STRATEGIC MANAGEMENT

CASE STUDY

The role of stakeholders

Introduction : amway

Amway is one of the world’s largest direct sales companies. It

is a global enterprise and is privately owned by the families that
started the company in 1959. Amway manufactures,markets
and distributes more than 450 consumer products. In the UK
Amway distributes a variety of products, including:
• Personal Care - fragrances, body care and hair care products
• Skin Care and Colour Cosmetics
• Durables - cookware and water treatment systems
• Nutrition and Wellness - food supplements, food and drinks
• Catalogue Items - third party electrical goods
• Home Care - laundry, cleaning and car care products.
Amway employs 14,000 people worldwide in its offices, manufacturing centres,
warehouses,call centres or stores it also works with around three million
Amway Business Owners (ABOs) in more than 80 countries. “These ABOs are
the link between Amway and its products
and the consumer”. They also link Amway with communities across the globe.
For more than
45 years, Amway Corporation has enabled people to have a business of their
own.
Amway has built up a strong regional structure. It recognises that to be a good
corporate citizen, it needs to support causes that matter to the communities
in which it operates.
Amway’s global vision is to help people live better lives. At the heart of this
commitment is the One by One Campaign for Children that helps disabled
children from around the world.
Amway works with many different groups of people to carry out its business.
This case study explores the relationship between Amway and its stakeholders
 As a private company, the families who own Amway are its sole
shareholders.
 It is important that Amway communicates regularly with its stakeholders.

They can affect or be affected by the business.

 Away uses different ways to communicate with its various groups of

stakeholders. The method chosen depends on the message and the

person receiving the message:
• websites, emails and voice mail updates promote products and services
to ABOs and customers and keep them up-to-date
• industry and trade memberships enable Amway to share and receive
industry information
• publications target key sales messages, for example, its monthly
newsletter for ABOs,
Amway Focus events and exhibitions help Amway to communicate to
ABOs, consumers and guests about running an Amway business and the
products it can provide.
 How stakeholders affect Amway
 Amway is a direct selling company, selling products directly to consumers without going
 through traditional retail outlets or ‘high street’. A supply chain links the finished

products
 to end consumers. Amway has its own distinct supply chain, placing a strong emphasis

on its
 ABOs.
 They are able to focus on individual customers and their needs. Amway’s way of

working depends on building lasting connections with the end consumer.

 Feedback provided by consumers and ABOs helps to shape future changes in products

and the service provided.

 ABOs operate independently as small businesses.
 ABOs determine for themselves how they will conduct business. This is a ‘self

regulatory’ environment.
 Consumers affect how Amway develops and promotes products. They do this by

indicating their preferences and requirements through feedback. Amway can then make
more of particular products or change the format of others.
 With many different types of stakeholders, it is possible that different groups will have

different key objectives .

How Amway affects its stakeholders
 Amway established some clear objectives. These were to:
 • build loyalty and pride among ABOs and employees

 • enhance Amway’s reputation as a caring organisation

 • make a real difference to human lives.

This helps to maintain Amway’s reputation with all its stakeholders.

 Amway regularly seeks to develop new products in line with market research aimed at
 finding out what customers want.

 Amway produced its Global Cause Program in 2002 as the result of extensive research..’ The
Global Cause
 Program:

 • helps Amway to bring its vision to life

 • declares what the organisation stands for

 • builds trust and respect in Amway brands

 • establishes corporate social responsibility as a high priority.

In developing its global cause strategy, Amway also listened to what its ABOs cared about.
Many favoured a cause to help children. This led to Amway’s partnership with UNICEF.
UNICEF benefits from the fundraising Amway and its ABOs contribute.
Questions

 1. what methods of communication does

Amway use with each?
 2. Explain how the ABOs operate their

business?
 3. Describe Amway’s strategy and its impact

on its stakeholders?