Revlon Case Analyis.docx

Revlon Case Analyis

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Revlon: Ca Case St Study analysis

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BUS 490 Comprehensive Comprehensive Examination: Examination: Strategi !anagement :: "nline |

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 (a)le  (a)le o* Contents

+ntr +ntrod odu uti tion on #

!iss !issio ion n Statem Statemen entt #

,ision o* the Company

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External Assessment

4

 (ehnologial  (ehnologial trends

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-emographi trends

4

Eonomi (rends

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/olit oliti ial al and and le legal gal on ons strain raints ts

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Soiologial *ators

1lo)al trends

2

+ndustry Analysis

2

Competitor analysis

9

External 3ator 3ator Evaluation E3E5 !atrix %0

+nternal Assessment

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Company or organi6ational st struture

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/erson rsonal al pol poliie iies s and manag anagem eme ent

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"perational pr prodution a apaiti ities an and po poliies ies

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3inan inani ial al sta sta)i )ilit lity y om ommo mon n ratios ratios and and mea measu surres5 es5

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Ratio Analysis

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7eade 7eadersh rship ip and and organ organi6at i6ation ional al )ehav )ehavior ior88 orpor orporate ate ult ulture ure88 et et

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!areting

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Ethial$ legal issues

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!ana !anage geme ment nt in*o in*orm rmat atio ion n sys syste tems ms and and res resea ear rh h and and deve develo lopm pmen entt

/aten atents ts88 (ra (rade dema mar rs s and and /r /roprie oprieta tary ry (ehn ehnol olog ogy y

 (he +nternal 3ator 3ator Evaluation +3E5 !atrix

Strategy 3ormulation

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Strate Strategi gi soluti solutions ons #0

 (imeline *or *or +mplementation

Conseuenes

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Re*er e*eren ene es: s: #4

RE,7";: CASE S(U-< A;A7
+ntrodution

Revlon is a glo)al olor osmetis8 hair olor8 )eauty tools8 *ragranes8 sinare8 anti=persiparant$deodorants8 and )eauty are produts ompany> ompany>

Revlon ase is a omprehensive strategi management ase that inludes '00& and '00 ?nanial statements8 ompetitor in*ormation8 in*ormation8 internal *ators8 *uture

outloo and more o* Revlon Company> +t has posted losses *or eight onseutive years and has struggled @ith de)t sine Ron /erelman /erelman purhased a maority stae in the ompany in %92.> And Revlon is a ompany in trou)le> ;et sales *or '00& dereased )y % million to %##% )illion and net losses in '00& @ere '.% million *ollo@ing a loss o* 24 million in '00.>+n reent years Revlon Revlon launhed a ne@ produt *or older @omen @ith %00 produts8 and it @as the largest launh o* the ompany sine ColorStay produt in %994> Un*ortunately8 this produt @as not reeived very @ell )y the maret )eause other ompetitors @ere providing produts and the pries o* the Revlon produt @as too high as omparing @ith ompetitors>

Revlon planned to launh a ne@ prestige *ragrane alled 3lair in '00&8 )ut delayed the launh until de)t ould )e restrutured> (he ompany issued %2. million in sto in '00& to raise money to redue de)t> !aAndre@s and 3or)es oldings agreed to purhase a portion o* the sto and to purhase any sto not purhased )y urrent stoholders> !aAndre@s !aAndre@s also extend a line o* redit o* 2 million to Revlon Revlon @hih an help the Revlon in the reovery o* losses>

Revlon produes and marets sin are8 osmetis8 and personal are8 *ragrane and pro*essional produts> Revlon produes in more than %00 ountries around the @orld in diDerent ountries under )rand names suh as Revlon8 Ultima ++8 ColorStay8 Almay8 Charlie8 3lex8 !ithum8 ean ;ate8 and ColorSil> Revlon Revlon Company ontinues to introdue ne@ produts> Alma +ntense Eye Color paage that om)ines liner8 masara8 and eye shado@5 @as suess*ully introdued in '00. and Almay Smart Shade olorless *oundation that hanges to orret olor @hen applied5 and ColorStay Smooth 7ip Color @ere introdued in '00&> Austin8 '005

!ission Statement

 (he long=term mission mission o* Revlon Revlon Company is to emerge as the dominant osmetis and personal are ?rm in the t@enty=?rst t@enty=?rst entury )y appealing to young$trendy @omen %58 health=onsious @omen sin are58 and older @omen @ith its variety o* )rands oDered all around the @orld '5> Also8 ontinuing gro@ing produt line @ith ne@ produts #58 @hih are sa*e and eDetive8 and that is responsi)ility o* very experiened hemists 45> Revlon and its employees are ative in supporting @omen health programs and other ommunity eDorts .5>

%> Customers

'> !arets

#> /roduts or servies

4> Conern *or employees

.> Conern *or pu)li image

,ision o* the Company

,ision o* Revlon Company is to provide glamour8 exitement exitement and innovation through uality produts at aDorda)le pries>

External Assessment

Revlon8 +n> is one o* the maor leaders in the glo)al osmetis8 sin are8 *ragrane8 and personal are industry> Revlon is a leading mass=maret osmetis )rand as @ell> (his ompany provides a variety o* produts to its ustomers @ho are health and )eauty onsious> Sine Revlon is operating @orld@ide8 it is it is is neessary to onsider some tehnologial8 demographi8 eonomi8 politial and legal8 soiologial and glo)al trends in order to get a )roader understanding o* maor issues that might arise *or this ompany>

 (ehnologial  (ehnologial trends

 (ehnologial  (ehnologial researh researh and development development is essential *or *or ompanies to gain a higher maret share and reognition among other )rands in this ompetitive industry> Fhereas some produts have the purpose to )eauti*y8 others to heal8 and other produts have the spei? purpose to stop aging8 ompanies have to spend large amounts o* money into researh> Fhile osmetis8 sin are8 *ragrane and personal are produts onsist o* a variety o* ingredients8 manu*aturers have gained the advantage to om)ine all the ahievements in )oth pharmaeutials and )iotehnology to use ne@ su)stanes as the

ingredients in their prodution> A@areness a)out ingredients among the onsumers has inreased> A@are onsumers demand *or sa*e p roduts> Until the reent year manu*aturers have relied mainly on extrats *rom plants or syntheti su)stanes as the ingredients used to eDetively a)sor) the produts to the sin> ;o@ researhers are paying more attention to implementing nanotehnology and to replae plant extrats )y mineral extrats and other more natural ingredients to inrease the eDetiveness o* a)sorption and the other eDets8 and ?nally to meet the needs o* the ustomers> +nreasing the eDetiveness and reating long=lasting eDets is a ey tehnologial hallenge *or osmetis manu*aturers> (he main purpose o* tehnologial advanements no@ is to mae osmetis osmetis more natural8 sin=*riendly8 long lasting and more eDetive>

-emographi trends

-emographi *ator impats heavily the industry o* osmetis and personal are produts> Forld Forld population is reported to ontinually gro@: )y 0>#G in more developed ountries *rom '000 to '0%08 )y %>#G in less developed ountries8 and )y '>G in least developed ountries> (he @orldHs population more than dou)led )et@een %9&0 and '0%0> (he inrease in glo)al population )et@een %9&0 and '0%0 an )e largely attri)uted to gro@th in Asia8 A*ria and 7atin Ameria> o@ever8 European and U>S> ountries no@ are *aing muh slo@er population gro@th> Europe and apan is at the danger o* ageing> Ageing ould redue eonomi po@er o* apan> Fithout rapid gro@th in produtivity8 greater greater partiipation rates in the la)or *ore8 or other aggressive orretive orretive ations8 la)or *ore ontration in many o* the @orldHs leading eonomies ould depress eonomi output8 )oost inIation and ur) investment> (his ould lead to overapaity and *alling returns on investment in ey setors o* some industriali6ed eonomies>(he United StatesH higher *ertility rate and its a)ility to a)sor) and assimilate ne@omers in @ays that others ulturally reet support the notion that demographi trends @ill only enhane the United StatesH a)ility to maintain its position as superpo@er on the @orld stage> Fith ontinued superpo@er status @ill remain ontinued pressure *or leadership and inreased i nreased hallenges> As the C+A reports8 )y '0.08 nearly %>. )illion people or %&># perent o* the @orldHs population @ill )e aged &. or older ompared to a)out 4'0 million or &>9 perent in '000>

