Amway India Case analysis Essay

courting B-6 AMWAY INDIAAssignment Presented toDr. G. N. Braithwaite-Sturgeon as per the requirements ofInter field Marketing ADM4328 MUniversity of OttawaJanuary 22nd 2013BUSINESS CONTEXT & initial SITUATIONAmway, a North Ameri toilet Multinational, subsidiary of Alticor Inc. has over the years become one of the leading in the 90 billion dollar rail selling industry through its use of multi-level trade and mankind of networks of independent line of reasoning owners and sales. Founded in 1959 by Jay Van Andel and Richard DeVos, the confederation grew and captivated interest on an transnational level, especially in breaking countries due to its ability to provide entrepreneurship opportunities. Amways range of 450 products and function be distributed worldwide in over 90 countries in a variety of sectors such as wellness, beauty, home care, commercial, insurance, education and nutritional care. Indias growing economy made it one of Amways some(prenominal) targeted countrie s, and, in May 1998, Amway India commenced its business operations.After 36 million dollars of enthronisation in the Indian merchandise, in 2002, Amway India came under some legal issues when Indian officials and the State Government of Andhra Pradesh registered a criminal complaint against Amway India gage and concluded their creation of a chain of distributors was operating against the Act Prize Chits and Money Circulation of 1978. Today, in 2013, Amway has continue its operations inside the outlandish and has even expanded into a 100 million dollar polish cosmetic segment. Business is booming but Amway sights future endeavours deep down India hang in the balance of its legal conclusions.PROBLEMDespite the fact that Amway Corporation has fuck offd tremendousinternational mastery, they are now facing legal concerns in India with respect to their direct sales practices. These legal issues tied to the creation of a chain of distribution that may be in misdemeanor of the law as outlined in and prohibited by the Prize Chits and Money Circulation Schemes (banning) act of 1978, have the potential to negatively regularise their profit margins and bottom line, and in turn, affect the corporations re assignation and international brand. All of the Corporation stakeholders are experiencing misgiving with the companys future in India.SWOT AnalysisInternal AnalysisStrengths Amways catechumen Business Kits are available at a low investment funds cost and are amply refundable within 90 days. This along with the corporations free and extensive training seminars make it companionable and enticing for potential distributors and independent business owners. Amway Corporation has a large distribution network and international coverage. Aggressive product launches with products backed with a 100% customer product Refund Policy pee-pee an image of low financial risk to the consumers.Weaknesses Limited sales approach direct selling cast out consumer perception - impression of pyramid selling scheme Amways is illustrating an ethnocentric commercialiseing strategy it is using the kindred strategy in India as it is in the United States with no adaptation.External AnalysisOpportunity The Corporation has a national and international scope because of its ability to provide entrepreneurship opportunities at the micro-level globally an impressive market opportunity for Amway in the direct sales sector. Indias economy in booming, increasing disposable income. in that location is a large focus on materialistic possessions and beauty in Indianwomen within the demesnes urban and metropolitan areas, making it easy for distributors and IBOs to sell a variety of Amway products.Threats effective policies change from one rural area to another Indias laws could prevent Amway to continue its operations in that crabbed country. Government policies can change at any moment and inhibit the ease of operation in a specific market. gnomish to no con trol over the merchandising and sale of their products Independent business owners have a lot of freedom to make those decisions. Competitors such as other multinationals or corporations (Ex Avon and bloody shame Kay) create threats for market share.OPTIONSOption 1 Planned Exit of the Indian Market & Exploration of opposite Potential Markets. principal(prenominal) Pros If Amway were to implement a planned exit of the Indian market, it could sell off its watercourse existing products enchantment they still were able to execute business within the market and not experience any unexpected losses. Amway Corporation would not have to spend additional time, effort and money in legal litigations and negotiations. The corporations time could be focused on exploring other potential markets within neighbouring countries with fewer legal restrictions on the distribution of their products. If neighbouring countries are tapped, the existing investment in Indias manufacturing plants and m achinery can still be used for fabrication of products for neighbouring countries. primary(prenominal) Cons Neighbouring countries could present little to no interest in adopting business practices from Amway Corporation, or could present little to no profit for the company due to the varying national economic situations. Loss of the 36 million dollar investment (including the 17 million state-of-the-art manufacturing facilities invested in India. Extremely large loss on potential profits in that particular market. Loss of direct and indirect jobs for the Indian citizens. Failure in such a large market could harm the companys image within the minds of the consumers.Option 2 Continue Business and Expansion in IndiaMain Pros The company could continue making profits within the country while fighting the legal battles. Little to no research or change needs to be made to the business model or marketing strategy. The expansion will create more jobs and revenues, benefiting both Indi as citizens and the corporation itself.Main Cons Amway could be forced out of the market if the court supports the governments view that the corporation is in violation of the Prize Chits and Money Circulation Act. Product lose is possible if Amway is forced out of business within the country the IBOs and distributors could keep all products they have on hand, instead of giving it back to the corporation. Further investment in legal fees would be incurred. Loss of time and human capital would be lost to the investment in winning the legal litigations.Option 3 Continue Business and Expansion in India with Ethocentrism lay a new marketing or distribution plan for its business in India that complies with the countrys legal constraints. Main Pros The company could continue to operate within the country, maintain its market share. Amway India would benefit from Indias growing economy and large population. If Amway had global integration with local responsiveness, they could attain a larger market share and increase sales. There would be little to no investment on legal issues.Main Cons Amway would have to invest in environmental scanning. There would be an initial investment in marketing costs to alter and implement a new marketing strategy. The new marketing strategy could in conclusion fail, leading to loss in marketing investments.RECOMMENDATIONAfter careful consideration of the pickaxs listed above, the recommendation that I would give to Amway Corporation would be option 3 to continue business and expansion in India while developing a ethnocentric marketing strategy a marketing strategy specific to that country in compliance with its laws on product distribution. It is important for Amway to continue its operations within India as it is a market that presents many current and future opportunities. This option presents the about benefits to the companys future success within the market and illustrates the lowest risk and least amount of potential los s.IMPLEMENTATIONThe implementation of option 3 is as followsShort term (0-6 months)Within the short term, Amway India would continue its regular proceedings within the country. It would have to do extensive environmental scanning to develop a deepened understanding of Indias economical, social, environmental, technical, and most importantly its legal aspects. I would also recommend that in the first six months, Amway Corporation should develop further market research, to enable them to ensure a positive corporate image within the minds of the distributors and the consumers. fair Term (6-12 months)Following the research phase, Amway should develop the Indian Marketing Strategy a strategy that complies within all of the political and legal requirements for sound business practice.Long Term (12+ months)Lastly, Amway Corporation will put in place its new Marketing strategy forAmway India. It will have to monitor its results and make venial changes along the way.*All information taken f rom textbook and lecture notes