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transcript
Global Business Management Audit
Avery DennisonCorporation
Module 1: Indentifying Global Business OpportunitiesCompany Name: Avery Dennison Corporation (Classification: 20201060 ) Company Sector: IndustrialsIndustry Group: Commercial Services & SuppliesIndustry: Commercial Services & SuppliesSub Industry: Office Services & Supplies
Avery Dennison Corporation is a diversified company that produces pressure-sensitive
adhesives and materials for industrial and consumer uses. Avery Dennison's products include
pressure-sensitive labeling materials; graphics imaging media; retail apparel ticketing, branding
systems; RFID inlays and tags; office products; specialty tapes; and a variety of specialized
labels for automotive, industrial and durable goods applications. Since its humble beginning in
1935 from a 100-square-foot loft in Los Angeles, California the company has grown to become a
global enterprise with about 31,300 employees in over 200 facilities in more than 60 countries
and product sales in 89 countries worldwide. Avery operates under a global area division
structure because through regional presence of its divisions the company can better respond to
local variances in demand and product differentiation within each area while still taking
advantages of the economies of scale that a company of the caliber of Avery Dennison has been
able to create.
I have identified Chile as a country in which Avery can invest its resources and secure
expansion in a business environment with minimal risks and optimistic outlook. Chile is a
country with strong projections for industrial growth, well-established governmental institutions
and a promising destination for foreign direct investment (FDI). Chile stands as one of the most
powerful economies in the region and according to a study by the World Economic Forum
(WEF) Chile has the most interconnected web economy in Latin America with outstanding
Macroeconomic conditions that continue to place Chile in the top-ranking nations for growth and
prosperity.
Avery Dennison can bring its expertise in optimizing industrial identification processes to
booming industries in construction, automotive, fleet transportation, retail, education, healthcare,
food processing and many other markets in Chile. The establishment of local manufacturing and
converting plants may also allow Avery to export and serve markets in the neighboring
countries of Ecuador, Bolivia, Peru and Argentina in which demand for specialized labeling,
media and identification systems is also growing.
Module 2: Analyzing International Competitors
The diversified nature of Avery Dennison business includes many competitors to each one of its
three well-defined divisions in the Pressure-sensitive Materials, Retail Information Services, and
Office and Consumer Products areas. I will concentrate in naming those competitors that can
offer diversifies products at the same scale and specialization as Avery does:
Bemis Company, Inc. (NYSE: BMS ): Is a multinational company that manufactures
and sells flexible packaging products and pressure sensitive materials in the United
States, Canada, Mexico, South America, Europe, and Asia. Bemis operates 81 facilities
in 13 countries and employs about 20,400 people worldwide. Bemis posted net sales of
$4.8 billion in 2009.
3M (NYSE: MMM): A diversified technology company serving customers and
communities with innovative products and services. The following business units
compete with product lines from Avery: Consumer and Office, Display and Graphics,
Industrial and Transportation. 3M posted global sales of $ 23 Billion in 2009. It runs
operations in 65 countries with 74,835 employees worldwide and 3M products sold in
nearly 200 countries.
Pitney Bowes (NYSE:PBI): A $5.6 billion company that employs 33,000 worldwide. It
competes with Avery in the mailing and labeling system segment. It operates in over 130
countries.
Among the many competitive advantages that Avery can bring to the Chilean market the
manufacturer should undertake a strategic imperative focused on quality. Avery can do this by
offering its Enterprise Lean Sigma (ELS) approach which empowers Avery’s employees to be
innovative in finding new ways to solve customer problems, meet their needs and create value
through their supply chain. Manufacturers around the world count on Avery’s solutions to
streamline their identification operations in the areas of branding, logistics, packaging, anti-
counterfeiting, data-tags, RFID inventory control management and more. Avery’s promise of
quality encompasses: reducing product sample response times, enhancing customer service and
accelerating the rate of new product introductions. A promise focused on process excellence that
has been transmitted throughout all business units and levels of the organization.
