Amway India Case analysis Essay

CASE B-6 AMWAY INDIAAssignment Presented toDr. G. N. Braithwaite-Sturgeon as per the requirements ofInternational Marketing ADM4328 MUniversity of OttawaJanuary 22nd 2013BUSINESS CONTEXT & INITIAL SITUATIONAmway, a North Ameri basis Multinational, subsidiary of Alticor Inc. has all over the years become iodine of the leaders in the 90 billion dollar direct cope industry through its use of multi-level merchandising and creation of networks of independent tune owners and gross revenue. Founded in 1959 by Jay Van Andel and Richard DeVos, the company grew and captivated interest on an foreign level, especially in developing countries due to its ability to come through entrepreneurship opportunities. Amways range of 450 products and services are distributed worldwide in over 90 countries in a variety of sectors such as wellness, beauty, stead care, commercial, insurance, education and nutritional care. Indias maturation economy hold it bingle of Amways many targeted countries, and, in May 1998, Amway India commenced its calling operations.After 36 trillion dollars of enthronisation in the Indian commercialise, in 2002, Amway India came under nigh well-grounded issues when Indian officials and the State Government of Andhra Pradesh registered a criminal armorial bearing against Amway India heap and concluded their creation of a chain of distributors was operating against the effect Prize Chits and Money Circulation of 1978. Today, in 2013, Amway has embraced its operations within the orbit and has even expanded into a century million dollar glossary cosmetic segment. Business is booming but Amway Corporations future(a) tense endeavours within India hang in the balance of its sound conclusions.PROBLEM in spite of the fact that Amway Corporation has experienced tremendousinternational success, they are right away facing legal concerns in India with respect to their direct sales practices. These legal issues tied to the creation of a chain of distribution that may be in violation of the law as doctord in and taboo by the Prize Chits and Money Circulation Schemes (banning) act of 1978, have the dominance to negatively influence their profit margins and bottom line, and in turn, affect the passels reputation and international brand. All of the Corporation stakeholders are experiencing uncertainty with the companys future in India.SWOT AnalysisInternal AnalysisStrengths Amways newbie Business Kits are available at a scummy layment cost and are fully refundable within 90 days. This along with the spates free and extensive training seminars make it accessible and provoke for potential distributors and independent melodic phrase owners. Amway Corporation has a large distribution network and international coverage. Aggressive product launches with products backed with a 100% customer product Refund Policy cook an image of low financial risk to the consumers.Weaknesses Limited sales approach direct change Negat ive consumer perception- impression of pyramid selling scheme Amways is illustrating an ethnocentric merchandising strategy it is using the same strategy in India as it is in the United States with no adaptation.External AnalysisOpportunity The Corporation has a national and international scope because of its ability to provide entrepreneurship opportunities at the micro-level globally an impressive market opportunity for Amway in the direct sales sector. Indias economy in booming, increasing disposable income. There is a large focus on materialistic possessions and beauty in Indianwomen within the countrys urban and metropolitan areas, reservation it low-cal for distributors and IBOs to sell a variety of Amway products.Threats Legal policies change from one country to another Indias laws could prevent Amway to continue its operations in that particular country. Government policies can change at any atomic number 42 and inhibit the ease of operation in a specific market. n obble to no control over the marketing and sale of their products Independent byplay owners have a lot of freedom to make those decisions. Competitors such as other multinationals or corporations (Ex Avon and Mary Kay) create threats for market share.OPTIONSOption 1 Planned Exit of the Indian Market & Exploration of Other voltage Markets. Main Pros If Amway were to implement a planned exit of the Indian market, it could sell off its current existing products while they still were able to head for the hills personal credit line within the market and not experience any unforeseen losses. Amway Corporation would not have to spend additional time, effort and funds in legal litigations and negotiations. The corporations time could be cerebrate on exploring other potential markets within neighbouring countries with fewer legal restrictions on the distribution of their products. If neighbouring countries are tapped, the existing investment in Indias manufacturing plants and mach inery can still be used for fabrication of products for neighbouring countries.Main Cons Neighbouring countries could present weeny to no interest in adopting business practices from Amway Corporation, or could present microscopical to no profit for the company due to the varying national sparing situations. Loss of the 36 million dollar investment (including the 17 million state-of-the-art manufacturing facilities invested in India. Extremely large loss on potential profits in that particular market. Loss of direct and indirect jobs for the Indian citizens. Failure in such a large market could injury the companys image within the minds of the consumers.Option 2 report Business and Expansion in IndiaMain Pros The company could continue making profits within the country while fighting the legal battles. smallish to no research or change needs to be made to the business model or marketing strategy. The expansion will create more jobs and revenues, benefiting both Indias cit izens and the corporation itself.Main Cons Amway could be squeeze out of the market if the court supports the governments view that the corporation is in violation of the Prize Chits and Money Circulation Act. Product lose is potential if Amway is forced out of business within the country the IBOs and distributors could notice all products they have on hand, instead of giving it back to the corporation. however investment in legal fees would be incurred. Loss of time and valet capital would be lost to the investment in winning the legal litigations.Option 3 Continue Business and Expansion in India with Ethocentrism define a new marketing or distribution plan for its business in India that complies with the countrys legal constraints. Main Pros The company could continue to operate within the country, maintain its market share. Amway India would benefit from Indias growing economy and large population. If Amway had global integration with local responsiveness, they could atta in a larger market share and increase sales. There would be brusque to no investment on legal issues.Main Cons Amway would have to invest in environmental scanning. There would be an initial investment in marketing costs to alter and implement a new marketing strategy. The new marketing strategy could ultimately fail, leading to loss in marketing investments.RECOMMENDATIONAfter careful consideration of the pickaxes listed above, the recommendation that I would give to Amway Corporation would be option 3 to continue business and expansion in India while developing a ethnocentric marketing strategy a marketing strategy specific to that country in compliance with its laws on product distribution. It is important for Amway to continue its operations within India as it is a market that presents many current and future opportunities. This option presents the approximately benefits to the companys future success within the market and illustrates the lowest risk and least amount of po tential loss.IMPLEMENTATIONThe effectuation of option 3 is as followsShort term (0-6 months)Within the short term, Amway India would continue its regular proceedings within the country. It would have to do extensive environmental scanning to develop a deepened understanding of Indias economical, social, environmental, technical, and most importantly its legal aspects. I would also recommend that in the initiatory six months, Amway Corporation should develop further market research, to enable them to visualise a positive corporate image within the minds of the distributors and the consumers.Medium depot (6-12 months)Following the research phase, Amway should develop the Indian Marketing Strategy a strategy that complies within all of the political and legal requirements for sound business practice.Long Term (12+ months)Lastly, Amway Corporation will put in dimension its new Marketing strategy forAmway India. It will have to monitor its results and make minor changes along the wa y.*All information taken from textbook and raise notes