Eonomi (rends

 (he last *e@ years years o* reession reession have had impat impat on the sales o* per*umes8 per*umes8 osmetis and personal are items> Several ne@ patterns have )eome notiea)le in this industry> 3irst8 during the reession people had lo@er inomeJ

there*ore there*ore they turned their heads to lo@er l o@er=pried =pried prodution> Seond8 onsumers have *ound that )uying items through dediated +nternet hannels is a heaper @ay to get the desired produts at a lo@er prie> o@ever8 sine the value o* the dollar is onsidered @ea8 prodution and export *rom U>S> reates a )ene?t against rivals @ho manu*ature in European ountries @here Euro is stronger than dollar and the prodution osts more> /rodution in Europe is onsidered expensive due to the appreiation o* the Euro8 exports are delining> -eveloping ountries8 suh as +ndia and China8 @ith lo@ ost la)or *ore has )eome the main threat to U>S> and European manu*aturers> manu*aturers> (he United States experienes slo@ gro@th and high unemployment8 @ithout muh poliy ation a tion until a*ter the presidential eletion8 leaving the ?sal sta)ili6ation8 gro@th8 and employment largely unattended8 and strutural adustment in the hands o* the private setor @ithout muh pu)li setor investment or support> Emerging eonomies settle do@n to near pre=risis gro@th patterns and remain the inomplete gro@th engine o* the glo)al eonomy> eonomy> Euro6one has ?nanial pro)lems @ith several o* its mem)ers8 @ho have )eome a threat to the @hole Euro6one ountries> +n ase those ?nanially unsta)le ountries de*aulted all the mem)ers @ould )e *aing serious onseuenes and the European eonomy as @ell>

/olitial and legal onstraints

U>S>

 (he United States @here the the headuarters and one o* the manu*aturing manu*aturing plants o* the Revlon ompany is loated has had signi?antly sta)le government sine the end o* the Civil @ar> @ar> +n ontrast many other nations have not enoyed suh longevity o* sta)ility in governane> 3or example8 suh ountries as 1ermany8 +taly or Russia have had internal onIits and politial insta)ility> insta)ility> -ue to politial poli tial sta)ility U>S> is onsidered a sa*e plae pl ae to operate *or the Revlon8 +n>

 (ax  (ax rates:

K 3ederal taxes and State taxes exist

K /rogressive /rogressive *ederal tax rates vary *rom %.G to #.G

K State tax rates vary *rom state to state and are also progressive

!exio

Revlon has a manu*aturing plant pl ant in !exio> !exio is 3ederal presidential presidential onstitutional repu)li> (his ountry has glo)al attention as the enter o* drug prodution and traLing> o@ever8 !exio !exio is in the middle o* a politial transition to@ards demoray8 omplete @ith *air eletions8 pu)li aounta)ility and the rule o* la@> la@> "ne o* the main threats today is !exioHs ?nanial sta)ility due to politial tur)ulene> 3oreign 3oreign investors may *reely esta)lish a ompany in !exio or )uy sto o* already esta)lished ompanies 3oeth8 3oeth8 '005>

 (ax  (ax rates:

K +nome tax rate M #0G

K Corporate tax rate M #0G

K Sales tax$,A( M %&G

,ene6uela

,ene6uela is ausing onerns to the U>S> )eause o* violation o* human rights8 and dys*untional government provides a @elome heaven *or riminals and terrorists>

 (ax  (ax rates:

K +nome tax rate M #4G

K Corporate tax rate M #4G

K Sales tax$,A( M %'G

South A*ria

S> A*ria is maintaining high reputation in @orld ranings8 @ith a num)er o* reent international reports supporting the ountryHs strengths as an investment destination> -espite some septiism @hih emerged a*ter eletions in '0098 )usiness analysts are still optimisti a)out S> A*ria and they are naming it as as less risy and more re@arding *or investment than other A*rian ountries> Aording to anes Country Ris Ratings reports8 South A*ria @as plaed in %%.th position out o* '#. ountries> (his raning sho@s that S> A*ria is rated alongside suh developed eonomies as Uraine or ,ietnam and @as raned 'ndthe most sta)le ountry in Su)=Saharan A*ria aneHs +n*ormation 1roup8 '0025>

Aording to Business (imes8 South A*riaHs ratings are:

K &' out o* %00 *or eonomi sta)ility

K &9 o* %00 *or military stead*astness

K 4' o* %00 *or soial sta)ility indiators o* health8 soial ohesion and rime5

K 2 o* %00 *or external *ators S> A*riaHs relationship @ith neigh)oring ountries5

K 2 o* %00 *or politial sta)ility

 (ax  (ax rates in S> A*ria: A*ria:

K +nome tax rate M 40G

K Corporate tax rate M '2G

K Sales tax$,A( M %4G

China

Aording to Eihengreen8 investors should )e @orried a)out ChinaHs politial sta)ility> sta)ility> Ris onsultany ageny alled !aplero*t reently analy6ed China and the ountry @as ategori6ed as the extreme extreme ris aross several areas> Aording to !aplero*t those areas @ould @ould )e ivil and politial rights8 udiial independene8 demorati governane8 governane8 la)or rights and human rights violations> -ue to these *ators entrepreneurs that @ant to esta)lish ompanies in China may suDer *rom reputational damage> China is a ommunist party=led state>

 (ax  (ax rates:

K +nome tax rate M 4.G

K Corporate tax rate M '.G

K Sales tax$,A( M %G

3rane

 (ype  (ype o* government government in 3rane 3rane is repu)li> (he upoming presidential presidential eletion @ill @ill tae plae in April> 3rane @as sored 0>.2 )y the politial sta)ility and a)sene o* violene +ndex in the range *rom ='>. to '>.8 the higher index sore the )etter governane the ountry has Nau*mann8 Nraay8 and !astru66i8 '0095> (his index is the measure o* pereptions o* the lielihoods that government @ill )e sta)ili6ed or overthro@n )y possi)ly unonstitutional or aggressive means> 7 7o@ o@ sores indiate distrust o* the iti6ens to@ards ontinuity o* the government poliy Nau*mann8 et al>8 '0095>

 (ax  (ax rates:

K +nome tax rate M 40G

K Corporate tax rate M ##>##G

K Sales tax$,A( M %9>&0G

Soiologial *ators

Cele)rities have an enormous ontri)ution in advertising and maing )eauty and health produts popular among asual people> (he ne@ trend is that males are a re no@ more onerned a)out their appearane8 so no longer only *emales are to )e targeted as possi)le onsumers> !aret expansion expansion *or male produts is the opportunity to inrease sales *or personal are8  are8 *ragrane and osmetis manu*aturers> "ne more target o* interest *or )eauty produts manu*aturers is the U>S> teenage maret sine *emales in this age group has exeeded exeeded almost '0 million )y '0%0> (he ispani Amerian segment is the *astest gro@ing and is proeted to )e the largest minority setor in the U>S> ;on=ispani @hites population has )een expeted to deline to &2G )y '0%0> !ore and more onsumers are onerned a)out produts sa*ety and animal=testing> Sine the ompetition in the la)or setor is drastially inreasing8 due to the glo)ali6ation and the @or*ore migration @ithin and outside ountries and the overall population gro@th in the @orld8 people are very onerned a)out their appearane8 inreased onsumption o* )eauty and health produts is the result> o@ever8 older people are spending less on osmetis due to rapid derease in disposa)le inome @hih is aused )y higher pries o* sare resoures>