Learn more about Avery’s Enterprise Lean Sigma Here http://www.youtube.com/watch?v=2gyKxK2Mspc&feature=channel_page
Module 3: Assessing the Economic-Geographic environment:
Chile is located in southern South America, bordering the South Pacific Ocean, between
Argentina and Peru. Chile’s total land area is 743,812 sq km. The climate varies by latitude being
temperate; desert in the north; Mediterranean in the central region; cool and damp in the south.
The terrain of the Andean nation is comprised of low coastal mountains to the west; fertile
central valley and the rugged longest continental mountain range, the Andes Mountains, to the
east. Chile enjoys a strategic location relative to sea lanes between Atlantic and Pacific Oceans
(Strait of Magellan, Beagle Channel, Drake Passage). Chile has a developed mining industry
concentrated on copper, gold, silver, coal, iron ore, nitrates, precious metals, molybdenum;
copper exports alone stand for more than one third of government income. Other major industries
that contribute to the Chilean economy include: wood, processed food, seafood and wine.
Volcanic and earthquake activity are natural occurrences in Chile and the incidence of such
activity may cause setbacks in the economy; However, Chilean authorities are prepared to handle
catastrophic situations effectively. They demonstrated so during the return to normal economic
activity within a few weeks of the massive 8.8- magnitude earthquake of February 27th, 2010
After decades of State-led economic policies the Chile Central Bank became autonomous and
during the last twenty years this institution has achieved the regulation and stability of the
Chilean financial sector by reducing monetary subsidies, eliminating price controls, setting non-
inflationary economic policies, selling state-owned enterprises to the private sector and restoring
confidence to attract foreign investment to this nation. The Chilean government has focused on
opening up its economy to the world by reducing tariff and non-tariff barriers, facilitating new
business entry and negotiating trade agreements with numerous nations and organizations around
the globe.
Avery should seek a location of its Chilean operations within the Central region of this nation
because of the high concentration of industrial activity, major cities and universities within this
area. There are well developed nautical, land and airborne transit ways that can serve as the
backbone for effective supply management from suppliers and to customers within the Chilean
border and also to neighboring countries.
Module 4: Assessing the Socio-Cultural environment:
The official spoken, written and business language of Chile is Spanish; although professionals
and business people are expected to have basic English written and conversational skills.
Chileans are very formal when conducting business, they are more punctual than other Latin
America counterparts and prior appointments are necessary in order to conduct business in Chile.
The template climate calls for warm attire and business people are used to wearing suits, neck tie
for the men, and high-heel shows for the women. Business attire are usually sober in color and
shades of blacks, grays, blues, browns are considered appropriate while wearing flashy, bright
colors and fashions is not suitable. Titles are important and should be included in business cards.
Greetings are affectionate and may include shaking of hands, warm hugs and kisses in the check
even from men to men. The percentage of professional women in Chile is higher than in
neighboring countries and today six out of every 10 graduates from Chilean universities are
women. Catholicism is an influencing element of the Chilean culture and 70% of the population
over 14 year of age identifies with this religion. Family and friends are very important in Chile
and business conversations that include discussions orbiting around family, friends and values
are generally accepted.
The Geert Hofstede™ cultural dimensions profile for Chile includes a high value of 86 for
Uncertainty Avoidance, to address this organization can work on establishing and implementing
strict rules, laws, policies, and regulations to better control the business environment. The rank
for individualism is low, confirming the tendency on Latin America countries to give more
importance to the group, family, work teams than to the individual. In this context companies can
foster an environment in which groups collaborate and work toward common goal and in the
same way are collectively recognized for their achievements.
When establishing business in Chile Avery Dennison must consider at all times that Chileans are
very structured in their ways of conducting business. There are many norms, customs and laws
that govern the privileges and duties of the workforce and in order to avoid uncertainty Avery
Dennison should carefully evaluate the human resource strategy to be employed in Chile in order
to foster a positive business environment for employees, customers and stakeholders who
become part of this new venture.
Module 5: Assessing the Political-Legal Environment
Even though Chile is considered to have one of the most stable democracies in South America;
the historical road to democracy has been a struggle of ideologies and beliefs. Chile was the last
of South American countries to transition to democracy after the end of the cold war, when
many countries in the region had fallen to the power of authoritarian, communist dictators for
decades. The democratic political framework of Chile is headed by the president, currently Mr.
