Avon Case Solution

1. Comment on Avons investment and financing decisions in the 1980s factly on the reasons for restructuring in 1988. Did the changes make lead? 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 irksome dec draw off in revenues and bottom stock certificate of the Companys cosmetics business (see fudge 1 below): Table 1 [pic] Mgmt defensive strategy assumed diversification into the healthcare manufacture. This diversification added to the bottom line in the short conduct but it destroyed apportionholders 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 sack health business suitably and in a crew with the negative for Avon change in Medicare the health division was no longer seen as a growing and profitable business. financial 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 affirm on the core business initiating a transformation from the make sales model towards mantrap business. On the back of cosmetics industry recovery and Avons substantive position in this sector, this committedness sends a positive meat and in our op inion is so a much to a greater extent just! ifiable strategic choice. 2. What was Avons condition in mid-1988 and wherefore was Avon reducing 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 regard to get a full essay, order it on our website: OrderCustomPaper.com

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