Question

How inflation in different countries affected Avon Products Inc.? And how the company is protecting itself from it?

Answer 1

Avon Products, Inc. is an international marketer and manufacturer of beauty and related products. Because the company has it's operations in multinational country therefore inflation rate of the country where Avon is operating is main factor for economic analysis. A certain level of inflation can impact the product's price of Avon. The inflationary forces may also affect economic factors such as exchange rates, the supply of loanable funds, price controls, and local labor availability.

The company take care of the macro economic factors such as savings rate, interest rate, inflation rate, and foreign exchange rate. When Avon conduct business in countries with high inflation may have to bear high rate of interest as nations with high inflation rate tends to have high rate of interest. Thus the company may consider financing with a currency that has lower rate of interest.