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Revlon Strategic Analysis

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Revlon Strategic Analysis

  1. 1. Revlon Case Strategic Analysis
  2. 2. Revlon Case Strategic Analysis - MBA 1 | P a g e Revlon Case Strategic Analysis MBA Project: Strategic Management 2015 Lecturer: Dr.Heba El-Dahshan By: Ahmed Bahnas
  3. 3. Revlon Case Strategic Analysis - MBA 2 | P a g e Contents Contents...................................................................................................................................................................................2 I. Introduction ......................................................................................................................................................................3 II. Current Performance .................................................................................................................................................3 A. Current Performance..........................................................................................................................3 B. Strategic Posture.................................................................................................................................3 1. Vision...........................................................................................................................................................................3 2. Mission........................................................................................................................................................................4 C. Strategic Posture.................................................................................................................................4 III. Environmental Scanning.........................................................................................................................................5 A. Internal Environment .........................................................................................................................5 1. Corporate Structure...............................................................................................................................................5 2. Corporate Value Chain..........................................................................................................................................5 3. Corporate Resources.............................................................................................................................................5 4. Financial Analysis...................................................................................................................................................6 Internal Factors Evaluation (IFE).........................................................................................................................8 B. External Environment.........................................................................................................................9 1. Societal Environment............................................................................................................................................9 2. Task Environment (Porter's five factors)..................................................................................................10 External Factors Evaluation (EFE)....................................................................................................................11 IV. Strategy Analysis Tools.........................................................................................................................................13 1. TOWS Matrix ...................................................................................................................................13 2. SPACE Matrix ..................................................................................................................................14 3. BCG Matrix ......................................................................................................................................16 4. IE Matrix...........................................................................................................................................17 V. Strategy Decision Stage...........................................................................................................................................18 QSPM....................................................................................................................................................18 VI. Strategy Formulation & Final Recommendations..................................................................................20
