You are on page 1of 42

Project on SWOT analysis for Amway India

2014

EXECUTIVE SUMMARY:
This executive summary will give you key facts concerning the Amway. These facts will help to find out how well the Amway opportunity can match your business goals. Lets start from main component that is business. A business' purpose is to attract and keep customers. Its one basic function is to reliably solve customer problems. Management in all business areas and organizational activities are the acts of getting people together to accomplish desired goals and objectives efficiently and effectively. Also Management is the act or function of putting into practice the policies and plans decided upon by the administration. Hence Administration makes the important decisions of an enterprise in its entirety, whereas management makes the decisions within the confines of the framework, which is set up by the administration. The important factor important to study is Organization. It is the foundation upon which the whole structure of management is built. Organization is not an end it itself but a means to achieve an end. Whether an organization is good or bad depends on the fact as to how much efficiently and promptly it is in a position to achieve the objectives. Another important topic is A Business ownership should be structured according to the needs of the owners and potentially liability that the business could incur. Corporate vision describes aspirations for the future, without specifying the means that will be used to achieve those desired ends. The Mission of organization should represent the broadest perspective of the enterprise's mission. The major outcome of strategic road-mapping and strategic planning, after gathering all necessary information, is the setting of goals for the organization based on its vision and mission statement. The most important topic is an organizational structure is a mainly hierarchical concept of subordination of entities that collaborate and contribute to serve one common aim. Analysis by A SWOT Exercise is a powerful technique for uncovering and understanding your Strengths and Weaknesses, and for looking at the Opportunities and Threats you face. The Amway/Amway Global, a subsidiary of Alticor, is marketing nutritional supplements, skin and personal care products, air and water purifiers and a line of home cleaning products. The products are sold through Independent Business Owners (IBO). The most effective strategy for this is direct marketing, today also known as attraction marketing. Using attraction marketing for Amway products is the fastest way to make steady retail profits. Amway already helped over 3 million people start on their path to success. They're attracted by the unlimited potential of the opportunity, the support of a corporation with 50 years of experience and compassion, a global community ready to offer support, and a premier compensation plan.

Project on SWOT analysis for Amway India

2014

INTRODUCTION
The Meaning of Business: Great quote on Worthwhile by Mark Kaiser on the meaning of business: "The simplest definition of business is you solve a customer's problem and create sustainable profits over time. Anyone with vision should understand the problem they're solving. The problem with business today is that people think the meaning is about building a monument to you. The meaning of business is having an impact on people's lives." A business' purpose is to attract and keep customers. Its one basic function is to reliably solve customer problems. A business is a legally recognized organization designed to provide goods or services, or both, to consumers, businesses and governmental entities. Businesses are predominant in capitalist economies. Most businesses are privately owned. A business is typically formed to earn profit that will increase the wealth of its owners and grow the business itself. The owners and operators of a business have as one of their main objectives the receipt or generation of financial returns in exchange for work and acceptance of risk. Notable exceptions include cooperative enterprises and state-owned enterprises. Businesses can also be formed not-for-profit or be state-owned. The etymology of "business" relates to the state of being busy either as an individual or society as a whole, doing commercially viable and profitable work. The term "business" has at least three usages, depending on the scope the singular usage (above) to mean a particular company or corporation, the generalized usage to refer to a particular market sector, such as "the music business" and compound forms such as agribusiness, or the broadest meaning to include all activity by the community of suppliers of goods and services. However, the exact definition of business, like much else in the philosophy of business, is a matter of debate and complexity of meanings. Meaning Of Management: Management is generally defined as the art and science of getting things done through others. This definition emphasizes that a manager plans and guides the work of other people. Some (cynical) individuals think that this means managers dont have any work to do themselves. As managers have an awful lot of work to do. Management is the art and science of getting things done through others, generally by organizing and directing their activities on the job. A manager is therefore someone who defines, plans, guides, assists, and assesses the work of others, usually people for whom the manager is responsible in an organization. Management Define: The efficient and effective operation of a business, and study of this subject, is called management.

Project on SWOT analysis for Amway India

2014

The main branches of management are financial management, marketing management, human resource management, strategic management, production management, operation management, service management and information technology management. 1. The group of individuals who make decisions about how a business is run. 2. The initiation and maintenance of an investment portfolio. Management in all business areas and organizational activities are the acts of getting people together to accomplish desired goals and objectives efficiently and effectively. Management comprises planning, organizing, staffing, leading or directing, and controlling an organization (a group of one or more people or entities) or effort for the purpose of accomplishing a goal. Resourcing encompasses the deployment and manipulation of human resources, financial resources, technological resources, and natural resources. Because organizations can be viewed as systems, management can also be defined as human action, including design, to facilitate the production of useful outcomes from a system. This view opens the opportunity to 'manage' oneself, a pre-requisite to attempting to manage others Management can also refer to the person or people who perform the act(s) of management. Basic functions of management: Planning: Deciding what needs to happen in the future (today, next week, next month, next year, over the next 5 years, etc.) and generating plans for action. Organizing: (Implementation) making optimum use of the resources required to enable the successful carrying out of plans. Staffing: Job analyzing, recruitment, and hiring individuals for appropriate jobs. Leading/Directing: Determining what needs to be done in a situation and getting people to do it. Controlling/Monitoring: Checking progress against plans. Motivation: Motivation is also a kind of basic function of management, because without motivation, employees cannot work effectively. If motivation doesn't takes place in an organization, then employees may not contribute to the other functions (which are usually set by top level management).

Business Administration: Business administration consists of the performance or management of business operations and thus the making or implementing of major decisions. Administration can be defined as: The universal process of organizing people and resources efficiently so as to direct activities toward common goals and objectives. The word is derived from the Middle English word administracioun, which is in turn derived from the French administration, itself derived from the Latin administratio a compounding of ad ("to") and ministratio ("give service").

Project on SWOT analysis for Amway India

2014

Administrator can serve as the title of the general manager or company secretary who reports to a corporate board of directors. This title is archaic, but, in many enterprises, this function, together with its associated Finance, Personnel and management information systems services, is what is intended when the term "the administration" is used. In some organizational analyses, management is viewed as a subset of administration, specifically associated with the technical and mundane elements within an organization's operation. It stands distinct from executive or strategic work. In other organizational analyses, administration can refer to the bureaucratic or operational performance of mundane office tasks, usually internally oriented and reactive rather than proactive. As business has become more complex, so too has the oversight of companies: their management, their growth strategies, their personnel issues, their taxes and the role that taxes play in corporate economic strategy. Advertising has grown to include multiple media outlets and an assortment of targeted interest groups: new customers, repeat customers, stockholders, investors and new geographic markets. Marketing has become the term of choice for this entire strategically placed product exposure. Defining business administration then means defining oversight roles for the assortment of internal specialties that every business of any size has come to include. Perhaps the best way to define business administration is to look at the types of courses offered in MBA curriculums and the specialties, or "majors," that one can opt for in an MBA program. For a large corporation, business administration is going to include international and global business, as well as strategy and economics. In this instance, the definition of business administration will include requirements of certain cultural differences and an acute understanding of the global economy and its current fluidity. Also included in business administration at this scale is the art and science of acquisition: when to buy a company or property and why. Business administration will always include the intangible quality of leadership; Along with leadership comes the task of negotiation and conflict resolution, specifically with regard to personnel. Behavioral psychology plays an important role in business administration: a misstep in an adversarial situation with a union can take a company under, as it did Continental Airlines some years ago. The definition of business administration will have to include marketing; you won't have a business to administer unless you sell your products. Ancillary to marketing is an understanding of the new tools available for product distribution, and that will involve understanding e-business and how it is rapidly evolving. Business administration includes an understanding of entrepreneurship: tax structures for small businesses along with personnel issues at that level, inventory and cash flow, and all the other small matters that make a big difference to a new or small business. A critical part of business administration is the awareness of risk. This might include the risk of launching a new product, and the costs involved; the risk of an acquisition, the risk of a competitive strategy, the company's exposure in opting for this health plan instead of that one. There are risks involved in other personnel decisions and this area is of tangible importance: company 4

Project on SWOT analysis for Amway India

2014

morale is a key to productivity and the resultant profitability. The definition of business administration includes whatever knowledge is required to make all of these components work productively, if not in complete harmony. Management vs. Administration: Management and administration may seem the same, but there are differences between the two. Administration has to do with the setting up of objectives and crucial policies of every organization. What is understood by management, however, is the act or function of putting into practice the policies and plans decided upon by the administration. Administration is a determinative function, while management is an executive function. 1. It also follows that administration makes the important decisions of an enterprise in its entirety, whereas management makes the decisions within the confines of the framework, which is set up by the administration. 2. Administration is the top level, whereas management is a middle level activity. If one were to decide the status, or position of administration, one would find that it consists of owners who invest the capital, and receive profits from an organization. Management consists of a group of managerial persons, who leverage their specialist skills to fulfill the objectives of an organization. 3. Administrators are usually found in government, military, religious and educational organizations. Management is used by business enterprises. The decisions of an administration are shaped by public opinion, government policies, and social and religious factors, whereas management decisions are shaped by the values, opinions and beliefs of the mangers. 4. In administration, the planning and organizing of functions are the key factors, whereas, so far as management is concerned, it involves motivating and controlling functions. When it comes to the type of abilities required by an administrator, one needs administrative qualities, rather than technical qualities. In management, technical abilities and human relation management abilities are crucial. 5. Administration usually handles the business aspects, such as finance . It may be defined as a system of efficiently organizing people and resources, so as to make them successfully pursue and achieve common goals and objectives. Administration is perhaps both an art and a science. This is because administrators are ultimately judged by their performance. Administration must incorporate both leadership and vision. 6. Management is really a subset of administration, which has to do with the technical and mundane facets of an organizations operation. It is different from executive or strategic work. Management deals with the employees. Administration is above management, and exercises control over the finance and licensing of an organization. Therefore, we can see that these two terms are distinct from one another, each with their own set of functions. Both these functions are crucial, in their own ways, to the growth of an organization.

