Cosmetics and Products

AVON -STUDY CASE- Analiza contextului global al a tonerilor prin prisma cistronilor de impact asupra industriei nonfunctionalelor The nonfunctional patience is one of which proceedss tend to be countercyclical. Demand for such(prenominal) returns norm onlyy remains constant and unaffected by economical distress. The pretense nonfunctionals ar predicted to feel a slow follow out in volume imply. A growing front in the nonfunctional labor is the introduction of green carrefours. More than one in seven (16%) of global beauty products launched in 2008 were certified organic, estimable or natural. there ar concerns that the global economic climate leave throttle sunrise(prenominal) product interruptment, change and sustain profession leader programs in 2009. An economic slowdown normally curbs companies from investing in look for and development and it is that research that has brought forth a wealth of green augmentatives. For example, retailers such as Wal-M art atomic number 18 change magnitudely requiring more(prenominal) than ecofriendly tag on chain. There be forecasts that consumers atomic number 18 un ilkly to give up their commitments to organic products just to save a hardly a(prenominal) pennies. 8% of consumers will remain loyal to a compevery that has a social and environmental commitment. umpteen consumers ar now voting with dollars for organic products and erecting brands that support values similar to their own. Economic factors mainly affect the purchasing spring of customers. The more customer demand for the product the more profit to the organization, at the same time if there is no customers demand its going to affect the organization in a negative manner.So economic factors ar very great external factors and affect the decorative patience. Economic factors complicate Unemployment charge per unit, Economic gain rate, Interest rate. Other factors that influence the augmentative intentness ar the government and legal basis. Also for AVON both(prenominal) of the risk factors atomic number 18 Success depends on our ability to execute undecomposedy our global phone line organisation strategy, May experience financial and strategic difficulties and delays or unexpected osts in completing our multi-year restructuring programs or long-range business review, including achieving either anticipated nest egg and benefits of the initiatives thereunder, The keystone personnel, The business is conducted worldwide primarily in one channel, educate grocery store placeing, The taxes, political issues, legal and regulatory risks atomic number 18 besides to be taken into servant on supranational merchandises, May be radicals to financial risks related to their transnational operators, including exposure to foreign currency fluctuations, tilt,A general economic downturn, a recession globally or sudden disruption in business conditions, A disruption of a key information t echnology system, process or site could indecently affect their operations, The ability to anticipate and respond to mart trends and changes in consumer preferences, Government reviews, inquiries, investigations, and actions could harm our business or reputation, Protection the happy property rights, limitedally patents and trademarks, Involvement in future, in the legal proceedings. Analiza mediului ramurii Avon intersection considers its two closest competitors to be Mary Kay and Revlon.Avon is nearly 8 clock grownr than Revlon. In circumstances of channel of distribution, Mary Kay well-nigh about resembles Avon beca uptake both use a pack merchandise approach. Revlon in rail line grasss its products through cosmetic counters in department stores and pharmacies. Avon has 42000 employees worldwide and Mary Kay has 5000 and Revlon has 5600. The tumescent difference in smart set representatives is attributable to the necessity of employing more multitude to denounc e directly to customers than change products through a storefront. The grosss of Avon as well as farther some exceed those of its closest competitors, with Mary Kay selling $2. 0 one zillion million million and Revlon selling $1. 35 billion in 2008 as compared to Avons $10. 37 billion. pic We tier controversy from competing products in each of our lines of business, in both the domestic and international marketplaces. Worldwide, we fence against products sell to consumers by different(a)(a) direct-selling and direct-gross revenue companies and through the Inter engagement, and against products sold through the hatful market and prestige retail channels. We excessively prospect change magnitude competition in our developing and emerging markets. Within the direct selling channel, we fence on a regional and often country-by-country basis, with our direct-selling competitors.There are also a number of direct-selling companies that sell product lines similar to ours, n ear of which also buzz off worldwide operations and deal with us globally. Unlike most other beauty companies, we fight within a distinct business mold where providing a harbor earnings opportunity for our vocalisms is as full of life as developing and marketing parvenu and innovative products. Therefore, in assembly line to a typical consumer packaged goods (CPG) company which ope order within a broad-based consumer pool, we