introduction to project(amway company)
TRANSCRIPT
INTRODUCTION TO PROJECT
Our objective of the study is to understand the Amway’s operations in
international marketing with respect to PESTLE analysis, SWOT analysis,
Marketing Mix (Product, Price, Place, Promotion, Packaging and People) and also
we have compared its operation domestically and internationally. To understand
the former part, we have visited ‘Amway India’ and gathered appropriate
information with regards to project.
We have analyzed the information of the companies with respect to above
determinants and prepared relevant statement. After all our proceeds we get to
know that this retail company enhanced its business through Direct Marketing and
created both Health & Wealth to its customers.
Executive SummaryAs the leader of the Japan direct selling market and the most successful company in the Amway group, Amway Japan Limited (AJL) has seen above market success in recent years. However, in the first half of 1997, AJL has suffered a net sales decline of 11.6% from the first half of the previous year, and net income was down 27.6%. This decline is attributed to several factors: (1) In 1996, new products accounted for 47% of AJL’s sales and no major “big ticket” items were released in the first half of 1997; (2) The weakening Japanese economy and declining value of the Yen relative to the Dollar has decreased AJL’s sales volume and profit margin; and (3) New laws recently passed by the Japanese government have confused AJL’s distributors and discouraged potential consumers from buying certain product lines. In addition, Amway Japan Limited still suffers from a negative public image with over 70% of their customer base having a neutral or negative opinion of the company.In order to rebuild growth in the second half of 1997 and achieve AJL’s long-term sales goal of ¥300 billion by FY2000, the following strategy must be implemented immediately. First, Amway Japan Limited needs to strengthen the overall Amway brand image in Japan by reverting back to its roots, promoting high quality products with a competitively fair price. In addition, AJL needs to target their advertising campaigns to specific groups by promoting individual products and product lines to build upon their brand equity. Second, AJL needs to undertake a focused and widespread distributor training program which emphasizes distributor
ethics, techniques on building stringer down-line relations, and greater understanding of Japan’s door-to-door sales laws and regulations. Third, as part of the internal marketing strategy, AJL needs to extend target marketing initiatives toward specific demographic distributor groups to add upon their recent success of The Club Artistry program....
Amway is the largest direct selling company and manufacturer in the world
that uses network marketing to sell a variety of products, primarily in the health,
beauty, and home care markets. Amway was founded in 1959 by Jay Van Andel
and Richard DeVos. Based in Ada, Michigan, the company and family of
companies under Alticor reported sales growth of 2.3%, reaching US$ 8.4 billion
for the year ending December 31, 2009. Its product lines include home care
products, personal care products, jewelry, electronics, Nutrilite dietary
supplements, water purifiers, air purifiers, insurance and cosmetics. In 2004,
Health & Beauty products accounted for nearly 60% of worldwide sales. Amway
conducts business through a number of affiliated companies in more than ninety
countries and territories around the world. It is ranked by Forbes as one of the
largest private companies in the United States and by Deloitte as one of the largest
retailers in the world.
Amway is more than an income opportunity or a company or products. It’s
about putting people in control of their lives. It’s about connecting people to others
who respect them, who share their goals and aspirations. It’s about supporting
people in their achievements. Amway is about people connecting people to a better
way of life.
Amway has more than 6000 employees worldwide. In addition, Amway has
more than 3.6 million Independent Business Owners (IBOs) around the world. In
China, Amway products are sold by Amway sales representatives.
Vision of Amway
Helping people live better lives.
Showing where the business wishes to be in the future.
Mission of Amway
Through the partnering of Distributors, Employees, and the Founding
Families and the support of quality products and service, we offer all people
the opportunity to achieve their goals through the Amway Sales and
Marketing Plan. Broad over riding statement of purpose.
To facilitate best business opportunities.
To deliver high-quality products to semi-urban and urban homes in diverse
areas of insurance, home tech, home care, personal care, cosmetics and
wellness.
Goal of Amway
The development of new business opportunities.
To increase the company's role in relations to social responsibility.
To provide excellent customer service.