1lo)al trends

Asian8 Asian=/ai? and South 7atin ountries are )eoming an inreasing maret maret *or onsumption o* )eauty produts> A ne@ trend is that osmetis onsumers no@ pre*er natural=loo )eauty produts that mae them loo natural8 lie @earing no mae=up> !ale onsumers are no@ more onerned a)out their appearane8 no longer only *emales are the onsumers o* these personal are and osmeti items> Consumers are also onerned a)out ethial prodution onditions and animal testing> (he inreased a@arenessamong a@arenessamong onsumers a)out ingredients has reated the trend that )uyers o* osmetis and )eauty prodution no@ reuire manu*aturers to use sa*e su)stanes>

+ndustry Analysis

Supplier po@er

 (he )argaining po@er po@er o* suppliers is *avora)le> *avora)le> (here are are many8 so so they do not have lots o* po@er8 there*ore players in the industry  an eep s@ithing them at almost no ost> (his maes maes the industry highly attrative> +n addition8 huge manu*aturers are a)le to produe ingredients used *or osmetis8 personal are items and per*umes on their o@n>

Buyer po@er

/o@er /o@er o* )uyers is un*avora)le in this industry>Buyers industry>Buyers in the osmetis8 *ragrane and personal are produts industry are not *airly loyal to a partiular ompany and they have the a)ility to s@ith to other )rands at very lo@ or no ost> !oreover8 onsumers o*ten o*ten do not sti to one partiular )rand> (his means that )uyer po@er is high> (he maority o* )uyers o@n a variety o* diDerent )rands o* maeup8 per*ume per*ume or personal are produts> (his also allo@s ustomers to shop *or *avora)le pries and produts>

 (hreat o* ne@ entrants

 (hreat o* ne@ entrants is un*avora)le un*avora)le *or this industry> industry> (his industry is onsidered onsidered not to have high )arriers o* entry8 it is not seen diLult *or a ne@ ?rm to step into the industry> +t maes the threat o* ne@ entrants high> ;e@ small and large maeup and *ragrane ompanies are entering this industry onstantly  onstantly>> Sine maeup and *ragranes are usually produed in large volumes8 due to eonomies o* sale eDet8 there is lo@ relative prodution ost per unit> Also8 it is pretty tough *or ne@ ompanies to ompete @ith older ompanies @hose )rands are already reogni6ed )y onsumers>o@ever8 onsumers>o@ever8 dereased ompetition is aused)y muh relative apital needed to )eome a player in the industry8 as apital is needed to auire plant8 euipment and supplies *or prodution8 and it maes it more diLult *or ne@ ?rms to enter>

 (hreat o* su)stitutes su)stitutes

 (he level o* threat threat o* su)stitutes su)stitutes *or osmetis8 osmetis8 personal are8 are8 and *ragranes is lo@> (hese are the produts that have very lo@ num)er o* su)stitutes oDered )y other industries> "ne and main o* the su)stitutes @ould )e osmeti surgery8 more spei?ally inetions o* su)stanes to the )ody> o@ever8 surgery is very expensive and still onsidered risy8 there*ore this su)stitute is not yet very popular> popular> Another *ator that some onsumers may ?nd attrative or unattrative8 depending on the pre*erenes8 pre*erenes8 is that surgery reates permanent results on oneHs )ody and appearane> As there are no other alternatives *or osmetis8 *ragrane and personal are produts8 demand elastiity is onstrained>

-egree o* rivalry

 (he degree o* rivalry in this industry industry is high due to large num)er o* ?rms ompeting *or the same resoures and ustomers> Slo@ industry gro@th also intensi?es rivalry as ompanies ?ght *or maret share> share> +n addition high hi gh ?xed osts resulting in the eonomy o* sale eDet inrease the degree o* rivalry> Rivalry is dereased )y the nature o* produts as they are not highly=perisha)le and an )e stored *or a longer time )e*ore )eing sold> Costs *or ustomers to s@ith *rom one produt to another are lo@8 there*ore there*ore rivalry is intensi?ed> Brand identi?ation8 @hih is attri)uta)le in this industry8 redues rivalry> rivalry>

Competitor analysis

/roter and 1am)le

/roter O 1am)le is a multinational ompany oDering @hih is oDering @ide range o* produts in many ategories8 suh as: personal are8 osmetis8 *ragranes8 hair are and sin are> /O1 Company is diDerentiated> /O1 oDers produts outside osmetis$sin are industry inlude di apers8 )aing mixes8 )leah8 dish are produts8 uie8 laundry produts and et> (he ompany operates in more than 0 ountries @orld@ide Austin8 '005>

/O1 oDers hair are produts through its @ell=no@n )rands @hih are /antene8 ead O Shoulders and er)al Essenes> /O1 has auired 1illette *or . )illion in '00.> Beauty are produts have ontri)uted to /O1 sales @ith O'%>% )illion and #>' )illion in pro?t> /O1 oDers a line o* produts alled Cover 1irl Advaned Radiane *or )a)y )oomers generation Austin8 '005>

7H"real

7H"real is the @orld largest ?rm in the osmetis industry> 7H"real has auired !ay)elline @hih @as one o* the leading ompetitors in osmetis industry> industry> +n %99& it @as )ought *or .2 million> (his @as the attempt to inrease its maret share in the U>S> this attempt @as suess*ulJ sine 7H"real 7H"real )eame 'nd largest osmetis ?rm Austin8 '005>

Unilever

Unilever is the Anglo=-uth ?rm @hih @as no@n *or manu*aturing soap$detergent and *ood produts> Reently the ompany started to manu*ature personal are and osmetis produts8 @hih ontri)utes to the ompany @ith '&G o* their )usiness sales> Some o* the most no@n Unilever produt )rands are: -ove8 /onds8 ,aseline ,aseline and Sunsil> +n '00. Unilever sold its *ragrane )rand alled Calvin Nlein to Coty *or 200 million> (he ?rm is *or using nonele)rities models to promote their produts and launhing ontroversial mareting mareting ampaigns> Sin are produts o* Unilever Company are leading in ;orth Ameria8 A*ria and 7atin Ameria regions Austin8 '005>

Avon /roduts8 +n>

Avon Avon is the leading ?rm in diret selling o* osmetis and )eauty are produts> Companies diret sales reahes . million people in %%4 ountries> !ost no@n Avon )rands are: Avon olor8 Avon Sin Care Solutions8 Ane@ and !ar> Besides )eauty are produts and *ragranes Avon sells vitamins and nutritional supplements8 as @ell as e@elry8 gi*t items and lingerie> 92G o* sales are ontri)uted )y the sales representatives8 representatives8 to maintain a smaller perentage Avon have lunhed its @e)site> Avon has made a *e@ ost=utting deisions in '00&>  (he deisions involved involved the simpli?ation o* )rands and Avon Avon has redued redued the o* management levels Austin8 '005>

Estee 7ouder

 (he Estee 7ouder 7ouder Companies8 +n> manu*atures manu*atures and marets marets osmetis8 osmetis8 *ragranes8 sin are produts and hair are produts *or sale in %0# ountries and territories> Some o* )est no@n )rands o* Estee 7ouder are Estee 7ouder and Cliniue> Estee 7ouder holds liense to sell produts )y the name o* (ommy

il?ger and -onna Naran> +n '00& net sales have reahed &84&4 million Austin '005>

External 3ator 3ator Evaluation E3E5 !atrix

|

Ney External 3ators

"pportunities

| Feight

| Rating

| Feighted Sore

|

||||

%> +mplementation o* the relatively ne@ nanotehnology

| 0>% | #

| 0># |

'> Constant gro@th o* @orld population )y '0.08 nearly %>. )illion people or %&># per perent ent o* o* th the @or @orld ldHHs pop popul ulat atio ion n @il @illl )e )e ag aged &. &. or or old olde er5 | 0>0 0>0% %|' | 0>' 0>' |

#> -evaluation o* dollar ag against Euro

| 0> 0>04 | 4

| 0>%& |

4> +nreasing sales over the +nternet

| 0>02 | '

| 0>%& |

.> Emerg Emerging ing ne@ mar marets Asian Asian88 Sout South h 7ati 7atin8 n8 Asian= Asian=/ /ai? ai? ountr ountries ies55 | 0>2 |

