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STRATEGIC MANAGEMENT

AUDIT

Group Members:
Falih Hermon 19015004
Muhammad Haekal 19015033
Muhammad Raka Rio Imam S. 19015038
Ivan Christian 19015045
Nehemia Kevin 19015086
Emil Fraenkel 12313131
CASE ABSTRACT
AVON is challenged in a strong competitive market
Profit is decreasing rapidly
New management is brought in, but a clear
turnaround strategy is still strongly needed.
AVON is drifting away from its core competencies
and is being overrun in a highly competitive market.
AVON should stay true to its image and its
consumers
To secure the long term grown AVON should
be innovative while cutting costs, such as :

Expanding AVONs online shop

Online training program

Hiring a new E-commerce


director is recommended.
Too ambitious to fulfil
their mission and
objectives
Too much Research and
Development

Too many kinds Lack of understanding by


of product representative and
customers

Lack of customer interest

CASE ISSUE DECREASE OF SALES


Strategic Factors Weight Rating Weighted Duration Comments
Short Intermediate Long

S1 Unique direct Selling channel .15 5 .75 X Key to success

Integrated system for a better


S2 New ERP system .20 4 .80 X
supply chain management

Could really help giving new


S4 Experienced senior Management .15 3 .45 X
insight for the company

Too fast innovation product Should slow down so it would


W1 .10 5 .50 X
development not backfire

AVON's inability to be sold in


W1 department stores at the level Should find another way to
.10 2 .20 X
many competitors products are distribute products
sold.

SFAS
Strategic Factors Weight Rating Weighted Short Intermediate Long Comment
The direct selling business
Should definitely maximize
O1 model is still viable in .05 2 .20 X
this opportunity.
developing nations.

People are becoming


Should be an opportunity to
increasingly aware of the
develop new product for
O4 suns effects on skin and .05 4 .20 X
meeting certain demand of
cancers associated with
customers.
being in the sun.

People are using the


Opportunity to increase sales
O5 internet for shopping more .10 2 .20 X
via the internet
and more.

Consumption of cosmetic
products per inhabitant is
10 to 20 times lower in AVON is weak in this part so
T3 immature countries .05 3 .15 X they should try to aim
(AVONs main target profitable market.
market) than in mature
countries.

SFAS
(contd.)
Strategic Factors Weight Rating Weighted Short Intermediate Long Comment
Only a 1.2% growth in industry-
T4 wide beauty sales in 2012 .05 3 .15 X
compared to 2011.

TOTAL 1.00 3.65

The total score of 3.65 means that AVON has been doing pretty well or above average with their
strategic management and environmental condition, since the 3.00 means average performance on an
industry.

SFAS
(contd.)
Strength Weakness
1. Unique direct Selling channel 1. Too many innovation product development
2. New ERP system 2. High cost of sales representative (promotion
3. Low cost due to economies of scale cost not in target)
4. Experienced senior Management 3. AVON's inability to be sold in department
5. In house manufacturing of beauty products stores at the level many competitors products
are sold.
4. Tentative: High turn over
Opportunities SO Strategies WO Strategies
1. The direct selling business model is still viable 1. S1O1. AVON can develop their market into Asia, 1. W3O5. People would prefer to use the internet
in developing nations. because most of Asia countries are developing for shopping. Due the large cost of direct selling
2. In May 2012, perfume company Coty offered nations. Also, most of the competitors dont use method, AVON should consider internet/social
$24.75 a share for AVON, which at $10.7 billion direct selling method. Its an advantage for media for their channel to reduce cost.
was nearly 20 percent above AVONs stock price AVON Company to use this model for reaching 2. W1O4. AVON should try to do their product
at the time the customer. development based on what people needs and
3. There are many qualified COOs available for 2. S2O3. Recruiting qualified COO could help with wants to reduce cost.
hire in the USA. the new ERP system. It could make the Finding new way to distribute products and learn new
4. People are becoming increasingly aware of the operation process more effective, so it could things.
suns effects on skin and cancers associated also reduce the production cost.
with being in the sun. Market developments and increase effectiveness
5. People are using the internet for shopping
more and more.

STRATEGIC
ALTERNATIVES
Strength Weakness
1. Unique direct Selling channel 1. Too many innovation product development
2. New ERP system 2. High cost of sales representative (promotion
3. Low cost due to economies of scale cost not in target)
4. Experienced senior Management 3. AVON's inability to be sold in department
5. In house manufacturing of beauty products stores at the level many competitors products
are sold.
4. Tentative: High turn over
Threats ST Strategies WT Strategies
1. The direct selling business model has waned in 1. S1T1. Due the direct selling method has waned 1. W3T1. AVON failed to compete on department
developed countries especially the USA. nowadays, AVON marketing team can make the store and sold their products there, and the
2. People prefer all natural products. direct selling method become a trend again. direct selling in USA has waned. AVON should
3. Consumption of cosmetic products per AVON can be a leader on direct selling method focus on selling their products to another
inhabitant is 10 to 20 times lower in immature and get the awareness of customers country to continue gaining profit.
countries (AVONs main target market) than in 2. S3T4. Despite low economic growth in the 2. W1T2. AVON could lose a lot of money wasted
mature countries. beauty sales sector AVONs low cost production on product development that people might not
4. Only a 1.2% growth in industry-wide beauty can give an competence advantage want to buy anymore. They should slow down
sales in 2012 compared to 2011. Maximizing direct selling channels the product development process and focus on
whats there to also learn about the all-natural
products.
Slow things down.

STRATEGIC
ALTERNATIVES
STRATEGIC RECOMMENDATIONS

A flexible method based on different culture in


different geographical

Research and development teams need to know


the demand pattern
IMPLEMENTATION
PLANS

Analyzing market related with


needs and wants

Analyzing behavioral of each


country
EVALUATION & CONTROL

Proper control and management of the collection, use and disclosure


of all data gained through survey and Independent Sales
Representatives

Not sharing critical information to outside parties

Proper use Oracle Enterprise Performance Management


Thank You