Community Services
Amway, its Independent Business Owners and employees are involved in
improving the communities in which they do business. Amway are committed to
serve their customers to fulfill their needs by focusing efforts on discovering and
thereby meeting stated and unstated requirements. Amway promote a culture of
openness and mutual trust by interacting objectively and without underlying
personal interests. Amway are committed to honor, encourage and support
individuals and teams who contribute, through their behavior and actions, to the
success of the organization.
Social responsibilities performed by AMWAY
One by One Campaign for Children
Amway Opportunity Foundation (AOF)
National Project for the Blind
THE HISTORY OF AMWAY
What does the word Amway mean? Amway is an abbreviation for
"American Way" and was coined in 1959 by company founders, Jay Van Andel
and Richard DeVos. Short, unique and easy to remember, Amway has been
registered as a corporate name and trademark ever since. In the following decades,
Amway Corporation successfully established itself as a leading multilevel
marketing business, built on strong values and founding principles that continue to
sustain our company today. The business is built on the simple integrity of helping
people lead better lives.
Today, Amway is a multibillion-dollar international business representing
freedom and opportunity to millions of people in more than 88 countries and
territories around the world. Amway offer over 3 million Business Owners the
inspiration to grow those businesses, and to work hard to provide new and better
ways for them to achieve their life goals.
A Solid Foundation
Rich DeVos and Jay Van Andel's friendship actually
began with a business proposition, when Rich struck
a deal with Jay for a ride to school for 25 cents a
week After high school they entered the military, but
they planned to start a business together after separate
tours of duty. A friendship formed and became a
business relationship that has lasted to this day. .
The Early Years
Amway quickly outgrew its original facilities in the basements of Rich DeVos's
and Jay Van Andel's homes. In its first full year of business, Amway's sales were
more than half a million dollars.
The Decade of Growth
As vowed by Jay Van Andel the night of the 1969 disaster, Amway rebuilt the
aerosol plant and went on. The '70s began with sales of more than $100 million at
estimated retail, and kept going strong. After a lengthy investigation, the FTC
verified that Amway is a genuine business opportunity and not a "pyramid."
The Billion-Dollar Decade
The '80s will be remembered for the first Billion Dollar Year at estimated retail in
1980. Building expansion at Amway World Headquarters continued at breakneck
speed as Amway scrambled to keep pace with demand, opening its new cosmetics
plant in Ada, Michigan.
The Next Generation
As carefully planned by Rich and Jay, the second generation Van Andel and
DeVos families took the helm during the ' 90s. The Policy Board was formed and
Steve Van Andel and Dick DeVos succeeded their fathers as Chairman and
President. Distributors witnessed a similar trend, with the second generation of
many distributor families taking on important leadership roles.
New Horizons
In 2000, Amway prepared for a new century and a
new exciting era. Almost 50 years after Amway
began, the DeVos and Van Andel families created a
new structure to meet the challenges of this new
century. A parent company, Alticor, was established
with subsidiaries Amway, Quixtar and Access
Business Group—the latter to consolidate
manufacturing and distribution for the enterprise.
At the helm of Alticor are Steve Van Andel (Chairman) and Doug DeVos
(President), jointly holding the Office of the Chief Executive. Today each area of
the business, including Amway, has the freedom to build on its strengths. Amway
continues to be a leading company in the direct selling industry. Its fundamental
principles—freedom, family, hope and reward—hold as true today as they did in
the very beginning.
Amway continued to expand, reaching past the borders of the US to offer
the same opportunities in other countries:
- Australia - 1971
- Europe and parts of Asia - 1974
- Japan - 1979
- Latin America - 1985
- China - 1995
- Africa - 1997
- India - 1998
- Russia - 2005
- Vietnam -- 2008
Awards
As a corporate leader in promoting environmental awareness and education,
Amway received the prestigious United Nations Environment Programme
Achievement Award in 1989.
Corporate Citizenship Award - On November 08, 2005, the United States
Chamber of Commerce awarded Alticor with the Corporate Citizenship
Award in the category of International Community Service for the One by
One Campaign for Children
AMWAY INDIA
Amway promotes individual entrepreneurship through its innovative direct
selling approach of world class consumer products. Amway India is the country’s
leading direct selling FMCG-company which manufactures and sells world-class
consumer products. Its business opportunity and all its products are covered
by 100% Money Back Guarantee. Amway sources all its products from within
India, thereby providing stimulus to the local manufacturing industry.