Project on SWOT analysis for Amway India

2014

1. Management is the act or function of putting into practice the policies and plans decided upon by the administration. 2. Administration is a determinative function, while management is an executive function. 3. Administration makes the important decisions of an enterprise in its entirety, whereas management makes the decisions within the confines of the framework, which is set up by the administration. 4. Administrators are mainly found in government, military, religious and educational organizations. Management, on the other hand, is used by business enterprises. Types of business: The following are the types of business, 1. Agriculture: Agriculture is the production of food and goods through farming. Agriculture was the key development that led to the rise of human civilization; with the husbandry of domesticated animals and plants (i.e. crops) creating food surpluses that enabled the development of more densely populated and stratified societies. The study of agriculture is known as agricultural science. Agriculture is also observed in certain species of ant and termite. Agriculture encompasses a wide variety of specialties and techniques, including ways to expand the lands suitable for plant raising, by digging water-channels and other forms of irrigation. Cultivation of crops on arable land and the pastoral herding of livestock on rangeland remain at the foundation of agriculture. In the past century there has been increasing concern to identify and quantify various forms of agriculture. In the developed world the range usually extends between sustainable agriculture (e.g. perm culture or organic agriculture) and intensive farming (e.g. industrial agriculture). 2. Mining: Mining is the extraction of valuable minerals or other geological materials from the earth, usually from an ore body, vein or (coal) seam. Materials recovered by mining include base metals , iron , uranium , coal, diamonds, limestones , oil shale , rock salt and potash . Any material that cannot be grown through agriculture processes, or created in a laboratory or factory, is usually mined. Mining in a wider sense comprises extraction of any non renewable resource (e.g., petroleum, natural gas, or even water).Mining of stone and metal has been done since prospecting for times. Modern mining processes involve e bodies, analysis of the Profit potential of a proposed mine, extraction of the desired materials and finally reclamation of the land to prepare it for other uses once the mine is closed.The nature of mining processes creates a potential negative impact on the environment both during the mining operations and for years after the mine is closed. This impact has led to most of the world's nations adopting regulations to moderate the negative effects of mining operations. Safety has long been a concern as well, though modern practices have improved safety in mines significantly.

Project on SWOT analysis for Amway India

2014

3. Finance: Finance is the science of funds management. The general areas of finance are business finance, personal finance, and public finance. Finance includes savings money and often includes lending money. The field of finance deals with the concepts of time, money, and risk and how they are interrelated. It also deals with how money is spent and budgeted.One aspect of finance is through individuals and business organizations, which deposit money in a bank. The bank then lends the money out to other individuals or corporations for investment, and charges interest on the loans. Loans have become increasingly packaged for resale, meaning that investors buy the loan (debt) from a bank or directly from a corporation. Bonds are debt instruments sold to investors for organizations such as companies, governments or charities. The investor can then hold the debt and collect the interest or sell the debt on a secondary market. Banks are the main facilitators of funding through the provision of credit, although private equity, mutual funds, hedge funds, and other organizations have become important as they invest in various forms of debt. Financial assets, known as investments, are financially managed with careful attention to financial risk management to control financial risk. 4. Intellectual property: Intellectual property (IP) is a term referring to a number of distinct types of creations of the mind for which property rights are recognizedand the corresponding fields of law. Under intellectual property law, owners are granted certain exclusive property to a variety of intangible assets, such as musical, literary, and artistic works; discoveries and inventions; and words, phrases, symbols, and designs. Common types of intellectual property include copyrights, trademarks, patents, industrial right and trade secrets in some jurisdictions. Although many of the legal principles governing intellectual property have evolved over centuries, it was not until the 19th century that the term intellectual property began to be used, and not until the late 20th century that it became commonplace in the United States. The British Statute tee 1710 is now seen as the origin of copyright and patent law respectively. 5. Manufacturing: Manufacturing is the use of machines, tools and labor to make things for use or sale. The term may refer to a range of human activity, from handicraft to high tech, but is most commonly applied to industrial production, in which raw materials are transformed into finished goods on a large scale. Such finished goods may be used for manufacturing other, more complex products, such as aircraft, automobiles, or sold to Wholesalers, who in turn sell them to retailers, who then sell them to end users the consumers. Manufacturing takes turns under all types of economic system. In a free market economy, manufacturing is usually directed toward the mass production of products for sale to consumer at a profit.

Project on SWOT analysis for Amway India

2014

Modern manufacturing includes all intermediate processes required for the production and integration of a product's components. Some industries, such as semiconductors and steel manufacturers use the term fabrication instead. 6. Real estate: Real estate is a legal term (in some jurisdictions, such as the United Kingdom, Canada, Australia , USA and Bahamas ) that encompasses land along with improvements to the land, such as buildings, fences, wells and other site improvements that are fixed in location immovable. Real estate law is the body of regulations and legal codes which pertain to such matters under a particular jurisdiction and include things such as commercial and residential real property transactions. Real estate is often considered synonymous with real property (sometimes called realty), in contrast with personal property (sometimes called chattel or personality under chattel law or personal property law). However, in some situations the term "real estate" refers to the land and fixtures together, as distinguished from "real property", referring to ownership of land and appurtenances, including anything of a permanent nature such as structures, trees, minerals, and the interest, benefits, and inherent rights thereof. Real property is typically considered to be Immovable property. The terms real estate and real property are used primarily in common law, while civil law jurisdictions refer instead to immovable property. 7. Retailing: Retailing consists of the sale of goods or merchandise from a fixed location, such as a department stores, boutique, or by mail, in small or individual lots for direct consumption by the purchaser. Retailing may include subordinated services, such as delivery. Purchasers may be individuals or businesses. In commerce, a "retailer" buys goods or products in large quantities from manufacturers or Importers, either directly or through a wholesaler, and then sells smaller quantities to the end-user. Retail establishments are often called shops or stores. Retailers are at the end of the supply chain. Manufacturing marketers see the process of retailing as a necessary part of their overall distribution strategy. The term "retailer" is also applied where a service provider services the needs of a large number of individuals, such as a public utility, like electric power. 8. Transport: Transport or transportation is the movement of people and goods from one location to another. Mode of transportation includes air rail, road, water, cable, pipeline, and space. The field can be divided into infrastructure, vehicles, and operations. Transport infrastructure consists of the fixed installations necessary for transport, and may be roads , railways, airways, waterways, canals, pipelines and terminals such as airports, rail stations, bus stations, warehouses, trucking terminals, refueling depots (including fueling docks and fuel stations), and seaports. Terminals may be used both for interchange of passengers and cargo and for maintenance. Vehicles traveling on these networks may include automobiles, bicycles, buses, trains, trucks, people, helicopters, and aircrafts. Operations deal with the way 8

Project on SWOT analysis for Amway India

2014

the vehicles are operated, and the procedures set for this purpose including financing, legalities and policies. In the transport industry, operations and ownership of infrastructure can be either public or private, depending on the country and mode. Meaning of Organization: Organization is the foundation upon which the whole structure of management is built. Organization is related with developing a frame work where the total work is divided into manageable components in order to facilitate the achievement of objectives or goals. Thus, organization is the structure or mechanism that enables living things to work together. In a static sense, an organization is a structure or machinery manned by group of individuals who are working together towards a common goal. Alike 'management', the term 'organization' has also been used in a number of ways. broadly speaking, An organization is a social arrangement which pursues collective goals, controls its own performance, and has a boundary separating it from its environment. The word itself is derived from the Greek word organon, itself derived from the better-known word ergon. In the social sciences, organizations are the object of analysis for a number of disciplines, such as sociology, economics, political science, psychology, management, and organizational communication. In more specific contexts, particularly for sociologists, the term "institution" may be preferred. The broader analysis of organizations is commonly referred to as organizational studies, organizational behavior or organization analysis. A number of different theories and perspectives exist, some of which are compatible, Organization process-related: an entity is being (re-)organized (organization as task or action). Organization functional: organization as a function of how entities like businesses or state authorities are used (organization as a permanent structure). Organization institutional: an entity is an organization (organization as an actual purposeful structure within a social context)

The 'organization' is used in four different senses: as a process, as a structure of relationship, as a group of persons and as a system, as given below: 1. Organization as a Process: In this first sense, organization is treated as a dynamic process and a managerial activity which is essential for planning the utilization of company's resources, plant and equipment materials, money and people to accomplish the various objectives. 2. Organization as a Framework of Relationship: In the second sense organization refers to the structure of relationships and among position jobs which is created to release certain objectives. The definitions of Henry, Urwick, Farland, Northcourt, Lansburgh and Spriegel Breach, Davis, Mooney and Reily etc., come under this group. For example: According to Mooney and Reily, "Organization is the form of every human association for the attainment of a common purpose."

