Avon Case Solution

1. Comment on Avons investment and financing decisions in the 1980s specially on the reasons for restructuring in 1988. Did the changes make esthesis? The trend towards greater female participation in a professional and social life in the early 80-ies challenged Avons traditional avocation model resulting in a daunt dec draw off in revenues and bottom tone of the Companys cosmetics business (see slacken 1 below): Table 1 [pic] Mgmt defensive strategy assumed diversification into the healthcare pains. This diversification added to the bottom line in the short pass but it destroyed donationholders foster eventually. There was no particular synergy between the effect business and the healthcare M&As. Apparently Avons centering lacked the expertise and skills to evaluate and go away health business suitably and in a conclave with the negative for Avon change in Medicare the health division was no longer seen as a growing and profitable business. fiscal out come of this policy was a modest 1% CAGR in total revenue in the period 1980-1987; EBT margin in 1987 was 6% lower than in it was in 1979 and earnings per share were down by ~50%.

The restructuring plan makes sense because Avons management demonstrates that it accepts the mistake of its healthcare diversification strategy, and now it concentrates nates on the core business initiating a transformation from the commit sales model towards mantrap business. On the back of cosmetics industry recovery and Avons substantive position in this sector, this freight sends a positive meat and in our opinion is hence a m uch to a greater extent excusable strategic! choice. 2. What was Avons condition in mid-1988 and wherefore was Avon cut back its dividends? In the mid-1988 Avon was divesting from its healthcare business with significant losings and call for to reserve money for the restructuring costs. The management planned to gain on the cosmetics market recovery and to double its investments in the lulu products...If you urgency to get a full essay, order it on our website: OrderCustomPaper.com

If you want to get a full essay, visit our page: write my paper