Miguel Piñera Echenique elected March 11, 2010, who serves as the head of state and the head
of government. The executive power is exercised by the government. Legislative power is
vested in the government and Congress. The Judiciary is independent of the executive and the
legislature. Chile scored highest of all South American countries, score of 7.1 out of 10, in the
Transparency International 2010 index of corruption perceptions and ranked no. 21 out of 178
nations considered. The political institution of the country are trusted by the public and
perceived to be transparent and accountable.
Chile’s legal system was inherited from Spain during colonization. The legal model was very
inquisitive and defendants were always presumed guilty, this was true for Latin America
colonies, but Chile was the most inquisitive system of all. Public law, which governs the
relationships among citizens, is administered by the Ministerio Publico. It is based on the
profound reforms of 1990 when the system became more open and participative reflecting the
changes from a totalitarian regime to a strong democracy. Private law is governed by the Civil
and Commerce Code, originally created by jurist Andres Bello these codes have been enforced
for more than 150 year and have been object of several alterations to include modern additions
dealing with bankruptcy and banking. Another alternative to the traditional legal system is to
settle private and commercial disputes through arbitration. In Chile arbitration issues are mainly
handled by the AmCham, the Chilean American Chamber of Commerce. The AmCham played
a very active role in the passage of the new International Arbitration Law.
The solid institutions that make up the political and legal environment in Chile give pose
minimal risk for international investors. Avery Dennison should become fairly familiar with the
legislative system of the nation and make sure agreements, contracts and any legal documents
that impose obligations in the new operation are clearly drafted and specify the jurisdiction and
system, whether code law or arbitration, in which any dispute will be settled.
Module 6: Establishing a Global Company Structure
Avery Dennison is a centralized organization and global strategies for the entire organization,
including all companies within its three groups of business, are developed in the corporate
headquarters in Pasadena, California. The centralization decision making style employed by
MNC is derived from factors such: the large size and large capital investment of the corporation
in operations abroad, the high degree of technology employed by all business units in the
production of homogeneous product lines, the fact that all international operations are wholly
owned subsidiaries and that proprietary innovation and technologies that distinguished Avery
Dennison from competitors must be protected by the organization. Once global strategies are set
the global area division structure helps Avery Dennison carry out the corporate governance and
message through the regional divisions in North America, Latin America, Europe, Asia and
Africa. These are each divided into 3 strategic business units: pressure-sensitive materials, retail
information services and office and consumer products. Each regional division is responsible for
running market development, product sales and local operations in the most efficient manner for
each one of the strategic business units and even though regional operations have the freedom to
respond to local demands and situations of the host countries they must operate within the
context set by the corporate guidelines and regulations of the global headquarters.
In the new business venture in Chile Avery can assimilate the corporate philosophy and put in
place the six core values that serve as the guiding principles for conducting business in all Avery
units: integrity, service, teamwork, innovation, excellence and community. Each of these
elements adds value to the organization and creates a motivating and innovative working
environment that fosters pride and ownership for employees at all levels.
Testimony of the unified global structure at work for Avery Dennison is on the career section of
their webpage; Norbert, a receptionist in Europe says “The Company cares for its customers,
employees, the environment and the communities in which we live and work. The desire to
continuously improve will bring Avery Dennison lasting success” and Paul, a cost analyst in the
U.S.A confirms “Avery Dennison nurtures innovation and encourages a commitment to
excellence, especially through continuous improvement initiatives such as Enterprise Lean
Sigma. The Company also invests in employee development because it recognizes that its future
relies on the talent of its employees”
Module 7: Financing Sources for Global Business Operations
Current economic conditions for American companies to enter the Chilean market are very
favorable because Chile and the United States have a signed free trade agreement that since its
implementation in 2004 caused the trade figures between the two nations to double to more than
US$ 15,000 million annually. The exchange rate is a determinant factor for calculating startup
cost of operations in the international arena and today the exchange rate favors American
investment in Chile because the exchange rate is 483.215 Chilean Pesos per US dollar. The
economic outlook for Chile is optimistic, the purchasing power of Chilean is in the rise and yet
the cost of living is significantly lower in the Andean nation compared to other Latin American
counter parts and that of European nations and the United States. The pro-market
macroeconomic policies implemented by the central bank in Chile have kept inflation low at
estimated 1.5 % in 2009 and 8% during the global crisis downturn in 2008. According to the
INE – National institute of Statistics in Chile- Unemployment has been declining during
2010 and it is now about 8%, one of the lowest jobless numbers in the region, it indicates the
Chilean economy is recovering and preparing to hit the growth projections and expectations to
become an industrialized nation by 2020.