  4. 4. Revlon Case Strategic Analysis - MBA 3 | P a g e I. Introduction: Revlon is an American cosmetics, skin care, fragrance and personal care company founded in 1932. Revlon operates as one of the world's leading cosmetics companies and markets its products in over 100 countries around the world with sales outside the United States accounting for approximately 55% of sales 2010. Revlon products fall into six strategic business categories or units: Cosmetics, Hair, Beauty, Fragrance, Anti-perspirants/Deodorants, and Skin Care. II. Current Performance: A. Current Performance: The second Quarter of 2011  Revlon's sales were $351.2 million.  Increase of 4% versus the second quarter 2010.  Revlon's sales increased $15.6 million (8.7%) due to increased sales of Sinful Colors.  Revlon's sales increased $4.2 million (8.6%) due to higher sales of Revlon color cosmetics in China and Australia.  Middle East and Africa, Revlon sales decreased $3.4 million (6.8%) led down by weak sales in the United Kingdom and Italy.  In Latin America, Revlon sales decreased $1 million (3.5%) led down by lower sales in Mexico and Venezuela, but sales in Argentina were good.  In Canada, Revlon sales decreased $2.24 million (11.5%) due to lower net sales of Revlon color cosmetics.  55% of Revlon sales are inside the United States.  62% of Revlon sales are from Cosmetics/Skin Care/Fragrances.  32% of Revlon sales are from Personal Care. B. Strategic Posture: 1. Vision: "Revlon is a global color cosmetics, hair color, beauty tools, fragrances, skincare, antiperspirant/deodorants, and beauty care products company whose vision
  5. 5. Revlon Case Strategic Analysis - MBA 4 | P a g e Glamour, Excitement and Innovation is through High-quality Products at Affordable Prices.'' (Source: Company documents)  Vision statement Evaluation: Revlon's vision may be stronger if it has future positioning of company view and reflect future growth. 2. Mission: "To emerge as the leader in cosmetics and personal care throughout the world. Revlon takes pride in manufacturing the top skin care products and strives to please young and older woman alike.''  Mission statement Evaluation: No. Mission Components Revlon 1 Products / Services Yes 2 Customers Yes 3 Employees No 4 Markets Yes 5 Technology No 6 Public Image No 7 Self-Concept No 8 Philosophy No 9 Survival / Growth / Profits Yes Revlon's mission statement needs to be broad in scope to focus on Employees' competencies and skills, Public Image (CSR), its production technology, self- concept and Managerial Philosophy which could given to its shareholders and stakeholders. C. Strategic Posture: President & CEO Finance Marketing Operations Senior VP Senior VP Senior VP Senior VP Senior VP Administration Science
  6. 6. Revlon Case Strategic Analysis - MBA 5 | P a g e In April 2009, Alan Ennis became president and the fourth CEO of Revlon since 2000. Ennis had the position of senior vice president and CFO. Ennis has implemented a worldwide organizational realignment at Revlon designed by eliminate management layers to be flat organizational management. III. Environmental Scanning: A. Internal Environment: 1. Corporate Structure:  CEO had the position of senior vice president and CFO (S1)  CEO has implemented a worldwide organizational realignment at Revlon designed to take advantage of more efficient processes and workflow, eliminate management layers, streamline certain functions, and consolidate more operations into the company (S2)  About 400 positions were eliminated (W1)  The restructuring saved the company $30 million, with $15 million quickly benefitting the 2009 result (S) 2. Corporate Value Chain:  Revlon has 80-year history of providing high-quality products at affordable prices to women (S3)  Several of the company's plants have ISO-9000 certification signifying their commitment to quality manufacturing standards (S4) 3. Corporate Resources:  Revlon's global market share in the cosmetics business has consistently declined, from 4% in 2009 to 3% in 2010 (W2)  After years of losses and management upheaval, 2008 was the first year since 1997 that Revlon posted a positive net income (S)  Limited presence in emerging markets (W3)  Relatively small R&D budgets (W4)  Relatively small advertising budgets (W5)  Revlon and its employees are active in supporting women's health programs and other community efforts, investing over $65 million in medical research programs, awareness and education programs, and doctor training (S5)
