Academic journal article International Journal of Business and Society

International Expansion Opportunities for Multi-Level Marketing Via Personal Networks: An Ethnographic Study from Colombia

Academic journal article International Journal of Business and Society

International Expansion Opportunities for Multi-Level Marketing Via Personal Networks: An Ethnographic Study from Colombia

Article excerpt

"This business opportunity is for those who want to succeed as independent entrepreneurs and not worry wondering if you are going to be employed or not in the future. Not having to wonder what are you going to do to survive another month because your salary is not enough" (Amway Host, 2014).

I. INTRODUCTION

Although, the business model of multi-level marketing (MLM) was created in 1945 (Bosley & McKaege, 2015), MLM and direct sales companies have risen controversies in recent times (Feinberg & Eastick, 1997; Peterson & Albaum, 2007); however, the sales of multi-level marketing (MLM) and direct retailing companies in Latin American and the Caribbean (LAC) countries has experienced significant growth in past years (WFDSA, 2012, 2013), and is expected to experience a 4% constant compound annual growth until 2018 (Euromonitor International, 2014b). Amway and Avon are popular United States based multinationals in the MLM industry that have grown and consolidated in the Latin American markets. Yanbal (Pemvian) and Natura (Brazilian), both Latin American MLM companies in the cosmetics and personal care industry, have also emerged and conquered markets in their own region. The latter mentioned are major participants in their industry. According to Euromonitor International (2014) LatinAmerica has been a market revolution of expectations in beauty and cosmetics.

MLM companies, have no barriers to expand their selling network as they accept independent and casual consultants regardless of education level, work availability, age, experience, socio-economic status, or gender (Albaum & Peterson, 2011; Bloch, 1996; Choudhary & Kamal, 2013; Croft & Woodruffe, 1996; Nga & Mun, 2011). Therefore, these companies can provide an income opportunity to those who are currently outside the labor market, aim for complementary income opportunities, or are seeking entrepreneurial freedom. According to Gordan (2010), "Colombia mirrors solid beauty industry growth seen elsewhere in Latin America". The country has is reaching a ceiling of sales and penetration of the direct selling business model, even at clients at the bottom of the pyramid, which has become more aspirational with a better economic landscape (Euromonitor International, 2015b; Mason et al, 2013). With this information in context, and using Colombia as model representing a Latin American country, reason why this country was chosen as the context of the study, this research aims to provide a deep analysis of the latent internationalization of the selling and consuming system of multi-level marketing multinationals in LAC by targeting the bottom of pyramid by providing promising income (and consumption) opportunities to its network. Also, it intends to explore if the distributors (independent agents, associates, etc.) may obtain an international income opportunity from these firms. Lastly, this research aims to explore if the internationalization of MLM companies in LatinAmerica might increase self-employment in countries with a large proportion of citizens at the BOP.

In order to design and to conduct this study, an academic literature was conducted on the relationship between multi-level, direct selling (due to its ties with MLM companies) and self-initiated expatriation took place. Then, a grounded theory approached process for both data collection and data analysis was carried out through an ethnographic immersion, and it was complemented with data collected and systematized from secondary sources, such as corporate reports and specialized business media. The study was developed in Colombia due to the proximity of the researchers to the country. Additionally, Colombia is an emerging economy country (Bremmer, 2015) which can serve as a representation for other Latin American and Caribbean countries (Gonzalez-Perez & Velez-Ocampo, 2014). Most importantly, Colombia holds the twelfth position worldwide in MLM revenue and is on the top 10 worldwide list of MLM highest percent growth (Tortora, 2014). …

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