Project on SWOT analysis for Amway India

2014

3. Organization as a Group of persons: In the third sense, organisation is very often viewed as a group of persons contributing their efforts towards certain goals. Organization begins when people combine their efforts for some common purpose. It is a universal truth that an individual is unable ability and resources. Barnard has defined 'Organization' as an identifiable group of people contributing their efforts towards the attainment of goals. 4. Organization as a System: In the fourth sense, the organization is viewed as system. System concepts recognize that organizations are made up of components each of which has unique properties, capabilities and mutual relationship. The constituent elements of a system are linked together in such complex ways that actions taken by one producer have far reaching effect on others. In short, organizing is the determining, grouping and arranging of the various activities deemed necessary for the attainment of the objectives, the assigning of people to those activities, the providing of suitable physical factors of environment and the indicating of the relative authority delegated to each individual charged with the execution of each respective activity. Definitions of Organization: Different authors have defined organization in different ways. The main definitions of organization are as follows: According to keith Davis, "Organization may be defined as a group of individuals, large of small, that is cooperating under the direction of executive leadership in accomplishment of certain common object." According to Chester I. Barnard, "Organization is a system of co-operative activities of two or more persons." According to Louis A. Allen, "Organization is the process of identifying and grouping the work to be performed, defining and delegating responsibility and authority, and establishing relationship for the purpose of enabling people to work most effectively together in accomplishing objectives." According to Mooney and Railey, "Organization is the form of every human association for the attainment of a common purpose."

Social unit of people systematically arranged and managed to meet a need or to pursue collective goals on a continuing basis. All organizations have a management structure that determines relationships between functions and positions, and subdivides and delegates roles, responsibilities, and authority to carry out defined tasks. Organizations are open systems in that they affect and are affected by the environment beyond their boundaries Characteristics of Organization: 1. Outlining the Objectives: Born with the enterprise are its long-life objectives of profitable manufacturing and selling its products. Other objectives must be

10

Project on SWOT analysis for Amway India

2014

2.

3.

4.

5.

established by the administration from time to time to aid and support this main objective. Identifying and Enumerating the Activities: After the objective is selected, the management has to identify total task involved and its break-up closely related component activities that are to be performed by and individual or division or a department. Assigning the Duties: When activities have been grouped according to similarities and common purposes, they should be organized by a particular department. Within the department, the functional duties should be allotted to particular individuals. Defining and Granting the Authority: The authority and responsibility should be well defined and should correspond to each other. A close relationship between authority and responsibility should be established. Creating Authority Relationship: After assigning the duties and delegations of authority, the establishment of relationship is done. It involves deciding who will act under whom, who will be his subordinates, what will be his span of control and what will be his status in the organization. Besides these formal relationships, some informal organizations should also be developed.

Significance of Organization: 1. It Facilitated Administration and management: Organization is an important and the only tool to achieve enterprise goals set b administration and explained by management. Sound organization increases efficiency, avoids delay and duplication of work, increases managerial efficiency, increases promptness, and motivates employees to perform their responsibility. 2. It Help in the Growth of Enterprise: Good organization is helpful to the growth, expansion and diversifications of the enterprise. 3. It Ensures Optimum Use of Human Resources: Good organization establishes persons with different interests, skills, knowledge and viewpoints. 4. It Stimulates Creativity: A sound and well-conceived organization structure is the source of creative thinking and initiation of new ideas. 5. A Tool of Achieving Objectives: Organization is a vital tool in the hands of the management for achieving set objectives of the business enterprise. 6. Prevents Corruption: Usually corruption exists in those enterprises which lack sound organization. Sound organization prevents corruption by raising the morale of employees. They are motivated to work with greater efficiency, honesty and devotion. 7. Co-ordination in the Enterprises: Different jobs and positions are welded together by structural relationship of the organization. The organizational process exerts its due and balanced emphasis on the co-ordination of various activities. 8. Eliminates Overlapping and Duplication or work: Over lapping and duplication of work exists when the work distribution is not clearly identified and the work is performed in a haphazard and disorganized way. Since a good organization demands that the duties be clearly assigned amongst workers, such overlapping and duplication is totally eliminated. 11

Project on SWOT analysis for Amway India

2014

Significance of Sound /Good Organization: Organization is not an end it itself but a means to achieve an end. Whether an organization is good or bad depends on the fact as to how much efficiently and promptly it is in a position to achieve the objectives. Thus, a sound or good or ideal and result-oriented organization must possess the following characteristics. 1. Realization of Objectives: Organization is tool of achieving objectives of an enterprise. For this purpose, the organization should be divided in several department, sub-departments, branches and units etc. 2. Harmonious Grouping of Functions etc: For achieving the organization objectives there must be harmonious grouping of functions, jobs and sub-jobs in such a way so that there is action, consultation and co-ordination without any delay and difficulty. 3. Reasonable Span of Control: Another characteristic of organization is that it should have reasonable span of control. Ordinarily, a person (personnel) cannot control more than five or six subordinates. 4. Clear-cut allocation of Duties and Responsibilities: There must be clear-cut allocation of duties and responsibilities in any scheme of sound organization. Every executive must know his scope of activities, the ideal number is three. 5. Promotion of Satisfaction: The most important element of any human organization is the promotion of satisfaction of workers. Man works in a group or in an organization and hence the success or failure of any organization depends on as to how much the organization is in a position to provide satisfaction to individuals or group working under him. 6. Fullest Utilization of Manpower: Another important characteristic of an ideal organization is as to how far it is successful in making fullest and economical utilization of the available manpower. 7. Provision and Development and Expansion: Another important of an ideal organization is that there exists the necessary provision for development and expansion so that it is possible to expand and develop any organisation according to needs and requirements and necessary changes an alternatives may be made. 8. Coordination and cooperation: In order to achieve the objectives of the enterprise, there must be close coordination and cooperation in the activities of everybody working in the organization. Further, there should also be active coordination and cooperation amongst the various departments an sub-departments. It will also assist in elimination the evil of red tapism. 9. Unity of Command: There must be unity of command. No one in any organization should report to more than one line supervisor, and everybody must know to whom he reports and who reports to him. No subordinate should get orders from more than one supervisor; otherwise it will lead to confusion, chaos and conflict. 10. Effective System of Communication: An ideal organization must possess effective system of communication. The inter-communication system should be clear and easier and there should be no ambiguity at and level.