  7. 7. Revlon Case Strategic Analysis - MBA 6 | P a g e  The primary customers for Revlon products are large mass merchandisers and chain drug stores (S6)  Wal-Mart sales were 22% of Revlon sales in 2010 (S7)  Revlon's products are also sold through its websites (S8)  Revlon spent $24 million on R&D efforts in 2010 and employed 140 people in this effort (S9)  Revlon employs spokespersons Halle Berry, Jessica Alba, and Jessica Biel in its advertising campaigns (S10)  Globalization of the company's manufacturing and distribution (S11) 4. Financial Analysis:  55% of Revlon sales in 2010 are inside the United States (S12)  54% of Revlon sales in 2010 are outside the United States (W)  62% of Revlon sales are from Cosmetics/Skin Care/Fragrances (W6)  32% of Revlon sales are from Personal Care (W)  Revlon had a large debt load of $1.1 billion by the end of 2010 (W7) Profitability Ratios 2007 2008 2009 2010 Profit Margin Ratio (0.01) 0.04 0.04 0.25 Return on Assets Ratio (0.02) 0.07 0.06 0.30  Improving Profit Margin Ratio due to increase sales in less operations cost which led to increase Net Income (S)  The ROA has increased radically to more than four time during the last three years. This is another ratio indicates that Revlon is a profitability company and efficient uses of resources (S) Liquidity Ratios 2007 2008 2009 2010 Current Ratio 1.35 1.32 1.30 1.49 Quick Ratio 0.88 0.85 0.92 1.13
  8. 8. Revlon Case Strategic Analysis - MBA 7 | P a g e  The Current Ratios of Revlon for the last year is one time and half which means the current assets are 1.5 the current liabilities, therefore we have considered Revlon having good short-term financial strength (S)  Improving Quick Ratio led to improve the company ability to pay off its current liabilities without having to liquidate its inventory (S) Asset Ratios 2007 2008 2009 2010 Inventory Turnover Ratio 8.45 8.73 10.87 11.49 Total Assets Ratio 1.57 1.66 1.63 1.22  The trend of Inventory Turnover Ratio in Revlon was increasing during the last four years, therefore This is unfavorable sign in Revlon which need more improvement in excessive stocks of inventory (W)  The Total Assets Ratio has decreased during the last three years which indicated Revlon is not generating a sufficient volume of business given its total investment (W8) Debt Ratios 2007 2008 2009 2010 Total Debt Ratio 2.22 2.37 2.30 1.64  The Debit Ratios has decreased during the last three years which indicated Revlon is balancing between the funds provided by creditors and its equity to take advantage of leverage option with less risk (S13) Growth Ratios 2007 2008 2009 2010 Sales Growth - (3.81) (3.78) 1.97 Net Income Growth - 459.63 (15.72) 570.70
  9. 9. Revlon Case Strategic Analysis - MBA 8 | P a g e  Revlon shows improvement in cash flows (S14)  Revlon seems to be increased performing (S15)  Internal Factors Evaluation (IFE) Key Internal Factors Weight Rate Weighted Score Strengths S1 CEO with financial background 0.03 3 0.09 S2 Flat organizational management 0.02 4 0.08 S3 Affordable price Brand Recognition 0.06 4 0.24 S4 ISO-9000 certification for quality manufacturing standards 0.03 3 0.09 S5 Investing over $65 million in strong CSR 0.05 4 0.2 S6 Primary customers are large mass merchandisers and chain drug stores 0.02 3 0.06 S7 Wal-Mart sales were 22% of Revlon sales in 2010 0.03 4 0.12 S8 Selling through its websites 0.03 3 0.09 S9 Start focus & Investment on R&D 0.09 4 0.36 S10 Celebrities support as spokespersons 0.06 4 0.24 S11 Globalization of Revlon 0.03 4 0.12 S12 Well established U.S. market 0.05 4 0.2 S13 Advantage of leverage option 0.02 3 0.06 S14 Improvement in cash flows 0.03 4 0.12 S15 Increased Revlon performance 0.03 4 0.12 Weakness W1 Insecure employees 0.03 2 0.06 W2 Global market share loss in 2010 0.04 1 0.04 W3 Limited presence in emerging markets 0.05 2 0.1 W4 Relatively small R&D budgets 0.06 1 0.06 W5 Relatively small advertising budgets 0.05 1 0.05 W6 Less diversified products comparing with competitor 0.06 2 0.12 W7 Large debt load of $1.1 billion 0.09 1 0.09 W8 Not generating a sufficient volume of business given its total investment 0.04 1 0.04 Total Weighted Score (TWS) 1 2.75
