Avon fights recession-one lipstick at a time

Introduction

Thesis Statement

Effective knowledge management is one of the strategies that a firm can utilize to attain competitive advantage. Avon’s organic structure gives it the ability to attain competitive advantage by encouraging organizational learning.

Purpose of Paper

The purpose of the paper is to chiefly discuss strategies that Avon can use to undertake acquisitions and enter into strategic alliances. The paper also looks into organizational learning and some of the strategies that Avon can use to manage knowledge.

Overview of Paper

The paper begins by analyzing methods that Avon can use to enter into alliances and undertake acquisitions. The paper also looks into organizational learning as it relates to Avon and also the main strategies that Avon can use to manage knowledge.

a) Avon can enhance shareholder value by engaging in acquisitions and strategic alliances in global markets. According to Nogeste (2010) global acquisitions are transactions in which companies gain control of management and part or all of the assets of other companies in global markets. Alliances occur when companies enter into strategic partnerships or joint venture partnerships with other companies to leverage the unique capabilities that they possess to achieve competitive advantage. Avon can enter into alliances and make acquisitions to expand product offering, gain from unique capabilities of the new entities or open new markets (Nogeste, 2010).

Avon should enter into acquirer oriented type of acquisitions and strategic partnerships. Acquirer oriented partnerships are characterized by flow of knowledge from the acquirer (Avon) to the targeted company. In this case Avon’s values, practices and other strategies can be disseminated throughout the acquired organizations thereby transforming the acquired organizations to be like Avon. This ensures that the acquired or partnering organizations will undergo high level of changes whereas Avon undergoes little or no changes at all (Nogeste, 2010).This is the best strategy because Avon has built a business model that is able to withstand a recession and return profits. However Avon could use integration oriented strategy especially where the targeted entity possess unique capabilities that Avon deems useful. In this case the partnership will capture the hidden synergies by swapping and leveraging capabilities between both Avon and the entities that it will acquire or form strategic alliances with. In this type of an arrangement Avon will undergo substantial change to accommodate the aspects of the new business entity that it deems useful (Nogeste, 2010). Avon should pay a lot of attention to the key factors that determine success of acquisitions and alliances. These include strength of the alliance relationship and shaping of a culture in which learning is shared and which provides a template for effective collaboration and growth of the alliance or new acquisition company (Nogeste, 2010).

b) According to Curado (2006) an organizations structure falls between two opposing extremes in a continuum of mechanistic and organic organizational structures. Avon’s structure leans more towards organic than mechanistic structure. Organic structure is flatter than mechanistic structure which has a lot of hierarchical chain of command. Hierarchical structures discourage sharing of knowledge, are centralized, highly formalized and have routine tasks. A good example of a mechanistic organizational structure is a soft drink assembly line. In this type of organizational structure employees follow laid down rules and regulations. Instructions are made by the top management and passed down through the hierarchy to the operating below to implement (Curado, 2006).

Avon embraces aspects of an organic organizational structure. Examples of organizations with this kind of structure include research institutions and other institutions whose work involve a lot of mental activity. Organic structures like the one in Avon are characterized by a lot of learning and collaboration. In organic structures complex integrating mechanisms are used and decision making is delegated. Employees are given the leeway to be innovative and come up with ways to undertake the tasks effectively and efficiently (Curado, 2006).Avon has benefited from organizational learning in that new ways of selling have been invented for example distribution of catalogues in churches, representatives attending parties to network etc. These new strategies have been incorporated as a result of organizational learning aspects in Avon.

c) There are many techniques that Avon can use to manage knowledge. The company can build an information technology infrastructure that ensures that is captures all new knowledge on processes, systems and strategies that it can use to create competitive advantage. The information technology infrastructure should be easily accessible to all representatives in all markets throughout the globe. The system should be able to store copious amounts of information and should enable authorized users to retrieve the information at the click of a button (Perçin, 2010).

The structuring of Avon must be able to encourage learning. Avon should remove all barriers that prevent it from being a learning organization which include ensuring that the organizational structure is flat. Avon should encourage its employees to take up courses that train them on aspects that will make them more effective in moving the products in the field. Avon can do this by offering study loans that representatives can access to pay for their studies. The other strategy of managing knowledge that Avon can embrace is putting up libraries that are easily accessible to its employees. Avon can establish on-line libraries that enable employees to share knowledge on how to perform their duties better (Perçin, 2010). Avon can also build a knowledge oriented culture by rewarding those who upholds ideals related to it.

Conclusion – Summary of main points

Avon has managed to craft a business model that has withstood a recession and which can be replicated in its acquisitions and alliances. Avon should mainly enter into acquirer oriented acquisitions and alliances to ensure it passes its business model to the new global entities. Avon should also enhance its organic structure to ensure it achieves its organizational learning goals. Avon should manage knowledge expeditiously to achieve competitive advantage.

Lessons Learned and Recommendations

Organizations should encourage organizational learning to achieve competitive advantage. Knowledge management is one of the key aspects that enable a company to attain competitive advantage. An organization should assess its business model to determine whether it should use acquirer oriented or integration oriented strategies in any acquisitions or mergers to attain competitive advantage.

References

Curado, C. (2006). Organisational learning and organisational design. The Learning

Organization, 13(1), 25-48. Retrieved from

http://search.proquest.com/docview/215656843?accountid=45049

Nogeste, K. (2010). Understanding mergers and acquisitions (M&As) from a program

management perspective.International Journal of Managing Projects in Business, 3(1),

111-138. doi:http://dx.doi.org/10.1108/17538371011014053

Perçin, S. (2010). Use of analytic network process in selecting knowledge management

strategies. Management Research Review, 33(5), 452-471.

doi:http://dx.doi.org/10.1108/01409171011041893

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