Avery Dennison can count in its global leverage to secure financing of its investment in Chile
through the growing number of global financial institutions that are looking to do business in
Chile and ride the momentum wave of inward direct foreign investments in the Andean nation.
Chile’s treatment of foreign and local investors equally, the offering of free access to nearly all
economic sectors, and minimum government intervention in investment activity is an example of
leadership and forward-thinking on behalf of Chilean financial institutions and it has resulted in
steady growth of incoming FDI to Chile. Registration to do business in Chile is simple and
transparent, and foreign investors are guaranteed access to the official foreign exchange market
to repatriate their profits and capital with little or no limitation at all.
The tax rate for corporate income tax is about 18% over profits which low compared with
industrialized countries. Value added tax is also levied at a rate of 19% and must be considered
as part of the cost of doing business in this nation. The revenues authority, Chile's Tax Service
(SII), is a modern organization that provides information online and printed on the tax cycle for
foreign investors from the moment they initiate business in Chile until the business ends. Tax
obligations can also be settled electronically though the SII tax portal for foreign investors:
http://www.sii.cl/portales/inversionistas
Module 8: Creating a Global Management Information System
The dynamics that are shaping the business environment for global firms are pushing MNCs to
become extremely competitive, efficient and resourceful. Taking advantage of the economies of
scale created by integrating and sharing information across multiple geographies, business units
and product divisions is vital to driving cost down. Undertaking a worldwide approach similar to
the Kaizen Japanese philosophy on continuous quality improvement can allow Avery Dennison
to move ahead of the competitors in all regions. A globally designed enterprise resource planning
system - ERP, although a pricey investment for global corporation, can be the ideal tool help
companies like Avery Dennison need to capitalize on existing relationships with global
customers and suppliers. It is recommended that top executives develop a robust, scalable data
sharing architecture that encompasses all process of the company in a single database and
platform. Allowing managers to access global data sources lets them compare their unit’s
performance with companywide statistics, implement initiatives that are being undertaken by
other company divisions to improve quality, negotiate contracts with suppliers that can provide
materials across geographies and business segments, strengthen relationships with global
customers and capitalize on these relationships by cross-promoting business solutions to
customer of all strategic business units.
According to TopBits, an online community with information on how technology can make the
world a better place, an ERP would be consider ideal if it chains all the below organizational
processes together:
Manufacturing: engineering, capacity planning, material planning, quality control, etc.
Financials: Billing, payable/receivables, fixed assets, general ledger, cash management.
Human Resource: Recruitment, benefits, compensations, training, payroll, time and attendance.
Supply Chain Management: Inventory management, supplier scheduling, claim processing,
transportation and distribution.
Projects: Costing, billing, activity management, time and expense
CRM: Sales and marketing, service, commissions, customer contact and after sales support
Data Warehouse: Generally, this is an information storehouse that can be accessed by
organizations, customers, suppliers and employees for their learning and orientation
A global IT system may be an expensive and time-consuming project to undertake, but it can
also create unbeatable competitive advantages for the global organization.
M odule 9: Identifying Human Resources for Global Business Activities
In the Avery Dennison website the importance the company bestows upon their human resource
may be sensed in many of their statements and they proudly transmit this message in the
following affirmation on their careers page “people are one of our most important sustainable
competitive advantages. That's why we recruit only highly motivated and focused individuals
who want to take their careers to new heights”
Integrating this corporate philosophy of high esteem for team members at all level may be a
challenging task for operations abroad, given the different approaches to leadership and labor
legislatures in other countries around the world
Labor legislation in Chile specifically allows the formation of workers unions without prior
government authorization and most of these groups have a right to engage in collective
bargaining. Employees in the private sector have the right to strike with authorization and
regulation from the government.