&> Sta)ility o* politial governane in ountries o* operation 0>%0 |

2> +nreasing num)er o* male onsumers

||||

| 0>02 | '

| 0>' 0>' | 4

| 0>0. | '

| 0>%& |

|

 (hreats

||||

%> Continual ageing o* @orld population | 0>02

|'

| 0>%& |

'> +nr +nrea ease sed d a@ar a@aren enes ess s and and dema demand nds s o* sa*e sa*ety ty *rom *rom ust ustom omer ers s | 0>0& 0>0& | ' 0>%' |

#> 3i 3inanial pr pro)lems in in th the Eu Euro6one | 0> 0>0 | %

| 0> 0>0 |

4> -er -erea ease se o* *ree *ree disp dispos osa) a)le le ino inome me o* olde olderr on onsu sume mers rs | 0>0 0>0 |'

.> 3uture regulation ions o* industry prodution

|

| 0>0. | #

| 0>% 0>%4 4|

| 0>%. |

&> Auisitions o* ompeting ompanies lie 7H"real and !ay)eline that have larger share in the maret | 0>0& | # | 0>%2 |

> Compet Competitor itor ompanie ompanies s lie lie /rotor /rotor O 1am)le 1am)le that that are are diDeren diDerentiate tiated d | 0>0. | # | 0> 0>%. |

|||

 (otal:  (otal: | %>00 | | #>#9

|

+nternal Assessment

Company organi6ational struture

"rgani6ational Chart Revlon8 '00

 (he ompany is harateri6ed harateri6ed )y a large degree o* *ormali6ation @here @here eah *untion relies on standardi6ed @ays o* operating> (he deision=maing po@er is o*ten entrali6ed at the top o* the hierarhy>(he simple sheme o* hierarhy an )e lie this /lant !anagerPP!anager Engineering P !anager Aounting P !anager +n*ormation Systems P !anager uman ResouresP ResouresP !anagers /urhasing> (he ompany has a learly *untional organi6ational struture> (he si6e o* the ompany @ith its lo@ rates o* hange and dynamism promoted the esta)lishment o* this type o* struture>Rao8 '0%05

/ersonal poliies and management

/lanning

Employees in the ompany are diDerentiated and per*orm narro@ span or speiali6ed tass> (hose tass are organi6ed around the *untions o* operations8 ?nane8 human resoures8 resoures8 and produt researh and development> /utting lie l ie speialties together results in eonomies o* sale8 minimi6es dupliation o* personnel and euipment and maes employees employees om*orta)le and satis?ed )eause it gives them the opportunity to tal the same language as their peers> o@ever8 this eLieny might have a potential pro)lem p ro)lem @hih is )ased on the ommuniation gaps and omplexes @ith management> 3untional "rgani6ation Struture8 '0%'5

!otivation

 (he ompany reated reated ne@ inentive inentive re@ards re@ards programs8 inluding inluding restrited sto sto grants *ora )road group o* ey ontri)utors @ho @ill )e important in exeuting exeuting our strategies andin ontri)uting to the ahievement o* our goal o* ahieving long=term8 pro?ta)le gro@th> gro@th> (he high standards and tough poliies in the ompany are )eing re@arded highly and generously as @ell> "ne o* the prominent ats to@ards employee appreiation @as undertaen )y reating and launhing a Revlon Revlon learning enter @here employees are oDered a )etter training> Besides8 sine '004 there @as an even more exiting enouragement enouragement poliy introdued @hih @as Charlie A@ards> Revlon Revlon Annual Report '005

StaLng

By -eem)er #%8 '008 the Company employed approximately .8&00 people> As o*-eem)er #%8 '008 approximately '0 o* suh employees in the U>S> @ere overed )y olletive )argainingagreements> (he Company )elieves that its employee relations are satis*atory> Although the Companyhas experiened minor @or stoppages o* limited duration in the past in the ordinary ourse o* )usiness8suh @or stoppages have not had a material eDet on the CompanyHs results o* operations or ?nanialondition>Revlon ?nanialondition>Revlon Annual Report '005

Controlling

 (he sientists at the Edison *aility are responsi)le responsi)le *or all o* the CompanyHs ne@ produtresearh produtresearh @orld@ide8 per*orming researh *or ne@ produts8 ideas8 onepts and paaging> (he researhand development group at the Edison *aility also per*orms extensive extensive sa*ety and uality testing on theCompanyHs produts8 inluding toxiology8 miro)iology and paage testing> Additionally8 uality ontroltesting is per*ormed at eah o* the CompanyHs manu*aturing *ailities> Revlon Annual Report8 '005

/ersonnel /ersonnel poliies and management

/oliies reIet reIet a ompanyHs value system> (he tone and language o* poliy statements @ill )e taen as reIetions o* management attitudes to@ard employees> Revlon Revlon has a strong team o* experiened managers> Fith the oming o* the ne@ CE" the ompany stis to very high standards> 3or example8 one o* the poliy reuires a 99G inventory and order auray in aounting proedures> proedures> Some o* the plants @here osmetis are )eing ela)orated are issued +S" M 9000 erti?ate @hih signi?es a very high manu*aturing level>  Revlon Annual Report8 '005

"perational prodution apaities and poliies

Capaity

!anagement onsiders theCompanyHs *ailities to )e @ell=maintained and satis*atory *or the CompanyHs operations8 and )elievesthat the CompanyHs *ailities and third party ontratual supplier arrangements provide suLient apaity*or its urrent and expeted prodution reuirements> Revlon Annual Report8 '005

/roess$3ailities

 (he Company ontinually ontinually revie@s its manu*aturing needs needs against its manu*aturing apaities toidenti*y opportunities to redue osts and operate more eLiently> (he Company purhases ra@ materialsand omponents throughout the @orld8 and ontinuously pursues redutions in ost o* goods through theglo)al souring o* ra@ materials and omponents *rom uali?ed vendors8 utili6ing its purhasing apaitydesigned to maximi6e ost savings> (he CompanyHs glo)al souring strategy *or materials and omponents*rom omponents*rom aredited vendors is also designed to ensure the uality o* the ra@ materials and omponents andassists in proteting the Company against shortages o*8 or diLulties in o)taining8 suh materials> (heCompany )elieves that alternate soures o* ra@ materials and omponents exist and does not antiipateany signi?ant shortages o*8 or diLulty in i n o)taining8 suh materials> Revlon Annual Report8 '005

3inanial sta)ility ommon ratios and measures5

3inanial "vervie@

Revenue

;AS-AQ8 '00

Revlon Avon Estee 7auder

%>4B 9>94

>04

+nome

;AS-AQ8 '00

Revlon Avon Estee 7auder

=%&>%!

.#0>!

449>'!

Analysis: (he negative inome is a very serious index revealing a su)stantial pro)lem in the ompany>

Ratio Analysis

7iuidity ratio

Current ratio  Current Assets$ Current 7ia)ilities

;AS-AQ8 '00

'00 Avon Estee 7auder

%>#.

