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SWOT Analysis

STRENGTH-

1.Advertising continues to be one of the primary areas of promotion spending by Revlon, which spent approximately
$120 million on U.S. advertising in 2006.

2. The company has production facilities in Oxford, China, and France. Several of the company’s plant have ISO-9000
certification signifying their commitment to quality manufacturing standards.

3. save the company $34 million a year in reduced Expenses due to restructuring of the organization.

4. Globalization of the company’s manufacturing and distribution efforts has enabled the consolidation of production
facilities and provided increased operating efficiency and better use of capital assets.

WEAKNESSES-

1.Revlon has struggled in recent years and has amassed debt of almost $2.3 billion.

2. Kennedy planned to cut a total of 250 jobs(8% of the workforce were layoff).

3.The company believes that restructuring will cost 29 million.

4. Current assets and total assets decreased while current liabilities and total liabilities increased from 2005 to 2006.

OPPORTUNITY-

1. Revlon expanded it’s product line with the introduction of manicure & pedicure instruments.

2.many baby boomers have high levels of disposable income and are brand loyal consumers.

3.aging baby boomers make up a significant proportions of the adult U.S population.

4. Women in China, ?India, and the middle East are rapidly growing interested in purchasing more cosmetics and
fragrances.

THREATS.-

1. Older people tend to spend less on cosmetics, and this is a growing for the industry

2.Competition is intense in the cosmetics/skin care industry.

3.The value of the dollar has dropped to his toric lows, which benefit cosmetic firms that do considerable global
business, such as Avon

4.Other social and demographic issues that may impact the industry include consumers concerns about product safety
and the use of animal testing by cosmetic companies.
Statement of the problem

I. Should Revlon concentrate its efforts on international markets, given the low value of the dollar and
competitive pressures? What countries should Revlon focus on?
In providing answer for the first question, I would say that it will be of a strategic and economic benefit
for Revlon to direct more of its effort on international market. There are a few reasons why I am thinking
in that direction. First, it is a fact that countries where the company sells more of its products such as
Japan, US, Canada and European states are becoming more ageing in population in relative terms. And
as people get older, they tend to spend less on personal care products. Consequently, it is almost
certain that revenue will continue to dwindle even as competitors fight for their share of the market.
Therefore, it will only be strategically pertinent for Revlon to shift its focus and efforts in markets where
the majority of the population is still vibrant and young.
Secondly, it is absolutely vital to examine the population matrix of the various markets Revlon currently
sells most of its personal care products. The countries as aforementioned constitute only 20 % of the
world population while the Asian region constitutes about 60 %. Moreover, the population of the Asian
countries are much younger and vibrant than their western counterparts.
Thirdly, one of the most important reasons for Revlon to direct its efforts on international markets is the
economic benefit of cashing in on the historic plummeting value of the dollar. As more women and
teenagers move away from the poverty line in Asia and the mid-east they tend to communicate their new
status in styles and physical appearance. And one effective way to achieve that is through personal care
products. Therefore, as the dollar probably continue to fall in value, Revlon products become cheaper
and seemingly affordable by women and teenagers of this region.
Having said that, it becomes ostensibly clear that the company should focus on Asian countries such
China, India, Indonesia, Singapore and some countries in the South America. Albeit, as promising and
profitable the listed countries may seem, it does not constitute sufficient reason for Revlon to lose focus
and interest in the current markets which yield the most revenue

II. Should Revlon diversify its operations or develop joint ventures with other cosmetics company? Would jewellery
be a good industry to enter given the ageing society?

If the popular old saying which says that jack of all trade is master of none is anything to go by, I think diversification
may not be the best option for Revlon. To properly answer this question, it is appropriate to check what the strategic
mission of the company is. Revlon state in its mission statement that it wants to emerge as the dominant cosmetics
and personal care firm in the twenty-first century by appealing to young/trendy women, health conscious women and
older women with its varieties of brands. The mission statement reveals what the essence of Revlon is; what and for
whom it will produce. Now, I think it is fair to say that it may not seem a disastrous decision for Revlon to diversify,
but it can learn from its history.
Michael Bergerac, after the death of Charles Revson shifted the focus of the company to the pharmaceutical side of
the business. Gradually, the core of Revlon was soon significantly reduced to only one third of the company’s
offerings. Consequently, what ensued was a drastic loss of market share of cosmetics and personal care products
to its major competitors. There is usually a danger that comes with diversification, despite the possibility of opening
up an extra channel of revenue for the company; a business might lose the core of its existence.

In recent times, Revlon has gone through all sorts of downsizing, de-layering and restructuring in the ultimate bid of
combating and/or overcoming its financial quandary. Therefore, it will be more rewarding for the company to
concentrate on products and markets that are sustainably profitable instead of looking out for a route of escape into
an entirely new business. In that light, the first and important step for Revlon to take is to strategically position the
company in a way that the organizational mission and goals will be accomplished. Thereafter, it can then diversify. It
is essentially important to state here that a company can fully maximize the benefits accruable from diversification
only if it has record considerable success on the current line of business. The goodwill and good brand image of the
successful business can then be transferred to the new business line. For example, BMW is doing remarkably well
in its financial services sector, owing partly, to the fact that the company is known for its veritable reputation in the
auto industry.
So, instead of attempting to diversify, Revlon should consider the option of merging with other companies. Because
the cosmetics/skin care industry is such a huge industry, competition tends to be somewhat stiff and turbulent.
Therefore, to be afloat and secure some competitive edge, apart from given customers value for their money, a
company would need to spend a lot of money in fighting the necessary competition war. So, with Revlon still
grappling with its debt issue, joining with other companies might help reduce its overhead while at same time reach
for customers.

III. Does Revlon have too many brands? Should the company keep brands such as Colorstay and get rid of brand
such as Mitchum?

In principle, it is arguable for a company to own as many brands as possible in other to reach various market
segments. But in practice, it is essential for any company to determine before introducing a new brand if it can
provide superior value to its intended markets than the competitors. This can be seen with the Vital Radiance
launched by Revlon in January 2006. Six months after the launch, the brand had to be discontinued because other
companies already offer similar products which cost less. And as a result of that, it was gathered that the negative
effect of the vital radiance on Revlon was approximately $110 million. Therefore, the question is never whether a
company has too many brands or too little brands; it is about asking simple strategic questions before introducing a
new brand.

From a broader spectrum, if Revlon has some brands that are not fulfilling the purpose for which they were
introduced; one can then conclude that it has too many brands- since it cannot manage it to give superior value to
customers and equally give reasonable returns to the company. Therefore, whether it is Colorstay brand or it is
Mitchum brand, the bottom line is clear: keep the brand that is profitable and discontinue the one that eats up the
revenue of the company. By so doing, it will afford Revlon the better opportunity to focus and improve on the brands
that give customer values for their money.
V. Should Revlon that its total debt is rather huge. And as such the worth of the company will be perceived by
various external stakeholders might agree to sell itself to Perllman or to a rival firm? What is Revlon worth on the
market?

Revlon has long been grappling with debts for a long time even after several exercises of one restructuring after
another. Therefore, it may not be out of place for the company to sell itself to Perlman. At the moment, it can be
deduced from Revlon balance sheet as at 2006 be lower than what the assessment of Revlon will be by the internal
stakeholders.
In conclusion, Revelon as one of the leaders in the personal care company can still meet customers’ expectations
and give values to customers and would-be customers even better than competitors if the company gets its
marketing strategic decisions right.

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