12

Project on SWOT analysis for Amway India

2014

11. High Morale: An ideal organization is that in which the workers possess high morale. They work with full capacity, energy, enthusiasm, devotion and sincerity. 12. Flexibility: The last but not the least important characteristic of an ideal organization is that it should be flexible so that necessary changes an modifications in the the size of the organization as well as technology could be easily and conveniently effected. Steps in the Process of Organization: Organization means identifying, arranging and integrating different elements of organization into efficient working order. It requires the management to follow the following process of organization. Division of work The main function is divided into sub-functions and entrusted to the different departmental heads. The result is the establishment of departments like Purchase, Sales, Production, Accounts, Publicity and Public relations. The departments can be further classified just as production department into (1) Planning (2) Designing, (3) Operations, (4) Production Control and (5) Repairs and Maintenance. The division of the work is based upon the fact that specialization is keynote of efficient organization. Grouping of Job and Departmentation The second step is to group similar or related jobs into larger units, called departments, divisions or sections. Grouping process is called departmentation. The department may be based upon functions such as manufacturing, marketing and financing etc. Department may also be based on products, such as textiles, cosmetic, stationery etc. These departments may have different sections as per requirement. Grouping jobs or Departmentation aims at achieving coordination and facilitates unity of efforts. The departments are linked together on the basis of interdependence. The divided task is assigned to specific individual or group of individuals who are supposed to be the most qualified and specialized persons for the task. Assigning duties The work to be performed by every individual is clearly defined and made known to him. Everyone must know what he is required to do in order to avoid any misunderstanding, duplication or overlapping in the work. Granting authorities and fixing responsibilities Assigning of duties to individuals must coincide with the appropriate and relevant authorities. Every employee must know, what the authorities granted to him and for what and to whom he will be responsible, liable and accountable. Delegation of authority

13

Project on SWOT analysis for Amway India

2014

Those who are made responsible for specific tasks are given due authority. Both responsibility and authority go hand in hand together. Reasonable powers are delegated to heads and supervisory staff to enable them to do their work with ease and efficiency. Effective communication Effective communication is the keynote of efficient organization. There should be proper arrangement of communication messages from executives to subordinates and vice-versa. Proper communication system establishes harmonious relationship between employees and enables execution of work in the right manner at the appropriate time and in an atmosphere of perfect mutual adjustment. Co-ordination of activities for common objectives Business activity is a team work or the group activity, so the efforts of every employee must be co-ordinate effectively to achieve the common objectives of the enterprise. Types of organization: 1) Static Organizations: Static Organizations have fixed practices, fixed size. Like static equations, these organizations have no variables. Time doesn't change them significantly. They persist until some new organization occupies their niche. 2) Dynamic Organizations: Dynamic Organizations have Fixed practices, variable size. Like dynamic equations, these organizations vary in size over time, even though their underlying practices don't change much. They go through a single life cycle, each growing rapidly as it occupies its niche, and then declining as its competitors implement better practices that steal away its clients. 3) Adaptive Organizations: Variable practices, variable size. Like complex adaptive systems, these organizations vary their practices, seeking the constant improvement that launches life cycle after life cycle, creating new products, services, and processes that hold on to clients generation after generation. They will soon motivate employees to climb adaptation curves by using ISOPs to fairly share the wealth that each innovation creates. ISOPs ensure that the innovator, the predecessors, and each shareholder in the corporation benefits. They will displace dynamic and static organizations in economic competition, so that within a generation, most people will have learned to expect continual improvement in their life experience. The fact that their ancestors once worked at the same job in the same way for an entire lifetime will seem almost as incredible as the fact that people used to stay at jobs they didn't thoroughly enjoy. 14

Project on SWOT analysis for Amway India

2014

A Business Ownership: A Business ownership should be structured according to the needs of the owners and potentially liability that the business could incur. The different types of business ownership are: 1) Limited Partnerships 2) A Corporation 3) Limited Liability Corporations 4) Sole Proprietorship and Partnership 5) Nonprofit Corporations 6) Cooperatives 7) Private Corporation: 1) Limited Partnerships: This type of business organization is costly and complicated to prepare. It is not recommended for the average small business owner. Limited partnerships are usually created by one person or company who solicits investments from others. The people who invest are considered the limited partners. The general partner is in charge of the business's everyday operations. They are personally liable for business dents. Limited partners have little control over daily business decisions or operations. Because of this they are not personally liable for business debts or claims. Limited partnerships are costly and complicated to set up and run, and are not recommended for the average small business owner. Limited partnerships are usually created by one person or company, the "general partner," who will solicit investments from others -- who will be the limited partners. The general partner controls the limited partnership's day-to-day operations and is personally liable for business debts (unless the general partner is a corporation or an LLC). Limited partners have minimal control over daily business decisions or operations and, in return, they are not personally liable for business debts or claims. Consult a limited partnership expert if you're interested in creating this type of business 2) A Corporation The most significant benefit to forming a corporation is that it limits the owners' personal liability for business dents and any court judgments against the business. A corporation is an independent legal and tax entity. This sets it apart from other types of businesses. The owners do not use their personal tax returns to pay tax on corporate profits because the corporation itself pays these taxes. Any money drawn from the corporation in the form of salaries, bonuses, etc is paid by the owners in their personal income tax returns. 15

Project on SWOT analysis for Amway India

2014

3) Limited Liability Corporations Limited Liability Corporations provide their owners just that, limited personal liability for business debts and claims. However, LLCs resemble partnerships when it comes to taxes. The owners of an LLC pay taxes on their shares of the business income on their personal tax returns. This type of organization is good for business owners who either could be sued by customers run the risk of piling up a lot of debt have substantial personal assets they want to protect. 4) Sole Proprietorship and Partnership A sole proprietorship, or partnership, is the ideal ownership structure for an up and coming business or the average small business. They do not have to be registered with the state and go into effect as soon as one person goes into business with themselves or two or more people go into business together. Any business income is reported on the owner's personal income taxes. They are also personally liable for any business debts or court decisions against the business. Before you can decide on an ownership structure for your business, you must learn at least a little bit about how each structure works. Here's a brief rundown of the most common forms of doing business: For many new businesses, the best initial ownership structure is either a sole proprietorship or if more than one owner is involved a partnership. A sole proprietorship is a one-person business that is not registered with the state as a limited liability company (LLC) or corporation. You don't have to do anything special or file any papers to set up a sole proprietorship. You create one just by going into business for yourself. Legally, a sole proprietorship is inseparable from its owner. The business and the owner are one and the same. This means the owner of the business reports business income and losses on her personal tax return and is personally liable for any business-related obligations, such as debts or court judgments. Similarly, a partnership is simply a business owned by two or more people that hasn't filed papers to become a corporation or a limited liability company (LLC). No paperwork needs to be filed to form a partnership. The arrangement begins as soon as you start a business with another person. As in a sole proprietorship, the partnership's owners pay taxes on their shares of the business income on their personal tax returns and they are each personally liable for the entire amount of any business debts and claims. Sole proprietorships and partnerships make sense in a business where personal liability isn't a big worry. For example, a small service business in which you are unlikely to be sued and for which you won't be borrowing much money for inventory or other costs. 5) Nonprofit Corporations A nonprofit corporation is a corporation formed to carry out a charitable, educational, religious, literary or scientific purpose. A nonprofit can raise much-needed funds by receiving public and private grant money and donations from individuals and companies. The federal 16

Project on SWOT analysis for Amway India

2014

and state governments do not generally tax nonprofit corporations on money they make that is related to their nonprofit purpose, because of the benefits they contribute to society. 6) Cooperatives Some people dream of forming a business of true equals. an organization owned and operated democratically by its members. These grassroots business organizers often refer to their businesses as a "group," "collective" or "co-op" but these are usually informal rather than legal labels. For example, a consumer co-op could be formed to run a food store, a bookstore or any other retail business. Or a workers' co-op could be created to manufacture and sell arts and crafts. 7) Private Corporation: A business that is a legal entity created by the state whose assets and liabilities are separate from its owners. While there are also public corporations. Who stock (and ownership) is traded on a public stock exchange. Most small businesses are (or at least start as) private corporations. A private corporation is owned by a small group of people who are typically involved in managing the business. Forming a corporation requires developing a legal document called the "Articles of Incorporation" and submitting them to the state in which the corporation wishes to reside. Advantages of a corporation include limited liability. An owner (stockholder) can only lose up to the amount s/he invested; unlimited lifespan. a corporation is charted to last forever unless its articles of incorporation state otherwise; great sources of funding; and ease of transfer of ownership. Disadvantages include double taxation. The corporation, as a legal entity, must pay taxes, and then shareholders also pay taxes on any dividends received.

17

Project on SWOT analysis for Amway India

2014

ORGANISATION ABOUT THE COMPANY


Amway (short for American Way) is an American company using multi-level marketing techniques, that sells a variety of products, primarily in the health, beauty, and home care markets. Amway was founded in 1959 by Jay Van Andel and Richard DeVos. Based in Ada, Michigan, the company and family of companies under Alticor reported sales of USD$11.3 billion for the year ended December 31, 2012, the seventh consecutive year of growth for the company. Its product lines include home care products, personal care products, jewelry, electronics, Nutrilite dietary supplements, water purifiers, air purifiers, insurance and cosmetics. Amway conducts business through a number of affiliated companies in more than a hundred countries and territories around the world. Amway was ranked No.114 among the largest global retailers by Deloitte in 2006, and No.25 among the largest private companies in the U.S. by Forbes in 2012. In 1949, DeVos and Van Andel had formed Ja-Ri Corporation (abbreviated from their respective first names) for importing wooden goods from South American countries. After their trip to the Nutrilite seminar, they dropped this business and Ja-Ri became their Nutrilite distributorship. In addition to profits on each product sold, Nutrilite also offered commission on the sales of products by new distributors introduced to the company by existing distributors a system today known as multi-level marketing or network marketing. By 1958, DeVos and Van Andel had built an organization of over 5,000 distributors. However, following concerns about the stability of Nutrilite, in April 1959 they and some of their top distributors formed The American Way Association to represent the distributors and look for additional products to market. Their first product was called Frisk, a concentrated organic cleaner developed by a scientist in Ohio. DeVos and Van Andel bought the rights to manufacture and distribute Frisk, and later changed the name to LOC (Liquid Organic Cleaner). They subsequently formed Amway Sales Corporation to procure and inventory products and to handle the sales and marketing plan, and Amway Services Corporation to handle insurance and other benefits for distributors (Amway being an abbreviation of "American Way"). In 1960 they purchased a 50% share in Atco Manufacturing Company in Detroit, the original manufacturers of LOC, and changed its name to Amway Manufacturing Corporation. In 1964 the Amway Sales Corporation, Amway Services Corporation, and Amway Manufacturing Corporation merged to form a single entity, Amway Corporation Amway bought control of Nutrilite in 1972 and full ownership in 1994. VISION OF AMWAY: Helping people live better lives. Showing where the business wishes to be in the future. Helping others to help themselves 18