  10. 10. Revlon Case Strategic Analysis - MBA 9 | P a g e B. External Environment: 1. Societal Environment: Political  Newly won freedoms in Tunisia, Egypt, Libya, and Algeria open up more interest among women in those countries wanting to look pretty and show that they are pretty (O1) Economical  In an economy with high unemployment, high gas prices, and high food prices (T)  High inflation, the strength of the dollar in international markets, and the fluctuation of foreign currency exchange rates all pose difficulties for companies operating in international markets (T1)  The economies in Japan, Latin America, and many European countries have slowed in recent years, and economies in developing nations are somewhat unstable (T) Sociocultural  Aging baby boomers make up a significant proportion of the adult U.S. population (T2)  The 75 million Americans born between 1946 and 1964 are a significant market for the cosmetics/personal care industry (T3)  Many baby boomers have high levels of disposable income, are brand- loyal consumers, and are sensitive concerning their looks (O2)  Between 2000 and 2010, the U.S. Hispanic population grew by 43%. The increase in Hispanic population during this 10-year period made up over half of the total population increase in the U.S. (O3)  International sales of cosmetic/skin care products are also impacted by ethnic/racial issues (O)  There are significant opportunities in Asian countries (60% of world's population) (O4)  The youthful, increasingly affluent Latin American countries also represent growth opportunity (O5)  Since the majority of personal care products are currently sold in the United States, Japan, Canada, and European countries (less than 20% of world's population) (O)
  11. 11. Revlon Case Strategic Analysis - MBA 10 | P a g e  The potential for sales of personal care products around the world is excellent (O6)  The youth market is still a vibrant consumer of cosmetics, hair care products, and fragrances (O7)  The U.S. teen market (ages 15-19) was estimated at almost 10.5 million teens by 2010 (O8)  The populations of countries outside the U.S. are growing more rapidly than the U.S. population (O9)  Sales of personal care products in Brazil, Russia, India, and China are expected to grow 40% from 2009 to 2014 (O10) 2. Task Environment (Porter's five factors): Threat of substitutes (Moderate)  More and more consumers are seeking out natural products and showing concern for the amount of chemicals in cosmetics (T)  There has been a growth in "cosmeceutical'' offerings (T) Threat of entry (Low)  International economics provide unique challenges for companies in cosmetics/skin care industry (T)  Many emerging economies in Asia and Eastern Europe are eager to have mass marketers enter operations in their countries, but operating situation are generally uncertain (T)  An emerging middle class in Asia, Africa, Eastern Europe, and Latin America offers companies a chance to tap into a new market for personal care products (O11) The bargaining power of buyers (High)  Social media have become an incredibly important tool in consumer relationship development in the cosmetics/skin care industry (O12)  Increasingly, cosmetics/personal care is not an industry for women only ; there has been impressive growth in the sales of male oriented grooming and hygiene products (O13)  Worldwide demand for deodorants is expected to reach $12.6 billion by 2015 (O)  Men are also interested in products that improve and enhance the shaving process (O)
  12. 12. Revlon Case Strategic Analysis - MBA 11 | P a g e  U.S. consumers cut back on spending, trading down from prestige cosmetics brands in favor of value brands (T4) Competitive rivalry (High) (T5)  There have been several examples of online social media campaigns within the industry (T6)  It is very difficult to gain and sustain competitive advantage in the cosmetics/skin care industry that offers hundreds of products (T7)  P&G serves 4.2 billion people in more than 180 countries (T8)  P&G segments its offering into three major brand categories: beauty and grooming, health and well-being, and household care (T9)  L'Oreal is the world's largest cosmetics firm (T)  Unilever has best volume growth in 30 years in 2010 (T)  Unilever was strength of the personal care brands and the growth in emerging markets that resulted in Unilever's 2010 sales growth (T10)  Avon is the number one direct seller of cosmetics and beauty products in the world. Over $10 billion in annual revenue produced by 6.5 million Avon representatives in more than 100 countries (T11)  In October 2010, it was rumored that L'Oreal was considering acquiring Avon for a reported $19 billion (T12)  Estee Lauder pulled the prescriptive brand from retail distribution in early 2010, but decided to offer the most popular items online only (T)  External Factors Evaluation (EFE) Key External Factors Weight Rate Weighted Score Opportunities O1 New market in Arab African countries 0.07 4 0.28 O2 Promising teen & youth market 0.07 3 0.21 O3 U.S. Hispanic population grew by 43% 0.05 3 0.15 O4 Asian markets (60% of world's population) uncovered by Revlon 0.07 4 0.28 O5 The youthful, increasingly affluent Latin American countries 0.04 3 0.12 O6 The potential for sales of personal care products around the world is excellent 0.04 4 0.16 O7 The youth market is still a vibrant consumer 0.05 3 0.15
