Published by MBA Skool Team, Last Updated: November 10, 2019
PESTLE Analysis of Avon analyses the brand on its business tactics. Avon PESTLE Analysis examines the various external factors like political, economic, social, technological (PEST) which impacts its business along with legal & environmental factors. The PESTLE Analysis highlights the different extrinsic scenarios which impact the business of the brand.
PESTLE analysis is a framework which is imperative for companies such as Avon, as it helps to understand market dynamics & improve its business continuously. PESTLE analysis is also referred to as PESTEL analysis.
The political factors in the Avon PESTLE Analysis can be explained as follows:
Avon has its presence in more than 60 countries spread across the globe. Avon has its stores in countries like Ukraine, Turkey, and Egypt etc. which are rated very low on the Political Stability Index. Avon needs to ensure that it doesn’t suffer from the political instabilities brewing in these nations. It needs either to develop a different marketing strategy to overcome any sort of political externality or it needs to reduce or end its operations in that country depending upon the severity of the situation.
Image: company website
Below are the economic factors in the PESTLE Analysis of Avon:
The world is witnessing a slowdown in the economic growth.
The Global Economic Growth has slipped from 3.6% (last year) to 2.9% (this year). So, during this period of uncertainty, Avon abstain itself from investing in countries with lower economic growth. Rather, it should leverage the opportunity to expand its operations in countries which are growing faster than the Global Average. Countries which charge high corporate tax can cause the companies to reduce its operations and layoff its workers. So, tax rates should be reduced in order to attract more Foreign Direct Investments. There is a huge potential in developing countries like India, Bangladesh etc. as these countries can provide cheap labor and help Avon reduce its costs.
Following are the social factors impacting Avon PESTLE Analysis:
Being present in more than 60 nations, Avon should develop cross cultural marketing techniques to make connect with their target audience. Different cultures have different preferences and practices. So, it is fair to say that the marketing campaigns should be customized keeping in mind the sentiments of the people of a particular geography. Also, countries with high levels of education and therefore more levels of income will like to spend more in Cosmetics. So, it will be more beneficial for Avon to invest in U.S.A than investing in countries like Zambia, Uganda etc. There is also a need of proper market segmentation i.e. Avon can’t sell its premium range cosmetics in a nation with majority of its people belonging from lower middle class society.
The technological factors in the PESTLE Analysis of Avon are mentioned below:
Having a presence around the globe, it is important for Avon to recognize the need of technology. It should possess the technology required to sustain in countries which observe huge technological disruptions. Avon should also assess its cost of production with respect to its competitors. If the cost of production exceeds the cost of its competitor, it will end up having fewer profit margins. Timely technological advancements are required in order to minimize the costs. E-Commerce is booming. It has become a convenient way for customers to get things.
Avon should also focus on its website; try to make it more user-friendly.
Following are the legal factors in the Avon PESTLE Analysis:
Protection of Intellectual Property Rights plays an important role in deciding which country to invest into. It is a bit riskier for Avon to operate in countries like India as it ranks very lowly on Intellectual Property Index of 45 nations compiled by the U.S. Chamber of Commerce. Also, the company needs to have a detailed analysis of the Business Laws, Employment laws of the country it wants to invest into; whether the laws match with their business model or not.
In the Avon PESTLE Analysis, the environmental elements affecting its business are as below:
Avon, like all different cosmetic brands, has to protect the environment.
People are becoming more sensitive towards the environment and hence there is need for corporate to change their operations in a way that minimizes the environmental damage. People like to associate themselves with the companies which do well for the environment. Also, after the Paris Agreement 2016, governments have laid down strict rules and guidelines failing which the companies like Avon would have to pay hefty fines.
To conclude, the above Avon PESTLE Analysis highlights the various elements which impact its business performance. This understanding helps to evaluate the criticality of external business factors for any brand.
This article has been researched & authored by the Content & Research Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.
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