Amway India is a wholly owned subsidiary of US $ 7.2 billion Amway
Corporation, Ada, Michigan, USA. Established in 1995, Amway India
commenced its commercial operations in May 1998 and has emerged as the largest
Direct Selling FMCG Company. The Company is headquartered at the National
Capital Region of India - New Delhi. Amway has invested in excess of US $ 35
million (Rs. 151 crore) in India of this; US $ 6 million (Rs. 26 crore) is in the form
of direct foreign investment. Amway India has 400 full time employees and has
generated indirect employment for 1,650 persons at all the contract manufacturer
locations.
The Company has provided income generating opportunity to over 4,50,000
active independent Amway Business Owners. Amway India provides free and
unlimited training to all its distributors to help them grow their business. Amway
India conducted over 29,000 training sessions during in the past 12-months with
an attendance of over 1.5 million Amway Business Owners and prospects. Amway
India recorded a sales turnover of over Rs. 800 crore during January’07 –
December’07. Amway India is a member of the Indian Direct Selling Association
(IDSA). The IDSA is an industry regulatory body, with several reputed
international and Indian Direct Selling companies as members. Amway India is
also a member of the Confederation of Indian Industries (CII) and Federation of
Indian Chambers of Commerce (FICCI).
In ten years of commercial operation, Amway India has established a
nation-wide presence in over 125 offices and 55 city warehouses and four regional
mother warehouses. The distribution and home delivery network set up with the
support of independent logistics partners is spread across over 3,000 locations.
Amway Opportunity Foundation (AOF)
Amway Opportunity Foundation (AOF) a registered non-profit organization which
looks after Amway India’s Corporate Social Responsibility (CSR). Amway
distributors are also volunteers of AOF and they have enthusiastically participated
in all AOF activities. Globally, Amway’s CSR campaign is known as the One by
One Campaign for Children.
Promoting Free Enterprise and Self-Employment
Amway has conducted several seminars on ‘Entrepreneurial Development and
Direct Selling’ in concert with the Confederation of Indian Industries (CII) and the
All India Management Association (AIMA) on the benefits of organized direct
selling.
Member - IDSA (Indian Direct Selling Association)
Amway India Enterprises Pvt. Ltd. is a member of the India Direct Selling
Association. The Indian Direct Selling Association is an association of companies
engaged in the business of direct selling in India. Its members are of high national
and international repute having set standards in delivering quality goods and in
following ethical business practices.
TERMS USED IN AMWAY
IBO/ABO/AIE-Independent Business Owner/Amway Business
Owner/Amway Independent Entrepreneur is a business partner of Amway who
is authorized to market and distribute products and services available from
Amway. Different names are used in different markets.
Distributor - an older term for IBO.
PV — Point Value is a value assigned to each product or service sold by Amway.
An IBOs monthly performance bonus bracket depends on total PV in a month.
BV — Business Volume is typically the wholesale cost of the product or service
sold by Amway. Performance bonuses are multiplied by the group’s total BV.
Performance bonus is the monthly bonus paid by Amway to IBO's. The higher
the PV, the greater the percentage earned. In North America the Performance
bonus ranges from 3% to 25%. In other markets it ranges from 3% to 21%. In
India it ranges from 6%-21%.
Retail Profit is the markup earned by an IBO when they sell a product to a
consumer, either personally or through an Amway website. Recommended retail
markup ranges from 20%-35%.
Sponsor is an IBO who refers (sponsors) a new IBO to Amway, although IBO's
do not get paid to sponsor.
Upline is the term used to refer all the IBOs up in the line of sponsorship of an
IBO.
Downline is the term used to refer all the IBOs down in the line of sponsorship of
an IBO. They are collectively also known as group.
Leg refers to a personally sponsored IBO and all of their downline.
Silver Producer is an IBO who has reached the maximum bonus level for one
month.
Gold Producer is an IBO who has reached the maximum bonus level for three
months.
