Wharton Today:

slowing sales, Avon is shaking up its executive suite. Andrea Jung, who had headed the direct sales giant since 1999, will remain executive chairman, but the company will name someone to take over her role as CEO.

The longest-tenured woman CEO of a Fortune 500 company, Jung is credited with modernizing the 125-year old brand from its “Ding-Dong, Avon calling!” days in the 1950s by revamping its product line and expanding the company globally. But the company’s stock value has dropped 44% this year, and Avon’s profits have missed analysts’ projections for four of the last five quarters.

“Avon hasn’t been performing well,” Wharton management professor Lawrence Hrebiniak says. “It’s not doing well in emerging markets, such as China and Brazil, although the potential upside in these growing markets is strong.” The company has also drawn the scrutiny of the U.S. Securities and Exchange Commission and is internally investigating possible violations of the Foreign Corrupt Practices Act over charges of bribes to officials in China that led to the firing of four executives.

Avon’s current challenges point to a need to shake up an entrenched culture and operations, Hrebiniak notes. “Andrea Jung has been strong over the years in marketing, but the company needs someone to take the reins and focus on execution and operations. A new CEO — really more of a COO — will provide this operational focus.”

Logo from Avon

Originally posted by Angela Shupe on December 20, 2011 in MLM Site.

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