The role of stakeholders

Introduction Amway is one of the worlds largest direct sales companies. It is a global enterprise and is privately owned by the families that started the company in 1959. Amway manufactures, markets and distributes more than 5! consumer products. In the "# Amway distributes a variety of products, including$ % &ersonal 'are ( fragrances, body care and hair care products % )kin 'are and 'olour 'osmetics % *urables ( cookware and water treatment systems % +utrition and ,ellness ( food supplements, food and drinks % 'atalogue Items ( third party electrical goods % -ome 'are ( laundry, cleaning and car care products. Amway employs 1 ,!!! people worldwide in its offices, manufacturing centres, warehouses, call centres or stores. It also works with around three million Amway Business Owners .A/0s1 in more than 2! countries. 3hese A/0s are the link between Amway and its products and the consumer. 3hey also link Amway with communities across the globe. 4or more than 5 years, Amway 'orporation has enabled people to have a business of their own. Amway has built up a strong regional structure around regional affiliates, for e5ample, Amway "# and the 6epublic of Ireland. 0perating through the regional structure, affiliate companies are responsible for$ % forecasting .ensuring enough stocks are available to meet demand1 % managing customer service and contact with customers % efficient distribution to ensure products reach A/0s on time and in top condition % product promotion and A/0 support, for e5ample, supplying brochures to A/0s. Amway is an e5ample of a business that recognises its wider responsibilities. It recognises that to be a good corporate citizen, it needs to support causes that matter to the communities in which it operates. As well as its business aims, the company has a range of social and ethical aims that are part of a 78lobal 'ause &rogram. Amways global vision is to help people live better lives. At the heart of this commitment is the 0ne by 0ne 'ampaign for 'hildren that helps disadvantaged children from around the world. 3his programme aims to support Amways employees, A/0s and customers in putting time and money into helping disadvantaged children get access to medicine and education. Amway works with many different groups of people to carry out its business. 3his case study e5plores the relationship between Amway and its stakeholders. Stakeholders )takeholders are groups or individuals who have an interest in the decisions of the company and its business. )takeholders can be internal to the business, such as employees, or e5ternal, like suppliers, customers or the public.
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A company may have shareholders who can be internal or e5ternal stakeholders. As a private company, the families who own Amway are its sole shareholders. It is important that Amway communicates regularly with its stakeholders. 3hey can affect or be affected by the business. Amway uses different ways to communicate with its various groups of stakeholders. 3he method chosen depends on the message and the person receiving the message$ % websites, emails and voice mail updates promote products and services to A/0s and customers and keep them up(to(date % industry and trade memberships enable Amway to share and receive industry information % publications target key sales messages, for e5ample, its monthly newsletter for A/0s, Amway Focus % events and e5hibitions help Amway to communicate to A/0s, consumers and guests about running an Amway business and the products it can provide. How stakeholders affect Amway Amway is a direct selling company, selling products directly to consumers without going through traditional retail outlets or 7high street. A supply chain links the finished products to end consumers. Amway has its own distinct supply chain, placing a strong emphasis on its A/0s. 3hey are able to focus on individual customers and their needs. 3his supply chain is different from a more conventional supply chain that sells goods to final consumers through retail outlets. Amways way of working depends on building lasting connections with the end consumer. 4eedback provided by consumers and A/0s helps to shape future changes in products and the service provided.

)uppliers must produce :uality goods that Amway A/0s can sell with confidence. 3he goods should offer value for money and provide guarantees that they will meet Amway standards. )uppliers may contribute to the design and appearance of Amway products. A/0s operate independently as small businesses. 3hey develop direct
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supply channels and sell products to friends and customers that they know or meet. 3hey need to have a fle5ible approach to business. 3hey re:uire Amway to provide high :uality, value for money products with a 1!!; satisfaction guarantee. A/0s determine for themselves how they will conduct business. 3his is a 7self regulatory environment. -owever, they sign a contract to

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work within Amways 6ules of 'onduct and Code of Ethics. If A/0s do not conduct business within these rules, their behaviour could reflect back on the company. 'onsumers affect how Amway develops and promotes products. 3hey do this by indicating their preferences and re:uirements through feedback. Amway can then make more of particular products or change the format of others. 'onsumer demand also influences how much stock Amway needs to carry. 'onsumers can show where Amway needs to address issues or concerns to improve the business. ,ith many different types of stakeholders, it is possible that different groups will have different key ob ecti!es or priorities. 4or e5ample, a business needs to make a profit but customers want low prices. 3he company might find it difficult to support price cuts, as this would reduce its profit. 3hese two priorities might be in conflict. How Amway affects its stakeholders Amways !ision is 7helping people live better lives. Amways business plays a key role in the communities in which it operates. Amway has a global strategy for producing, distributing and marketing its products worldwide. It also has a strategy for promoting corporate social responsibility .')61 in a global way. ')6 refers to the role that a company plays in meeting its wider commitments as a citi<en. )uch commitments include supporting worthy causes and always acting in an ethical, honest way. Amway operates in many different markets worldwide and has a range of affiliates and A/0s. It therefore has to devise and communicate its plans for corporate social responsibility activities carefully to take account of different priorities and interests. 4rom the outset, Amway established some clear ob=ectives. 3hese were to$ % build loyalty and pride among A/0s and employees % enhance Amways reputation as a caring organisation % make a real difference to human lives. 3his helps to maintain Amways reputation with all its stakeholders.