Platinum or direct is an IBO who has reached the maximum bonus level for six
months. In North America Platinum is generating a minimum of approximately
$30,000 in sales volume per month.
Emerald a distributor with at least three legs generating Silver Producer volume
for at least 6 months of a year.
Diamond a distributor with at least six legs generating Silver Producer volume for
at least 6 months of a year.
Q-12 is a Platinum or higher IBO that qualifies every month for 12 months of a
year.
Independent Business Owner (IBO)
An IBO is, literally, an Independent Business Owner: an individual or
individuals who own and operate their own business, which is powered by Amway
North America, formerly Quixtar. IBOs are the CEOs of their own businesses,
and they make many of the same daily business decisions other business
executives make. As independent business men and women, IBOs decide how
active to be in their business, what products to sell and at what prices, who to
sponsor, what hours to keep, and other important decisions. IBOs are independent
contractors; they are not employees of Amway North America or Amway
Corporation. As independent business owners, IBOs are free to make decisions
many others in business are not free to make.
Independent Business Owners Association International (IBOAI)
The IBOAI (IBOA International or Independent Business Owners
Association International) is a trade association representing Independent Business
Owners affiliated with Amway North America, formerly Quixtar. It is the primary
advocacy organization for IBOs in North America. A trade association is an
organization of business people who share common interests or concerns, and who
educate and represent their members. The IBOAI (or IBOA International) is one
example.
Role of the IBOAI Board
The IBOAI Board is the representative body of the Association acting on
behalf of all IBOs. With IBO input, support, and participation, the IBOAI Board
listens to ideas, proposes improvements, and advises Amway on the best way to
move the business forward. Working closely with corporate staff, the Board
advises Amway on every facet of the business, from products and promotions to
operations and business guidelines, as it has for 50 years. Together, they bring
positive change to this business, to keep it moving forward and make certain the
business is better for every generation.
PESTLE ANALYSIS
Political
Political factors are how and to what degree a government intervenes in the
economy. Specifically, political factors include areas such as tax policy, labour
law, environmental law, trade restrictions, tariffs, and political stability.
Furthermore, governments have great influence on the health, education, and
infrastructure of a nation.
With the flow of Liberalization in India many foreign companies
have invested in India.
Production base in India help Amway for Government allowances.
Supportive for India’s entry into WTO.
Economical
Economical factors include economic growth, interest rates, exchange rates and
the inflation rate. These factors have major impacts on how businesses operate and
make decisions.
Localization of production and raw materials.
Own production plant in India.
50% of raw materials acquired itself from India.
Localization of employees
More than 2000 employees were Indians.
Social
Social factors include the cultural aspects and include health consciousness,
population growth rate, age distribution, career attitudes and emphasis on safety.
Trends in social factors affect the demand for a company's products and how that
company operates.
Active involvement of community
Financial and human support in areas of human services education, art, culture,
etc.
Invested $ 4 million for this purpose
Technological
Technological factors include technological aspects such as R&D activity,
automation, technology incentives and the rate of technological change. They can
determine barriers to entry, minimum efficient production level and influence
outsourcing decisions.
Setup R&D department
Invested $ 1.5 million
Developed new and tailored products like whitening make up for Indian
women.
Legal
Legal factors include discrimination law, consumer law, antitrust law, employment
law, and health and safety law. These factors can affect how a company operates,
its costs, and the demand for its products.
Environmental
Environmental factors include ecological and environmental aspects such as
weather, climate, and climate change, which may especially affect industries.
Furthermore, growing awareness of the potential impacts of climate change is
affecting how companies operate and the products they offer.
Amway products are 100% natural products, so they not affect our
Environment.
Amway recycle its waste bottles & containers
PRODUCTS AND SERVICES
Over 450 unique, high-quality products carry the Amway name in the areas
of nutrition, wellness, beauty and home, as well as commercial products and a
variety of services (from which 105 products are offered in India). In addition,
Amway independent business owners in selected markets sell additional brand-
name goods through local merchandise catalogues, plus a variety of services and
educational products. All products are backed by a customer satisfaction
guarantee.
