IBUS 462 Lecture Notes - Lecture 8: Procter & Gamble, Andrea Jung, Economic Surplus

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Rapid extension based on country economic growth until. 2005 where failure started to show in avon"s global strategy. Jung"s turnover strategy: duplication of manufacturing operations and supply chain, profusion of new products, communication problem because country managers were given too much autonomy. Hired seasoned managers from well known company (procter & gamble) and laying off 30% of managers. Flattened the organization to improve communication, performance visibility, and accountability. Manufacturing was consolidated, supply chain rationalized, eliminating duplication and costs (25% of products were abandoned) By 2007, nez strategy started to show in dividends. 2009 avon improved its shares of market by hiring intensively and using stars in their ads. Profitability can be defined as the rate of return the firm makes on its invested capital (roic) Profit growth is the percentage increase in net profits over time. Expanding internationally can boost profitability and profit growth. Managers can increase the profitability of the firm by pursuing strategies that lower costs.

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