  13. 13. Revlon Case Strategic Analysis - MBA 12 | P a g e O8 U.S. teen market 10.5 million teens 0.03 3 0.09 O9 International populations are growing more rapidly than the U.S. population 0.03 3 0.09 O10 Sales of personal care products in Brazil, Russia, India, and China are expected to grow 40% from 2009 to 2014 0.04 4 0.16 O11 Asia, Africa, Eastern Europe, and Latin America are new market for personal care products 0.05 4 0.2 O12 Social media important CRM tool 0.04 3 0.12 O13 Sales growth for Men cosmetics / personal care products 0.0 3 0.15 Threats T1 Global economics crisis 0.02 1 0.02 T2 Aging U.S. population 0.02 2 0.04 T3 Aging of U.S. cosmetics' consumers 0.06 1 0.06 T4 U.S. consumers cut back on spending, trading down from prestige cosmetics brands in favor of value brands 0.02 2 0.04 T5 Intensive competition 0.07 1 0.07 T6 Online social media campaigns 0.02 2 0.04 T7 Difficult to gain competitive advantage 0.02 1 0.02 T8 Huge customer base of competitor 0.04 1 0.04 T9 High diversified products of competitor 0.02 2 0.04 T10 Sales growth personal care for competitor 0.05 1 0.05 T11 Direct sales of cosmetics 0.02 1 0.02 T12 Horizontal Integration of competitors 0.01 2 0.02 Total Weighted Score (TWS) 1 2.62
  14. 14. Revlon Case Strategic Analysis - MBA 13 | P a g e IV. Strategy Analysis Tools: 1. TOWS Matrix Internal Factors (IFE) Internal Factors (IFE) Strengths S1 CEO with financial background S2 Flat organizational management S3 Affordable price Brand Recognition S4 ISO-9000 certification for quality manufacturing standards S5 Investing over $65 million in strong CSR S6 Primary customers are large mass merchandisers and chain drug stores S7 Wal-Mart sales were 22% of Revlon sales in 2010 S8 Selling through its websites S9 Start focus & Investment on R&D S10 Celebrities support as spokespersons S11 Globalization of Revlon S12 Well established U.S. market S13 Advantage of leverage option S14 Improvement in cash flows S15 Increased Revlon performance Weakness W1 Insecure employees W2 Global market share loss in 2010 W3 Limited presence in emerging markets W4 Relatively small R&D budgets W5 Relatively small advertising budgets W6 Less diversified products comparing with competitor W7 Large debt load of $1.1 billion W8 Not generating a sufficient volume of business given its total investment Opportunities O1 New market in Arab African countries O2 Promising teen & youth market O3 U.S. Hispanic population grew by 43% O4 Asian markets (60% of world's population) uncovered by Revlon O5 The youthful, increasingly affluent Latin American countries O6 The potential for sales of personal care products around the world is excellent O7 The youth market is still a vibrant consumer O8 U.S. teen market 10.5 million teens O9 International populations are growing more rapidly than the U.S. population O10 Sales of personal care products in Brazil, Russia, India, and China are expected to grow 40% from 2009 to 2014 O11 Asia, Africa, Eastern Europe, and Latin America are new market for personal care products O12 Social media important CRM tool O13 Sales growth for Men cosmetics/personal care products SO Strategies S3S4S8S10S11 O2O4O7O9 : Entry to youth Asian markets (Market Development) S3S4S8S10S11 O2O5O7O9 : Entry to youth Latin American markets (Market Development) S3S4S8S10S11 O1O2 : Entry to youth Arab African markets (Market Development) S3S4S9S11S14S15 O6O10O11 : Introduce developed personal care products to Asia, Africa, Eastern Europe & Latin America (Product Development & Market Development) S3S4S10S12 O2O3O7O8 : Penetrate U.S. teen & U.S. Hispanic markets (Market Development) S3S4S11S14S15 O13 : Targeting men worldwide for using its products (Market Development) S8S14S15 O2O7O8O12 : Developing it E-Selling (Forward Integration) S6S11 O9 : Create international network distribution with big chain drug stores (Forward Integration) WO Strategies W2W3W7W8 O2O4O7O9O13 : Targeting new emerging markets specially Asia with focusing on youth and men (Market Development) W2W5W8 O12 : Increase social media advertising & campaigns which represents promotion with low cost (Market