Nutrition and Wellness
Nutrilite® is the world’s leading brand of vitamin, mineral, and dietary
supplements, grown harvested and processed on its own certified organic farms.
Cosmetics
Our skin is the outward appearance of who or what we are , or what we would like
to be. But it is more than a simple cover. It is the largest organ of our body - a
complex and dynamic system that is vital to our health and reflects it as well.
Artistry®
Artistry® is one of the world’s top five largest-selling prestige brands of facial
skin care and colour cosmetics.
Attitude®
All products of Attitude contain Skin Vitalizing Complex that synergistically
combine to cleanse, Replenish & Moisturize the skin making it soft & supple.
Home Care
Amway’s Home Care Brands provide complete cleaning systems that fit with
everyone’s needs. Their versatile, effective product systems offer the features and
benefits consumers want. No matter what your lifestyle, Amway’s Home Care
products make light work of your cleaning chores.
SA8®
SA8 Gelzyme is India's only 3-in-1 laundry detergent which pretreats, cleans and
softens.
LOC®
LOC High Suds is a multipurpose household liquid cleaner.
Dish Drops®
Dish Drops is a concentrated hand dishwashing liquid with a powerful "Triadic
Detergency System".
Personal Care
Amway Personal Care products have built global reputation based on their world-
class research and development. These products are designed to deliver the
ultimate grooming experience and the confidence that lasts long.
Glister®
Glister Toothpaste is a revolutionary Multi-Action Toothpaste with Sylodent that
offers seven benefits.
Persona®
Persona Premium 3 in 1 Soap is a complete soap for the entire family promises
refreshing confidence.
Satinique®
Satinique Advanced Range with unique Ceramide Infusion System uses nature's
own renewing technology to rejuvenate, strengthen and protect your hair.
Dynamite®
Dynamite's range of male grooming products, formulated internationally is
designed to deliver the ultimate grooming experience.
G&H®
G&H Range enriched with the goodness of Glycerine and Honey, deeply
nourishes and hydrates the skin for a healthy glow.
Apart from this Amway also deals in Air purifiers and Water purifiers, Jewellery,
Electronics, & Insurance products.
Manufacturing Strategy
Almost all Amway India products are manufactured in the country through
third party contract manufacturers. With the exception of Cosmetics range
(Artistry*) and some products in Nutrition and Wellness category, all Amway
India products and bottles are manufactured in India.
The products match Amway’s global quality standards. They carry a
tamper-proof seal and a ‘100% Money Back Guarantee'. If not completely
satisfied with the product, the consumer can return it for a refund. Amway
products are environment friendly, and are not tested on animals. Amway
encourages the return of its used product bottles for re-cycling and to prevent their
misuse.
To bring the identified contract manufacturers’ production facilities and
skills to international standard, Amway has invested in excess of US$ 4 million
(approx. Rs. 17 crore). The transfer of this state-of-the-art, world-class technology,
has been free of cost.
SALES AND MARKETING PLAN
The Amway is private co operative organization. The Amway Sales and
Marketing Plan put you in control, allowing you the flexibility to work where and
when you want, giving you time for family and friends as well as the opportunity
to earn a good income. It adapts easily to your needs and ambitions, and grows
with them, offering you all the personal support and assistance you require to
become the Business Owner you want to be. With Amway you are Connected to
the global leader in multilevel marketing, with over 40 years of experience,
Supported by great products and people who will help you succeed, and finally In
Control of your life.
The Amway Sales and Marketing Plan is a low risk, low start-up cost
business opportunity that is open to everyone. It allows you to build your business
through retailing products and sponsoring other people who, in turn, can retail
products and offer the business opportunity to others. By passing your sales and
marketing knowledge to your developing team, you not only build your own
business network but also enable others to build one of their own.
Marketing strategy
A strategy is a plan of action designed to achieve the goals of the
organisation. In creating a marketing strategy for the Super Concentrated Cleaning
System, Amway needed to set out the key objectives it wanted to achieve. The
following objectives for the brand were set:
To increase distribute or profitability and productivity by providing a new
and exciting business opportunity
To optimize consumer convenience and value through enhanced product
differentiation with this exclusive and revolutionary cleaning system
To provide innovative and unique products to enhance the image of Amway Home
Care.