Amway contributes time, effort and money to support its business communities$ % It creates appropriate Amway products for A/0s to sell.
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% It develops campaigns that support the business and social aims of the company. 8etting the image right is vital in a business that relies on building relationships with individuals and the wider community.

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% Amway regularly seeks to develop new products in line with market research aimed at finding out what customers want. % Its employees volunteer at different charity organisations. % It has shared ?99 million .around @15! million1 with non(profit organisations since the company began. Amway produced its 8lobal 'ause &rogram in 9!!9 as the result of e5tensive research. Amway defines a global cause as 7a social issue affecting many people around the world engaged in a struggle or a plight that warrants a charitable response. 3he 8lobal 'ause &rogram$ % helps Amway to bring its vision to life % declares what the organisation stands for % builds trust and respect in Amway brands % establishes corporate social responsibility as a high priority. In developing its global cause strategy, Amway also listened to what its A/0s cared about. Aany favoured a cause to help children. 3his led to Amways partnership with "#ICE$s Immunisation &lus programme. 3his aims to provide vaccination against the si5 most serious diseases affecting children in the developing world. Amways business image benefits from the relationship with "+I'B4. "+I'B4 benefits from the fundraising Amway and its A/0s contribute. Ethical business Ethical enterprises do more than simply provide goods and services for customers. 3hey also make a real contribution to the communities in which they operate by$ % creating employment and =ob security % providing products that give consumers good value for money % contributing to creating a more caring and cared(for community. /usinesses operate in a competitive environment. 3hey may compete on a number of factors$ % price % range of products % :uality % speed of service % customer service. Amway is a global enterprise. It must comply with the laws of the many different countries in which it operates. Its business ethics provide a framework to guide the behaviour of the company and its stakeholders. As part of its business !alues, it protects its consumers through the :uality of the products and by offering guarantees of satisfaction. It promotes and supports ethical selling behaviour amongst the A/0s through its codes of conduct. -owever, in a highly competitive market where businesses are similar, Amway needs to find a way of achieving competiti!e ad!antage. *emonstrating a positive involvement in the community and attention to environmental issues can provide a business with competitive advantage. It shows that the company behaves in an ethical way, shares its values and enhances its image as a responsible organisation. Amway recognises that to respond to ')6 issues, it must base its business on the principles of 7relevance, simplicity and humanity. 4or e5ample, Amway set up the 70ne by 0ne programme following
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discussions with various organisations involved in providing help to underprivileged communities worldwide. Amway is also active in a number of programmes to reduce its impact on the environment,

including$ % supporting organic farms to grow the plants for its vitamin and mineral products % training employees to protect the environment, for e5ample, encouraging re(use and recycling to conserve resources % changing product formulations to be more concentrated and biodegradable, which reduces packaging and waste % using sources of renewable energy, for e5ample, a wind farm at its ,orld -ead:uarters will provide 1!; of energy needs % measuring its environmental impact by auditing its activities to internationally recognised standards. All these activities carry a cost, therefore Amway needs to balance the costs of its corporate social responsibility programmes against not only the benefits of doing so, but also the cost of not doing so. /usiness practices that do not take account of ethical behaviour might lead stakeholders to reconsider their relationship with the company. )uppliers might stop trading or customers might stop buying .which would result loss of revenues1. At the company level, it might lead to infringement of the law or loss of reputation, which would influence the wider public. Conclusion Amway is a global direct selling organisation. It has to deal with many different stakeholders with different ob=ectives. 3hese stakeholders may be internal or e5ternal to the company and can affect or be affected by Amway in different ways. Its organisational structure is based on a network of A/0s who work independently. 3herefore, it is important that Amway sets the standards of ethical business behaviour for the people who work with, and for, the company. It demonstrates these standards by setting rules of conduct and codes of ethics. In addition, it puts its ethics into practice through its various ')6 programmes of activity, supporting the environment, its employees and disadvantaged children across the world. %uestions 1. ,ho are the stakeholders and what methods of communication does Amway use with eachC 9. B5plain how the A/0s operate their business and the potential issuesC >. *escribe Amways strategy and its impact on its stakeholdersC . "sing e5amples, discuss the meaning of an ethical businessC

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