Herbalife

Herbalife is united with a single purpose&mdashø capitalize on the core strengths that have raised Herbalife to the worldwide status it enjoys today and, through strategic decision-making, to lead Herbalife toward greater success in the future. Key Dates: Mark Hughes establishes Herbalife and begins selling diet aids out of the trunk of his car. Herbalife is labeled one of the fastest-growing companies in the United States by Inc. magazine amidst negative publicity. The company officially takes on the name Herbalife International and goes public. The company continues aggressive international expansion into Japan, Spain, New Zealand, Israel, and Mexico. The firm again becomes subject to negative publicity when Clint Fallows, a former distributor, files suit against Herbalife. Herbalife International, Inc. markets and distributes a broad spectrum of more than 150 herb- and botanicals-based weight management and dieting products, cosmetics, and general health and nutrition products, through a worldwide network of more than one million independent distributors in 50 countries. Herbalife products, sold under a variety of brand names, include the Thermojetics Weight-Management Program, the Health & Fitness Bulk & Muscle Program, the Dermojetics herbal and botanical skin care products, the Cell-U-Loss cellulite-attacking supplement, Colour cosmetic products, as well as perfumes for men and women under the Vitessence brand name. Herbalife has thrived despite negative claims against its marketing schemes, product ingredients, and distribution methods. 'Herbalife uses network marketing' as a way to describe its marketing and sales programs as opposed to multi-level marketing,' according to the company's 1995 annual report, 'because multi-level marketing has had a negative connotation in certain countries in which Herbalife does business.' Nevertheless, Herbalife's distribution network closely resembles the typical multilevel marketing approach--sometimes referred to as a pyramid scheme--and has been accused of crossing the line into the illegal endless-chain marketing. Multilevel marketing remains legal in most states in the United States, with the condition that the company's sales force of distributors actually receive earnings by selling products to people not related to the company. In an illegal endless-chain scheme, earnings are achieved primarily through recruiting new salespeople into the pyramid. Company founder and CEO Mark Hughes, owner of more than 60 percent of the company, died unexpectedly in 2000, just after failed attempts to take his company private. Master salesman Mark Hughes began Herbalife in a Beverly Hills warehouse in 1980, selling the new company's dieting aids from his car. Hughes, whose parents were divorced soon after his birth in 1956, was raised in Lynwood, California, outside of Hollywood. By ninth grade, Hughes had dropped out of high school. He became involved in drug use and by the age of 16 was sent to the Cedu School, a private residential home for emotionally disturbed and troubled teenagers. It was there that Hughes developed a knack for salesmanship, rehabilitating himself by selling door-to-door raffle tickets in support of the school. By the end of his tenure, Hughes had joined the school's staff. Before founding Herbalife, Hughes the salesman received another kind of training when, in 1976, he began selling the Slender Now diet plan from multilevel marketer Seyforth Laboratories. Hughes quickly rose to become one of the pyramid's top earners. When that operation collapsed, Hughes joined another multilevel marketer, selling Golden Youth diet products and exercise equipment. By 1979, however, Hughes, then 23 years old, decided to form his own company. Among the complaints leveled against the company was a number of the claims Herbalife made for its products in the Career Book. The Herbal-Aloe drink, for example, was said to help treat kidney, stomach, and bowel 'ulcerations'; and Herb