The role of stakeholders
An Amway case study

Page 3: How stakeholders affect Amway

Amway is a direct selling company, selling products directly to consumers without going through traditional retail outlets or 'high street'.

The supply chain

A supply chain links the finished products to end consumers. Amway has its own distinct supply chain, placing a strong emphasis on its ABOs. They are able to focus on individual customers and their needs.

This supply chain is different from a more conventional supply chain that sells goods to final consumers through retail outlets. Amway's way of working depends on building lasting connections with the end consumer. Feedback provided by consumers and ABOs helps to shape future changes in products and the service provided.

Suppliers must produce quality goods that Amway ABOs can sell with confidence. The goods should offer value for money and provide guarantees that they will meet Amway standards. Suppliers may contribute to the design and appearance of Amway products.

ABOs

ABOs operate independently as small businesses. They develop direct supply channels and sell products to friends and customers that they know or meet. They need to have a flexible approach to business. They require Amway to provide high quality, value for money products with a 100% satisfaction guarantee.

ABOs determine for themselves how they will conduct business. This is a 'self regulatory' environment. However, they sign a contract to work within Amway”s Rules of Conduct and Code of Ethics. If ABOs do not conduct business within these rules, their behaviour could reflect back on the company.

Consumers

Consumers affect how Amway develops and promotes products. They do this by indicating their preferences and requirements through feedback. Amway can then make more of particular products or change the format of others. Consumer demand also influences how much stock Amway needs to carry. Consumers can show where Amway needs to address issues or concerns to improve the business.

With many different types of stakeholders, it is possible that different groups will have different key objectives or priorities. For example, a business needs to make a profit but customers want low prices. The company might find it difficult to support price cuts, as this would reduce its profit. These two priorities might be in conflict.

Amway | The role of stakeholders

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