Change Model Embraced by Avon Product Inc to Make the Company Successful
From the Goldsmith & Carter textbook, select either the Avon Products (Chapter 1) or GE Money Americas (Chapter 6) case study for this assignment.
Write a five to seven (5-7) page paper in which you:
1.Provide a brief description of the status of the company that led to its determination that a change was necessary.
2.Identify the model for change theory typified in the case study of your choice. Discuss what led you to identify the model that you did.
3.Illustrate the types of evaluation information that were collected and how they are used to benefit the company.
4.Speculate about success of the changes within the next five (5) years and how adjustments could be made if the results become less than ideal.
5.Use at least five (5) quality academic resources in this assignment no older than 4 years. Note: Wikipedia and other Websites do not quality as academic resources.
Your assignment must follow these formatting requirements:
-Be typed, double spaced, using Times New Roman font (size 12), with one-inch margins on all sides; references must follow APA or school-specific format. Check with your professor for any additional instructions.
-Include a cover page containing the title of the assignment, the student's name, the professor's name, the course title, and the date. The cover page and the reference page are not included in the required page length.
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Introduction
Avon Product, Inc has been considered as a ten billion dollars consumer product organization dealing with fragrances, cosmetics and skin care products. For more than a hundred years, the company has been involved in the promotion of economic empowerment of females globally. The company operated in over forty countries and over 70% or its revenue came from outside the United States. In 2005, the company had been valued at $8 billion and had achieved a 10% CAGR (cumulative annual growth rate) in operating profit between 2000 and 2004. In 2006, the company started the most radical process of restructuring which was motivated by the belief that the company was in a position to sustain its historically potent financial performance and still build the foundation for a bigger and more internationally integrated organization. The proposed change impacted on every aspect of Avon Company and would therefore necessitate an approach that would find, build as well as engage talents that were unlike anyone tried before. In this paper I discuss the the change model that was embraced by Avon Product Inc in making the company successful.
As the turnaround commenced in Avon Company, there were several changes of which the major ones included: crossing over to a matrix structure from regional structure (the previously geographical regions which initially operated with important latitude were later matrixed with international business functions such as supply and marketing chain); Delayering (involved a systematic 6-month process where the organization was taken from 15 layers of management to 8 managerial layers and it included a reduction in compensation and benefit up to 25% ); investing significantly in executive talent (involved replacement of CFO, head of Latin America, Head of North America and the leaders of Marketing, Strategy and, Human Resource); Creation of new capabilities (which included sourcing Brand Management, supply chain capabilities and marketing analytics resulting in hundreds of new leaders in Avon Company) (Goldsmith & Carter, 2009).
This process of change seems to be guided by Kotter's 8 Step Change Model. This model helps organizations to achieve change in an ever changing world. The first step involves creating a sense of urgency that change is needed and should be done immediately. The leaders in Avon Company understood clearly the significance of the sense of urgency to commence change more so after the company experienced loss for the first time in its history. The state of Avon Company was complacency because the organization was at the top of its market (Kotter, 2013; Stragalas, 2011) but it failed to act thinking that all was okay. The company found itself facing challenges related to flattening revenues as well as declining operating profits. There were several contributing factors but one underlying issue was the fact that Avon had developed at faster rate than portions of its talent and structure could support (Goldsmith & Carter, 2009).
The second step of Kotter's theory involves creating the guiding coalition through putting together leadership with potential of initiating and leading change. A qualified and focused team of leadership work together to develop the right vision, communicates the vision to the vast numbers of workers, eliminate the key obstacles, generate short term wins, lead and manage dozens of change projects as well as anchoring new approaches at the core of the organization's culture. The guiding coalition should reflect position power, expertise, credibility and leadership (Appelbaum et al., 2012). These steps were fully implemented by Avon through various processes including creation of new capabilities which included sourcing brand management, supply chain capabilities and marketing analytics ad; there were therefore hundreds of new leaders.
The third step of Kotter's theory involves developing a change vision which helps in clarifying how the future is expected to be as compared to the past. A clear vision helps in accomplishing three significant purposes. These include; simplifying dozens of detailed decision, motivating people to act in the right direction even where the initial step is a painful one, and lastly helping in the coordination of actions of various workers in a remarkably efficient and fast manner (Appelbaum et al, 2012). The Avon's leadership team was guided by this third step in that it was able to delineate the guiding principles towards achieving the company's goals. The two guiding principles included executing on the "what" and differentiating on the "how" (Gold smith & Carter, 2009).
The fourth step involves communicating the vision in a way that can be understood and accepted b...