The Ministry of Labor enforces the minimum wage law, sets the legal workweek at six days or
45 hours, and establishes the regular workday to be 8 hours and the maximum workday length in
10 hours (including two hours of overtime pay). The government enforces these standards
adequately and fines employers who do not comply with these and other labor laws. The
Ministries of Health and Labor monitor the minimum standards of safe working conditions are
met. It also protects the employment of workers who remove themselves from dangerous
working conditions. Insurance mutual funds provide workers' compensation and occupational
safety training.
Another challenging aspect human resource management in this new business venture in Chile is
the distinct approach to leadership Latin American countries; where superiors are distant from
subordinates in the workplace and usually do not welcome input from people who work below
them because it might be a sign of incompetence and weakness.
In order to address these differences the company could appoint a corporate transitional leader
who is capable of transferring the corporate philosophy effectively as well as the advantages of
assimilating corporate values to improve their workplace. This leader must also tactically hit a
balance of respect and acceptance in regards to local customs and norms and be in the lookout
for improved methodologies of doing business that could be transferred from this host country to
the home office or other locations.
Module 10: Managing International Finance and Business Risks
Managing risk in operations abroad is a complex mission that depends in multiple variances and
changes in the business environment. Variations can be of political origin such ideology shifting
or attitude alteration in regards to FDI on behalf of the government in the host nation. It might be
from lack of performance and adaptation to corporate governance by the human resource,
including actions by employees that can affect the profitability of the operation such labor
strikes. Losses can also be attributed to natural disasters; in Chile earthquakes and volcanic
activity have historically caused many damages and setbacks in economic activity. Economic
risk is also an element that can deeply affect the profitability of the operation abroad, a
devaluation of the currency in Chile and detrimental macroeconomic conditions can have a
negative effect on the return on investment of the operations in Chile.
Avery Dennison strategy for entry and establishing operations abroad is based on the
development of wholly owned subsidiaries; a strategy for which the Chilean government
presents minimal limitation today. The decision to run a wholly-owned subsidiary is based on the
need to have maximum control of the operation’s efficiency processes, quality control, and also
to protect the know-how, specialization and proprietary technological innovations that the
company has developed through the years.
The company uses Value-at-Risk (VaR) analysis, which assesses the percentage of assets in the
case of worse possible scenario losses.
Another way of dealing with risk management is implementing the ISO standards - International
Organization for Standardization- for risk management which establishes the following steps for
effectively managing risks:
1) Identification: of risks/problems in a selected
domain
4) Defining: a framework for the activity and an
agenda
2) Planning: the remainder of the process 5) Developing: an analysis of risks in the process
3) Mapping out: social scope, objectives and
evaluation
6) Mitigation or solution: Using available
resources
Module 11: Product and Target Market Planning
The opportunities that make Chile an ideal market for establishing operations of Avery Dennison
include the nature of the Chilean economy; an economy based in exports of commodities and
also in the production of processed food including wine, cheeses and seafood. The sustained
economic growth Chile has been experiencing in the last has caused the retail, utility,
transportation and public sectors to expand as well. Avery Dennison industrial solutions include
applications that can streamline operations in all of these sectors and since Chile is an importer
of technology products and intelligence there is a strong opportunity for Avery Dennison to
succeed in this market. Some of the products that Avery Dennison can promote in Chile include
specialty pressure labels used for consumer product packaging and that can be applied in wine
bottles, drinks, cleaning products and seafood items. Avery labeling systems can effectively be
used for managing inventory levels, expiration dates and safety recalls. In the mining industry
Avery RFID and metal tags can be applied for machinery positioning and identification
purposes. Avery specialty reflective graphics offer a wide variety of media and branding
solutions used for road signals, work zone, safety apparel and fleet vehicle applications. And in
the retail sector printing solutions for inventory control, distribution, logistics, ticketing, pricing,
branding, promotional coupons, security, woven, heat transfer, fastening tags and labels help
retailers streamline their operations, cut cost and become more competitive in their market place.