A New Strategy of Amway
Agreement with the government and company
Resumed Operations
Goods will be sold in retail outlets and through
Sales Representatives
Income of sales distributors will be based on direct selling done by them
Same Distribution centers served as retail outlets for the company
Localization of employees
Localization of production and Raw Material
Localization of research and development
Transparency and Credibility of company’s management
SWOT ANALYSIS OF AMWAY
STRENGTH
Based on direct selling operations. Hence it can be A home based business.
Every can participate in business. It’s easy to get admission in Amway with
easy rout like intent.
Training to staff.
Functions are performed by IBOs.
Organize meetings and events time to time.
Have good customer service system.
Backed by a 100% Customer Product Refund Policy produce faith and reselling
attitude in customers.
Quality Products that Inspire Confidence. Almost no risk of money as world class
quality Minimal start up costs gives strong base to the initiation of business. So
everyone can participate in business. The person who wants do something can be
make profit with investment of low cost.
Products are easy to sell.
A business with national and international scope gives more opportunity to the
costumers.
The possibility of financial security and freedom of time to enjoy life.
WEAKNESS
More power to IBOs gives critical structure to organization.
Initially high entry cost leads to somewhat restrictions for business development.
Rumors for direct selling operations.
Focus shifted from selling products to recruiting.
OPPURTUNITIES
Setup a manufacturing plant in all countries leads to better platform for
company.
Population of INDIA gives better opportunity to company to receive more profit.
As the company name itself gives reliance and faith for the customer and buyer
produce greater opportunity for marketing which leads to decrease in total
expenditure of company.
THREATS
Too much freedom to IBOs.
Change in government policy may affect to the profit and freedom of company.
Competitors like AVON, MARY KAY; SUNRIDER creates lot of competition in
market which leads to strong marketing competition in market.
USE OF MLM IN AMWAY
Multi-level marketing (MLM) is a marketing strategy in which the sales
force is compensated not only for sales they personally generate, but also for the
sales of others they recruit, creating a downline of distributors and a hierarchy of
multiple levels of compensation. Other terms for MLM include network
marketing, direct selling, and referral marketing.
Although the products and company are supposed to be marketed directly
to consumers and potential business partners by means of relationship referrals and
word of mouth marketing,http://en.wikipedia.org/wiki/Multi-level_marketing - cite_note-12
critics have charged that most MLMs are pyramid schemes.
MLM companies have been a frequent subject of criticism as well as the
target of lawsuits. Criticism has focused on their similarity to illegal pyramid
schemes, price-fixing of products, high initial start-up costs, emphasis on
recruitment of lower-tiered salespeople over actual sales, encouraging if not
requiring salespeople to purchase and use the company's products, potential
exploitation of personal relationships which are used as new sales and recruiting
targets, complex and sometimes exaggerated compensation schemes, and cult-like
techniques which some groups use to enhance their members' enthusiasm and
devotion. Not all MLM companies operate the same way, and MLM groups have
persistently denied that their techniques are anything but legitimate business
practices.
Amway use direct Selling model to sell its products & services. For this
Amway offer membership to their potential customers. These members also act as
agents for Amway & sell their products entirely on their wish. Amway provide
points on each product sell to their IBO which further get converted into monetary
terms. Also, these points have worldwide acceptance.
To start the Amway Business one needs to buy the Amway Business Kit
and be sponsored in the business by an already existing Amway Business Owner.
Despite what you may have heard, starting an Amway business doesn't involve
handing over large amounts of cash. With your efforts and our knowledge, the
Amway opportunity can become everything from a means of earning a little extra
cash to building an international business. Where do you want to go?
Business Kit--Priced at Rs995 only
CONTROVERSY
Pyramid Scheme Accusations
Amway has several times been accused of being a pyramid scheme. A 1979
FTC investigation in the United States (see below), a 1997 Belgian court and a
2008 court judgment in the United Kingdom all dismissed these claims.
FTC Investigation
In a 1979 ruling, the Federal Trade Commission found that Amway does
not qualify as a pyramid scheme since Amway compensation system is based on
retail sales to consumers, not payments for recruiting.
