ARAB ACADEMY FOR SCIENCE AND TECHNOLGY

GRADUATE SCHOOL OF BUSINESS

Revlon, Inc. 2007

Strategic Management Case Study
Prepared By: Mohamed Gaber Eldamati 3/30/2012

Submitted to: Prof. Tarek Abdeen

Table of Contents
Revlon Vision and Mission Statements ........................................................................................... 3 Revlon Vision Statement ............................................................................................................. 3 Current Vision Statement: ....................................................................................................... 3 Comments: .............................................................................................................................. 3 Proposed Vision Statement: .................................................................................................... 3 Revlon Mission Statement........................................................................................................... 3 Current Mission Statement: .................................................................................................... 3 Comments: .............................................................................................................................. 3 Revlon Opportunities .................................................................................................................. 4 Revlon Threats ............................................................................................................................. 4 Competitive Profile Matrix (CPM) ............................................................................................... 5 Comments: .............................................................................................................................. 5 External Factor Evaluation (EFE).................................................................................................. 6 Comments: .............................................................................................................................. 6 Revlon Strengths ......................................................................................................................... 7 Revlon Threats ............................................................................................................................. 7 Internal Factor Evaluation (IFE) ................................................................................................... 8 Comments: .............................................................................................................................. 8

Revlon Vision and Mission Statements

Revlon Vision and Mission Statements

Revlon Vision Statement
Current Vision Statement: To provide glamour, excitement and Innovation through quality products at affordable price. Comments: The statement is too vague; it should reveal cosmetics industry Proposed Vision Statement: Provide glamour, excitement and Innovation through cosmetics quality products at affordable price.

Revlon Mission Statement

Current Mission Statement: To emerge as dominant(5) cosmetics and personal care(2) firm In the Twenty-First century by appealing to young/trendy women, health conscious women (skin care), and elder women(1) with its variety of brands. Comments: As per our model the Mission Statement should include the following Components 1. Customerswho are the firms customers? 2. Products or serviceswhat are the firms major products or services? 3. Marketsgeographically, where does the firm compete? 4. Technologyis the firm technologically current? 5. Concern for survival, growth, and profitabilityis the firm committed to growth and financial soundness? 6. Philosophywhat are the basic beliefs, values, aspirations, and ethical priorities of the firm? 7. Self-conceptwhat is the firms distinctive competence or major competitive advantage? 8. Concern for public imageis the firm responsive to social, community, and environmental concerns? 9. Concern for employeesAre employees a valuable asset of the firm?

Revlon Vision and Mission Statements

As we see Revlon mission statement covers only 3 components which are Customer, Product and concern for survival Proposed Mission Statement: To emerge as dominant (5) firm enriching women (1) lives all over the world (3) with unique innovative (7) cosmetics and personal care (2) products. Commitment to providing secure & challenging work environment (9) and to a willingness to embrace new ideas and learn continuously (6)

Revlon External Assessment

Revlon Opportunities
Increase in US teen market 20 million by 2010 Asian markets still 60% uncovered by Revlon Increase in online retailing Women in China, India and middle East are rapidly growing interest in purchasing more cosmetics Sales of personal care products increased from 428 to 499.4 in 2006 which indicates a new trend Men also using the cosmetic products Expansion in Hair coloring market among youth The young migrants to America are increasing Latin America represents a growth opportunity Older age women entering into the cosmetic industry Baby boomers have high levels of disposable incomes

Revlon Threats
Racial and ethnic changes in US market Intense competition (so many brands offering the same stuff, even the competition for African American market has increased with the entry of brands like Fashion Fairs and cosmetics lines launched by Patti Labelle) Some competitors of multinational companies are offering more than just skin care and makeup products Disposable income of Americans decreasing Consumers concerns about product safety and CSR activities

Revlon External Assessment

Major retailers reducing inventory levels due to recession Decrease in the value of dollar

Competitive Profile Matrix (CPM)

Critical Success Factors Price competitiveness Global Expansion Product Safety Customer Loyalty Market Share Advertising Product Quality Product Image Financial Position Total Weight Revlon Rating Score 3 0.45 2 0.2 3 0.24 2 0.24 4 0.32 2 0.2 3 0.45 3 0.3 2 0.24 2.64 Procter & Avon Gamble Rating Score Rating Score 3 0.45 4 0.6 4 0.4 3 0.3 2 0.16 2 0.16 3 0.36 2 0.24 4 0.32 2 0.16 2 0.2 2 0.2 3 0.45 2 0.3 4 0.4 3 0.3 4 0.48 3 0.36 3.22 2.62

0.15 0.1 0.08 0.12 0.08 0.1 0.15 0.1 0.12 1

Note: The ratings values are as follows: 1 = major weakness, 2 = minor weakness, 3 = minor strength, 4 = major strength.

