Herbalife was founded in 1980. It is an international is a

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USANA - MLM

• Fred Lizotte

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Overview

• The mission at USANA is To develop and provide
  the highest quality, science-based health
  products worldwide.
• USANA is a manufacture of these supplements and
  they are centrally located in Salt Lake City,
  Utah. They have no retail outlets, they purposely
  keep the supply chain of the company small as to
  keep costs low and still provide a great product
  for a competitive price.

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Management

• Myron Wentz, Ph.D. chairman and CEO. Dr. Myron is
  the founder and an internationally recognized
  microbiologist, immunologist, and pioneer in the
  development of human cell culture technology and
  infectious disease diagnoses, he holds a
  bachelors degree in biology from North Central
  College in Naperville, Illinois, master's degree
  in microbiology from the University of North
  Dakota, and a Ph.D. in microbiology and
  immunology from the University of Utah.

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Management

• David Wentz is the president of USANA. He
  received a bachelors degree in bioengineering
  from the University of California, San Diego.
• Gil Fuller is the Executive Vice President of
  Finance. Gil joined the company in May 1996 as
  vice president of finance and served in this
  capacity from May 1996 to June 1999, when he was
  appointed senior vice president. He has served as
  USANAs CFO since October 1997.

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Competition

• Avon Products, Inc. Just like USANA it is a
  direct marketing company. Avon Products, Inc.
  manufactures and markets beauty and related
  products.
• Amway is one of the largest multi-level marketing
  organizations in the world. It is a multi-billion
  dollar a year company based on the sale of
  products as varied as soap, water purifiers,
  vitamins, and cosmetics.
• Herbalife was founded in 1980. It is an
  international is a company that sells
  weight-loss, nutrition and skin-care products by
  multi-level marketing, also known as network
  marketing.

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History

• Dr. Myron Wentz in 1973 he started Gull
  Laboratories in Salt Lake City to use advanced
  cell culture techniques to make commercial tests
  to diagnose viral diseases.
• In 1990 USANA was born as the Gull Health
  Products Division, to test and manufacture herbal
  and other natural products.
• In 1992 Wentz incorporated USANA, Inc., as a
  wholly owned subsidiary of his Gull Laboratories.
  In 1993 he spun off USANA as an independent firm.
  

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History

• By the summer of 1994 the company had begun its
  own publication for its distributors, USANA
  Magazine
• USANA grew rapidly in the first few years
• From 1993 sales in the United States of 3.9
  million, the company reported an increase to 7.3
  million in 1994.
• In 1995 U.S. sales reached 21.5 million

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History

• By early 1996 USANA had joined the Direct Selling
  Association (DSA), a trade group for firms in
  network marketing and other kinds of direct
  sales. The DSA governing board took a year to
  look at USANA to make sure it complied with the
  DSA's ethical standards.
• In 1998 USANA offered a wide variety of
  nutritional and personal care products.

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History

• According to the firm's 1997 annual report, USANA
  received about 82 percent of its sales from
  nutritional products.
• In 1997 USANA also started its Preferred Customer
  Program for those who wanted to purchase USANA
  products at wholesale prices but not become
  distributors.
• This was later moved onto the internet website
  Preferred customers were required to purchase 20
  in products every month.
• Since 1992 USANA has paid out 500 million to
  USANA Independent distributors. USANA has made
  the Forbes to 20 lists in the last three years in
  a row, 2004, 2005, and 2006. USANA (2007)

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Commissions
Binary Compensation Plan USANA Health Sciences
(2007)
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Commissions

• Commissions in traditional network marketing are
  you on top, and you have any number of people
  under you. This number is not limited, so you can
  have hundreds of people directly under you
  getting you sales, generating commissions. In the
  binary network marketing, you have two people
  under you, and those two people have two more
  people under them. The commission comes from
  multiple levels, so you can benefit from the
  commissions of the people below you and the
  people below them and so forth.

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Distribution Channel New way to do
business

• The distribution channel involved with
  traditional nutritional supplements sold in
  retail stores includes manufacturing, national
  distributor, regional distributor, local
  distributor, retail sales, advertising and
  customers.
• USANA created a distribution channel which
  includes manufacturing, independent associates,
  and the customer. By building a business around
  this fact, USANA was able to change existing
  channels that occurred in other companies and
  make it more efficient.

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Channel

• They did this by making sure that information
  about what is needed, what has been produced, and
  what is in process is available wherever it is
  needed in the chain.
• They focused on manufacturing the products and
  they were able to ship them directly to the
  customer.
• They only have a dozen products, which also makes
  this process run smoother.

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Channel

• There is no excess storage that needs to take
  place because the only people touching the
  product are the manufacturer, individual
  distributor and the customer.
• All excess products would be held only by the
  manufacturer and possibly the independent
  distributor, but is not required for them to hold
  any product the manufacturer could drop ship to
  the customers as well.
• This leads to a very efficient system where the
  costs could be controlled directly by the
  manufacturer.

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Channel

• As the Internet became more useful, this company
  set up a system where the customer could buy
  products online directly from the manufacture.
• They also set up a system that allowed customers
  to buy online directly from the manufacturer
  through a discount of an independent distributor.
• This solved the channel conflict of independent
  distributors competing with the same company that
  sells their products.

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DSIR

• Demand-side increasing return does not exist in a
  Multi-level marketing system for the customer or
  the independent distributor.
• The customer does not receive anything more by
  having more distributors asking them to buy
  products
• the manufacturer fixes the prices so there is no
  competition between independent distributors

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DSIR

• Independent distributors receive very little by
  having more distributors. They may receive
  commissions based on new Independent distributors
  that they have brought in, but it is a
  self-canceling system.
• When there are too many distributors present in a
  location, the market quickly becomes saturated.
  When the markets become saturated, no new
  customers buy products. No new independent
  distributors will make money, because there are
  no new customers to buy any products.
• The independent distributors on the bottom will
  not make money most will realize a loss in
  money.

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Fraud Discovery Institute

• The FDI was an institute that checks companies
  ways of doing business to see if there is
  something that doesnt seem right.
• They did an investigation on USANA and found
  numerous holes within their company.
• When the Fraud Discovery institute did statistics
  they found that in 2006 the current distributors,
  70 of the commissions made by the distributors
  went to the top 3 of the distributors.

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FDI

• 87 of the distributors lost money in 2006 in
  USANA Health Sciences.
• One of the main focus on USANA is to condemn
  Multi-level marketing as a scheme, just like the
  pyramid scheme.
• FDI sent a report to the SEC, FBI and IRS earlier
  this year, the USANA stocks went down 15 in one
  day.

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Summary

• Before this controversy occurred this company was
  a very successful growth company. They have been
  open since 1992. They have had record sales every
  year for the last 5 years. Forbes has named USANA
  12 on the top 200 best small companies in 2006.
  All in all they are still doing good in sales
  givin the controversy that was brought up. Since
  this whole situation was brought up in the last
  year, we will expect that this situation is not
  over and there is more to come that may change
  how good USANA is doing.