Penetration) Threat T1 Global economics crisis T2 Aging U.S. population T3 Aging of U.S. cosmetics' consumers T4 U.S. consumers cut back on spending, trading down from prestige cosmetics brands in favor of value brands T5 Intensive competition T6 Online social media campaigns T7 Difficult to gain competitive advantage T8 Huge customer base of competitor T9 High diversified products of competitor T10 Sales growth personal care for competitor T11 Direct sales of cosmetics T12 Horizontal Integration of competitors ST Strategies S1 T1 : Decrease some of expenses by cutting cost (Retrenchment) S3S4S11S12 T1T4T5T7 : Setting new positioning as the most affordable brand with standard quality (Cost Leadership Business Strategy) S5S12S14 T2T3T5T7 : Increase CSR particularly care of the elderly in U.S. and Global (Market Penetration) WT Strategies W4W8 T7T8T9T12 : Temporary partnership with one of big company in Asia as Joint Venture (Horizontal Integration) W2W7W8 T1T5 : Selling or partial liquidation the most loss department or production line (Divestiture) W2W6W8 T5T8T9 : Produce new related products as like : Baby Care, Hair care, or Oral Care to attract new customers and retain existing customers (Concentric Diversification)
  15. 15. Revlon Case Strategic Analysis - MBA 14 | P a g e Recommended Strategies from TOWS Matrix: As Business Strategy: Cost Leadership Strategy As Corporate Strategy: Market Penetration – Market Development – Product Development – Forward Integration - Horizontal Integration – Concentric Diversification – Retrenchment – Divestiture 2. SPACE Matrix Internal Strategic Dimension External Strategic Dimension ComparingtothebenchmarkofOrganization X-Axis(-Ve) Competitive Position (CP) ComparingtothewholeIndustry X-Axis(+Ve) Industry Position (IP) Affordable price Brand Recognition -2 International populations are growing more rapidly than the U.S. population 4 ISO-9000 certification for quality manufacturing standards -2 Intensive competition 1 Investing over $65 million in strong CSR -1 High diversified products of competitor 2 Global market share loss in 2010 -6 Sales growth personal care for competitor 2 Relatively small R&D budgets -4 Relatively small advertising budgets -5 Less diversified products comparing with competitor -3 Total -23 Total 9 Average -3.3 Average 2.25 Y-Axis(+Ve) Financial Position (FP) Y-Axis(-Ve) Stability Position (SP) Leverage 5 Promising teen & youth market -1 Sales Growth 4 Asian markets (60% of world's population) uncovered -1 Net Income Growth 3 Global economics crisis -5 Large debt load of $1.1 billion 1 Aging of U.S. cosmetics' consumers -4 Total Assets Ratio 2 U.S. consumers cut back on spending -3 Total 30 Total -14 Average 3 Average -2.8 X-axis: CP + IP = (-3.3) + 2.25 = -1.05 Y-axis: FP + SP = 3 + (-2.8) = 0.2 # (X,Y) = (-1.05,0.2)
  16. 16. Revlon Case Strategic Analysis - MBA 15 | P a g e Recommended Strategies from SPACE Matrix: From analysis SPACE matrix we found that Revlon has middle strategic position and best strategy is Conservative Strategy which contains: Market Penetration – Market Development – Product Development – Concentric Diversification
  17. 17. Revlon Case Strategic Analysis - MBA 16 | P a g e 3. BCG Matrix (Boston Consulting Group) Recommended Strategies from BCG Matrix: According to BCG matrix Revlon suffering from losing market share among intense competition in growing market. Revlon will represented as Question Mark (Problem Child) which need more invest to move: Market Penetration Strategy
  18. 18. Revlon Case Strategic Analysis - MBA 17 | P a g e 4. IE Matrix (GE-Mckinsey) IFE EFE Strong (3 - 4) Average (2 - 2.99) Weak (1 - 1.99) Strong (3 - 4) 1 2 3 Average (2 - 2.99) 4 5 6 Weak (1 - 1.99) 7 8 9 Recommended Strategies from IE Matrix: Based on two key dimensions: IFE (X-axis) = 2.75 (Average) EFE (Y-axis) = 2.62 (Average) Revlon placed at Box 5 (Hold & Maintain) which recommend: Market Penetration – Market Development – Product Development