Comments: Revlon total weighted score of 2.64 is above the average so it is doing partly well. Revlon is the strongest on market share compared to its competitors

Revlon External Assessment

External Factor Evaluation (EFE)

Key External Factors Weight Rating Weighted Score

Opportunities 1. Increase in US teen market 20 million by 2010 2. Asian markets still 60% uncovered by Revlon 3. Increase in online retailing 4. Women in China, India and middle East are rapidly growing
interest in purchasing more cosmetics 5. Sales of personal care products increased

0.04 0.08 0.09 0.05 0.05 0.07 0.04 0.04 0.04 0.05 0.07 0.04 0.1 0.04 0.05 0.05 0.06 0.04 1

3 4 4 3 3 3 3 3 4 3 4 1 1 2 2 2 1 2

0.12 0.32 0.36 0.15 0.15 0.21 0.12 0.12 0.16 0.15 0.28 0.04 0.1 0.08 0.1 0.1 0.06 0.08 2.7

6. Men also using the cosmetic products 7. Expansion in Hair coloring market among youth 8. The young migrants to America are increasing 9. Latin America represents a growth opportunity 10. Older age women entering into the cosmetic industry 11. Baby boomers have high levels of disposable incomes Threats 1. Racial and ethnic changes in US market 2. Intense competition 3. Some competitors of multinational companies are offering 4. 5. 6. 7.
more than just skin care and makeup products Disposable income of Americans decreasing Consumers concerns about product safety and CSR activities Major retailers reducing inventory levels due to recession Decrease in the value of dollar Total

Note: The ratings values are as follows: 1 = the response is poor, 2 = the response is average, 3 = the response is above average, 4 = the response is superior.

Comments: Revlon total weighted score of 2.7 is above the average so it is doing partly well in terms of responding towards appropriate threats and opportunities.

Revlon External Assessment

Revlon Internal Assessment

Revlon Strengths
$25 million was spent on CSR program Currently, $24.4 million on R&D Aggressive Advertising worth 120 million Great operating efficiency and use of capital assets Quality manufacturing standards and having ISO-9000 certification Strong Brand recognition The company tries to introduce new products Produces products for all type of women, young, trendy, health conscious and older women Strong Social Responsibility programs Large mass merchandisers Great operating efficiency use of capital assets Continues new product development Big share of share of sales in the foreign market (43% in 2006) Net sale in 2007 increased from 2.6% after suffering a loss in 2006 The baby boomer chunk of the population tends to be brand loyal Joint venture of Revlon and Pacific World Corporation into establishing a new line of nail and nail care products Sales of products through internet

Revlon Threats
Long term debt 2.3 billion. In 2003 Mac Andrews and Forbes Holdings Inc gave out $150 million, later in 2006 an extension of $87million debt by Mac Andrews was made; High restricting cost that amounted up to $29 million when David Kennedy was in command. From the year 2006 2007. First there was a layoff of 15% before Kennedy in 2000 then another reduction of 8% when he took charge Higher prices than competitors Decrease in sales by 1 million (from 2005 - 2006) High net losses in 2006, which resulted because of the discontinuation of Vital Radiance and because of the long term debt Discontinued vital radiance in 2006. The brand was launched in 2006 but was discontinued as the customers didnt respond to it. Negative impact of this product line was estimated to be $110 million Employ layoff by 8% during 2006 2007 Less diversified products compared with competitors Constant organizational restructuring Lack of financial resources Large amount of advertising expenses Decrease in current assets and increase current liabilities

Revlon Internal Assessment

Internal Factor Evaluation (IFE)

Key Internal Factors Weight Rating Weighted Score

Strengths
$25 million spend on CSR program Spend $24.4 million on R&D Aggressive Advertising worth 120 million Great operating efficiency and use of capital assets Quality manufacturing standards and having ISO-9000 certification Strong Brand recognition The company tries to introduce new products Produces products for all type of women Strong Social Responsibility programs Continues new product development 0.05 0.08 0.09 0.05 0.04 0.06 0.04 0.04 0.05 0.06 0.03 0.07 0.08 0.04 0.04 0.04 0.04 0.04 0.04 1 3 3 4 4 4 2 3 3 3 4 1 2 1 1 2 2 1 1 3 0.15 0.24 0.36 0.2 0.16 0.12 0.12 0.12 0.15 0.24 0.03 0.14 0.08 0.04 0.08 0.08 0.04 0.04 0.12 2.53

Weaknesses
Extension of $87 million debt by Mac Andrews; high restricting cost Long term debt 2.3 billion High prices than competitors Decrease in sales by 1 million High net losses in 2006 Discontinued Vital radiance in 2006 cause $110 million negative impact Less diversified products compared with competitors Constant organizational restructuring Lack of financial resources Total

Note: The ratings values are as follows: 1 = major weakness, 2 = minor weakness, 3 = minor strength, 4 = major strength.

Comments: Revlon total weighted score of 2.53 is almost equal to the average which indicates that there is definitely room for improvement in Revlon.

Revlon Internal Assessment