1. What forces in the industry environment might affect Avon’s choice of strategy? And what does an internal analysis tell us about this?

2. What business-level strategy should Avon pursue? What other options does CEO McCoy have to try and fix the company?

Avon has had a history of successes as a direct selling pioneer. However, competitive pressures had increased from global and regional competitors. In addition, execution issues plagued the company’s efforts to get back on the growth track. New CEO Sheri McCoy was appointed in April 2012 to turn around the faltering company. In 2015 she sold 80 percent of the Avon Products North American business to Cerberus Capital Management, forming a separate private entity called New Avon LLC. Then she laid out a three-year transformation plan for Avon Products starting 2016 through 2018 to improve declining revenues and achieve cost efficiency.

The plan’s focus was to invest in growth, drive out cost, and improve financial resilience. Specific priorities of this plan were to involve the direct-selling representatives in the planning process, and find a way to combat the intense competition and price discounting that threatened to erode market share and profitability in emerging markets within the Latin America, EMEA (Europe, Middle East & Africa), and Asia-Pacific regions.

By the beginning of 2017, Avon Products was one of the biggest direct-selling enterprises globally, with over 6 million active sales representatives, but declining revenue and associated losses had made the company continuously unprofitable since 2012. Although McCoy’s previous initiatives of refining the consumer value proposition, expanding the company’s presence through digital media, streamlining processes and divesting low performing segments had shown some progress, it was unclear if the company had much more potential to keep growing. Further, the path ahead was fraught with many challenges. Given this, should CEO McCoy continue to try to return the company to profitable growth, or throw in the towel and recommend that the rest of the company be sold to the next bidder?