Amway Case Study

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Amway Case Study

Company Name

Amway

Type of Industry

Multi-level marketing

Headquarters

Ada Township, Michigan, United States

Sales/Revenue

‎$8.8 billion (2018)

Area Served

Worldwide

Number of Stores

NA

Competition

NakedPoppy, Walker & Company Brands, Dollar Shave Club, Purplle.com, Avon Products, Oriflame

USP

Diversified product range

Target Group

People who are health- and beauty-conscious, and who have the ability to spend on products that are priced relatively higher.

Products

Nutrition, Beauty, Personal Care, Disinfectants etc.

Website

www.amway.com

Amway Introduction

The American multi-level marketing giant, Amway, has proved before the world that implementation of new marketing strategies in an innovative way can help a company reach new unexpected heights and unimaginable competitive advantages. Having a diversified production lists Amway has been able to secure a sales of $8.8 billion in 2018. A SWOT and PESTLE analysis of the Company is essential to strengthen the Amway case study and to ascertain how Amway is operating within a given business environment adapting to surpassing numerous different business challenges. It is in order to assess the effectiveness of the marketing strategies of Amway that the Amway case study has become necessary quite explicitly.

Amway Swot Analysis

The Amway case study should have its inception with a Strength, Weakness, Opportunities and Threats (SWOT) analysis of Amway. This beginning is needed to make certain a logical flow in the Amway case study.

Strengths

One of the primary strengths of Amway, as revealed by the Amway case study, is the Company’s global presence. The Company’s business is presently spread in over eighty countries and it boasts its success in assigning more than three million business owners/agents. It is this expansive business reach that has provided Amway with a competitive advantage. Blooming market reputation is yet another strength of Amway. By the dint of receiving myriads of accolades, Amway has been able to sustain a strong foothold in its domestic and international markets.  Moreover, having a wide product range has added to the strengths of Amway in a thorough manner. Furthermore, the Amway case study reveals that, having wider range of products has allowed Amway to target a wider range of customer segments, and this has also acted as a strength of the Company in terms of ensuring steady revenue earning.

Weakness

Despite having multiple strengths, the primary weakness of Amway is the limited availability of its products owing to having limited supply channels. It should be noted that as Amway’s products are only to be purchased through designated agents, it is quite difficult for some segments of customers to purchase the products in spite of having the willingness to purchase the same. Such barrier to purchase acts as an agent that has alleviated Amway’s market share in a thorough manner. Moreover, as the Amway case study reveals, the trend of falling sales has also contributed to Amway’s weakness. Besides, as Amway’s products are relatively costly than other substitutes available in the market, it often becomes difficult for Amway’s agents to overcome the sales limitations.

Opportunities

The presence of an extensive market for the range of products that Amway deal with provides the Company with the opportunity to spread its business even further on a global basis. Moreover, as the Amway case study reveals, the Company has the opportunity to convert to its advantage the usability and effectiveness of social networking platforms as marketing channels. In this regard it should be noted that Amway has huge opportunity to promote its word-of-mouth marketing to new heights by employing social media as a channel partner. Also, should be noted that Amway has the opportunity to spread its business internationally by establishing collaborations and tie-ups with different salon brands and health and fitness brands.

Threats

The very nature of Amway’s business, i.e. multi-level marketing is a threat to the Company (Liu, 2018). The volatility of consumer preferences and the limited channel of product selling should also be considered threats to Amway’s business. Moreover, low cost of product switching also acts as a threat to Amway’s global business.

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Amway PESTLE Analysis

To ensure an effective completion of the Amway case study, it has become an imperative to conduct a thorough analysis of the political, economic, social, technological, and legal environments in which Amway operates. Evaluation of the aforesaid factors against the backdrop of some precise environmental factors will provide a deeper insight into Amway’s global business position as a key player in the global multi-level marketing industry.

Political Environment

Political environment, in which a business operates, plays a crucial role in determining the fate of a business. Political factors like stability of the government, government regulations etc have a thorough impact on the running of a business. In terms of political environment, it should be noted, as revealed by the Amway case study, that most of the governments of the countries in which Amway operate have provided allowance to the Company’s multi-level marketing strategy. Moreover, those governments have also recognized many of the products of Amway to be pharmaceutically relevant. Also, the stability of the governments in the concerned countries has also added to Amway’s business advantages in a thorough manner.

Economic Environment

A good balance in the economic environment in terms of the presence of suppliers and demand-generators should be considered a boon for any business. In this respect, Amway has been blessed with an economic environment (in many of the countries in which the Company operates) where there is demand for its products and where there are ample suppliers to provide raw materials and ingredients to make the products. Moreover, as the economies, in which Amway operates, have provided scope to the Company for localization of employees; Amway has been able to sustain its success run internally too.

Social/Socio-Cultural Environment

Appeasing the social and socio-cultural needs of individual stakeholders can improve the market reputation and operations of any business, and in this respect, as the Amway case study reveals, Amway is no exception. Amway’s core business strategy has allowed the involvement of community members and such involvement has ensured their financial growth and development. This should be considered as a corporate social responsibility (CSR) activity of Amway, and this has provided Amway with the scope of expanding its business in a more sustainable manner. It should be noted that Amway aims at building healthy communities globally and its product philosophy reflects its commitment to a healthy planet (Amway, 2019).

Technological Environment

The Amway case study reveals that the Company has succeeded in capitalizing on the technological innovations that have made the word-of-mouth marketing strategy even more expansive and far reaching. To prove itself as a technologically innovative company, Amway has established sixty five special laboratories and has employed more than seven hundred scientists to develop its research and development (R&D) facilities (Soulscavenger, 2015). This has again gain the trust of the Company’s stakeholders about the scientific basis of the Company’s products.

Legal Environment

The legal environment has been a favorable one of Amway. This can be argued by citing the fact that in most of the countries where Amway operates, government bodies have termed Amway compliant with certain specific consumer and product-specific laws. By complying with the labeling laws of the United States and other countries of operation, Amway has established itself as a thoroughly legal business entity. Furthermore, the accreditation provided by the International Organization of Standards (ISO) has added to the legality and reputation of Amway in a thorough manner.

Environmental Factors

To ensure a greener and healthier environment to live in, Amway has strived for distributing more products that are eco-friendly and nutritious. This has added to the reputation of the Company of being an environment-friendly business entity. Moreover, Amway has implemented programs to increase its use of renewable energy along with ensuring a decrease in water consumption to save the world from water crisis (Amway, 2019). Such efforts have also established Amway as a eco-friendly business entity.

Conclusion

The Amway case study has revealed that the Company has been rendering efforts to sustain its market reputation through investing in social, legal, and environment needs. Both the SWOT and PESTLE analyses conveyed the fact that Amway is continuing to emerge as a leader within its industry, promoting itself as a customer and community-oriented, environmental-friendly, and innovative business entity.

References

Amway (2019). Corporate Social Responsibility: Improving global communities. Retrieved August 9, 2019, from https://www.amwayglobal.com/amway-improving-communities/

Liu, H. (2018). The Behavioral Economics of Multilevel Marketing. Hastings Business Law Journal, 14(1), 109-138. Retrieved August 9, 2019, from https://repository.uchastings.edu/cgi/viewcontent.cgi?article=1176&context=hastings_business_law_journal

Soulscavenger. (2015). Amway. Retrieved August 9, 2019, from https://www.slideshare.net/soulscavenger/amway-48531614

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