%>4'

%>2&

Analysis: Current ratio is a)ove % that means *or every % o* urrent lia)ilities there is a %>#. urrent assets> assets> (he short term o)ligations are )eing managed @ell> (his index might )e ?ne *or the reditor )ut unliely to )e satis*atory *or the investor>

Qui Ratio Current Assets = +nventory$ Current lia)ilities

;AS-AQ8 '00

'00 Avon Estee 7auder

0>2

%>0'

%>4%

Analysis: Qui ratio sho@s to @hih extent the ompany an deal @ith its short term o)ligations @ithout relying on the sales o* its inventory> inventory> Sine the ratio is lover than % it implies that the ompany heavily relies on its o@n inventory to meet the short term o)ligations> Being slightly )elo@ 6ero means that there is some small pro)lems in the ompany though these hardships are not disastrous>

7everage Ratios

-e)t to Euity ratio

;AS-AQ8 '00

'00 Avon Estee 7auder

=%>2' #>9#

%>4

Analysis: (he negative index points to onlusion that the share o* o@nerHs euity omparing @ith the reditors in lending money is )igger> )igger> Euity is o* prime dependeny *or the ompany>

/ro?ta)ility ratios

1ross pro?t margin Sales M Cost o* 1oods Sold$Sales

;AS-AQ8 '00

'00 Avon Estee 7auder

&9>&%G

&#>#% .>2

Analysis: (his margin an over the ompanyHs &9>&% G o* operating expense and still generate a pro?t> ;ot a )ad indiator in omparison to the ompetitors>

"perating /ro?t !argin  Earnings Be*ore +nome (ax$ Sales

;AS-AQ8 '00

'00 Avon Estee 7auder

2>.4G0> G0>.#

''>4%

Analysis: (he residual %%>. G pro?t prior to paying oD tax and i nterest> ;ot )ad in omparison @ith some ompetitors @hile in ontrast to others the index is small>

Return on Assets ;et +nome$ Average Assets

;AS-AQ8 '00

'00 Avon Estee 7auder

%#>'G %%>.G

%%>..G

Analysis: 3or eah dollar o* assets the ?rm generates a pro?t o* 0>%#> +t is not a very high indiator )eause the pro?t might not )e )ig a*ter paying oD taxes and interest>

Return on Euity ;et +nome$ (otal StoholderHs Euity

;AS-AQ8 '00

'00 Avon Estee 7auder

%>#9G 0>&G

#%>24G

Analysis: 3or every stoholderHs euity the pro?t per dollar i s 0>0%#9> (his is a seriously lo@ indiator @hih signi?antly @arns the potential investors>

/rie to Earnings Ratio /rie$ Earnings per Share

;AS-AQ8 '00

'00 Avon Estee 7auder

=#9> =#9>&%#0 &%#0>' >'. . %9>. %9>.

Analysis: (his indiator measures the attrativeness o* the ompany in the euity maret and sho@s ho@ muh investor is @illing to pay to o@e one share o* the ompany> ompany> =#9>&% is a very lo@ ?gure @hih sho@s that investors are not expeting to reeive muh in returns *rom the ompany>

7eadership and organi6ational )ehavior8 orporate ulture8 et

Corporate or organi6ational ulture o*ten times is )ased on stories and legends @hih are ommuniating the values and norm o* the ompany> /eople are sharing these stories as a result they reate unspoen unspoen orporate atmosphere> +nside people are a@are o* ans@er *or suh uestions o@ does the )oss reat to mistaesT Fhat eventsare eventsare so important that people get ?redT Fho8 i* anyone8 an )rea the rulesT A *ounder and CE" o* Revlon Charles Revson and he @as prominent *or demanding every @orer to )e in time @hereas himsel* @as arriving *or @or a*ter noon> "ther ases @ith his involvement are notorious as @ell>

 (he ontemporary orporate ulture is )ased )ased on )ehaviors o* aounta)ility8 olla)oration8 ommuniation8 exeution8 value o* integrity8 respet and trust Revlon8 Revlon8 '0%'5>

 (he Code o* )usiness )usiness Condut states: states:

K Everything eah o* us does in our )usiness must reIet the highest ethial standards as @ell as our ommitment to integrity>

K +t is essential *or our suess that @e protet and preserve RevlonVs RevlonVs assets to ena)le us to gro@ our )usiness and its value *or our staeholders> staeholders>

K Fe must al@ays ollet and report aurate in*ormation a)out our results so that @e )ase our )usiness strategies and deisions on aurate data and properly *ul?ll our pu)li reporting o)ligationsJ and

K W3inally8 Revlon Revlon is *ully ommitted to *ully omplying @ith all applia)le la@s and eah o* us must reIet this ommitment in our day=to=day )ehavior>

!areting

/romotion

 (he ompany rein*ores rein*ores lear8 lear8 onsistent )rand positioning positioning through eDetive8innovative eDetive8innovative advertising and promotion> +t also uses ooperative advertising programs8 supported )y Company=paid or Company su)sidi6ed demonstrators8 and oordinated in=store promotions and displays> (he Company also has various arrangements @ith ustomers pursuant to its trade termsto reim)urse them *or a portion o* their advertising or promotional osts8 @hih provide advertising andpromotional )ene?ts to the Company> Revlon Annual Report '005

Cele)rities advertising

 (he ompany is intended intended to ontinue a strategy strategy o* supporting ne@produts @ith advertising and promotions at spending levels that are a re intended to )e ompetitive8 using talented8 @ell no@n8 ele)rity )rand am)assadors> Revlon Annual Report8 '005

/rie

 (he Company marets marets extensive extensive onsumer onsumer produt lines prinipally pried in the upper range o* themass retail hannel and ertain other hannels outside o* the U>S> Revlon Annual Report8 '005

-istri)ution

 (he CompanyHs produts are sold in more than than %00 ountries aross aross six ontinents> (he ompanyHs@orld@ide sales *ores had app roximately roximately #40 people as o* -eem)er #%8 '00> +n addition8 the Companyutili6es sales representatives and independent distri)utors to serve ertain marets and related distri)utionhannels> ;et sales in the U>S> aounted *or approximately approximately .G o* the CompanyHs '00 netsales8 a maority o* @hih @ere made in the mass retail hannel> ;et sales outside the U>S> aounted *or approximately approximately 4#G o* the CompanyHs '00net sales> (he ?ve largest ountries in terms o* these sales @ere South A*ria8 Australia8 Canada8 U>N andBra6il8 @hih together aounted *or approximately approximately '#G o* the CompanyHs '00 net sales> Revlon Annual Report8 '005

Customers

 (he CompanyHs prinipal ustomers inlude large mass volume volume retailers and hain drug stores8inluding suh @ell=no@n retailers as Fal=!art8 (arget8 Nmart8 Falgreens8 Rite Aid8 C,S and 7ongs inthe U>S>8 Shoppers -rug!art in Canada8 A>S>Fatson A>S>Fatson O Co> retail hains in Asia /ai? and Europe8 andBoots in the United Ningdom> Revlon Annual Report8 '005

Ethial$ legal issues

 (he Company is su)et to regulation regulation )y the 3ederal 3ederal (rade (rade Commission the the XX3(CHH5 XX3(CHH5 and the 3oodand -rug Administration the XX3-AHH5 in the U>S>8 as @ell as various other *ederal8 state8 loal and *oreignregulatory authorities8 inluding the European Commission in the European Union XXEUHH5> (heCompanyHs "x*ord8 ;orth Carolina manu*aturing *aility is registered @ith the 3-A as a drugmanu*aturing esta)lishment8 permitting the manu*ature o* osmetis that ontain over=the=ounter over=the=ounter drugingredients8 suh as sunsreens and anti= perspirants> Compliane @ith *ederal8 state8 loal and *oreign la@sand regulations pertaining to disharge o* materials into i nto the environment8 or other@ise relating to theprotetion o* the environment8 has not had8 and is not antiipated to have8 a material eDet on theCompanyHs apital expenditures8 expenditures8 earnings or ompetitive position> State and loal regulations in the U>S>and regulations in the EU that are designed to protet onsumers or the environment have an inreasinginIuene inreasinginIuene on the CompanyHs produt laims8 ingredients and paaging>Revlon paaging>Revlon Annual Report8 '005

!anagement in*ormation systems and researh and development

 (he Company )elieves )elieves that it is an industry leader in the the development o* innovative andtehnologially=advaned osmetis and )eauty produts> (he Company has aross=*untional produt development proess8 inluding a rigorous proess *or the ontinuous developmentand evaluation o* ne@ produt onepts> As o* -eem)er #%8 '008 the Company employed approximately approximately %&0 people in its researh and development ativities8 inluding speialists in pharmaology8 toxiology8 hemistry8 miro)iology8engineering8 )iology8 dermatology and uality ontrol> +n '008 '00& and '00.8 the Company spent'4>4 million8 '4>4 million and '&>% million8 respetively8 on researh and development Ativities> Revlon Revlon Annual Report8 '005

