AVON - Goal Mass organizational structure to cost cutting structure.
The experience of AVON is a good illustration of - Structure follows strategy
What did Ms. Jung from Avon want to change? - AVON want to eliminate cost cutting and they need to
do some organizational restructuring. After restructuring profit went back up.
What is AVON's GOAL? - Match organization structure to cost cutting. Improvement of overall
performance of the company, not one division.
Multi-Business Company - 1 Type of organization structure ->Divisional structure.
1 Business , set up from separate entity compare to other business and CEO report to me. More
management level.
Multi-division structure: Benefits
Enhanced corporate Financial Control - Increase ROI 5% for mature stage
HQ knows industry entering shakeout, increase market share.
Multi-division structure: Benefits
Enhanced strategic control - Mature industry, follows some cost leadership strategy. Growth company
you want to do differentiation.
Multi-division structure: Benefits
Growth - 1- Grow from year to year in Size, by going through mergers and acquisition.
2- Maximize growth rate by organizing the slower B.U into one division the remainder business will grow
faster.
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