Business Administration - AVON

1. Introduction

"The business environment has never been more challenging or complex, particularly for a company such as Avon that conducts business in almost every country in the world. Only through the highest ethical conduct, and through a corporate culture that recognizes the value of compliance with these standards, can Avon look forward to continued success in the future.

Avon’s impeccable reputation is built upon a proud heritage of doing well by doing right. For more than a century, we have been setting the very highest example of integrity and ethics in all of our relationships -- with our shareholders, associates and Representatives; our suppliers and competitors; governments and the public. Our values and principles are the bedrock not only of Avon's past – but of its future. "

(Andrea Jung, Chairman & CEO, Message to all Associates Worldwide: September 2004)

2. The Company and its Environment

THE MISSION OF AVON COSMETICS

The beginning

The story of Avon begins 120 years ago, when its founder David McConnell, a book-seller at that time, found that rose fragrances that he gave as a gift were really the reason why people bought his books. Starting to understand the possibly of a new business, McConnell found in 1886, California Perfume Company, in New York. In 1939 the company was named Avon, after the river’s name that passes through Stratford-Upon –Avon, Shakespeare’s homeland.

Avon understood that an intercultural communication is possible only if one or more involved cultures are keened on the same purpose. That why Avon tried to fulfill different’ nations needs, imposing a third culture, the one that’s respecting values, norms and customs. That’s how they managed to win billions of customers around 100 countries.

Avon Products, Inc. is a publicly traded global company, with $7.7 billion in annual revenues and nearly 48,000 employees. They are listed on the New York Stock Exchange (symbol: AVP). They have been operating for over a century, and have become the world’s leading direct seller of beauty and related products.Their primary distribution channel is direct sales through 4.9 million independent Avon Sales Representatives all over the world. Today, their Representatives serve more than 300 million customers globally and handle nearly one billion customer transactions each year.

GLOBAL BRANDS

Avon has built a world-class portfolio of trusted brands, all backed by their satisfaction guarantee. They develop more than 1,000 new products every year to meet continually changing customer tastes, and to maintain their position as a leading manufacturer and marketer of beauty and related products. In 2004, global beauty sales accounted for 69% of total net sales, or $5.2 billion. And for the first time in their history, all four beauty subcategories—cosmetics, fragrance, skincare and toiletries—recorded sales of over $1 billion each. For the past three years, approximately 70% of Avon’s consolidated net sales and 90% of operating profit has come from operations of subsidiaries outside of the United States.

Beauty products include Avon Color • Avon Naturals

• Avon Beyond Color • Anew • mark

• Avon Solutions • Skin So Soft • Avon Wellness

• Advance Techniques Hair Care

Beauty Plus products include Fashion Jewelry

• Watches • Apparel • Accessories

Beyond Beauty products include • Home Productsand Gift & Decorative products

BUSINESS OVERVIEW

Avon’s strategic initiatives include a focus on Beauty brands as a key driver of sales growth, as well as new product lines such as Health and Wellness products and mark. Growth is also targeted from further expansion of Sales Leadership, a career opportunity for Avon Representatives, as well as exploration of geographic opportunities, in particular China, Central and Eastern Europe, Turkey and the Middle East, and the Andean region of South America.

Direct Investment Markets

Avon’s global and U.S. headquarters are located in New York City. They have sales operations in 62 markets, including the United States, and distribute products in over 60 more through distributorships, appointed Sales Representatives and licensees. Their first major geographic expansion was in the 1950s into Latin America. Since then, new markets have been added to their global portfolio of businesses, most recently Vietnam (2004), and Finland and Macedonia (2005).