/atents8 (rademars and /roprietary (ehnology

 (he CompanyHs maor trademars are are registered registered in the U>S> and and in @ell over %00 other ountries8 andthe Company onsiders trademar protetion to )e very important to its i ts )usiness> Signi?ant trademarsinlude Revlon8 ColorStay8 Revlon Age -e*ying maeup @ith Bota?rm8 Super 7ustrous8 7ustrous8 Almay8 SmartShade8 !ithum8 Charlie8 ean ;atY8 Revlon Colorsil8 Eterna ' and8 outside the U>S>8 Bo66ano8 Cutex81atineau and Ultima ++> (he Company regularly rene@s its trademar registrations in the ordinary ourseo* )usiness>Revlon )usiness>Revlon Annual Report8 Report8 '005>

 (he +nternal 3ator 3ator Evaluation +3E5 !atrix

Ney +nternal 3ators

Feight

Rating Feighted Sore |

|

Strengths

|

|

%>Expenditure o* '4>4 million  on RO- 0>0& #

0>%2

|

0>%'

|

|

'>+S"= 900 erti?ation 0>04

4

0>%& |

|

#>Attempt to introdue ne@ produts

0>04 #

|

4>CSR program '. million expenditure

0>0. #

|

.>Brand reognition

0>0& '

0>%' |

0>%.

|

|

&>Soial Responsi)ility programs 0> 0>0. #

0>%.

|

|

>%'0 @orth aggressive advertising

0>09 4

0>#&

|

|

2> ;e@ produt development ontinuation

0>0# 4

0>%'

|

9>igh operating eLieny

0>0. 4

0>'

|

|

%0>/rodution *or all type o* @omen

|

|

Feanes eanesse ses s|

|

0>04 #

0>%'

|

|

%>% million  sales derease 0>04

%

0>04

|

|

'>!a Andre@ 2 million de)t extension

0>0# %

0>0#

|

#>3inanial resoures de?it

0>0& %

0>0& |

|

4> /ries higher than ompetitorsH

0>09 %

0>09

%

|

|

|

.>7ess diversi?ed produts then 0>0.

ompetito itors ha have

0>0.

|

&> '># )illion as a long term de)t 0>0 '

0>%4 |

|

>igh net losses *rom disontinuation 0>04

o* ,ital radiane prodution

|

'

0>02

|

|

|

2> "*ten organi6ational re restruturing

0>04 #

0>%'

|

|

9>igh advertising expenses

0>0' '

0>04 |

|

%0> %0> (he (he neg negat ativ ive e impa impat t o* o* ust ustom omer er

|

non responsiveness to ,ital radiane

0>0. '

pro produt dutio ion8 n8 the the los loss s o* o* %%0 %%0  mil milli lion on

|

0>%

|

-ampa negati* dari pelanggan non tanggap terhadap produsi ahaya ,ital8 hilangnya %%0 uta  |

|

 (otal  (otal %

'>4#

|

Strategy 3ormulation 3ormulation

SF"( !atrix

Str Strengt engths hs | Fea Fea ness nesses es

|

%> 7oyal ustomer )ase

| %> 7arge de)t

|

'> ealth a@areness program rams | '> Short produt li*e yle

#> Fell no@n )rand name

|

| #> 7a o* inn innovative ive8 ne@ produts

4> /rodut sold all around the @orld

| 4> Constant employee uts

.> Stro Strong ng man manu* u*a atu turin ring$ g$di dist stri ri)u )uti tion on ent enter ers s | .> Fea Fea  mana manage geme ment nt

&> Fell= ell=n no@ o@n n adve advert rtis isin ing g repr epresen esenta tati tive ves s

> Strong Strong resea resear rh h and and dev develo elopme pment nt

2> ig igh h ual ualit ity y prod produ uts ts

"pportunities

| > ;arro ;arro@ @ tar target get mar maret |

| 2> 7a 7a o* div divers ersi? i?a atio tion n in prod produ uts ts |

|

| (hreats

%> /o /ossi)le a auisitions

|

| %> %> ,e ,ery st strong o ompetition

|

'> +ssuane o* more more sto | '> Unsta)le ?nanially ?nanially |

#> -iDe -iDerrent ent appr approa oah h to sale sales s

|

|

| &> -er -erea easi sing ng mar maret et shar share e

| 9> ,ery slo@ gro@th |

| %0> Capital alloation

|

| #> 7o@er o@er ost ost prod produ uts ts

|

|

4> -ev -evelop elopin ing g ou ount ntri ries esHH mar mar ets ets generation |

| 4> 4> ig ighl hly y dep depen ende dent nt on )a)y )a)y=) =)oo oome merr

.>
| .> .> Eonomi slo@do@n

&> /roduts *or ma male maret

|

| &> Counter*eitin iting g |

S/ACE !atrix

3/

Conservative

Aggressive

Z'

Z&

C/

+/

-e*ensive

='

Competitive

='

S/

RevlonHs RevlonHs ?nanial position is i s very poor8 @ith inreasing de)t8 @hih in i n '00& @as #8#'9 million> +t also means inreasing interest expenses expenses over the oming years> 3inanial position @as also @eaened @eaened )y restruturing osts and unsuess*ul produt launhes> +t leaves Revlon @ith Z' rating>

 (he ompany is very very sta)le in ompetitive ompetitive osmetis industry8 sine it has strong ustomer )ase and has )een a reogni6a)le )rand *or many years> "n the other hand8 there is strong ompetition8 more produts are heaper> heaper> +t means M' rating>

Competitive position is threatened )y maret share mainly8 )eause it has )een steadily dereasing8 )ut in '0%08 it @as still '0G in the US ;AS-AQ5> /rodut /rodut ualities8 RO-8 suppliers mainly Fal=!art and N=!art5 are also strong8 @hih means Revlon Revlon has =' rating>

+ndustry position is strongJ exploring Asian8 A*rian marets is )ringing more value to Revlon> +t means Z& rating>

Conlusion is8 that Revlon is a ?nanially trou)led8 although strong ompetitively ompany8 in a large8 ompetitive and gro@ing industry o* osmetis>

BC1 !atrix

Relative !aret Share /osition

igh !edium

| #G |

||

igh %0G

4>2G

!edium

0G

7o@

0>%0 0>0. 0>0# 0>00

7o@

=%0G

1lo)al maeup maret maret has )een gro@ing at the average rate o* 4>2G sine '00%> RevlonHs RevlonHs glo)al maret share has dereased to #G in '00& -atamonitor5> (his puts Revlon at the position o* uestion mars in the BC1 !atrix> Company that is one o* the oldest in the industry )eing in this position an )e explained that it is ust going through normal yle and the next stage @ill pro)a)ly )e that o* star> (he disadvantage o* this matrix is8 that it does not sho@ RevlonHs RevlonHs advantages over other ompanies in the industry8 also other large osmetis ompanies @ould also )e in the similar position in the BC1 !atrix>

+nternal=External +nternal=External +E5 !atrix

| Strong#>0 to 4>0

| Average'>0 to '>99

igh#>0 to 4>0

||||

| Fea%>0 to %>99 |

!edium !edium'>0 '>0 to to '>99 '>99 | | | |

7o@%>0 to %>99

||||

 (he +3E !atrix provides provides result result o* '>4# o* strengths strengths and @eanesses> @eanesses> E3E !atrix provides result o* #>#9> +t means that +E !atrix provides a solution o* gro@ and )uild8 @hih is exatly @hat strategi plan suggests that ompany should do>