It did, however, order Amway to stop retail price fixing and allocating
customers among distributors and prohibited the company from misrepresenting
the amount of profit, earnings or sales its distributors are likely to achieve with the
business. Amway was ordered to accompany any such statements with the actual
averages per distributor, pointing out that more than half of the distributors do not
make any money, with the average distributor making less than $100 per month.
The order was violated with a 1986 ad campaign, resulting in a $100,000 fine.
Amway Andhra Pradesh (India)
In September 2006, following a public complaint, Andhra Pradesh state
police (CID) initiated raids and seizures against Amway distributors in the state,
and submitted a petition against them, claiming the company violated the Prize
Chits and Money Circulation Schemes (banning) Act. They shut down all offices
of firm Amway, and Arijit Saha writes that "with it the fate of 80,000 distributors
of the company has been indefinitely sealed". The enforcement said that the
business model of the company is illegal. The Reserve Bank of India (RBI) had
notified the police that Amway in India may be violating certain laws regarding a
"money circulation scheme" and the IB Times article writes that "some say ...
Amway is really more about making money from recruiting people to become
distributors, as opposed to selling products."The complaint was initiated following
a dowry dispute between a local man and his wife, an Amway distributor.
Following a petition by Amway, the state High Court issued an injunction against
the CID and stated the Act did not prima facie apply, however after Amway
requested the CID petition be dismissed the High Court declared that if police
allegations were true, Amway's Indian subsidiary would be in violation of the act
and the investigation should continue. On August 14, 2007 the Supreme Court of
India ordered the state police to complete the investigation against Amway in 6
months. In 2008, citing the High Court decision, the Andhra Pradesh state
government enacted a ban on Amway media advertisements. Amway challenged
the ban and in July 2009 the AP High Court refused a petition the ban should be
enforced. As of June, 2009 the original 2006 CID case was still pending at the
Chief Metropolitan Magistrate Court in Hyderabad.
Class Action Settlement
On November 3, 2010, Amway announced that it had agreed to pay $56
million - $34 million in cash and $22 million in products - to settle a class action
that had been filed in Federal District Court in California in 2007. The class
action, which had been brought against Quixtar and several of its top-level
distributors, alleged fraud, racketeering, and that the defendants operated as an
illegal pyramid scheme. While noting that the settlement is not an admission of
wrongdoing or liability, Amway acknowledged that it had made changes to its
business operations as a result of the lawsuit. The settlement is subject to approval
by the court, which is expected in early 2011. The economic value of the
settlement, including the changes Amway made to its business model, totals $100
million.
Canadian Tax Case
In 1983, Amway pleaded guilty to criminal tax evasion and customs fraud
in Canada, resulting in a fine of $25 million CAD, the largest fine ever imposed in
Canada at the time. In 1989 the company settled the outstanding customs duties
for $45 million CAD. In a 1994 interview, Amway co-founder Rich DeVos stated
that this incident had been his greatest "moral or spiritual challenge", first in "soul
searching as to whether they had done anything wrong" and then for pleading
guilty for technical reasons, despite believing they were innocent of the charges.
DeVos stated he believed that the case had been motivated by "political
reasons".http://en.wikipedia.org/wiki/Amway - cite_note-77
RIAA Lawsuit
The Recording Industry Association of America (RIAA), as part of its anti-
piracy efforts, sued Amway and several distributors in 1996, alleging that
copyrighted music was used on "highly profitable" training
videotapes.http://en.wikipedia.org/wiki/Amway - cite_note-78 Amway denied
wrongdoing, blaming the case on a misunderstanding by distributors, and settled
the case out of court for $9 million. In a related lawsuit initiated by the distributors
involved, the Court established that Mahaleel Lee Luster, who had been contracted
to make the videotapes, had violated copyright without the knowledge of three of
the five of those distributors.
