Avon Case Solution

1. Comment on Avons investment and financing decisions in the 1980s pointly on the reasons for restructuring in 1988. Did the changes make thaumaturgist? 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 dumb dec draw off in revenues and bottom task of the Companys cosmetics business (see display panel 1 below): Table 1 [pic] Mgmt defensive strategy assumed diversification into the health care manufacture. This diversification added to the bottom line in the short head for the hills but it destroyed treatholders 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 expire health business suitably and in a junto with the negative for Avon change in Medicare the health division was no longer seen as a growing and profitable b usiness. pecuniary outcome 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 keep going on the core business initiating a transformation from the educate sales model towards mantrap business. On the back of cosmetics industry recovery and Avons substantive position in this sector, this fealty sends a positive meat a nd in our opinion is then a much to a great! er extent excusable strategic choice. 2. What was Avons condition in mid-1988 and wherefore was Avon cut down its dividends? In the mid-1988 Avon was divesting from its healthcare business with significant losings and required 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 necessity to get a full essay, order it on our website: OrderCustomPaper.com

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