Avon is a $5.3 billion company whose direct-sales model enabled the company to build enormous success both domestically and abroad for years (Byrnes 1). However, Avon’s profits over the past ten years have been “anemic” at 4% annually on average (Byrnes 1). Further, the advent of Internet-based e-tailers has cut into the company’s market share and threatens to make their successful direct-sales model obsolete. Adding to Avon’s woes over the past five years were a number of significant factors. One, management decision-making regarding the Internet and an Avon Web-Site was slow, plodding, and allowed the competition to establish a successful initial foothold in the beauty and cosmetics industry. Further, Avon sales representatives were initially antagonistic and opposed to a Web-based Avon site. In 1999, Avon’s fourth-quarter sales and earnings causes Avon shares to drop by 50% (Byrnes 2).
At this point in Avon history, Charles R. Perrin, Avon CEO, resigned opening the door for its newest CEO, Andrea Jung. Jung quickly assessed the company’s problems and became intent on finding a strategic method of reconciling explosive Internet growth and Avon’s traditional but increasingly ineffective direct-sales business model. Jung’s strategic plan for reinvigorating the company and its profits is a three-prong attack. The first major strategy is to expand the product lines and services of Avon to include “anything and everything a woman wants to buy” (Byrnes 2). The second major strategic change involves offering Avon products on the retail level, in stores and malls. From kiosks in shopping malls to store offerings in Wal-Mart and J.C. Penney, Avon is hoping to reach customers who have never purchased Avon products. Changing technology and changing lifestyles have prompted the company to modify its historically successful but recently ineffective direct-sales model “Avon has neve
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