Project on SWOT analysis for Amway India

2014

MISSION OF AMWAY: Through the partnering of Distributors, Employees, and the Founding Families and the support of quality products and service, we offer all people the opportunity to achieve their goals through the Amway Sales and Marketing Plan. Broad over riding statement of purpose. To facilitate best business opportunities. To deliver high-quality products to semi-urban and urban homes in diverse areas of insurance, home tech, home care, personal care, cosmetics and wellness.

GOAL OF AMWAY: The development of new business opportunities. To increase the company's role in relations to social responsibility. To provide excellent customer service.

Awards and Recognition: Presented the Millennium Outstanding Service Award 2000, by the Confederation for the Blind (AICB), in recognition for work carried out for the visually challenged. The Indian Red Cross Society, Orissa awarded AOF a memento & certificate for conducting a mega-Blood Donation camp of 816 units on 4th May, 2003. The Surat Raktdaan Kendra felicitated Amway India at their annual function on 5th Oct, 2003, for the largest number of donors at a Blood Donation Camp (BDC) held by any financial and commercial institution and industry. The Mayor of Surat - Snehlata Chouhan - presented a trophy and a certificate of appreciation.

Social responsibilities performed by AMWAY: One by One Campaign for Children Amway Opportunity Foundation (AOF) National Project for the Blind:

Project Sunrise: The objective is to identify one orphanage/institution at each location where Amway has a modestly-large office (52 cities). On-going assistance to be provided in education, healthcare and vocational training under the following heads: Health care Education and vocational training Safe drinking water Childrens Day and AOF Day celebration with Amway staff & Amway

19

Project on SWOT analysis for Amway India

2014

Amway Products: In 2008, Alticor announced that two-thirds of the company's 58 markets reported sales increases, including strong growth in the China, Russia, Ukraine and India markets. Amway's product line grew from LOC, with the laundry detergent SA8 added in 1960, and later the hair care product Satinique (1965) and the cosmetics line Artistry (1968). Today Amway manufactures over 450 products, with manufacturing facilities in China, India and the United States, as well as Nutrilite organic farms in Brazil, Mexico and the United States (California and Washington State). Amway brands include: Artistry, Atmosphere, Body Blends, Body Works, Clear Now, eSpring, Fulton Street, Glister, iCook, Kahve, Legacy of Clean, Nutrilite, Peter Island, Perfect Empowered Drinking Water, Personal Accents, Ribbon, Satinique, Tolsom, XS, and Zsenso Amway offers a range of exclusive, competitive brands that meet proven customer needs around the world. From nutritional supplements to water treatment, cosmetics to cleaning products, these brands are the solid foundation for a successful, independent Retail business. Active Lifestyle Artistry Atmosphere Beautycycle Body Series Boutique Dish Drops Eddie Funkhouser Emma Page eSpring L.O.C. Gensona Glister Hymm iCook LifeStyle Balanced Solutions NAO Cosmetics Moiskin Skin Care Nutrilite Nutriway XS Energy Ocean Essentials Personalized Health Peter Island Protique Positrim Satinique SA8 Time Defiance Tolsom Trim Amway Personal Care Products

Amway's largest selling brand is the Nutrilite range of health supplements (marketed as Nutriway in some countries), and in 2008 Nutrilite sales exceeded US$3billion globally. In 2001, five Nutrilite products were the first dietary supplements to be certified by NSF International. In 2006, 2007, 2008, and 2009 in the nutrient and health food category, Nutrilite won "Platinum" and "Gold" awards in Malaysia, China, Taiwan, Thailand, and Asia overall in the Reader's Digest "Trusted Brands of Asia" survey. In 2008 Nutrilite scientists, in partnership with Alticor subsidiary Interleukin Genetics won the 12th John M. Kinney Award for Nutrition and Metabolism for their research into the interaction between nutrition and genetics. In January 2009, Amway announced a voluntary recall of Nutrilite and XS Energy Bars after learning that they had possibly been manufactured with Salmonella-contaminated ingredients from Peanut Corporation of America. The company indicated that it had not received any reports of illness in connection with the products. Nutrilite is the worlds leading brand of vitamin, mineral, and dietary supplements, grown harvested and processed on its own certified organic farms.

20

Project on SWOT analysis for Amway India

2014

Artistry is one of the worlds top five largest-selling prestige brands of facial skin care and colour cosmetics. Our scientists and formulators have developed the complete line of cosmetics,

All products of Attitude contain Skin Vitalising Complex that synergistically combine to cleanse, Replenish & Moisturise the skin making it soft & supple.

Dynamite's range of male grooming products, formulated internationally is designed to deliver the ultimate grooming experience.

Glister Toothpaste is a revolutionary Multi-Action Toothpaste with Sylodent that offers seven benefits.

Persona Premium 3 in 1 Soap is a complete soap for the entire family promises refreshing confidence.

Satinique Advanced Range with unique Ceramide Infusion System uses nature's own renewing technology to rejuvenate, strengthen and protect your hair

Amway is best known in North America for its original multi-purpose cleaning product LOC, 21

Project on SWOT analysis for Amway India

2014

SA8 laundry detergent, and Dish Drops dishwashing liquid. In the January 2007 issue of Consumer Reports, SA8 with Bioquest was rated the best-performing laundry detergent, scoring 99 out of a possible 100 points. Consumer Reports did, however, criticise SA8's pricing, a situation which was disputed by Amway. Consumer Reports conducted blind testing of detergents in 2010 and ranked versions of Amway's Legacy of Clean detergents 9th and 18th of 20 detergents tested. Consumer Reports program manager Pat Slaven recommended against buying the products because consumers can "go to the grocery store and get something that performs a whole lot better for a whole lot less money." SA8 Gelzyme is India's only 3-in-1 laundry detergent which pretreats, cleans and softens. LOC High Suds is a multipurpose household liquid cleaner. Dish Drops is a concentrated hand dishwashing liquid with a powerful "Triadic Detergency System".

G&H Range enriched with the goodness of Glycerine and Honey, deeply nourishes and hydrates the skin for a healthy glow.

Great Value Product Range offers you Great Quality, Great Performance, Great Price and a Money Back Guarantee! Amways competitors: 1) Direct competitors: AVON MARY KAY SUNRIDER

2) Indirect competitors: Local INDIAN companies.

22

Project on SWOT analysis for Amway India

2014

Changing Political & Economic Atmosphere Products used as samples to persuade relatives and friends to join Amway Focus shifted from selling products to recruiting.

Organizational structure of Amway: Terms used in Amway: IBO/ABO/AIE-Independent Business Owner/Amway Business Owner/Amway Independent Entrepreneur is a business partner of Amway who is authorized to market and distribute products and services available from Amway. Different names are used in different markets. Distributor - an older term for IBO PV Point Value is a value assigned to each product or service sold by Amway. An IBOs monthly performance bonus bracket depends on total PV in a month. BV Business Volume is typically the wholesale cost of the product or service sold by Amway. Performance bonuses are multiplied by the groups total BV. Performance bonus is the monthly bonus paid by Amway to IBO's. The higher the PV, the greater the percentage earned. In North America the Performance bonus ranges from 3% to 25%. In other markets it ranges from 3% to 21%. In India it ranges from 6%-21%. Retail Profit is the markup earned by an IBO when they sell a product to a consumer, either personally or through an Amway website. Recommended retail markup ranges from 10%-35%. Sponsor is an IBO who refers (sponsors) a new IBO to Amway, although IBO's do not get paid to sponsor. Upline is the term used to refer all the IBOs up in the line of sponsorship of an IBO. Downline is the term used to refer all the IBOs down in the line of sponsorship of an IBO. They are collectively also known as group Leg refers to a personally sponsored IBO and all of their downline. Silver Producer is an IBO who has reached the maximum bonus level for one month. Gold Producer is an IBO who has reached the maximum bonus level for three months. Platinum or direct is an IBO who has reached the maximum bonus level for six months. In North America a Platinum is generating a minimum of approximately $30,000 in sales volume per month. Emerald a distributor with at least three legs generating Silver Producer volume for at least 6 months of a year. Diamond a distributor with at least six legs generating Silver Producer volume for at least 6 months of a year. Q-12 is a Platinum or higher IBO that qualifies every month for 12 months of a year. Independent Business Owner (IBO):

