Amway Corporation. Direct Selling Company

Company Background Direct Selling Company As defined by the World Federation of Direct Selling Associations, direct selling refers to the selling of products and services directly to consumers, usually at their homes or at their work places, or places away from a fixed retail location. Sales are typically made through presentations or demonstrations by direct selling representatives. However, CARS practice is a major controversial Issue among the direct selling Industry. This paper presents a case from a Hong Kong direct selling company, Anyway, to discuss and evaluate about their sustainability performance In different aspects.

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This company starts Its business as a direct selling company and develops from a small company to a worldwide corporation. Background Anyway Corporation Anyway Corporation was founded in Dad, Michigan U. S. A. In 1959. It hires a team of over 500 research and development scientists over the world and it has more than 800 patents and 600 patents pending. Anyway Corporation has grown rapidly to become an international enterprise that has more than 3 million distributors and operates in more than 80 countries worldwide.

It was ranked 30th on the list of the America’s largest private companies in the U. S. By Forbes Magazine in 2010 Anyway Hong Kong Anyway Hong Kong, founded in 1974, is the first company to introduce the concept of direct selling to Hong Kong. Being Mammy’s fifth overseas market, the Hong Kong operation had a modest beginning with a staff of Just four people. Today, Anyway employs around 1 50 people with 100,000 distributors and customers. Causeway Bay Flagship Store and Kowloon Showroom are equipped with advanced technology for providing health and beauty tests.

Beauty consultants and nutritionists are stationed to offer test and expert advice to customers. Self-service shopping corridor and technician display are also available. It offers more than 400 consumer Items, Including health and fitness, cosmetics and skincare, personal care, homestretch and homemade products. Anyway had received several awards based on Research and Development In the past years such as, UNESCO Transpolar Medal and Conservation Achievement Award for Corporate Leadership and etc.

Both Amy;ay and Herbalist are the large direct selling company in Hong Kong and hence they are the close competitors. The following table shows the comparison between Anyway and Herbalist regarding different aspects: I Anyway I I Product Categories ND shakes I Nutrition, energy and fitness I Villain and mineral I Herbalist Ltd. I Protein snacks Skincare and cosmetics care and I home technology Company Mission People’s Lives” countries Supplements I Personal care I “Helping People Live Better Lives” I I Distributors worldwide II . Million in 70 countries I Household I “Changing 13 million in 80 I I Non-profit I Anyway Opportunity organization Foundation (HOFF) created in 1994 I Wellness for Life program I Success Award by the Direct I The Herbalist Family I Foundation lone By One Global Campaign for Children I I Employee wellness I On-site fitness I facilities I Wellness education land resources I Incentive program I Work/life support I resources Selling Association in 2008 Both companies’ mission emphasis on the element of “people” and they spend a lots effort and resources on carrying out their corporate social responsibility.

However, some people doubted that both companies Just see carrying corporate social responsibility as “weapon” to compete with each other. 3. Controversial issues of Anyway Anyway is one of the largest controversial companies in the world which caused many discussions in the society. Anyway itself claims that the company has done a lot to river and protect the community in order to create the positive changes. However, many people criticized that Anyway tried every way to escape their responsibility in the society.

The followings are some controversial issues of Anyway Global: 1. Pyramid scheme accusation l. Violation of Copyright about the profit and the sales revenue they can get and they uses the cult-like tactics to attract new distributors and keep them involved and committed. So, Anyway is a controversial company, to what extent it is a CARS company? 4. Environmental analysis – PEST Before we evaluate to what extent Anyway is a CARS company, let us know more about CARS in Hong Kong, which is greatly affected by the PEST (Political, Economic, Social and Technological) environment.

Political Perspective: The Hong Kong government promotes CARS[I] in three aspects. They are business ethics, corporate involvement in community, and business and environmental protection. Business ethics: To build a fair business environment, the government delegates several departments to promote business ethics. For example, Hong Kong Independent Commission Against Corruption provides anti-corruption guidelines for various business sectors to build a fair business environment in Hong Kong; Hong

Kong Ethics Development Centre provides plenty of practical resources to help foster business ethics; The Consumer Council publishes the Good Corporate Citizen’s Guide which outlines good business practices. Corporate Involvement in Community: The government actively supports corporations to involve in the community through a number of programmers. The Home Affairs Department launches Enhancing Self- Reliance through District Partnership Programmer to provide dollar-to-dollar matching grants to donations made by business corporations to support MONGO promoting social welfare projects.

Moreover, Community Investment and Inclusion Fund organized by Labor and Welfare Bureau aims to develop social capital, in order to help the disadvantaged achieve self-reliance; promote mutual help in the neighborhood; and encourage tripartite partnerships like businesses and welfare bodies to apply. Business and Environmental Protection: The Hong Kong government announced policies to protect the environment. For instance, the government has introduced 100% profits tax deduction for environment-friendly facilities as to encourage the business community to use them.