1rand Strategy !atrix

Rapid !aret 1ro@th

Fea Strong

Competitiv itive e /o /osition

Competitive /o /ositio ition n

Slo@ !aret 1ro@th

+n the 1rand Strategy !atrix8 Revlon is in the Quadrant ++8 )eause onsidering all the previous in*ormation a)out the ompany8 it is in a relatively @eaer @eaer ompetitive position than other osmetis ompanies> (he @hole maret is gro@ing every year rapidly8 @ith huge possi)ilities to strengthen maret maret share overseas> Revlon is already taing means to )eome more aggressive and ompetitive )y improving RO-> "n the other hand8 it is not nearly enough8 so Revlon must onsider stronger maret penetration and diversi?ation> (he strength o* 1rand Strategy !atrix is that it sums up @hat has already )een seen as a pro)lem M @ea RevlonHs RevlonHs ompetitive position> "n the other hand8 it does not sho@ @hat other strengths o* the ompany are>

"verall8 every matrix sho@ed that RevlonHs main pro)lem is staying ompetitive among other large osmetis ompanies> (he pro)lem is that Revlon is not diversi?ed and their main target maret is @omen8 @ho are )a)y=)oomer generation8 @hih means that the ompany is not taing steps to *urther inrease their maret share share )y targeting @omen o* other age groups and even possi)ly men>

Quantitative Strategi /lanning !atrix QS/!5

Strategi Alternatives Al ternatives::

"utsouring to Asia and -iversi*ying in produts

A*ria8 @hile also targeting ethni

expanding to their minorities8 males and

marets> @omen o* more diverse

age groups

NE< E[(ER;A7 E[(ER;A7 3AC("RS"//"R 3AC("RS"//"R(U;+(+ES (U;+(+ES %> /ossi)le auisitions |

'> +ssuane +ssuane o* o* more more sto |

#> -iDe iDerent appr approa oa h to to sal sales es

|

4> -eveloping ountriesH marets

|

.>
|

&> /roduts *or male maret

|

 (REA(S  (REA(S %> ,ery ,ery strong ompetition ompetition

|

'> Unsta)le ?nanially |

#> 7o@er ost produts

|

4> igh ighly ly depe depend nden entt on )a)y )a)y=) =)oo oome merr gen genera erati tion on

.> Eonomi slo@do@n

&> Counter*eiting

|

|

|

 ("(A7NE<  ("(A7NE< +;(ER;A7 3AC("RSS(RE;1(S %> 7oyal ustomer ustomer )ase

'> eal ealth th a@ar a@aren enes ess s pro progr gram ams s |

|

#> Fell no@n )rand name

|

4> /rodu odutt sol sold d all all arou around nd the the @or @orld ld

|

.> Strong Strong manu*a manu*aturing turing$dist $distri)ut ri)ution ion enters enters |

&> Fel Fell= l=n no@ o@n n adve advert rtis isin ing g repr repres esen enta tati tive ves s

> Stro Strong ng rese resear arh h and and dev devel elop opme ment nt

2> igh igh ual ualit ity y pr produ oduts ts

|

|

FEAN;ESSES %> 7arge de)t

|

'> Short produt produt li*e li*e yle |

#> 7a a o* o* in innova novattive8 ive8 ne@ ne@ pr produ oduts ts

4> Constant employee uts

.> Fea management

|

|

|

&> -ereasing maret share

|

> ;arr ;arro@ o@ targ target et mar maret et |

2> 7a 7a o* dive divers rsi? i?a ati tion on in in pr produ oduts ts

|

|

9> ,ery slo@ gro@th |

%0> Capital alloation

|

 ("(A7  ("(A7|| FE+1(0>%0>020>0.0>%'0>%%0>%0>%'0>020>0&0>0.0>090>04%>000>%0>0'0>%'0>0&0> 0.0>020>040>%0>0#0>0#0>0.0>0'0>0.0>040>0&0>00>0.0>0#%>00 0.0>020>040>%0>0#0>0#0>0.0>0'0>0.0>040>0&0>00> 0.0>0#%>00 | AS % # 4 % ' ' ' 4 ' # % ' % ' |  (AS0>%0>#&0>440>%0>'40>'0>040>420>%'0>#0>  (AS0>%0>#&0>440>%0>'40>'0>040>420>%'0>#0>#0>%0>0.0>%4'>9 #0>%0>0.0>%4'>9 | AS ' % % 4 # % 4 % # % # 4 ' 4 |  (AS0>'0>%'0>%%0>40>#&0>%0>020>%'0>%20>%0>  (AS0>'0>%'0>%%0>40>#&0>%0>020>%'0>%20>%0>90>'0>%0>'2#>'. 90>'0>%0>'2#>'. |

Strategi solutions

A*ter the development o* SF"(8 S/ACE8 BC18 +E8 1rand Strategy and QS/! matrixes )est strategi alternatives @ould )e to adopt ompetitive strategy> Competitive strategy @ould )e to try adopting *or@ard and hori6ontal integration as @ell as maret development development and produt development and unrelated diversi?ation strategy models> (hese strategies @ill help the Revlon +n> to turn its @eanesses into strengths and threats into opportunities>

 (o  (o maintain reasona)le reasona)le and eLient implementations implementations and strategies strategies in general the *ollo@ing riteriaHs has to )e met> Strategies should not reate inonsistent goals and poliies @ithin organi6ation> Strategy should )e representing adaptive response to the external environment environment and to the ritial hanges ourring @ithin it> (he ?nal )road test o* strategies is its *easi)ilities> Strategies must neither overtax availa)le resoures nor reate unsolva)le pro)lems> (he last not the least metri to *ollo@ is i s the advantage> Strategies must provide *or reation and maintenane o* ompetitive advantage in a seleted area or ativity -avid8 '0%%5> (o (o evaluate strategi solutions evaluation metris has to )e *ollo@ed>

Adopting *or@ard integration @ill result in gaining o@nership or inreased ontrol over distri)utors or retailers> Sine Revlon is not using diret sales assistants to o)tain net sales8 the o@nership o* distri)utors or retailers @ill help the ompany to shrin distri)ution hannel> +n this ase the pro?t margin @ill )e higher> higher> ori6ontal integration @ill result in inrease in o@nership and ontrol o* ?rmHs ompetitors> (he auisition o* @ell no@n )rand @ill eliminate the @eaness o*

narro@ target maret maret sine ne@ )rands @ill oDer ne@ produts *or ne@ ustomers> !aret development development strategy is the ey to higher pro?ts> Aording to -avis hugest perentage o* Revlon produts are onsumed )y the Ba)y Boomer generation> Fithout researhing ne@ produts the same p rodut lines might )e introdued in the ountries @here )irth rates are delining and there are more elder people> Attrative marets @ould )e apan8 ong Nong and et>  (his strategy @ill eliminate eliminate the threat threat o* )ig dependa)ility on Ba)y Boomer generation>

Aording to SF"( matrix @eanesses o* Revlon Corporation are la o* la o* diversi?ation in produts8 narro@ target maret and la o* innovative$ne@ produts> /rodut development strategy is strongly reommended *or Revlon Corporation> /resent produt improvement improvement or development o* ne@ produts servies or are inevita)le in the ompetitive  ompetitive osmetis industry sine ompetitors suh as /O18 Avon8 7H"real 7H"real are oDering more produts *or )igger variety o* target marets> Besides strong ompetition the narro@ target maret is the reason o* maret share derease *or Revlon # perent yearly even @hen glo)al trend *or osmetis industry is measured 4 perent yearly in sales> Revlon should strongly onsider unrelated diversi?ation strategy> strategy> Sine the ompetition is very intense in this industry and the target maret o* Revlon is very narro@> Adding ne@ unrelated produts @ould hange the onsumer vie@ on the ompany> (he ompany @ould )e seen as more innovative @hih @ill attrat teenage onsumers> Aording to -avid teenage maret @ill reah '0 million )y '0%0>

-ue to eonomi8 politial and demographi trends Revlon Revlon should )e seeing and esta)lishing )usiness in Asia=/ai?8 A*ria and 7atin Ameria regions> (hese regions are adapting vast tehnologial advanes and integration o* ne@ tehnologies @hih gives )ene?ts *or people living in these regions and inreases the produtivity o* ountries @hih are in these regions> -ue to *ast gro@th o* developing ountries more disposa)le inome are generated )y households @hih provides suLient *unds to )uy osmetis8 sin and )ody are produts>