Avery Dennison products are highly customizable and the company can work with their
customers to allow them to strengthen their visual appeal and support their branding strategies
through the labeling solutions offered; however, there is no need for adaptation of their
converting and production techniques and this can be beneficial on controlling R&D, set-up and
maintenance cost for Avery’s labeling converting and graphics printing plants in Chile.
Module 12: Designing a Global Distribution Strategy
The most used from of transportation in Chile is by roads. The country has a infrastructure that
adds to more than 40,000 miles of paved highways, including the Pan-American highway that
runs from Argentina, passing trough Chile, Peru, Ecuador, Colombia and North to Panama,
Mexico and The United States. Even though the route system is well planned and efficient in
Chile the Southern part of the country is no accessible by road, alternative means of
transportation like maritime and by air are employed to service these remote and less populated
areas of the country. There are a total of 62 airports in Chile, 8 of them strategically scattered
thru the Chilean territory and servicing international flights. Chile’s territory is a long and
narrow strip on land, as matter of fact it is considered the longest country in the world, and its
coastal lines stretch 4,000 miles along the Pacific Ocean and its privileged strategic location
relative to sea lanes between Atlantic and Pacific Oceans (Strait of Magellan, Beagle Channel,
Drake Passage) allowed Chile to develop a strong infrastructure for logistics that connect to
international shipping lanes.
The U.S. and Chile agreed in 2004 to eliminate tariffs on U.S. and Chilean goods over a ten-year
period for industrial goods and a twelve-year period for agricultural products and over 85 percent
of imports and exports became duty-free immediately upon implementation of the FTA of 2004.
Products that fall in taxable categories pay a flat duty of 6% and by 2016 all trading good
between Chile and the USA will be duty-free.
Chile has also negotiated free trade agreements with Australia, Canada, China, Colombia,
Costa Rica, El Salvador, Guatemala, Honduras, (Chile-Central America), EFTA – European Free
Trade Association, Japan, MERCOSUR, Mexico, Panama, Peru and the Republic of Korea.
In establishing operations in Chile Avery Dennison can take advantage of the free trade
agreements this nation has negotiated with other countries which allow Avery to import capital
and resources needed for their plants free of tariffs from the United States, China and other
origins. It is recommended that Avery Dennison employs a short distribution channel for the
distribution of the goods manufactured at its new facility since business strategy of customized
industrial and business products in Chile is the focus for growth in this new market there is no
need for intermediaries. Relationships with transportation carriers and providers must be
established to allow efficiency and economies in the logistics of getting the products from the
Avery production plant to the business locations and plants of its customers.
Module 13: Planning a Global Promotion Strategy
Freedom of expression of observed in Chile for the most part. There are a number of channels
that can be used to implement the promotional strategy crafted to the new operation in Chile
among them newspapers, trade publications, professional journals, billboards, electronic
advertisement in industrial/trade portals, etc.
In a video introduction to its company president and CEO of Avery Dennison, Mr. Dean
Scarborough, argues that the products and material the company produces are encountered by
consumers hundreds of times a day, but that most people are unaware of the powerhouse this
Global company has created through its innovative industrial solutions. For example Avery
products are found in multiple packages of shampoos, beer and soft drink bottles, the exit signs
in the highways, the woven tags in clothing, and the price labels in retail environments. It is not
difficult to understand that the strength of the company lies in the solutions offered by the
pressure sensitive materials unit which accounts for 56% of companywide sales. For this reason
the promotional strategy which is developed by the corporate headquarters is focused on
presetting the industrial solutions message to professionals who make decisions about improving
operation in their own manufacturing plants. The new international operation can translate
advertisement messages and adapt them to show how Avery can create competitive advantages
in their customer’s plants in Chile through the unique technological solutions.
My promotional management recommendations for Avery Dennison in Chile are:
- Dedicate promotional dollars to reaching key industry engineers, business owner, executives, and
high level professional in the targeted industries where Avery wants to push their business
solutions.