In addition, in order to operate businesses in Hong Kong, companies are needed to observe the environmental protection ordinances and apply for permits and licenses as required. Economic Perspective Hong Kong is the world’s 1 lath largest trading economy and is a trading as well as sourcing hub for the international trade community. It handles an estimate of over SIS$400 billion of exports through direct and offshore trade each year. Therefore, Hong Kong is a business environment greatly affected by the global trading business[2].

A number of factors have over the years shaped the development of CARS[3], among which globalization, trade liberalizing, stronger expectations of tizzies in developed countries, growing use of international supply chains and supplier codes, are especially relevant for economies heavily reliant on external buyers, in particular reputable Macs and brand-name holders in developed countries, Hong Kong manufacturing companies comply with ASSAYS labor requirement, various consumer protection and environment regulations such as ISO 14000.

Besides, the figure reported from Caring Company Award Scheme, organized by Hong Kong Council of Social Service, showed that there were an increasing number of awarders participating in this scheme. This illustrates the growing interest among Hong Kong manufacturing and trading companies in CARS practices. Social Perspective According to a survey conducted by Community Business in 2007, 38% of consumers in Hong Kong rank environmental and social considerations in their top three purchasing factors. Therefore, we can see that Hong Kong people concern about CARS.

To cope with the trend and expectation of consumers, almost 7 out of 10 companies actively support the community through cash donation (69%), employee volunteering (67%) and contributions in kind (67%) (as shown in graph 1 in Appendix). Graph 2 shows that 67% of companies have community involvement enshrined in their corporate values or principles. Besides, the environment has become a major concern for many companies operating in Hong Kong. Over 66% of companies have policies and programmers on environmental protection as shown in Graph 3.

This is positive for Hong Kong and demonstrates that a significant percentage of companies take their responsibility to the environment seriously. In addition, a recent work-life balance survey commissioned by Community Business showed that more than 61% of people work overtime every week. Hong Kong companies are starting to have policies to care for their employees. Graph 4 shows that 20% of responding companies have a policy on maximum working hours. Technological Perspective Since environment has become a major concern for many Hong Kong companies, they try to contribute to the environment by using environmental technologies.

For example, CLC[4] is utilizing efficient combustion technology and retrofitting emissions control equipment to reduce sulfur dioxide and nitrogen oxide emissions in a significant manner. Moreover, Twangs[5] is now using natural gas and landfill gas or cleaner production in order to reduce the emission of greenhouse gases. In short, Hong Kong PEST environment fosters the development of CARS activities. In view of the changing business environment, Hong Kong companies have started to have policies which care for employees, natural environment, society and consumers. 5.

Management Corporate Social Responsibility (CARS) consists of a course of actions which required a well-established management system to carry them out. In other words, a CARS company should have a good CARS strategic management system. Needed. It also need to be organized by CARS strategic objective and motivated by tragic initiatives. Mammy’s vision is helping people live better live and its mission is through the partnering of Distributors, Employees, and the Founding Families and the support of quality products and service, offer all people the opportunity to achieve their goals through the Anyway Sales and Marketing Plan.

They are also the mission and vision that guide the CARS of Anyway. This mission fit Mammy’s operation as it’s only a middleman which provides opportunities to BIOS. However, this vision is applicable to any actions and too board. There are three CARS strategic objectives for Anyway. First, build loyalty and pride mongo BIOS and employees. Second, enhance Mammy’s reputation as a caring organization. Third, make a real difference to human lives[6]. The first one is the initiatives that motivate employee as they feel good when they think they are doing something beneficial to society.

The second one is the external effect of CARS action which has the most influence on profit of Anyway. The third one is the same as the vision of Anyway. These 3 objectives set by Anyway are very clear, reachable and realistic. Due to the good vision, mission and objective set by Anyway, it has a strong base and foundation when adapting CARS strategy. Here is an example of how Anyway putting its CARS plan to action[7]. A partnership is established between Anyway and EUNICE. The cooperation is maintained by communication and the actions are also to be directed through good communication methods.

There are 5 methods of communications used in this project which ensure the actions of CARS can be carried out effectively and efficiently. They take regular meeting between Anyway, EUNICE and BIOS. These meetings are time consuming but it is the most direct way to communicate. It gives attention to everyone in both organizations the seriousness of this cooperation and make the immunization be less bureaucratic. They also put the cooperation details and activities contents on Anagram which is a printed material issued by Anyway.

This is not only an internal communication but also an external communication to public which will enhance their reputation. They also hold lots of public relations such as the public relations held in Milton Keynes in 2006. The E-mail also hold a main part in communication. To make the communication more effective, there is also a micro- site dedicated to Anyway UK/EUNICE. This case demonstrates how efficient Anyway put its plan into action by communication. However, when we asked Mammy’s representative on speech if there is any plan on CARS in the next coming years, she was avoiding the questions and couldn’t hide there is no plan at all.

We suspect that they don’t have a plan because they do any CARS activates whatever convenient to them. So, the true intention of their CARS activities Anyway regulate internal CARS action by enforcing the Rules of Actions. It set the right and duties of BIOS and the actions which against the rules. However, the enforcement is weak as they treat BIOS as partners not employee. The ultimate penalty is to terminate BIOS’ business. There is no past case and it is not realistic to terminate partner’s business. The enforcement of rules is weak. The CARS projects are usually delegated to regional division.