23

Project on SWOT analysis for Amway India

2014

An IBO is, literally, an Independent Business Owner: an individual or individuals who own and operate their own business, which is powered by Amway North America, formerly Quixtar. IBOs are the CEOs of their own businesses, and they make many of the same daily business decisions other business executives make. As independent business men and women, IBOs decide how active to be in their business, what products to sell and at what prices, who to sponsor, what hours to keep, and other important decisions. IBOs are independent contractors; they are not employees of Amway North America or Amway Corporation. As independent business owners, IBOs are free to make decisions many others in business are not free to make. Independent Business Owners Association International (IBOAI): The IBOAI (IBOA International or Independent Business Owners Association International) is a trade association representing Independent Business Owners affiliated with Amway North America, formerly Quixtar. It is the primary advocacy organization for IBOs in North America. A trade association is an organization of business people who share common interests or concerns, and who educate and represent their members. The IBOAI (or IBOA International) is one example.

Role of the IBOAI Board: The IBOAI Board is the representative body of the Association acting on behalf of all IBOs. With IBO input, support, and participation, the IBOAI Board listens to ideas, proposes improvements, and advises Amway on the best way to move the business forward. Working closely with Corporate staff, the Board advises Amway on every facet of the business, from products and promotions to operations and business guidelines, as it has for 50 years. Together, they bring positive change to this business, to keep it moving forward and make certain the business is better for every generation. 2010 IBOAI Board and Governance & Oversight Committee: Steve Woods, Chairman Brad Duncan, Vice Chairman Bob Andrews, Past Chairman

Other important directors: 1. 2. 3. 4. 5. Alberto Aguilera Glen Baker Mike Bundy John Crowe Howie Danzik

24

Project on SWOT analysis for Amway India

2014

6. 7. 8. 9. 10. 11. 12. 13. 14. 15.

Jim Dornan Jody Dutt Kanti Gala Bert Gulick Leif Johnson Shivaram Kumar Pedro Lizardi Doug Weir Doyle Yager Dan Yuen

IBOs are never alone. They have a sponsor, a line of sponsorship, and the IBOAI their primary advocacy organization behind them all the way. Organization type and Business Opportunity: The Amway is private co-operative organization. The Amway Sales and Marketing Plan put you in control, allowing you the flexibility to work where and when you want, giving you time for family and friends as well as the opportunity to earn a good income. It adapts easily to your needs and ambitions, and grows with them, offering you all the personal support and assistance you require to become the Business Owner you want to be. With Amway you are Connected to the global leader in multilevel marketing, with over 40 years of experience, Supported by great products and people who will help you succeed, and finally In Control of your life. Sales and Marketing Plan: The Amway Sales and Marketing Plan is a low risk, low start-up cost business opportunity that is open to everyone. It allows you to build your business through retailing products and sponsoring other people who, in turn, can retail products and offer the business opportunity to others. By passing your sales and marketing knowledge to your developing team, you not only build your own business network but also enable others to build one of their own. Marketing strategy: A strategy is a plan of action designed to achieve the goals of the organisation. In creating a marketing strategy for the Super Concentrated Cleaning System, Amway needed to set out the key objectives it wanted to achieve. The following objectives for the brand were set: To increase distribute or profitability and productivity by providing a new and exciting business opportunity 25

Project on SWOT analysis for Amway India

2014

To optimize consumer convenience and value through enhanced product differentiation with this exclusive and revolutionary cleaning system To provide innovative and unique products to enhance the image of Amway Home Care.

A New Strategy of Amway: Agreement with the government and company resumed operations Goods will be sold in retail outlets and through sales representatives Income of sales distributors will be based on direct selling done by them Same Distribution centers served as retail outlets for the company Localization of employees Localization of production and Raw Material Localization of research and development Transparency and Credibility of companys management

Functional pattern of Amway: Following are the main departments of Amway: 1. Finance and accounts. 2. Marketing and Sales. 3. Human resource and administration. Amway Global provides you with support like: 1. Customer care: If you have a question about anything - like registration, renewal, Business, or product information - our Customer Care Associates can help you. 2. Business management: You can manage your business, check customer Volume, order products, and renew your business, all at Amway Global.com. 3. Order management: You sell the products, and we'll do the rest, like process the order, manages your customer accounts, and handles the shipping details. 4. Training: Online, video, and instructor-led training are some of the ways we can share with you the knowledge to grow a successful independent business. 5. Marketing: We support your sales efforts with DVDs, online sites, Magazines, brochures, and free websites you can personalize. And we help Build awareness of

26

Project on SWOT analysis for Amway India

2014

your products and brands with national advertising, promotions, and event sponsorship. Amway believe that quality improvement happens when people come together. This core belief is what all AOF initiatives are based upon and it holds true time and again. With a passionate and vigorous workforce ready to contribute their bit to the well-being of society, volunteering becomes a way of life in Amway. The 550,000 Amway distributors and 450 full-time employees are all considered AOF volunteers. At 56 Amway offices across India, AOF has formed a team of 6 or more distributors and employees to form a Local Implementation Committee (LIC). LIC takes ownership of being the face of Amways CSR at the location. They identify potential partners, form a project, and implement this with other volunteers. The LIC also plays a lead role in raising funds they wish to utilize. The beauty of this system is that the LIC raises the funds, and then decides how best to utilize this in their town or city. Strategic analysis to overcome problems: Today it is a global business that, along with its parent and sister companies, directly employs 10,000 people worldwide. The business also operates strategically at a Global, European and National level. Amway (UK) began operations in 1973 and has its own distribution and Product Selection Centers. Amway has helped millions of people around the world to start their own independent business, through which they engage in person-to-person marketing. This type of direct selling involves matching a consumer's needs with the goods and services on offer. The better the match, the more lasting the relationship between the seller and the buyer. Ownership of Amway: IBOs and Customers:

Amway services the needs of both Independent Business Owners and customers. IBOs build businesses that allow them to earn income based on sales made resulting from their efforts. To launch an Amway-powered business, individuals must register with an existing IBO. Customers pay no fee to shop from a large selection of products and learn from expert advice on health, beauty, home care, and other topics. Products are shipped to their homes and covered by Amway's Customer Satisfaction Guarantee. Customers must register with the identification number of their servicing IBO. If a new registrant Does not have a servicing IBO, Amway will assign them one.. Personal Referrals:

Unlike most other companies, Amway's sales are not the result of advertising. The biggest chunk of Amway's marketing budget goes directly to rewarding IBOs for sales volume resulting from their efforts. Those efforts include registration of new Ibos, Members, and Clients, resulting in product sales. Amway's tiered compensation plan rewards the movement of product through an IBO's sales organization and their ability to train others to create their 27

Project on SWOT analysis for Amway India

2014

own successful organizations. When people visit Amway's site, it is the result of a personal referral by an IBO -not as a result of some advertisement they saw on TV. Personal referrals have proven to be much more effective. Only 8% of respondents in the Edelman 2005Annual Trust Barometer study indicated that information obtained in advertising was credible, while 42% trusted information obtained from family, friends, and colleagues. Buzz Marketing:

Alticor pioneered buzz marketing through its person-to-person referral model. Some companies spend millions on strategies intended to get people to spread the word about their products. Through its Independent Business Ownership Plan, Am-way does the same by rewarding IBOs for spreading the word about the business opportunity and the exclusive products available through Amway. This is a much targeted market spend, since IBOs are rewarded only when their efforts actually result in product sales. Business Systems:

IBOs employ many different approaches to build their businesses, typically involving training systems, motivational meetings and tools, and time-tested tactics to approach people and interest them in the business opportunity and products. When a person registers with Amway, it typically is the result of having been approached by an IBO already involved in one of several large organizations that provide training and support to IBOs. Often, a new IBO also will choose to attend optional and voluntary training sessions or purchase professional development materials provided by that organization - all covered by a money-back guarantee. Independence:

The beauty of Amway's business model is that there can be as many ways of pursuing the business as there are IBOs. If you're into health, you can focus on Nutrilit supplements and XS Energy Drinks. International expansion Amway expanded overseas to Australia in 1971 Europe in 1973 Parts of Asia in 1974 Japan in 1979 Latin America in 1985 China in 1995 Africa in 1997 India and Scandinavia in 1998 Ukraine in 2003 Russia in 2005 28