inherent premier(prenominal) compete for a limited pool of Representatives before we chip in the eventual(prenominal) consumer.Direct sellers compete for representative or entrepreneurial talent by providing a more competitive earnings opportunity or bump deal than that offered by the competition. Representatives are threaded to a direct seller by competitive earnings opportunities, often through what are commonly cognize as field incentives in the direct selling constancy. Competitors devote real effort to finding out the effectiveness of such incentives so that they screw invest in incentives that are the most cost effective or produce the better payback.As the largest and oldest beauty direct seller, Avons business model and strategies are often passing sought after, particularly by small local and more nimble competitors who seek to capitalize on our coronation and experience. As a result, we are subject to signifi erectt competition for the enlisting of Representatives from other direct selling or network marketing organizations. It is therefore continually necessary to innovate and enhance our direct selling and run model as well as to recruit and retain newfangled-made Representatives.If we are ineffectual to do so our business will be adversely affected. Within the broader CPG diligence, we compete against large and well-known cosmetics and fragrances companies that perform and sell broad product lines through discordant types of retail establishments. In addition, we compete against many a(prenom inal) another(prenominal) other companies that manufacture and sell in more get Beauty product lines sold through retail establishments. This industry is spicyer(prenominal)ly competitive, and some of our school principal competitors in the CPG industry are larger than we are and have greater resources than we do.Competitive activities on their part could cause our gross gross revenue to suffer. We have many competitors in the postgraduately competitive demonstrate and decorative products and lop industries globally, including retail establishments, mainly department stores, gift shops and peculiar(a)ty retailers, and direct-mail companies specializing in these products. Our principal competition in the postgraduately competitive counterfeit jewelry industry consists of a few large companies and many small companies that sell fashion jewelry through retail establishments.The number of competitors and story of competition that we face in this beauty and related products industry varies widely from country to country. If our advertising, packagingal, merchandising or other marketing strategies are not successful, if we are unable to present new products that represent expert breakthroughs, if we do not successfully manage the timing of new product introductions or the profitability of these efforts, or if for other reasons our Representatives or end customers perceive competitors products as having greater appeal, and so our gross revenue and financial results may suffer.Global cosmetic and toiletries market is fancying substantive egression in terminals of sales and technological advancements over the past few years because of increasing consumer awareness towards personal hygiene and wellness. Growing concerns regarding fell economic aid is particularly fueling the robust growth across all market segments and geographies. Increasing demand for organic and natural cosmetic and toiletries products is creating new growth opportunities in t his field which is encouraging the emergence of new market players in this arena.One of the major reasons behind the considerable growth of global cosmetic and toiletries industry is the shifting of production units to cost effective Asian economies like India and China. Emergence of new distribution channels like online retailing is campaign the growth of this market. Increasing consumer preferences towards the use of herbal and natural cosmetic products is forcing the cosmetic and toiletries manufacturers to change and adapt strategies according to consumer preferences.Worldwide market for cosmetics and toiletries products was severely affected by economic downturn, but with the global economy geting, this market is projected to witness a significant growth and reach the value of USD 19. 2 billion by the year 2015. However, difficulty in obtaining credit and weakening consumer authority are affecting consumer spending on cosmetics which is one of the major challenges face up b y this industry. Presence of large domestic markets is helping emerging economies to recover from deepening economic crisis.Cosmetics and toiletries market is still in its embryonic stage and holds strong growth potential in near future. Consumption of cosmetic and toiletries products is no more limited to female population alone. Male bandaging products are emerging as an important segment of this market. Skin anxiety products, hair care products, face cleansers, and premium shaving products are important offerings for male grooming products market. The US and Europe is the largest market for sun care and skin care products. Products with natural and organic ingredients are in increasing demand in European and North American markets despite of high up cost.Major reason behind this increased demand of organic products is better