossible. This analysis above assumes a 10% interest rate. The amount of capital needed is relatively
small though, so a more favorable rate would not have material changes on predicted EPS.

M. Epilogue
Avon sees big growth coming in direct sales in emerging markets. In 2011, emerging economies accounted
for about 40% of worldwide beauty spending, but that is expected to grow to 50 percent by 2016 – and
Avon plans to be there leading the way. Although Latin America represents nearly half of Avon’s
revenues, Asia represents just under 10 percent, so Avon sees extensive room to expand along with Asia's
growing middle class. But the company is not yet doing well in Asia.

Avon’s total revenue for its fiscal 2013 Q1 declined 4 percent year-over-year to $2,483.7 million,
compared with $2,575.4 million the prior year. The company reported a loss of 3 cents per share for that
Q1 compared with the year-ago earnings of 6 cents. During Q1 2013, the company’s total units sold
declined 3 percent. For that Q1, Avon reported a revenue decline in its Beauty Products and Fashion
categories, in which sales decreased 5 and 4 percent, respectively. However, sales at the company’s Home
category business improved 8 percent. The decline in Beauty revenues was primarily due to weak results in
its color, skincare and personal care products.

For Q1 2013, Avon’s revenues in Latin America remained flat, while company revenues in Brazil, Mexico
and Venezuela increased 11, 3, and 3 percent, respectively. Units sold were down 2 percent during Q1,
while Active Representatives grew 4 percent year-over-year. In North America, Avon’s sales decreased 15
percent year-over-year to $406.2 million, mainly due to a decline in the number of Active Representatives.
At for the company’s Silpada jewelry business, sales were down 18 percent as both average orders and
Active Representatives declined. Avon’s units sold in North America dropped 13 percent year-over-year,
while Active Representatives also declined 13 percent.

Avon’s Q1 2013 revenues in Europe, the Middle East and Africa increased 1% year-over-year to $733.1
million. Sales increased 3 percent in Russia, but revenues in UK, Turkey and South Africa declined 9, 2,
and 11 percent, respectively. Avon reported a 4 percent increase in Active Representatives, while units
sold were up by 4 percent during Q1 in this segment.

Avon’s Asia-Pacific division’s revenues in Q1 2013 declined 10 percent to $200.0 million, marked a 4
percent decline in Active Representatives and an 11 percent fall in units sold. The company reported a 30
percent and 1 percent revenue decline in China and Philippines, respectively for Q1 2013.

Ever since Avon reported fiscal second-quarter results on August 1, 2013, of revenues of $2,508.9 million,
analysts estimate that Avon’s full 2013 revenues will be down 5.2 percent and estimates for 2014 are for
another 3.6 percent decline. A primary reason is that Avon continues to report declines in its North
America revenues, especially the USA, mainly due to a decrease in active representatives, partly offset by
larger average order. Total revenue from North America in 2009, 2010, 2011 and 2012 were $2,293.4
million, $2,193.5 million, $2,064.6 million and $1,906.8 million, respectively.
Chapter 17: Avon Products

10 Basic Questions

1: A

2: D

3 B

4: C

5: B

6: B

7: A

8: B

9: A

10: D

15 Applied Questions

Organizational Culture

1: A

2: A

3: A

4: A

5: A

Human Resource Management

1: B

2: D

3: A

4: C

5: D
Business Ethics

1: D

2: A

3: A

4: A

5: D