Avon 2009 Annual Report Download - page 30

PART I
and other external factors over which we have no control.
These risks may be exacerbated by our efforts to increase facility
consolidation covering our manufacturing, distribution and
supply footprints or if we are unable to successfully enhance
our disaster recovery planning. The loss of, or damage to, any of
our facilities or centers, or that of our third party manufacturers
could have a material adverse effect on our business, results of
operations and financial condition.
Our success depends, in part, on the
quality and safety of our products.
Our success depends, in part, on the quality and safety of our
products, including the procedures we employ to detect the like-
lihood of hazard, manufacturing issues and unforeseen product
misuse. If our products are found to be defective or unsafe, or
if they otherwise fail to meet our Representatives’ or end
customers’ standards, our relationship with our Representatives
or end customers could suffer, we could need to recall some of
our products, our reputation or the appeal of our brand could be
diminished, and we could lose market share and/or become
subject to liability claims, any of which could result in a material
adverse effect on our business, results of operations and
financial condition.
Our information technology systems may
be susceptible to disruptions.
We employ information technology systems to support our
business, including systems to support financial reporting, an
enterprise resource planning system which we are implementing
on a worldwide basis, and an internal communication and data
transfer network. We also employ information technology systems
to support Representatives in many of our markets, including
electronic order collection and invoicing systems and on-line
training. We have Internet sites in many of our markets, including
business-to-business sites to support Representatives. We have
undertaken initiatives to increase our reliance on employing
information technology systems to support our Representatives,
as well as initiatives, as part of our multi-year restructuring pro-
gram, to outsource certain services, including the provision of
global human resources information technology systems to our
employees and other information technology processes. Any of
these systems may be susceptible to outages due to the complex
landscape of localized applications and architectures as well as
fire, floods, power loss, telecommunications failures, terrorist
attacks, break-ins and similar events. Despite the implementation
of network security measures, our systems may also be vulner-
able to computer viruses, break-ins and similar disruptions from
unauthorized tampering with these systems. The occurrence of
these or other events could disrupt our information technology
systems and adversely affect our operation.
Our success depends, in part, on our key
personnel.
Our success depends, in part, on our ability to retain our key
personnel, including our executive officers and senior management
team. The unexpected loss of one or more of our key employees
could adversely affect our business. Our success also depends,
in part, on our continuing ability to identify, hire, train and retain
other highly qualified personnel. Competition forthese employees
can be intense. We maynot be able to attract, assimilate or retain
qualified personnel in the future, and our failure to do so could
adversely affect our business. This risk may be exacerbated by
the uncertainties associated with the implementationofour
multi-year restructuring plan.
Our ability to anticipate and respond to
market trends and changes in consumer
preferences could affect our financial
results.
Our continued success depends on our ability to anticipate,
gauge and react in atimely and effective manner to changes in
consumer spending patterns and preferences for beauty and
related products. We must continually work to develop, produce
and market new products, maintain and enhance therecognition
of our brands, achieve afavorable mix of products, and refine our
approach as to how and wherewemarket and sell our products.
While we devote considerable effort and resources to shape,
analyze and respond to consumer preferences, consumer spending
patterns and preferences cannot be predicted with certainty and
can change rapidly. If we are unable to anticipate and respond
to trends in the market for beauty and related products and
changing consumer demands, our financial resultswillsuffer. This
risk may be exacerbated by our product line simplification
(“PLS”) program, which is leading to significant changes to our
product offerings.
Furthermore, material shifts or decreases in market demand for
our products, including as aresult of changes in consumer
spending patterns and preferences, could result in us carrying
inventory that cannot be sold at anticipated prices or increased
product returns by our Representatives. Failure to maintain proper
inventory levels or increased product returns by our Representa-
tives could result in amaterial adverse effect on our business,
results of operations and financial condition.
If we are unable to protect our intellectual
property rights, specifically patents and
trademarks, our ability to compete could
be negatively impacted.
The market for our products depends to asignificant extent
upon the value associated with our product innovations and our