health benefits offered by these products. Rising environmental concerns, carcinogenic nature of synthetic cosmetic ingredients, and increasing awareness about sustaining resources are some of the major factors move the growth of organic and natural ingredients in cosmetic industry. Worldwide market for cosmetics and toiletries is categorized into skin care, hair care, fragrances, make-up, oral care, baby care, bath and shower, deodorants, color cosmetics, mens grooming, sun care, and others.For the environmental analysis, it should be taken into consideration the five draw ins of Porter 1 Threat of new entry This factor analyzes the ease with which firms may enter into an industry. Competitive industries are apt(predicate) to attract many firms which will strive to capture a market region. This is likely to reduce the boilers suit profitability of firms which are present in the industry. In order for firms to enjoy long term profitability, they should develop customer committal within their industry.This will ensure that although new firms enter an industry, their market share is unaffected since customers have faith on their products. Development of customer devotion is achieved through innovating new products which meet the unique market ask. The cosmetic industry has a low threat of new entrants. This is due to several factors. The prototypical is the wide be of entry. Developing unique cosmetic products requires a diffuse of resources both in terms of research and development and the actual manufacturing process. a couple of(prenominal) middle and small scale firms have access to the funds and expertness required to perform this effectively.Another factor which discourages entry into this industry is the co outletal competition present in the industry. In addition to the huge competitors such as Avon, Revlon, Clinique, Estee Lauder, LR, Mac and Unilever, who have a large market share, there are many other small scale competitors who also have a small market share and who reduce the overall profitability of firms in the industry. 2 3 Bargaining might of customers The talk terms supply of cu stomers analyzes the power which consumers have relating to hurt changes in the industry.This factor analyzes the power which consumers have in manipulating price changes due to shifts in demand (Aaker, 2000 102-120). When consumers have a high talk terms power, the manufacturers and sellers may not adequately predict future demand by the market. This may make them unable to achieve long term profitability due to unpredictable demand mock ups. The cosmetic has a high bargaining power of customers. This is due to the increase competition and accessibility of cosmetic products from a variety of manufacturers.Since these products have high substitutes, then it is possible for consumers to force manufacturers to reduce their product prices through purchasing those of their competitors. This is a challenge which manufacturers of cosmetic products face across the world. 4 Bargaining power of suppliers This factor analyzes the power which suppliers have regarding making price changes f or their products. Suppliers who have a high bargaining power are able to influence price changes through utilize techniques such as market manipulation through hoarding and restraining supply.Although some of these strategies are illegal in many countries, suppliers commonly apply them when they deficiency to effect price changes. The cosmetic industry has a low bargaining power of suppliers. This is due to the high number of market players and large supply of diverse products to the market. There are many cosmetic products which are create by both large and small scale manufacturers. Due to the huge supply, consumers have the power to influence the market prices as opposed to the suppliers. 1 Threat of substitutesThe threat of substitutes arises when there are similar products developed by competitors which get together the market needs. When consumers have access to substitute products which can satisfy their market needs, then manufacturers and suppliers lose their bargaini ng power. Consumers are able to procure competitors products if they are not satisfied with product price or whole tone. In order for suppliers to tackle the challenge of threat of substitutes, they have to innovate products which meet the needs of their target market segments. In the cosmetic industry, there are many competitors as has been discussed.There is therefore a high threat of substitute products. If manufacturers sell their products at higher prices, or if the products are of low quality, then consumers are able to purchase substitutes from the many competitors who are present in the market environment. It is therefore essential for the market players in the cosmetic to be innovative if they are to tackle the challenge of the threat of substitute. 