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