  19. 19. Revlon Case Strategic Analysis - MBA 18 | P a g e V. Strategy Decision Stage: After using Strategy Analysis Tools, we have numbers of common and repeated solutions (strategies): Market Penetration – Market Development – Product Development – Concentric Diversification Quantitative Strategic Planning Matrix (QSPM): QSPM Weight Market Penetration Market Development Product Development Concentric Diversification AS Rate TAS WxR AS Rate TAS WxR AS Rate TAS WxR AS Rate TAS WxR Opportunities: O1 New market in Arab African countries 0.07 1 0.07 4 0.28 2 0.14 3 0.21 O2 Promising teen & youth market 0.07 1 0.07 4 0.28 3 0.21 2 0.14 O3 U.S. Hispanic population grew by 43% 0.05 1 0.05 3 0.15 2 0.1 4 0.2 O4 Asian markets (60% of world's population) uncovered by Revlon 0.07 3 0.21 4 0.28 1 0.07 2 0.14 O5 The youthful, increasingly affluent Latin American countries 0.04 3 0.12 2 0.08 4 0.16 1 0.04 O6 The potential for sales of personal care products around the world is excellent 0.04 2 0.08 3 0.12 4 0.16 1 0.04 O7 The youth market is still a vibrant consumer 0.05 1 0.05 3 0.15 2 0.1 4 0.2 O8 U.S. teen market 10.5 million teens 0.03 2 0.06 1 0.03 4 0.12 3 0.09 O9 International populations are growing more rapidly than the U.S. population 0.03 2 0.06 4 0.12 1 0.03 3 0.09 O10 Sales of personal care products in Brazil, Russia, India, and China are expected to grow 40% from 2009 to 2014 0.04 3 0.12 4 0.16 1 0.04 2 0.08 O11 Asia, Africa, Eastern Europe, and Latin America are new market for personal care products 0.05 3 0.15 4 0.2 1 0.05 2 0.1 O12 Social media important CRM tool 0.04 4 0.16 1 0.04 2 0.08 3 0.12 O13 Sales growth for Men cosmetics / personal care products 0.05 0 0 0 0
  20. 20. Revlon Case Strategic Analysis - MBA 19 | P a g e Threats: T1 Global economics crisis 0.02 0 0 0 0 T2 Aging U.S. population 0.02 1 0.02 4 0.08 2 0.04 3 0.06 T3 Aging of U.S. cosmetics' consumers 0.06 1 0.06 4 0.24 2 0.12 3 0.18 T4 U.S. consumers cut back on spending, trading down from prestige cosmetics brands in favor of value brands 0.02 0 0 0 0 T5 Intensive competition 0.07 1 0.07 3 0.21 2 0.14 4 0.28 T6 Online social media campaigns 0.02 0 0 0 0 T7 Difficult to gain competitive advantage 0.02 1 0.02 2 0.04 4 0.08 3 0.06 T8 Huge customer base of competitor 0.04 4 0.16 3 0.12 2 0.08 1 0.04 T9 High diversified products of competitor 0.02 1 0.02 2 0.04 3 0.06 4 0.08 T10 Sales growth personal care for competitor 0.05 1 0.05 4 0.2 2 0.1 3 0.15 T11 Direct sales of cosmetics 0.02 0 0 0 0 T12 Horizontal Integration of competitors 0.01 0 0 0 0 TOTAL Opportunities + Threats 1 Strengths: S1 CEO with financial background 0.03 0 0 0 0 S2 Flat organizational management 0.02 0 0 0 0 S3 Affordable price Brand Recognition 0.06 2 0.12 4 0.24 1 0.06 3 0.18 S4 ISO-9000 certification for quality manufacturing standards 0.03 1 0.03 2 0.06 4 0.12 3 0.09 S5 Investing over $65 million in strong CSR 0.05 1 0.05 2 0.1 3 0.15 4 0.2 S6 Primary customers are large mass merchandisers and chain drug stores 0.02 4 0.08 3 0.06 1 0.02 2 0.04 S7 Wal-Mart sales were 22% of Revlon sales in 2010 0.03 3 0.09 4 0.12 1 0.03 2 0.06 S8 Selling through its websites 0.03 2 0.06 4 0.12 1 0.03 3 0.09 S9 Start focus & Investment on R&D 0.09 0 0 0 0 S10 Celebrities support as spokespersons 0.06 0 0 0 0 S11 Globalization of Revlon 0.03 0 0 0 0 S12 Well established U.S. market 0.05 1 0.05 3 0.15 2 0.1 4 0.2 S13 Advantage of leverage option 0.02 1 0.02 4 0.08 2 0.04 3 0.06 S14 Improvement in cash flows 0.03 1 0.03 3 0.09 2 0.06 4 0.12 S15 Increased Revlon performance 0.03 4 0.12 2 0.06 1 0.03 3 0.09 Weaknesses: W1 Insecure employees 0.03 0 0 0 0 W2 Global market share loss in 2010 0.04 0 0 0 0
  21. 21. Revlon Case Strategic Analysis - MBA 20 | P a g e W3 Limited presence in emerging markets 0.05 1 0.05 4 0.2 3 0.15 2 0.1 W4 Relatively small R&D budgets 0.06 0 0 0 0 W5 Relatively small advertising budgets 0.05 0 0 0 0 W6 Less diversified products comparing with competitor 0.06 0 0 0 0 W7 Large debt load of $1.1 billion 0.09 4 0.36 1 0.09 2 0.18 3 0.27 W8 Not generating a sufficient volume of business given its total investment 0.04 1 0.04 3 0.12 2 0.08 4 0.16 TOTAL Strengths + Weaknesses 1 Total TAS 2.7 4.28 2.96 3.96 VI. Strategy Formulation & Final Recommendations:  After the above Matrix (QSPM) it was clear that our selected strategies: 1- Market Development is the most optimal strategy to implement by targeting new segments of customers and markets (Men, youth, Asian, Latin American, Arab African, Africa, Eastern Europe and U.S. Hispanic) to increase its market share and be capable to generating a sufficient volume of business given its total investment and increased performing to decrease its debt load. 2- Concentric Diversification (Related) is the contingency strategy plan by producing new related products as like: Baby Care, Hair care, or Oral Care to attract new customers (Men, youth & uncovered emerging markets) and retain existing customers (U.S. & Global)  We recommend Revlon to apply Cost Leadership Strategy as Business Strategy by setting new positioning as the most affordable brand with standard quality (from TOWS matrix)

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