2 Barriers to entry and give-up the ghost Barriers to entry and exit refer to the challenges firms face when entering or leaving the industry respectively.It has been discussed that there are huge be which are associated wit h entry to the cosmetic industry. These costs implicate costs for developing the products as well as research costs. These are some of the prohibitions to entry in the cosmetic industry. In addition, there are many competitors who reduce the overall profitability of the industry, which makes it a barrier to entry. Finally, the many large scale cosmetic firms which enjoy economies of scale make it a barrier to entry especially for middle and small scale firms. Barriers to exit include the high development and research costs.Due to the high costs associated with developing cosmetic products, it is difficult for firms to leave the industry without achieving the costs for production. There are also many machines and equipment used in developing cosmetic products and disposing these at a fair market value is difficult hence making it an exit barrier. 3 4 Seller and buyer absorption The cosmetic industry is appealing fir people of all age groups and social backgrounds. There are many c osmetic products which are tailored to meeting the needs of diametrical market segments. The buyer concentration can herefore be deemed as low since there are many buyers who cut across different market segments both in the developed countries and the developing countries. However, the seller concentration may be deemed as high in developed countries. Many large scale cosmetic producers are concentrated in develop countries such as the joined States, France and Germany. For instance, the cosmetic industry is valued at $6 billion in France and $12 billion in Germany. In the US, it is valued at over $20 billion. However, the seller concentration in developing countries and emerging markets is relatively low.Few firms have ventured into developing products which meet the specific needs of this market segment. In order to achieve long term profitability, new market entrants should focus on this neglected population segment. The high seller concentration in the developed countries leads to high competition and an overall reduction in profitability for cosmetic firms in this industry. Analiza competentelor functionale Avon Distribution We directly have sales operations in 65 countries and territories, including the U. S. and distribute our products in 42 other countries and territories. Unlike most of our competitors, which sell their products through trey party retail establishments (e. g. drug stores, department stores), we primarily sell our products to the eventual(prenominal) consumer through the direct-selling channel. In our case, sales of our products are made to the ultimate consumer principally through direct selling by approximately 6. 4 million active freelance Representatives. Representatives are independent contractors and not our employees.Representatives earn a profit by purchasing products directly from us at a discount from a published brochure price and selling them to their customers, the ultimate consumer of our products. We generally have no arrangements with end users of our products beyond the Representative, except as described below. No single Representative notices for more than 10% of our net sales. A Representative contacts customers directly, selling primarily through our brochure, which highlights new products and special promotions for each sales campaign.In this sense, the Representative, together with the brochure, are the store through which our products are sold. A brochure introducing a new sales campaign is usually generated every two weeks in the U. S. and every two to four weeks for most markets outside the U. S. Generally, the Representative forwards an order for a campaign to us using the Internet, mail, telephone, or fax. This order is processed and the products are assembled at a distribution center and delivered to the Representative usually through a conspiracy of local and national delivery companies.Generally, the Representative then delivers the merchandise and collects salary from the customer for his or her own account. A Representative generally receives a refund of the price the Representative paid for a product if the Representative chooses to return it. We employ certain web enabled systems to increase Representative support, which chuck up the sponge a Representative to run her or his business more efficiently and also allow us to improve our order-processing accuracy.For example, in many countries, Representatives can utilize the Internet to manage their business electronically, including order submission, order tracking, fee and two-way communications with us. In addition Representatives can further advance their own business through personalized web pages get outd by us, alter them to sell a complete line of our products online. Self-paced online training also is easy in certain markets, as well as up-to-the-minute countersign about us. In some markets, we use decentralized distinguishes, satellite stores and independent retail operations to ser ve Representatives and other customers.Representatives come to a branch to place and pick up product orders for their customers. The branches also create visibility for us with consumers and help reinforce our beauty image. In certain markets, we provide opportunities to license our beauty centers and other retail-oriented and direct to consumer opportunities to reach new customers in complementary ways to direct selling. In the U. S. and selected other markets, we also market our products through consumer websites (www. avon. com in the U. S. ). Promotion and Marketing gross sales