- Run print advertisement campaigns in business journal, trade publication and chamber of
commerce periodicals. Elaborate white papers and case studies sharing statistical data about
efficiencies created for other customers.
- Buy billboard space around industrial complexes in proximity to manufacturing, commerce,
warehousing and distribution centers.
- Participate in industrial trade shows like Vinitech (wine industry trade show) and Exponor
(mining industry) and also in events organized by the distinct chamber of commerce in Chile.
- Given the reliability of the post service in Chile, Avery Dennison could also employ direct
marketing campaigns aimed at transmitting a more personalized and convincing message to
identified top-executives in the targeted industries.
Module 14: Selecting an International Pricing Strategy :
In 2010 Avery Dennison celebrated their 75 year anniversary and they are proud to say the
company is leading the way in innovation and business solution technologies around the globe.
Emerging markets in Asia, Latin America and Eastern Europe represent 1/3 of sales for the
corporation today and as these markets continue to grow, so does the commitment and
investment of Avery abroad.
According the investors annual report the leading position of many of their business groups
allows Avery to set their pricing at premium levels.
A premium pricing strategy or prestige pricing allows companies to price their products and
services near the high end of the possible price range to help attract status-conscious clients and
to enhance and reinforce the product's quality and unique image. The industry leadership status
Avery Dennison has developed during its 75 years of operations let the company capitalize on
charging premium price for its products and services. Avery printing materials and intelligence
services require faultless performance because their customers rely on Avery Dennison’s
expertise to create attractive and distinctive brands, to control their supply chain and inventory
levels, and to meet the needs of their end-customers. The high level of specialization, its
commitment to excellence and being a premium provider of intelligence business solutions give
Avery Dennison the leverage needed to charge top dollars for its products and services and still
experience and project growth in the bottom lines.
Avery Dennison can continue to capitalize in their established reputation and still charge
premium pricing for the products and serviced commercialized Chile. Even though, smaller and
local competitors present in the labeling solution segment of the market may pose negligible
threats to Avery’s new proposed business the company can still offer many unique services of
industrial intelligence that incorporate bar-coding, reflective and RFID technologies and give
Avery Dennison a competitive edge.
Avery can also negotiate global contract with multinational customer with presence in the Chile
market and develop loyalty programs and alliances that secure financial earnings from business
that have already been earned in other geographies.
Charging premium price can also offset some of the diminishing returns Avery Dennison may
incur when importing resources needed for production or when repatriating earnings derived
from their investment in Chile in the case the Chilean currency devaluates.
Module 15: Determining Organizational Financial Results
In analyzing the financial results for Avery in 2009 we can see how the decline in consumer
products and diminishing aggregate demand for their industrial products negatively impacted
their financial statements. The company was forced to take cost reduction measures necessary to
deal with the recessionary environment including the reduction of their global workforce by
10%, paying debt and reduce dividends.
We see that the losses in the US region continue to increase from -4% in 2007 to -9% in 2009
and although other regions also experienced losses the percentage was lower, specifically only
2% in Latin America. Although the company is experiencing the negative effect of a challenging
business environment it is taking discipline measure to emerge strong from the crisis. The
company has completed the acquisition of Paxar industries to complement its business
intelligence portfolio and is strongly investing in emerging markets, which today represent one
third of total company sales.
Some of the Green Initiatives and Research and Development goals Avery Dennison has set to
ensure sustainability for the year to come include:
- Developing and offering eco-friendly products to help customers reduce their impact on
the environment.
- Piloting emission control technology that converts solvent manufacturing waste into an
energy source in North American plants.
- In Europe and North America Avery is partnering with waste recycling experts to collect
and recycle liner waste from our roll materials customers and, as a result, reduce landfill
waste.
- Since 2005, Avery has retrofitted lighting projects in North America resulting in an
annual carbon dioxide emission decrease of more than 22.6 million pounds and an energy
savings in excess of $1.2 million annually for 15 locations. Another 14 sites are in
progress.
- Avery’s retail information services operations are using water and soy-oil based printing
inks for customer materials to reduce the need for hazardous solvents during disposal
processes.
- Avery is investigating in ways to use solar power in factories that have the technology
and appropriate climate around the world.
