Culture a contributing factor to its success

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Opening Case

Andrea Jung has been CEO of Avon Company since November 1999. The oldest child of Chinese immigrants, Jung grew up speaking both English and Mandarin Chinese. Ten years ago, Avon, the world's largest direct seller of women's cosmetics, was experiencing some difficulties. Increasing sales in a market saturated with beauty products and savvy consumers was proving to be a daunting task even for a giant of Avon's stature. Jung gave the company what can only be described as "an extreme makeover," pouring millions into research and development, launching new lines of skin cream, expanding into overseas markets, and developing snazzy ads with celebrities like Salma Hayek. These strategy changes resulted in revenue and profit growth.

However, in 2005, Avon was facing some tough times again. With growth slowing and its stock price plunging, Jung told investors in November 2005 that she was embarking on a bold multi-year restructuring plan that will cost about $500 million. Since that announcement, Andrea Jung has cut employee ranks by 10 percent and management by nearly 30 percent. She downsized on the number of product lines and only retained the most successful products. She almost tripled Avon's ad spending from 2005 to 2007 and gained some ground expanding Avon's presence in overseas markets, particularly Asia. She has won the first direct-selling license in China and already has a salesforce of more than 700,000. By all accounts, it appears Jung's strategies are once again paying off. Early results show positive gains in many areas. The share price, sales, and profits of the $15.6 billion company have been trending upward since 2007. Avon embraces diversity in the workforce and continues to be a leader in taking affirmative action to ensure that doors are opened to talented individuals, and that all associates and employees have opportunities for development and advancement. Avon also strives to create a work environment that values and encourages the uniqueness of each individual, and is committed to creating a culture that supports associates as they balance their many, and sometimes competing, work and personal responsibilities. Andrea Jung has definitely transformed Avon and, in the process, some believe she has given herself a career makeover, with her name cropping up on shortlists of candidates to turn around bigger companies. Opening Case Questions:

1. Is Avon's culture a contributing factor to its success? Explain.

2. The text points out that an organization's culture serves two important functions: (1) it creates internal unity, and (2) it helps the organization adapt to the external environment. Has this been the case at Avon?
3. The chapter discusses the characteristics of a highperformance (strong) culture. What is the evidence that Avon has a strong culture?
4. Is Avon's culture competitive, adaptive, bureaucratic, or cooperative? Support your answer.
5. What role has Andrea Jung played in fostering a climate of strict ethical standards at Avon?
6. What is Avon's stance on diversity, and has it lived up to it so far?

Reference no: EM131069661

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