promotion and sales development activities are directed at assisting Representatives, through sales aids such as brochures, product samples and demonstration products. In order to support the efforts of Representatives to reach new customers, specially designed sales aids, promotional pieces, customer flyers, television and impress advertising are used. In addition, we seek to motivate our Representative s through the use of special incentive programs that reward superior sales performance. Periodic sales meetings with Representatives are conducted by the district sales or zone managers.The meetings are designed to keep Representatives abreast of product line changes, explain sales techniques and provide recognition for sales performance. A number of merchandising techniques are used, including the introduction of new products, the use of combination offers, the use of trial sizes and samples, and the promotion of products packaged as gift items. In general, for each sales campaign, a distinctive brochure is published, in which new products are introduced and selected items are offered as special promotions or are given particular prominence in the brochure.A key current priority for our merchandising is to continue the use of determine and promotional models to enable a deeper, fact based understanding of the office staff and impact of pricing within our product portfolio. From t ime to time, various regulations or laws have been proposed or adopted that would, in general, restrict the frequency, duration or volume of sales resulting from new product introductions, special promotions or other special price offers. We expect our pricing flexibility and broad product lines to mitigate the effect of these regulations.Competitive Conditions We face competition from various products and product lines both domestically and internationally. The beauty and beauty-related products industry is highly competitive and the number of competitors and degree of competition that we face in this industry varies widely from country to country. Worldwide, we compete against products sold to consumers by other direct-selling and direct-sales companies and through the Internet, and against products sold through the mass market and prestige retail channels.Specifically, due to the nature of the direct-selling channel, we compete on a regional, often country-by-country basis, with our direct-selling competitors. Unlike most other beauty companies, we compete within a distinct business model where providing a compelling earnings opportunity for our Representatives is as critical as developing and marketing new and innovative products. As a result, in contrast to a typical CPG company which operates within a broad-based consumer pool, we must first compete for a limited pool of Representatives before we reach the ultimate consumer.Within the broader CPG industry, we principally compete against large and well-known cosmetics and fragrances companies that manufacture and sell broad product lines through various types of retail establishments. In addition, we compete against many other companies that manufacture and sell more narrow beauty product lines sold through retail establishments and other channels. We also have many competitors in the gift and decorative products and apparel industries globally, including retail establishments, principally department stor es, gift shops and specialty retailers, and direct-mail companies specializing in these products.Our principal competition in the fashion jewelry industry consists of a few large companies and many small companies that sell fashion jewelry through retail establishments and direct-selling. We believe that the personalized customer service offered by our Representatives the amount and type of field incentives we offer our Representatives on a market-by-market basis the high quality, attractive designs and prices of our products the high level of new and innovative products our easily recognized brand name and our guarantee of product satisfaction are significant factors in helping to establish and support our competitive position.International Operations Our international operations are conducted primarily through subsidiaries in 64 countries and territories outside of the U. S. In addition to these countries and territories, our products are distributed in 42 other countries and ter ritories. Our international operations are subject to risks inbred in conducting business abroad, including, but not limited to, the risk of adverse currency fluctuations, currency remittance restrictions and unfavorable social, economic and political conditions.See the sections essay Factors Our ability to conduct business, particularly in international markets, may be affected by political, legal, tax and regulatory risks and Risk Factors We are subject to financial risks related to our international operations, including exposure to foreign currency fluctuations in Item 1A on pages 7 through 15 of our 2011 Annual Report. Manufacturing We manufacture and package almost all of our Beauty products. Raw real(a)s, consisting chiefly of essential oils, chemicals, containers and packaging components, are purchased for our Beauty products from various suppliers. close to of our Fashion and Home products are purchased from various