Module 16: Measuring Internationsl Business Success:
The weak economy and slow recovery in the United States continues to be a challenge for Avery
Dennison North America and this is reflected in the 2009 income statement, the decrease of value of the
stock and dividend. Expanding the company’s frontiers and being able to capitalize on the new business
they have earned by servicing location abroad for global customers like Wal-Mart, Ford Motors, P&G,
and BMW can represent an optimistic outlook to secure shareowners gains translated in more dividends, a
rebound in the value per share and additional gains to offset the increasing losses in the domestic market.
Avery Dennison operation in Chile will benefit the host country in numerous ways:
- Creation of jobs in the region.
- For every dollar invested in the Chilean economy the multiplier effect can raise economic activity
in the Andean nation.
- Rise in the overall income level of the Chilean employees.
- Benefits of labor training, accumulation of new skills and transfer of knowledge from highly
specialized and efficient operations in the home country.
- Transfer of technologies from the highly industrialized home country to the fast-developing host
nation and increased industrial output for streamlined operations of Avery’s customers in Chile.
- Chile can also benefit from the green initiatives and cleaner technologies Avery employs n its
plants.
Although the benefits of FDI in the host country are evident there are also concerns of the threats that
MNC’s present to small and medium local producers. Although data confirming the disappearing of local
producers is scarce it is believed many smaller national enterprises disappear from the market upon
entrance of MNC’s into the host country due to unfair competition and inability to operate in the new
business environment.
Res ources
Module 1:
http://www.averydennison.com
http://finance.yahoo.com/q/pr?s=AVY+Profile
http://www.thisischile.cl/Articles.aspx?id=3092&sec=189&eje=negocios&itz=&t=chile-has-
the-most-interconnected-economy-in-latin-america&idioma=2
Module 2:
http://www.bemis.com/
http://solutions.3m.com/wps/portal/3M/en_US/About/3M/
http://www.pb.com/
http://www.averydennison.com/avy/en_us/About-Us/Enterprise-Lean-Sigma
Modules 3:
https://www.cia.gov/library/publications/the-world-factbook/geos/ci.html
http://pdf.usaid.gov/pdf_docs/PNADL012.pdf
Module 4:
http://www.cyborlink.com/besite/chile.htm
http://www.geert-hofstede.com/hofstede_chile.shtml
Module 5:
http://en.wikipedia.org/wiki/Law_of_Chile#Public_law
http://www.transparency.org/policy_research/surveys_indices/cpi/2010
Module 6:
http://www.averydennison.com/
Luthans, Fred, and Jonathan P. Doh. International Management.
McGraw Hill. Print.
Module 7:
http://www.fdi.net/country/sub_index.cfm?countrynum=45
http://www.minhda.cl/english/informacion_inversionista/
incentives_for_foreign_investment.php
http://www.sii.cl/portales/inversionistas
Module 8:
http://www.tech-faq.com/erp.html
Luthans, Fred, and Jonathan P. Doh. International Management.
McGraw Hill. Print.
Module 9:
Luthans, Fred, and Jonathan P. Doh. International Management.
McGraw Hill. Print.
http://www.averydennison.com/
Module 10:
http://www.finpipe.com/mrisk.htm
http://en.wikipedia.org/wiki/ISO_31000
http://www.averydennison.com/avy/static/ar_2009/assets/AD_09AR_full_report.pdf
Luthans, Fred, and Jonathan P. Doh. International Management.
McGraw Hill. Print.
Module 11:
http://www.averydennison.com/
Module 12:
http://www.export.gov/FTA/chile/eg_main_017577.asp
Module 14:
http://www.averydennison.com/avy/static/ar_2009/avy_annual_report_2009.html#/
weIdentifyYourWorld/opportunity/frame1
Module 15:
http://www.averydennison.com/avy/static/ar_2009/avy_annual_report_2009.html#/
weIdentifyYourWorld/distinction/frame1
Module 16:
http://www.averydennison.com/avy/static/ar_2009/avy_annual_report_2009.html#/
weIdentifyYourWorld/distinction/frame1
http://finance.yahoo.com/q?s=avy&ql=1