+n the ase study o* Revlon -avid @as desri)ing the gro@th o* @orld=@ide maret and even maret maret gro@th in U>S> Sine the inIo@ o* human apital is inreasing year )y year> Fhile the ompetitive position o* Revlon is @ea sine the ompetitors lie /rotor O 1am)le8 Unilever8 Av Avon on /roduts8 +nH has stronger positions due to @ell no@n )rand names and diversi?ed produts8 @hih are adapted to diverse population o* U>S> (here*ore @hite non=ispani population o* iti6ens in U>S> @ill derease till &2G )y '0%0 -avid8 '005> (his means that almost every third iti6en in U>S> @ill )elong to ethnial minorities> Aording to 1rand Strategy !atrix Revlon Company lies in 'nduadrant8 this means that the ompany needs to adapt strategies lie maret development8 produt

development8 and hori6ontal integration> 1rand Strategy !atrix proves that the strategy alternatives suggested *or Revlon Revlon are the ones that have to )e implemented in order to turn @eanesses into strengths and threats into opportunities> (he )est alternative *or the Revlon @ould )e a mixture o* maret development8 produt development8 and hori6ontal integration strategies>

 (he ations items reuired to ahieve implementation implementation @ould ?rst o* all have to start @ith raising apital and dereasing RevlonHs de)t> +* the ompany @ants to implement *or@ard integration )y auiring other ompaniesH produts8 it has to have resoures to do that> RevlonHs sales have not )een ompetitive enough8 so implementing a strategy o* diret sales @ould possi)ly inrease their pro?ts8 as @ell as derease de)t> !ore emphasis on other ustomer groups an )e ahieved )y diret mareting o* produts8 @hih is heaper than advertising ampaigns Revlon urrently urrently has to pursue their ustomers> All o* that means that the ompany @ould have to employ more people to ahieve their long term goals8 @hih still @ould )e less expensive than going *urther into de)t>

 (o  (o ahieve more more diversi?ation8 Revlon Revlon has to produe produe ne@ produts produts and introdue them to the mass maret8 not a spei? group o* onsumers> (hat an )e done )y reating supplementary produts8 su)stitutes> Also8 in the past i t proved to )e ostly to reate strong )rand produts that @ere introdued to the maret8 maret8 so Revlon should *ous more on heaper8 generi goods *or mass maret>

1aining a ompetitive maret share in other regions suh as Asia and A*ria an )e ahieved )y )uilding ne@ prodution plants in those ountries> +t @ould )e very expensive8 )ut it is a strategy that has proved to )e suess*ul *or Revlon in the past> -eveloping relationships and signing ontrats @ith Asian stores @ould )e the main step needed to ahieve results> Also ?nding suppliers and reating a logistis system in those marets @ould derease osts )y a lot> "utsouring @ould also derease osts>

 (argeting  (argeting hanging US population o* ispanis @ould also need hanging o* RevlonHs RevlonHs strategy in mareting mareting and ne@ produts> ;e@ advertising ampaigns @ould have to inlude more diverse *aes8 @hih @ould sho@ that Revlon is targeting )igger maret> Right no@8 ompanyHs adverts are inluding @hite *emales8 @hih leave males and minorities out o* the ontext> Another step to gain share in *ast gro@ing maret o* ethni minorities @ould )e introdution o* heaper produts> (his maret segment does not have a lot o* disposa)le inome8 so pries o* the produts @ould have to )e ompetitive8 on the other hand uality might suDer8 )ut that an )e improved later8 @hen a loyal ustomer )ase is ahieved>

 (imeline *or *or +mplementation

'0%'

K Creation o* ne@ distri)ution hannels in Asia8 A*ria

K Researh o* possi)le mareting segments @ith the US

K Researh and development o* ne@8 heaper generi Revlon produts

K Start o* employing ne@ diret sales @or*ore in the US

'0%#

K +mplementation o* strategies o* diret sales and mareting mareting

K Start o* ne@ mareting ampaign targeting ethni minorities in the US

K +ntrodution o* ne@8 heaper generi Revlon produts

K Expanding diret sales into *oreign marets marets M mostly Europe

K '0%4

"pening o* ne@ distri)ution entres in Asia and A*ria

K Expansion o* diret sales into Asia and A*ria

K Restruturing M employment o* more @or*ore in mareting and sales

K Start o* advertising ampaign in Asia and A*ria

K '0%.

/ossi)le auisitions o* other )rands and produts

K Esta)lishment o* Revlon Revlon as a diversi?ed ompany targeting more maret segments

'0%2

K -erease in de)t

K Repurhase o* shares o* sto

 (he measurements measurements @hether @hether implementation is omplete @ould )e those o* perentage o* maret share8 share8 sales8 and ?nally de)t> Steady inrease o* at least #G o* maret share in the US eah year and at least G inrease in maret share in Asia and A*ria eah @ould mean that the implementation o* ne@ strategies is suess*ul> By the year '0%28 there is goal to have at least .0G o* the Asian and A*rian supermaret supermaret hains as partners @here RevlonHs produts @ould )e sold>

Conseuenes

Strategies should not reate inonsistent goals and poliies @ithin the organi6ation8 also it should not reate unsolva)le pro)lems> Any strategies @hat are oDered an help Revlon ompany to improve in positive @ay and to inrease its sales> Fhat onseuenes @ould )e i* applying any o* those strategies is not hard to predit>

3irstly8 to gain o@nership and inrease ontrol on distri)utors is the @ay @hat is going to happen i* adopting *or@ard integration> igher pro?ts @ould )e ahieved i* using !aret development strategy> (he strategy o* adding ne@ unrelated produts to the produt line @ould lead to hange o* onsumerHs vie@> vie@>  (his @ould give really really positive onseuenes onseuenes )eause teenage mared mared *or the ompany @ould expand> Also8 it is neessary to mae protetions protetions *or *uture> Revlon is dependent on Ba)y )oomer generation8 so reating marets in apan8 ong Nong and et> @ould help to redue dependeny on it> (hat is )eause in those regions live more elder people and attrating them @ould let to involve i nvolve more people to the maret>

As it @as mentioned earlier8 the )est alternative *or the Revlon Company @ould )e a mixture o* maret development8 produt development8 and hori6ontal integration strategies> Using those strategies ompany ould solve its pro)lems and improve>

"n the other hand not everything an loo so positive> Fhat @ould hange i* Revlon Company @ould hoose the strategy o* not hanging anything8 it is hard to no@> no@> !ain thing is that hanging nothing and not applying any o* those strategies lead ompany to trou)les> (he onseuenes o* not applying any strategy @ould really hurt the ompany> Nno@ing the *at that Revlon are struggling in some ases it is neessary to improve the situation> And as it @as said the )est thing is to hoose the )est strategy to avoid )iggest possi)le pro)lems and )anrupty>

Re*erenes:

%> -atamonitor> '0028 !arh5> 1lo)al !ae=Up !aret to '0%%> Researh and!arets> and!arets> Retrieved !arh %48 '0%'8 *rom @@@>researhandmarets>om$reports$.9#9'$glo)al\mae\up\maret\to\'0%%

'> Eihengreen8 B> >8 1upta8 />8 O Numar8 R> '0%05> Emerging giants: China and +ndia in the @orld eonomy> ;e@

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Aountany8 !anagement Consultany +ssues> Retrieved Retrieved !arh %.8 '0%'8 *rom http:$$@@@>monda>om$uniteds http:$$@@@>monda>om$unitedstates$artile>aspTartileid.0&24 tates$artile>aspTartileid.0&24

4> Nau*mann ->8 Nraay A>8 O !astru66i !> '0095> 1overnane matters ,+++ aggregate and individual governane indiators %99&='002> Fashington8 ->C]>: Forld Ban -evelopment Researh 1roup8 !aroeonomis and 1ro@th (eam>

.> /erry8 F> '005> aneVs sentinel ountry ris assessments> Coulsdon8 Surrey:  aneVs +n*ormation +n*ormation 1roup>

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