third-party suppliers. Additionally, we design the br ochures that are used by the Representatives to sell our products. The loss of any one supplier would not have a corporal impact on our ability to source raw materials for our Beauty products or source products for our Fashion and Home categories or paper for the brochures. wilinessmarks and Patents Our business is not materially dependent on the existence of third-party patent, trademark or other third-party intellectual property rights, and we are not a party to any ongoing material licenses, franchises or concessions.We do seek to protect our key trademarked technologies by aggressively pursuing comprehensive patent reportage in major markets. We protect our Avon name and other major proprietary trademarks through registration of these trademarks in the markets where we sell our products, monitoring the markets for infringement of such trademarks by others, and by taking appropriate steps to stop any infringing activities. Research and Product Development Activities New produc ts are essential to growth in the highly competitive cosmetics industry.Our research and development departments efforts are significant to developing new products, including formulating effective beauty treatments pertinent to womens needs, and redesigning or reformulating animate products. To increase our brand competitiveness, we have bear on our focus on new technology and product innovation to deliver first-to-market products that provide visible consumer benefits. Our global research and development facility is located in Suffern, NY.A team of researchers and technicians apply the disciplines of science to the practical aspects of bringing products to market around the world. Relationships with dermatologists and other specialists enhance our ability to deliver new formulas and ingredients to market. Additionally, we have satellite research facilities located in Argentina, Brazil, China, Mexico, Poland and South Africa. In 2010, we invested in our R&D facility in Shanghai, China to increase our ability to develop products to better meet Asian consumers needs. In 2011, our most significant product launches include crackShock MaxMascara. Moisture Seduction Lipstick, Outspoken Intense by Fergie Fragrance, Step Into Fragrance, Anew Genics Treatment Cream, Anew Solar Advance sun blocker Face Lotion SPF 45, Solutions Youth Minerals Restorative Night Cream, Skin So Soft Perfecting Oil, Advance Techniques Damage Repair 3D Rescue Leave-in Treatment, Super Enchant Mascara, and ExtraLasting Makeup. The amounts incurred on research activities relating to the development of new products and the improvement of existing products were $77. 7 in 2011, $72. 6 in 2010 and $65. 4 in 2009.This research included the activities of product research and development and package design and development. Most of these activities were related to the development of Beauty products. Environmental Matters In general, compliance with environmental regulations impacting our global o perations has not had, and is not anticipated to have, any material adverse effect on our capital expenditures, financial position or competitive position. Employees At December 31, 2011, we diligent approximately 40,600 employees. Of these, approximately 5,400 were employed in the U. S. nd 35,200 in other countries. Seasonal Nature of production line Our sales and earnings typically have a seasonal pattern characteristic of many companies selling Beauty, gift and decorative products, apparel, and fashion jewelry. spend sales generally cause a sales peak in the ordinal quarter of the year however, the sales volume o vacation gift items is, by its nature, difficult to forecast. Fourth quarter revenue and direct data was as follows 2011 2010 Fourth uarter revenues as a % of total revenue 27% 29% Fourth quarter operating profit as a % of total operating profit 2% 33% The stern quarter operating profit comparison between 2011 and 2010 was unfavorably squeeze by a $263. 0 imp airment charge, or 31% of full year operating profit, recognized in the fourth quarter of 2011. The fourth quarter operating profit comparison was partially offset by lower costs to implement our restructuring initiatives in 2011 compared to 2010.The fourth quarter of 2011 included costs to implement our restructuring initiatives of $8. 7, whereas the fourth quarter of 2010 included $58. 3 of costs to implement our restructuring initiatives. Finance The financial statement of the company in 2011 is Internationalizare Avon pic As the worlds largest direct seller, Avon markets leading beauty, fashion and home products to women in more than light speed countries through more than 6 million active independent Avon Sales Representatives. The countries areAlbania, Anguilla, Antigua and Barbuda, Argentina, Armenia, Aruba, Australia, Bahamas, Barbados, Belarus, Belize, Bermuda, Bolivia, Bonaire, Bosnia and Herzegovina, Brazil, Bulgaria, Canada, Chile, China, Colombia, Costa Rica, Croatia, Curacao, Cyprus, Czech Republic, Dominica, Dominican Republic, Ecuador, Egypt, El Salvador, Estonia, Finland, France, Georgia, Germany, Grand caiman Island, Greece, Grenada, Guatemala, Guyana, Honduras, Hong