For example, the Mammy’s China Education Program is solely performed by China division of Anyway. In other word, the top management holds little responsibility to CARS program. All in all, Anyway did a fine Job on managing CARS strategies and putting them into actions. However, the intention of doing CARS is suspicious. 6. Stakeholders analysis 6. 1 Employees The Resource-Based View mentions if a company manages its resources wisely, it will enhance its capabilities, such as service, design etc, and also maintain its competitiveness. Since employees are an important resource to every company, they should be treated nicely.

For Anyway, its corporate social responsibility (I. E. CARS) to employees can be described into five aspects, including wages, working condition, training, use of human resources to CARS and also flexible working patterns. 1 . Wages Generally, fair wages is one of the basic concerns for employees. Moreover, it is also awareness for public recently, such as the Minimum Wage Law in May, so fair wages is an ethical issue. Once employees receive reasonable wages, they will have better performance which will lead to better service or product to customers.

Moreover, reasonable wages helps to build up a positive image to the public. Let’s use the wages of Anyway US as an example. In US, it has minimum wages requirement in different states with range of USED$7/hour to USED$9/hour and the average annual salary in 2009 was USED$39,054. 62. For graph 1, it shows the salaries for each of the post are much higher than the minimum requirement. In addition, Anyway has a cash bonus program which pays them bonus bases on their performance. Therefore, Anyway does not only offer fair wage to employees and even more to ensure everyone is satisfied. . Working Condition Working condition is another important consideration for employees. Generally, they concern about their safety and health in the working environment. Recently, people start focusing on safety and health at work; it can be proved by observing the World Day for Safety and Health at Work on Paprika, 2003 and formation of Hong Kong Occupational Safety and Health Association… For Anyway, it has a well-defined health 4. Vacation and holidays, 5. Company paid life insurance and 6. Wellness program.

The illness program is a very thoughtful program in which it provides wellness education, on-site fitness facilities… To ensure employees’ health. Meanwhile, it organizes various ‘green’ activities to its staff, including green lunch, green walk and green planting. Overall, Anyway offers various health checks, wellness support, regular activities and holidays to its staff. Hence, employees have a work-life balance as well as a healthy and safe working environment. 3. Training In the competitive commercial world, it is necessary for employees to well-equipped themselves.

However, they may face time and financial difficulties in pursuing further education. Nowadays, more and more employers are willing to support their act, especially Anyway. For example, Anyway China spent about RAMBLE million in 2008. On the other hand, it usually spends an average of REMEMBER to each employee in training. Despite of financial support, Anyway also offers e-learning and training program tailored to each employee. It also provides internship program to undergraduates and fresh graduates which helps them to gain working experiences.

Surprisingly, trainings are not only limited to its staff, its independent business owners (BIOS) also receive trainings through seminars. In order to have a good environment for trainings, Anyway has invested to build its training centers in worldwide. Meanwhile, its training programs have good reputation as it won 2011 Learning Leaders Award for the Operational Training and Development Excellence category. As a result, all of its employees will have personal growth during the employment due to its well-developed training programs and seminars. 4.

Use of Human Resources in Corporate Social Responsibility Every company has responsibility to contribute to the society in which some of the owners think being socially responsible may incur a huge cost. However, this concept is wrong and even helps to increase its revenues as well as employees’ enthusiasm bases on the four sources of employee pride in an organization (Scrota 2005). ‘Moral character’ of the company is one of the four sources, so inviting employees to participate its CARS activities has positive impact to employees’ enthusiasm in which Anyway has done the same thing.

Actually, Anyway always invites its employees to Join its CARS activities, including Smiley Children Program, Anyway “Happy Angels”–Children Mental Health Nurturing Project, health and beauty roadways and district community service. Hence, employees have increased their motivation and pride for working in Anyway. Moreover, successful CARS for Anyway can attract potential employees due to ’employer brand’ effect. Hence, Anyway uses its human resources wisely to contribute into its CARS activities.

Moreover, it has positive effect to employees’ loyalty and working performance for employees’ participating in CARS activities. 5. Flexible Working Pattern Nowadays, working in office from am to pm is no longer being the only working 2, it shows each flexible working arrangement increased over 1998 to 2004. Flexible working pattern also happens in Anyway. The major distribution channel for Anyway is direct selling to consumers but Anyway prefers to have partnerships with BIOS rather than employing sales. Therefore, BIOS are not protected by labor law.

Meanwhile, Anyway can bear a lower operating cost and also exclude employer’s responsibility from having partnership with BIOS, such as MAP, paid leave… As if an employer, it is definitely not a good and socially responsible way to employees. Therefore, Anyway is always being criticized by this strategy, so it should think another way to solve their problem. Otherwise, it will lose customers’ trust as well as loyalty. Brief Summary Overall, Anyway has put a lot of effort in being socially responsible to its employees as well as maintaining a good relationship with them.