Procter & Gamble
Some Amway distributors were involved with an urban legend that the
(old) Procter & Gamble service mark was in fact a Satanic symbol or that the CEO
of P&G is himself a practicing Satanist. (In some variants of the urban legend, it is
also claimed that the CEO of Procter & Gamble donated "satanic tithes" to the
Church of Satan.) Procter & Gamble alleged that several Amway distributors were
behind a resurgence of the urban legend in the 1990s and sued several independent
Amway distributors and the company for defamation and slander. The distributors
had used Amway's Amvox voice messaging service to send the rumor to their
downline distributors in April 1995. After more than a decade of lawsuits in
multiple states, by 2003 all allegations against Amway and Amway distributors
had been dismissed. In October 2005 a Utah appeals court reversed part of the
decision dismissing the case against the four Amway distributors, and remanded it
to the lower court for further proceedings.http://en.wikipedia.org/wiki/Amway -
cite_note-83 On 20 March 2007, Procter & Gamble was awarded $19.25M by a
U.S. District Court jury in Salt Lake City, in the lawsuit against the four former
Amway distributors. On November 24, 2008 the case was officially settled.
Amway UK
In May 2007, the UK Department of Trade and Industry (DTI) accused
Amway and distributor organizations Britt WorldWide and Network TwentyOne
UK of "objectionable practices" and petitioned to wind up the companies. The
case against Amway was dismissed in 2008 on the condition that a full earnings
disclosure is published publicly, no registration or renewal fees are charged and
that the sale of business support materials are prohibited. The case against
Network 21 was dismissed in 2009.
Welcome to Life (Poland)
In 1997, Amway Poland and Network TwentyOne separately sued the
makers of a Polish film Welcome to Life for defamation and copyright violations.
The film was banned while the suit proceeded, the first banning of a film in Poland
since the fall of Communism. In 2001 Network 21 won their case and the
producers were ordered to remove the violating material. In 2003 the producers
were convicted of libel, order to pay a fine to a children's charity and publish a
public apology.
Other Issues
A Dateline NBC report from 2004 picked up the criticism against some
Amway distributor groups. Amway subsequently published a website with a
response to the Dateline report.
Some Amway distributor groups have been accused of using cult-like
tactics to attract new distributors and keep them involved and committed.
Allegations include resemblance to a Big Brother organization with paranoid
attitude to insiders critical of the organization, seminars and rallies resembling
religious meetings and enormous involvement of distributors despite minimal
incomes. An examination of the 1979–1980 tax records in the state of Wisconsin
showed that the Direct Distributors, comprising less than 1% of all distributors,
reported a net loss of $918 on average.
Sociologist David G. Bromley calls Amway a quasi-religious corporation
having sectarian characteristics. Bromley and Shupe view Amway as preaching
the Gospel of Prosperity. Economists Bhattacharya and Mehta propose an
alternative economic explanation to negative claims, concluding that distributors'
continued involvement despite minimal economic return results from social
satisfaction compensating for less economic satisfaction.
CONCLUSION
Amway is one of the largest direct selling company in the world. The main
objectives of Amway are to profit there distributers by eliminating the middlemen
and provide the products to the distributers in cheaper price. The products of
Amway are world class product quality. They are made up of natural a thing that’s
why they are good for health and environment.
Amway covers a wide range of products from beauty care. Health care, to
clothing, and daily use products etc. the products are costly as compared to other
branded products available in market but if we compare the quantity while using
the products require less amount and thus can be used for longer time. Successful
business today depends upon a company's ability to quickly adapt to changes in
the marketplace.
At Amway, they pride it selves on knowledge of the dynamic networking
market that is quickly becoming central to modern business. This knowledge, and
its willingness to act upon it, has enabled us to become one of the industry's
technological leaders. Through they continued pursuit of new product ideas, and
by consistently refining our existing product line, they have become one of the top
providers of cutting-edge networking products in the global market. If you're
looking for high quality products and solid customer support at rock-bottom
prices, then choosing Amway really does make sense.
SUGGESTIONS
Trial packs should be used because customer must have to introduce the
product. Once customer gets idea about product he comes to know
advantages of products.
The products should be cheap the home delivery system takes at least two days to
deliver the products so the delivery should be instant.
There must be multiple options for purchasing the products for distributers like
online, tale and instant purchasing.
In every city, the Amway office should be situated in such a location so that it is in
reach of all distributers.