Essay About Amway’S Operation And Annual Sales Increas

Amway Case Study
Amway’s history began in 1949 by richard devos and jay van andel of nutriliteAfter 10 years : 200 distributors in US midwest1961: American Way Association (Amway) was official establishment1962: enter Canada marketEnd of 1962: Product line is cosmetic (>200) ;  100000 contributor ; annual sales increas 12 times1970s: enter europe and asia market1979: FTC concluded that amway’s operation is an illegal pyramid scheme1980 reach 1billion $ revenue1980s ,1990s : expand globally but face of growing hostilities from a number of source1986 : french government concluded investiation in to amways’ operation was dangerous mind-control cult and fraudulent business1996: amway was rank 22th in forbes500 largest private company2004: Amway operation in >80 contries , 3.6 million business ownerAmway in China: April 1992, Amway China – JV between Amway Asia Pacific & Guangzhou Economic Technological Development ZoneCompany was required to produce in China as wellSetup a manufacturing plant – $100 million-  in Guangzhou – three yearsIn April 1995, Amway officially began operations in ChinaBusiness grew rapidly By 1997, 80,000 distributors in Amway network in China – sales $178 million——-“We will expand  not by selling more per store but by opening more store”, Richard DeVosAmway provides equal opportunity to all people to further their own achievement through personal effort and initiative. Opportunity to those who have special skills, education, capital to investAmway is a network of direct sellers, as independent business owners (IBOs)IBOs not only conduct sales but also recruit new sellersSwotStrength: High growth rateMonetary assistance providedLowed labor costWeakerness:Investment in research and developmentSmall business unit Opportunity:Growth rate and profitableGrowing demandNew market, global marketNew acquistionThreatsRicing cost of raw meterialFinancial capacityCash flowGovernment regulationCompetitorsAvon, Mary Kay, SunriderP&G, Unilever, local companiesApril 21 1998 – Chinese Government imposed a ban on all direct selling operations Stop pyramid scheme and other fraudulent businesses in China. October 31 was deadline to withdraw from the market to register revised plansTo continues operations companies had to open retail or wholesale operationsAmway’s was incurring huge losses, millions of dollars a monthSolutionStrategic responseGoods will be sold in retail outlets and through sales representativesIncome of sales distributors will be based on direct selling done by them onlySame Distribution centers served as retail outlets for the company New Amway China worked closely and positively with Chinese administrationAmway also monitored the size, ticket price, frequency of training sessions and meetings in different cities March 2001, meetings by Amway distributors in Beijing and Shanghai – high admission feesAmway China suspended the distributors license Amway suspended certification to new sales representatives and stopped all promotional and sales meetingsCompany retained 310 business managers and 800 business directors Amway managing its sales representatives with firm handAmway gave periodic reports to government about company’s operations, including training, accounting and human resourceResult of changing:Yuan 2.3 million in taxes Yuan 30 million as charitable contributions13% of the distributors were unemployed and hired and trained by AmwaySince 2002, sales has reached $700 million, four times before the banMarch 2003,  sales from China one seventh of global revenue will surpass revenue from USA marketConclusion:To attain a win-win situation,the government should listen carefully to the opinions of genuine foreign and local direct sellers to derive a mutually agreed-upon set of regulations for the industry.