Project on SWOT analysis for Amway India

2014

Vietnam in 2008

Global markets According to the Amway website, as of 2011 the company operates in over 100 countries and territories, organized into regional markets: the Americas, Europe, greater China, Japan and Korea, and SE Asia/Australia. Business model Amway combines direct selling with a multi-level marketing strategy. "Independent Business Owners" (IBOs) may market products directly to potential customers and may also recruit (sponsor) and train other people to become IBOs. IBOs may earn income both from the retail markup on any products they sell personally, plus a performance bonus based on the sales volume they and their downline (IBOs they have sponsored) have generated. People may also register as IBOs to buy products at discounted prices. Amway provides training to the IBOs on products and business skills through the sale of "business support materials"; for example, DVDs, CDs, books, websites, seminars, and business conventions. Commercial sponsorships Orlando Arena naming rights In December 2006, Alticor secured the naming rights for the 17,000-seat basketball arena in Orlando, Florida home of the Orlando Magic, which are owned by the family of Rich DeVos. The arena, formerly known as the TD Waterhouse Centre became known as the Amway Arena. It was demolished by implosion in March 2012, following the 2010 opening of its successor, Amway Center. San Jose Earthquakes Prior to the 2009 Major League Soccer season, Amway Global signed a three-year deal with the San Jose Earthquakes to become the team's official jersey sponsor. A major part of the partnership is focused on community initiatives in the Bay Area. As a result, Amway Global is now also the official sponsor of the team's Kicks for Kids program that focuses on fitness and healthy lifestyles, as well as bringing underprivileged children to Earthquakes games. The partnership also saw the creation of the Amway Global Street Team, which appears at all Earthquakes home games and at a number of soccer and non-soccer events throughout the Bay Area. The members of the Amway Global Street Team give away Earthquakes-branded merchandise and provide soccer skills demonstrations at each event. Los Angeles Sol

29

Project on SWOT analysis for Amway India

2014

In March 2009, Amway Global signed a multi-year deal to become the official presenting partner of the Los Angeles Sol of Women's Professional Soccer. The deal, however, would last only one year, as the Sol folded after the 2009 season. Detroit Red Wings Prior to the 201112 season, Amway signed a three-year deal to be the presenting sponsor of the National Hockey League's Detroit Red Wings. Canadian Championship Since 2012, Amway has been the lead sponsor of the Canadian Championship, an annual soccer tournament contested by premier Canadian professional teams. The winner is awarded the Voyageurs Cup and Canada's berth in the CONCACAF Champions League. Religion Several sources have commented on the promotion of Christian conservative ideology within the Amway organization. Mother Jones magazine described the Amway distributor force as "heavily influenced by the company's dual themes of Christian morality and free enterprise" and operating "like a private political army. "In The Cult of Free Enterprise, author (and former Amway distributor) Stephen Butterfield wrote [Amway] sells a marketing and motivational system, a cause, a way of life, in a fervid emotional atmosphere of rallies and political religious revivalism. Philadelphia City Paper correspondent Maryam Henein stated that, The language used in motivational tools for Amway frequently echoes or directly quotes the Bible, with the unstated assumption of a shared Christian perspective. Businessweek correspondents Bill Vlasic and Beth Regan characterized the founding families of Amway as "fervently conservative, fervently Christian, and hugely influential in the Republican Party", noting that, "Rich DeVos charged up the troops with a message of Christian beliefs and rock-ribbed conservatism." High-ranking Amway leaders such as Richard DeVos and Dexter Yager were owners and members of the board of Gospel Films, a producer of movies and books geared towards conservative Christians, as well as co-owners (along with Salem Communications) of a rightwing, Christian non-profit entity called Gospel Communications International. Rolling Stone's Bob Moser reported that former Amway CEO and co-founder Richard DeVos is connected with the Dominionist political movement in the United States. Moser states that DeVos was a supporter of the late D. James Kennedy, giving more than $5 million to Kennedy's Coral Ridge Ministries. DeVos was also a founding member and two-time president of the Council for National Policy, a right-wing Christian-focused organization. Sociologist David G. Bromley calls Amway a "quasi-religious corporation" having sectarian characteristics. Bromley and Anson Shupe view Amway as preaching the Gospel of Prosperity. Patralekha Bhattacharya and Krishna Kumar Mehta, of the consulting firm Thinkalytics, LLC, reasoned that although some critics have referred to organizations such as 30

Project on SWOT analysis for Amway India

2014

Amway as "cults" and have speculated that they engage in "mind control", there are other explanations that could account for the behavior of distributors. Namely, continued involvement of distributors despite minimal economic return may result from social satisfaction compensating for diminished economic satisfaction. Chamber of Commerce Amway co-founder, Jay Van Andel (in 1980), and later his son Steve Van Andel (in 2001) were elected by the board of directors of the United States Chamber of Commerce as chairman of the private American lobbying organization. Environmental initiatives: Amway emphasizes the environmental benefits of many of its products, and in June 1989 the United Nations Environmental Program's Regional Office for North America recognized it for its contributions to the cause of the environment. Criticism Pyramid scheme accusations: Amway utilizes a tiered distribution and remuneration model (the Amway Sales and Marketing Plan) that promises to reward participants who grow Amway's market share through a combination of sales and recruitment. This tiered distribution model relies on Independent Business Owners (IBOs) acquiring and training further Independent Business Owners, which is the principal characteristic of a pyramid scheme. Harvard Business School of Leadership, which described Amway as one of the most profitable direct selling companies in the world", noted that Amway founders Van Andel and DeVos: "accomplished their success through the use of an elaborate pyramid-like distribution system in which independent distributors of Amway products received a percentage of the merchandise they sold and also a percentage of the merchandise sold by recruited distributors." The "pyramid-like distribution system" of the Amway business model led to Amway being accused of being a pyramid scheme. However, a 1979 US Federal Trade Commission ruling established that the Amway business model is not an illegal pyramid scheme.

31

Project on SWOT analysis for Amway India

2014

RESEARCH METHODOLOGY
OBJECTIVES Primary Objective: The main objective is to carry out a SWOT analysis of Amways overall marketing strategies in India. SWOT Analysis SWOT Analysis is a useful technique for understanding your Strengths and Weaknesses, and for identifying both the Opportunities open to you and the Threats you face. Used in a business context, a SWOT Analysis helps you carve a sustainable niche in your market. Used in a personal context, it helps you develop your career in a way that takes best advantage of your talents, abilities and opportunities. Business SWOT Analysis What makes SWOT particularly powerful is that, with a little thought, it can help you uncover opportunities that you are well placed to exploit. And by understanding the weaknesses of your business, you can manage and eliminate threats that would otherwise catch you unawares. More than this, by looking at yourself and your competitors using the SWOT framework, you can start to craft a strategy that helps you distinguish yourself from your competitors, so that you can compete successfully in your market. How to Use SWOT Analysis Originated by Albert S Humphrey in the 1960s, SWOT Analysis is as useful now as it was then. You can use it in two ways as a simple icebreaker helping people get together to "kick off" strategy formulation, or in a more sophisticated way as a serious strategy tool. Points to look forward: Strengths: What advantages does your organization have? What do you do better than anyone else? What unique or lowest-cost resources can you draw upon that others can't? What do people in your market see as your strengths? What factors mean that you "get the sale"? What is your organization's Unique Selling Proposition (USP)?

32

Project on SWOT analysis for Amway India

2014

Weaknesses: What could you improve? What should you avoid? What are people in your market likely to see as weaknesses? What factors lose you sales? Again, consider this from an internal and external basis: Do other people seem to perceive weaknesses that you don't see? Are your competitors doing any better than you? Opportunities: What good opportunities can you spot? What interesting trends are you aware of? Useful opportunities can come from such things as: Changes in technology and markets on both a broad and narrow scale. Changes in government policy related to your field. Changes in social patterns, population profiles, lifestyle changes, and so on. Local events. Threats: What obstacles do you face? What are your competitors doing? Are quality standards or specifications for your job, products or services changing? Is changing technology threatening your position? Do you have bad debt or cash-flow problems? Could any of your weaknesses seriously threaten your business? The Methodology adopted was combination of: Primary Data Collection: Direct Interview with people who are associated with the Amway corporation in India. Questionnaire filled by a selected group of people. Secondary Data Collection: The data has also been collected from:

33

Project on SWOT analysis for Amway India

2014

Books Magazines Editorials Internet Nottingham e-Library Amway Business Planner Amway Opportunity Brochure etc.

