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Competition In The Bottled Water Industry

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Andrea Jung and Avon Products in 2003:

Accelerating the Transformation

Last year 2006, Avon celebrates its 120th year anniversary. As a global brand and world leader in lipsticks, fragrances and anti-aging skincare, Avon continues to enlarge by launching innovative, first-to-market products using Avon-patented technology. With a highly diverse global workforce Avon has today nearly 45,000 employees. The growth vision of Avon includes expanding into new geographies, bringing high-quality products and personalized service to more and more woman.

Avon till mid-1990:

The founder, David H. McConnell, lead this company, originally known as the California Perfume Company, till his dead in 1937. 1914 the company reached the milestone of 5 million units. Avon Product went public in 1946; its sales grew at annual rates of 25 percent in the 1950s and entered in international markets as the company expanded its product line. From 1960 till mid-1980's Avon was the world's largest cosmetics company with an annuals sales average of more than $3 billion. By 1980 Avon's sales began to decline as a consequent of following wrong strategies and the recession in this time. Avon tried to boost its revenues with business diversification, but the hoped-for level of performance failed.

Andrea Jung:

Andrea Jung was born in Toronto, Canada, in 1958. Her Shanghai-born mother and Hong Kong-born father had met at the city's university. Both parents were ambitious. She graduated magna cum laude in 1919 with a degree in English literature. She started to work as a management trainee for Bloomingdales and achieved early success before moving to I. Magnin. In 1992 Jung was in charge of women's apparel for Naiman Marcus. Avon offered her a job in 1994 as president of U.S. product marketing, where she quickly made a name for herself. At age of 40, Jung became CEO of Avon Product, Inc., and in 2003 she was number third on Fortune's ranking of the 50 most powerful women in American business.

Avon from mid-1990 till 2003:

After CEO James Preston retired, the outsider Charles Perrin led Avon with the aid of two chief lieutenants, Andrea Jung and Susan Kropf. Together they initiated steps to revitalize Avon. With Perrin's and Jung's strategy Avon improved its image with consumers, shorten product development times, develop new brands and products hat could be marketed worldwide, and utilize technology to aid sales representatives in placing and tracking orders. Perrin believed also that Avon needed to evaluate its dated direct sales model. Specific undertakings begun in 1998 included the establishment of Avon's Global Development Center, which eliminated duplicative local product development efforts with a coordinated global approach to develop brands that would have worldwide appeal. The successes included a launch of a fragrance in 54 countries that exceeded the initial sales of Avon's previous sales launch leader by 31 percent and two new lines that were targeted toward younger consumers and Techniques, a hair care line. Avon's old image (innovativeness, commodity-like, not glamorous) could attacked with new global products and advertising campaign. Avon improved also its web site under Perrin to the benefit for consumer and sales representatives. They also began experimenting with new trade channels, for example Beauty Centers. With the mentioned strategies and a new payment system Avon increase sales by 3 percent and earnings increase of 17 percent.

Andrea Jung became Avon's new CEO in 1999. The strategies initiated by Perrin had resulted in some initial improvement, but in late 1999 it was clear that Avon was in need of a bold new direction, because the annual sales growth of the company had slowed to less then 1,5 % and its stock price had fallen from a high of $55 to a three-year low of $25.



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