The Global Expansion Strategy
Introduction
Avon Products, Inc commonly known as Avon is an international organization based in
the US. Its primary business activity is in the manufacture, distribution and selling of beauty,
household and personal products. It has representatives in more than one hundred and forty
countries worldwide with an annual turnover of over $10.7 billion dollars. Its present CEO is
Sherilyn. S. McCoy who took over from Andrea Jung in April the year 2012. Both of whom
were women. (Klepacki, 2005). Brazil is the largest market for Avon’s products after surpassing
the US in the year 2010.
Avon’s decision to enter the Brazilian Market paid off after its sales surpassed those ones
in the US market, its homeland. It would be advisable for Avon to start exploring immediately
other options of expanding to other markets like in Sub-Saharan Africa and other parts of Asia
and Latin America. These markets ones they have been established will naturally increase as the
population growth rates are very high in these regions i.e. in parts of Africa, Asia and Latin
America. The are many Multi-nationals companies from the same industry, i.e. its competitors
who are also eyeing these markets, the earlier they establish themselves in these regions the more
they will entrenched in these regions to compete effectively having mastered the market patterns
and its challenges. The key to all market expansion is determined by the demand of its product.
2 Management
The key liabilities that Avon will face when entering these markets are the resources
required to mobilize the team needed to strategize on the market entry, logistics, market research
and determination. Going global requires a lot of time and money. The major strategy to gain
global advantage depends on the creation of global resource network by forming alliances with
suppliers, customers and even some competitors.
The key management factors that Avon needs to consider when planning wider global expansion.
Global expansion has been facilitated by the constant and very fast and efficient flow of
information around the world which has resulted in people becoming more conscious of their
tastes, habits, lifestyle and preferences of other foreign people in other countries. The economic
perspective of this flow of information to the global citizens translates to more countries opening
their borders to deal in trade or invest abroad. To turn a global vision into a successful reality
requires a careful outline and an effective strategy for the business to successfully turn global.
Globalization compels a firm to redesign its strategies, central competition, it’s product and
service mixture. These results affect the way a firm conducts its business operations and who it
deals with, how and why. (Baldwin and Wylosz, 2004)
The following five factors have to be taken into account when a company is turning global. The
dimensions and decisions of developing, researching, implementing and maintaining a global
and competitive advantage. These decisions also determine the focus on the actual continuous
strategy. These other factors are the product market participation, Products and services, Focus
and intensity of the firms activities, the government role and influence on the export market,
coordination in decision making in the market.
3 Management
The market participation determines the countries to operate in, the number of countries, and the
regions the firm has to operate in and the competition they are facing. Few firms can actually
afford to enter and participate in every available market. Every company has to implement a
strategic discipline when deciding the choice of markets that weigh the relative or real
advantages of either direct or indirect presence in a specific country. Some companies expand
after assurance of direct opportunity and an assurance of a long term and relatively stable
competitive advantage. (Baldwin and Wylosz, 2004)
Products and services are generally adapted to mainly local demand. As tastes or preferences
and norms for a particular product becomes more homogenous many firms looks for chances to
standardize their products and services. The major advantage of standardization is to cut down
costs and improve the quality of the product. Complete standardization is hard to achieve, most
companies only standardize proportions of their regular products and then adjust some of them to
as per the host countries requirements and its export regulations.
The other factors to consider are the ones that target key activities that add value to the firm.
The availability of industrial activity support, the nature, location of the product’s demand and
the available competitors play a big role in determining a firm’s strategy to go global.
Tax differentials and double taxation present also problems for the firms planning to
enter the global market. The other factors to be considered are the facilities available to repatriate
the benefits or the utilities earned, the risk in currency fluctuations and devaluations, political
risks and also the availability of other physical amenities, infrastructures like roads, electricity,
and internet facilities. The firm also has to factor the ability of the company to coordinate
4 Management
different levels of management in different locations and all other factors that may interfere with
the achievement of the company’s objectives and its targeted strategic growth.
The government’s role in the recipient country’s export market, its policies for
commerce, regulations, competitors and the available subsidies the government offers and to
which sectors. The regulations and laws of the host country can frustrate globalization in several
ways. A country can impose quotas on exports and imports or tariffs or even prevent foreign
investment.
The degree in which the procedure of decision making is integrated in the global market
portrays the success of implementation in globalization. The existing forces compel firms to
think globally. The pressure to go global is led not only by diversification or the competition in
local market but also by necessities or the preferences.
5 Management
References
Baldwin, R. and Wylosz, C. (2004) The Economics of European Integration. New York:
McGraw Hill.
Klepacki, L. (2005). Avon: Building the World’s Premier Company for Women . John Wiley and
Sons. p. 151. Retrieved 2013-04-16.