Survey had been conducted in order to get some valuable data which has been collected through direct, telephone and online interviews with people associated with Amway to get a better insight of Amways operations in India. Survey Sample Design Interview method Sample Unit IBOs and people working in Amway India Corp. Segment Respondents IBOs - 6 Amway India employee - 1

My project involves the study of Amways marketing strategies in India. I had planned my work on the project along the following lines: Data Collection Data Analysis Data Compilation The preparation and presentation of the report. My first step in data collection involved meeting my guide for having a general understanding of what my product should be like and then some specific understanding of the company. After deciding upon the broad frame work of my project, I proceeded on a search for secondary sources of data. After analysing the data I prepared, I proceeded towards the primary sources in which direct, phone and online interview were conducted so as to substantiate my research with more facts. LIMITATIONS OF THE PROJECT The company or the IBOs were hesitant to give time and good information to students, so information required for the primary research which is a basic need of this project was not easily available in required quality and quantity. 34

Project on SWOT analysis for Amway India

2014

I have conducted this type of an elaborate and analytical project for the first time so information might not be utilized adequately. SWOT analysis of Amway: STRENGTH: Based on direct selling operations. Hence it can be A home based business. Every can participate in business. Its easy to get admission in Amway with easy rout like intent. Training to staff. Functions are performed by IBOs. Organize meetings and events time to time. Have good customer service system. Backed by a 100% Customer Product Refund Policy produce faith and reselling attitude in customers. Quality Products that Inspire Confidence. Almost no risk of money as world class quality. Zero start up costs gives strong base to the initiation of business. So everyone can participate in business. The person who wants do something can be make profit with investment of low cost. Products are easy to sell. A business with national and international scope gives more opportunity to the costumers. The possibility of financial security and freedom of time to enjoy life.

WEAKNESS: More power to IBOs gives critical structure to organization. Initially high entry cost leads to somewhat restrictions for business development. Rumors for direct selling operations. Focus shifted from selling products to recruiting.

OPPURTUNITIES: Setup a manufacturing plant in all countries leads to better platform for company. Population of INDIA gives better opportunity to company to receive more profit. As the company name itself gives reliance and faith for the customer and buyer produce greater opportunity for marketing which leads to decrease in total expenditure of company.

THREATS: Too much freedom to IBOs. Change in government policy may affect to the profit and freedom of company. Competitors like AVON, MARY KAY; SUNRIDER creates lot of competition in market which leads to strong marketing competition in market.

35

Project on SWOT analysis for Amway India

2014

FINDINGS
Ive written about Amway based entirely on factual, confirmable sources. If youre researching Amway, especially on the Internet, chances are youve encountered people who claim Amway is some kind of scam business, its illegal, the products are poor quality, or some other information that has made you think twice about being involved. Skim through these finding and decide for yourself whether those kinds of opinions really have a lot of credibility in the face of all of these facts. Have all these major companies and organizations that have recognized Amway for excellence been conned? For fifty years? Or perhaps the opinions you read on the internet have been formed from limited or even no experience from encountering some new or inexperienced Amway rep that never bothered to learn how to act professionally or properly explain the concept, and probably never did much more than dabble for a few months. Or perhaps the experience was with just one of dozens and dozens of different Amway affiliated organizations, each with different ways of doing things that may not all appeal to everyone? Or perhaps their opinions driven by business interests working or being paid by competitors or potential competitors to Amway?

36

Project on SWOT analysis for Amway India

2014

CONCLUSION
Amway is which is one of the largest direct selling company in the world. The main objectives of Amway are to profit there distributers by eliminating the middlemen and provide the products to the distributers in cheaper price. The products of Amway are world class product quality. They are made up of natural a thing thats why they are good for health and environment. Amway covers a wide range of products from beauty care. Health care, to clothing, and daily use products etc. the products are costly as compared to other branded products available in market but if we compare the quantity while using the products require less amount and thus can be used for longer time. Successful business today depends upon a company's ability to quickly adapt to changes in the marketplace. At Amway, they pride it selves on knowledge of the dynamic networking market that is quickly becoming central to modern business. This knowledge, and its willingness to act upon it, has enabled us to become one of the industry's technological leaders. Through they continued pursuit of new product ideas, and by consistently refining our existing product line, they have become one of the top providers of cutting-edge networking products in the global market. If you're looking for high quality products and solid customer support at rock-bottom prices, then choosing Amway really does make sense.

37

Project on SWOT analysis for Amway India

2014

SUGGESTIONS
1. Trial packs should be used because customer must have to introduce the product. Once customer gets idea about product he comes to know advantages of products. 2. The products should be cheap the home delivery system takes at least two days to deliver the products so the delivery should be instant. 3. There must be multiple options for purchasing the products for distributers like online, tale and instant purchasing. 4. In every city, the Amway office should be situated in such a location so that it is in reach of all distributers.

38

Project on SWOT analysis for Amway India

2014

BIBLIOGRAPHY

1) http://www.amway.in/ 2) http://www.amway.in/Articles/Article. 3) http://en.wikipedia.org/wiki/Amway 4) http://www.nutrilite.com/ 5) http://en.wikipedia.org/wiki/Organisation 6) http://en.wikipedia.org/wiki/Business 7) http://en.wikipedia.org/wiki/Administration 8) http://www.business-standard.com 9) http://www.scribd.com 10) http://wiki.answers.com 11) http://dictionary.reference.com 12) http://www.thetruthaboutamway.com/

39

Project on SWOT analysis for Amway India

2014

ANNEXURE
Amway India plans 250 new branches by 2014 Eyes 25% y-o-y growth for the next five years. Amway India Enterprises Pvt Ltd, a major direct selling FMCG Company in the country, is planning to open 250 new branches across the country in the next three years (by the year 2014). The company is also eyeing 25 per cent year-on-year growth for the next five years. Presently, the company has 170 branches across the country. The company offers 150 products in five categories- Personal care, Home care, Nutrition & Wellness, Cosmetics and Great Value products. Nutrition & Wellness segment contributes around 50 per cent of Amway Indias total turnover. "With an aim to strengthen our network base, we are planning to increase the number of touch points (branches) up to 300, by adding 250 new branches across the country in the next two-three years. We are also planning to launch 6 to 8 new products every year," William S. Pinckney, MD & CEO, Amway India, said at a press conference during plant visit of reporters to its Baddi facility in Himachal Pradesh. With an aim to meet the market demand, the company has just tripled the capacity at its contract manufacturing facility in Baddi (Himachal Pradesh) at an investment of Rs. 55 crore. "Amways focus in the past 2-3 years was to improve consumer access and awareness, which paid off handsomely. We have grown from Rs. 799 crore in 2007 to Rs. 2200 cr in 2012 over the past five years, essentially as the quality of the Amway pick-up centres has undergone a sea change, and are more experiential for the consumers. We are eyeing 25 per cent year-onyear growth for the next five years," Pinckney said. Opening another factory in Tamilnadu with an investment of Rs. 500 crs. To be opened by 2015.

40

Project on SWOT analysis for Amway India

2014

SWOT ANALYSIS OF Amway INDIA Parent Company Category Sector Tagline/ Slogan USP STP Segment Target Group Positioning Product Portfolio 1. Amway Nutrilite 3. Amway Dynamite 5. Amway Glister Brands SWOT Analysis Based on direct selling operations. Hence it can be A home based business. Every can participate in business. Its easy to get admission in Amway with easy rout like intent. Training to staff. Functions are performed by IBOs. Organize meetings and events time to time. Have good customer service system. Strength Backed by a 100% Customer Product Refund Policy produce faith 7. Amway SA8 2. Amway Attitude 9. A.P.S.A 4. Amway Artistry 6. Amway Satinique 8. Amway G&H 10. Life, Motor and Health Insurance Personal care, home care, health care, beauty care and insurance Middle income and higher income family Premium products for your every problem Alticor Personal care, home care, health care, beauty care and insurance FMCG and Insurance Helping others to help themselves Pioneer company to start multi level marketing

41

Project on SWOT analysis for Amway India

2014

and reselling attitude in customers. Quality Products that Inspire Confidence. Almost no risk of money as world class quality. Zero start up costs gives strong base to the initiation of business. So everyone can participate in business. The person who wants do something can be make profit with investment of low cost. Products are easy to sell. A business with national and international scope gives more opportunity to the costumers. The possibility of financial security and freedom of time to enjoy life. More power to IBOs gives critical structure to organization. Initially high entry cost leads to somewhat restrictions for business development. Rumors for direct selling operations. Weakness Focus shifted from selling products to recruiting. Setup a manufacturing plant in all countries leads to better platform for company. Population of INDIA gives better opportunity to company to receive more profit. As the company name itself gives reliance and faith for the customer and buyer produce greater opportunity for marketing which leads to decrease in total expenditure of company. Too much freedom to IBOs. Change in government policy may affect to the profit and freedom of company. Competitors like AVON, MARY KAY; SUNRIDER creates lot of competition in market which leads to strong marketing competition in market.

Opportunity

Threats Competition

Competitors

1. VLCC 2. LOREAL DABUR

3. HUL 4. P&G

5. AVON 6.

42

You might also like