CASE STUDY: AMWAY JAPAN LIMITED
With net sales at 1.3% forecasted growth over last year and net income at a 6.8% forecasted decrease, Amway Japan Limited (AJL) is not on target to reach its goal of ¥300Billion in sales by 2000. AJL must focus on reducing its operational costs and increasing its sales by implementing several strategies in the areas of finance, advertising, marketing, product development, education and communication within the organization as well as overall management of their distributor relationships.
To address the critical issues facing AJL, we recommend implementing a series of short-term initiatives to increase sales and recommend developing a long-term strategy that encompasses the following six major initiatives: (1) emphasizing product innovations to keep pace with changing market conditions and the needs of the Japanese consumer(2) emphasizing process innovations to cut operating costs by relocating manufacturing centers and instituting currency hedging programs (3) improving distributor relationships through communication, education and incentives (4) developing an effective retention plan with incentives for distributors to retain their sponsorships and developing a mentoring program (5) focusing on the “quality of products” in marketing and advertising messages and (6) expanding revenue streams by partnering with other on-line distributors and collaborating with other companies to utilize AJL’s strong logistics systems.
To immediately increase sales in 1997, we would advise AJL to announce a new incentive program for their distributors to increase as well as retain their existing sponsorships. To coincide with this program, we would advise AJL to execute new advertising and marketing messages to further enhance this sales incentive plan and begin the “quality product” advertising campaign. For the next 2-3 years, AJL should roll out new products that are more responsive to the needs of Japanese end consumer,...