case-study   Amway Case Study Swot Analysis

Amway is considered to be the pioneer of multilevel marketing and direct sales marketing. The original product offered by Amway was liquid cleansing. It was the first concentrated, bio-degradable and environment-friendly cleansing product. That was the start. Now, Amway ranks 3rd amongst the world’s largest direct sales business with 3 million independent consultants who promote more than 450+ personal care, household, nutrition and cleaning products. It is a global player of personal and skin care (/www.dsa.org/).

Brief history of the company

Amway has rich and adventurous history. Amway was founded by two Dutch friends, Jay Van Andel, born in Grand Rapids, Michigan, in 1924, and Richard M. DeVos, born in the small nearby community of Ada in 1926. They met at Christian High School in Grand Rapids.

After they returned from World War II, they started a flying school. After they got some experience in other business as well, they sailed to Latin America. But the vessel sank in the Caribbean and they had to stay in South America for six months. In 1949, these two friends registered as distributor of vitamins for Nutrilite Company of California. When they experienced modest success in their retail sales, in April 1959 they created American Way Association and later renamed it as Amway Distributors Association with the purpose of protecting individual distributors.

Industry type

Direct selling

Headquarters

Ada, Michigan, United States

Products

Home care products, personal care products, jewelry, electronics, Nutrilite dietary Supplementswater purifiers, air purifiers, insurance and cosmetics.

Key people

Steve Van Andel, Chairman

Doug DeVos, President

Mark Stevens, Chief Financial Officer

Employees

17,000+ (last recorded in 2018)

Website

www.amwayglobal.com

Annual revenue

8.6 Billion USD

Subsidiaries

Ø Nutrilite

Ø Artistry

Ø XS

Ø Legacy of clean

(Source: Wikipedia)

The vision of the company

“Helping people live better lives.”

SWOT analysis of Amway

With SWOT analysis, strengths, weaknesses, opportunities and threats can be reviewed in order to decide further planning for the organization.

Strength

Weakness

Amway’s One-by-One campaign for children engages various countries, employees and distributors to help children in need. The campaign has tasted success in United States, Guatemala and China

 

This multinational American company has bagged several awards like Asia Pacific Frost & Sullivan Water Filtration Company of the Year Award and LEED Gold Certification

 

Amway is considered among the top 30 America’s privately held companies that trades in more than 80 countries with more than 3 million individual business owners

 

 

The only way one could get hold of the Amway products is online facility and through business agents. It is missing on the revenue it could earn from retail sales

 

The cost of the products is high compared to other brands

 

Amway does not promote its products and services by TV advertisement or any brand ambassador.

 

 

 

Opportunity

Threats

Increasing availability of the products in international market

 

Online platform has proved to be an ideal scope for Amway to promote its products internationally

 

There is a bright opportunity for this organization. It could tie up with national and international chains of beauty salons and beauty experts in order to introduce its products to more consumers.

Competition is increasing with days both nationally and internationally

 

There is a possibility that the consumer could switch to competitor’s products as they are cheaper

 

Local products pose threat to this company as they are cheaper in cost and feasible to more consumers.

PEST analysis

Political factors

Economical factors

Due to globalization in business market, Amway have the chance to expand its product line internationally

 

 

This company has re-located its production factories in China in order to export products in the Asian countries

 

Amway supported China’s entry into WTO (World Trade Organization) as the chairman of Amway, Steve Van Andel is the chairman of the US Chambers of Commerce as well.

 

 

Turbulence in the Chinese market could be devastating for Amway, which has relied on China for much of its growth over the last decade. It is now, by far, the largest of the multilevel marketing companies here, with 1.5 million distributors, more than all the others combined, according to the Ministry of Commerce’s records. China is now Amway’s largest market, accounting for $2.6 billion in revenue, or about 30 percent of its worldwide sales. In a statement, an Amway vice president, Scott Balfour, said the company welcomed the crackdown, saying it would distinguish pyramid schemes from legitimate direct selling(/www.nytimes.com/).

 

The success behind Amway’s growth is the localization of the employees, business model, production and raw material

 

This company has invested $1.5 million to localize R&D model in China

 

Amway is the member of World Federation Direct Selling Association in which the consumers have the right to return products and avail refund if they are unsatisfied

 

Amway’s board of directors takes the responsibility to provide an overview of the company to its shareholders and stakeholders

 

 

50 percent of raw material is acquired from the Chinese market. Also, the labor cost in China is cheaper compared to United States, so 2000 Chinese were appointed employees in this company

 

Amway’s economic growth has increased due to its low cost and low risk business opportunity for IBOs (independent business owners) based on selling quality products.

Social factors

Technological factors

Amway contributed in the development of local communities by providing them financial and human support in areas like art, culture, human service, education, sports and environment. This company has invested $4 million for this cause

 

This international organization is aware of increasing health consciousness in consumers, so it creates products out of natural resources that are investigated by thousands of professional scientists in order to provide safety and security to consumers. This step prevents environment from any harmful impact.

 

Artistry products that come under the Amway brand are proved to be harmless for the skin and no artificial color is used in its production.

Amway has set up R&D department in order to conduct researches on how to manage teamwork to achieve its vision. For example, One-by-One Campaign has proved to be a successful one for the company

This company changes its technology based on the system. For instance, shareholders and stakeholders have to meet IBOs, employees and board of directors to get more information about the company

Amway’s website has increasing rate of visits from interested stakeholders and shareholders who want to invest in the company

This company has developed new tailored products like whitening cream as its new innovation.

Conclusion

Amway maintains family values as it grew out of a family business. The IBOs of the company are inspired to contribute in the communities in order to make a difference in other people’s lives. This organization considers the environmental aspects and improves the existing products. The international brand continues to rise on the economic curve despite a number of challenges. They have shown other corporations how to manage the work force and direct positive force. This has brought forth their new brand name, Amway Global. There are equal amount of opportunities and threats for the company in recent global market, but it will successfully grab the opportunities in order to fight the threats.

With these two models, the company can understand what should be the future strategies for the organization in order to continue their success journey. The reviewer can comprehend what are the areas that this company still need to work and what should be the ways to fight the odds in the competition. By evaluating the SWOT and PEST analysis, you get to know crucial facts that are significant in building marketing strategies.

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