Kong, Hungary, Iceland, India, Ireland, Italy, Jamaica, Jordan, Kazakhstan, Kuwait, Kyrgyzstan, Latvia, Lebanon, Lithuania, Macedonia, Malaysia, Malta, Mauritius, Mexico, Moldova, Mongolia, Montenegro, Morocco, New Zealand,Nicaragua, North Cyprus, Oman, Panama, Paraguay, Peru, Philippines, Poland, Portugal, Puerto Rico, Reunion, Romania, Russia, Saint Vincent and the Grenadines, Saudi Arabia, Serbia, Slovakia, Slovenia, South Africa, South Africa, Spain, St. Croix, St. Kitts & Nevis, St. Lucia, St. Maarten, St. Thomas, Suriname, Taiwan, Thailand, Tortola, Trinidad & Tobago, Tunisia, Turkey, Turks & Caicos, United Arab Emirates, Ukraine, United Kingdom, United States, Uruguay,Venezuela. When the Avon lady comes knocking at the door, shed better let the cat out of the bag good P ortuguese. Or Spanish. Or even Russian. Cosmetics giant Avon Products (AVP) is increasing its revenue these days, with sales outside of the United States really driving business. The company reports first quarter 2011 total revenue of $2. billion, 7 percent higher than that of first-quarter 2010 and in line with company targets. Net income jumped 238 percent to $143. 6 million, thanks to stronger sales and restructuring. We are pleased with the early progress against our commitment to return the business to mid-single digit revenue growth, says Avons Chairman and Chief Executive Officer Andrea Jung in an earnings statement. We are squarely focused on restoring growth in Brazil and Russia in the second half, and ensuring execution in gross delimitation improvement and cost control. Revenue in Latin America, which includes Mexico, was up 16 percent during the quarter while North American revenue was down 2 percent.Central and Eastern European sales were flat although Russia was up 3 percent, while Western Europe, Middle East & Africas first-quarter revenue increased 16 percent and Asia Pacific, which includes China, reported a first quarter revenue even up of 6 percent. Analysts are pleased with the companys results, but some wonder if the company can keep the momentum going. Zacks Investment Research has assigned a short-term hold rating, although the long-term recommendation is currently underperform. Restructure, then compete Avon is currently in the middle of a multi-year restructuring program designed to drive on investments toward growth opportunities, streamline manufacturing operations, and improve cost effectiveness and efficiency in general. Restructuring should save the company $430 million a year when fully use by 2012. After that, keep an eye on the competitors. Avon faces competition from various products and product lines both domestically and internationally, Zack says. The internationalization of Avon most take into account some factors, su ch as Political Factors Tax policies Employment laws Trade restrictions and tariffs Political stability Economic Factors Economic growth Interest rates Exchange rates Fluctuation in oil and gas prices accessible Factors Emphasis on safety No animal testing discolor Environment Philanthropic Issues Technology Factors Automation Technology incentives Rate of technological change Technologies Adaption External Assessment Avon Opportunities 1. A growing trend in the cosmetics industry is the introduction of ? green? products.More than sixteen percent of beauty products launched in 2008 were certified organic, ethical, or all natural. 2. Eye makeup market 3. The cosmetics industry tends to be countercyclical. This means that those are industries for which the demand is either not correlative with the business cycle. The demand for their products is not much affected by availability of current income, but by other personal, social or economic factors. The recession als o contributes to the industry being counter-cyclical. There is an upsurge in people joining the industry in the past six or eight months and theres absolutely no doubt that this is because of the recession and the effect on employment. 4.Aveda cosmetics found that sixty eight percent of consumers will remain loyal to a company that has a social and environmental commitment. 5. Urban Trendsetters markets 6. geographic growth enormous growth opportunities existed in countries with huge populations such as China, Indonesia and India. 7. Demand for cosmetic products normally remains constant and unaffected by economic distress 8. The baby boomers are aging and they are more conscious on their appearance, beauty and also improving their looks. Emphasize direct selling in emerging and developing markets External Assessment Avon Threats 1. Competition such as Mary Kay and Revlon 2. Rejection of internet selling by sales representative 3.Global economic climate stifled new product developm ent, innovation and sustainability programs in 2009. 4. In terms of color cosmetics, environmental International Inc. predicted that many of these markets will see slowdown in volume demand. 5. Inflation rate and Rising cost of commodities 7. Direct-selling becoming more popular Amid the financial crisis Aussie mums are increasingly turning to direct selling and at-home product parties to supplement their sign of the zodiac income. 8. They are a multilevel based company that sells inferior quality with a higher price tag than what it is worth 9. Avon products outpaced by jazzier? products to women who successful more exciting product lines 10. Decreased earning opportunities