STRATEGIC MANAGEMENT

CASE STUDY

SUBMITTET TO:
Sir. Ishfaq Ahmed
SUBMITTED BY:
Dur-e-shahwar Butt 681
Sonia Latif 693
Asma Khalid 694
Rafia Riaz 695
Maryam Zahid 697
Bushra Khalid 700
Sadia Qaiser 708

Hailey College of Commerce

University of the Punjab

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 Table of Contents

Topics Page
History 4

Vision, Mission 5

Financial and business Performance 5

Financial strengths 9

Environmental analysis 10
SWOT analysis 12
CPM-Competitive Profile Matrix 13
External Factor Evaluation (EFE) Matrix 14
Internal Factor Evaluation (IFE) Matrix 15
SWOT Matrix 16
SPACE Matrix 17
Grand Strategy Matrix 18
The Boston Consulting Group (BCG) Matrix 18
The Internal-External (IE) Matrix 19

The Quantitative Strategic Planning Matrix(QSPM) 20

Suggestions 21

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History:

Revlon was founded in 1932, by Charles Revson and his brother Joseph, along with a chemist,
Charles Lachman, who contributed the "L" in the REVLON name. Starting with a single product
- a nail enamel unlike any before it - the three founders pooled their meager resources and
developed a unique manufacturing process.

1950:
The company began its success with opaque long-lasting nail enamel sold to beauty salons.
Revlon sold its nail enamel through department stores and selecteddrugstores.

1960:
Revlon contributed directly to the war effort, by manufacturing first aid kits and dye markers for
the navy. At war's end, Revlon began to produce manicure and pedicure instruments.

1970:
1973 saw the introduction of Charlie® fragrance, designed for a young, working woman market
and by the mid 70's, Charlie® was the #1 Fragrance in the world. Revlon sales figures passed the
$1 billion mark in 1977.

1980:
Growth and innovation led the way for Revlon. In 1985, Revlon was sold to a subsidiary of
MacAndrews & Forbes Holdings. In 1987 Almay joined the Revlon lineup.

1990:
the 1990's, Revlon revitalized its cosmetics business and strengthened its industry leadership
role. Revlon introduced the first transfer resistant lipcolor which led to a full ColorStayTM
Collection of transfer-resistant products. The company closed the gap on its closest competitors
and reached a dramatic goal - the #1 brand in mass color cosmetics. Revlon again became a
public company in 1996, listed on the New York Stock Exchange (NYSE: REV).

Business Description:
Revlon, Inc.. The Groups' principal activities include manufacturing, marketing and selling an
array of cosmetics, women's hair color, beauty tools, anti-perspirants/deodorants, fragrances,
skincare and other beauty care products. It is a direct and indirect majority-owned subsidiary of
MacAndrews & Forbes Holdings Inc. The Group's products are sold worldwide and marketed
under brand names, including the Revlon ColorStay, Revlon Super Lustrous and Revlon Age
Defying franchises, as well as the Almay brand, including the Almay Intense i-Color and Almay
Smart Shade franchises, in cosmetics; Revlon ColorSilk in women's hair color; Revlon in beauty
tools; Mitchum anti-perspirants/deodorants; Charlie and Jean Nate in fragrances, and Ultima II
and Gatineau in skincare.

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Vision:
Revlon Inc. Vision is “Glamour, Excitement and Innovation through High-quality Products at
Affordable Prices.”

Mission:
Revlon Inc. mission is to emerge as the leader in cosmetic and personal care throughout the
world. Revlon takes pride in manufacturing the top skin care and strives to please young and
older woman alike.

Evaluation of mission statement:

 Customer: it is customer –oriented as it focus to fulfill the needs of the customer.
 Products and Services: Revlon is a company leader in the cosmetic and personal
products industry.
 Markets : the firm is successful in market as it has implemented an aggressive R&D
investment.
 Technology: no
 Concern of survival, growth and profitability: yes
 Philosophy – It focuses on global expansion.    
 Self concept – yes
 Concern of public image = yes
 Concern of employees –no

Financial and business performance in last 3 years:

key Revlon, Inc. Financials
Company Type
Public -(NYSE: REV)
Headquarters
Fiscal Year- December
End
2009 Sales $1,295.9
(mil.)
2009 Employee 4,800

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s

Revlon, Inc. Stock Quote (NYSE: REV)

Latest
Change ($) Change (%) High Low
06/03/10 12:43:49 EST
$12.87  -0.180  -1.379 $13.41 $12.70

Quotes delayed 15 minutes for NASDAQ, 20 minues for NYSE and AMEX. Market Data
provided by Interactive Data. Powered and Implemented by Interactive Data Managed Solutions.

Prev. Close $13.05 Open $12.92

High $13.41 52 Week high $19.87
Low $12.70 52 Week Low $4.29
Volume 90,381 Market Cap ($ mil.) 0,636
EPS $0.73 P/E Ratio 17.88

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Revlon, Inc. Income Statement:

All amounts in millions of US Dollars except per share amounts.

Dec 09 Dec 08 Dec 07

Revenue 1,295.9 1,346.8 1,400.1

Cost of Goods Sold 474.7 490.9 522.9
Gross Profit 821.2 855.9 877.2
Gross Profit Margin 63.4% 63.6% 62.7%
SG&A Expense 629.1 709.3 748.9
Depreciation & Amortization 60.1 91.9 3.3
Operating Income 170.8 155.0 121.0
Operating Margin 13.2% 11.5% 8.6%
Nonoperating Income (21.5) (6.8) 8.5
Nonoperating Expenses (92.5) (119.0) --
Income Before Taxes 56.8 29.2 (8.1)
Income Taxes 8.3 16.1 8.0
Net Income After Taxes 48.5 13.1 (16.1)
Continuing Operations 48.5 13.1 (16.1)
Discontinued Operations 0.3 44.8 --
Total Operations 48.8 57.9 (16.1)
Total Net Income 48.8 57.9 (16.1)
Net Profit Margin 3.8% 4.3% -1.1%
Diluted EPS from Total Net Income 0.94 1.13 (0.30)

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Revlon, Inc. Balance Sheet:

All amounts in millions of US Dollars except per share amounts.

Assets Dec 09 Dec 08 Dec 07
Current Assets
Cash 54.5 52.8 46.8
Net Receivables 181.7 169.9 202.7
Inventories 119.2 154.2 169.1
Other Current Assets 48.2 51.6 52.6
Total Current Assets 403.6 428.5 471.2
Net Fixed Assets 111.7 112.8 113.7
Other Noncurrent Assets 278.9 272.1 304.4
Total Assets 794.2 813.4 889.3
Liabilities and Shareholder's Equity Dec 09 Dec 08 Dec 07
Current Liabilities
Accounts Payable 82.4 78.1 89.7
Short-Term Debt 13.9 19.4 8.6
Other Current Liabilities 213.0 225.9 250.4
Total Current Liabilities 309.3 323.4 348.7
Long-Term Debt 1,186.2 1,310.2 1,432.4
Other Noncurrent Liabilities 332.3 292.6 190.2
Total Liabilities 1,827.8 1,926.2 1,971.3
Common Stock Equity (1,033.6) (1,112.8) (1,082.0)
Total Equity (1,033.6) (1,112.8) (1,082.0)
Shares Outstanding (thou.) 51,894.6 51,894.6 51,894.6

Revlon, Inc. Cash Flow Statement:

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All amounts in millions of US Dollars except per share amounts.

Dec 09 Dec 08 Dec 07

Net Operating Cash Flow 110 22 4
Net Investing Cash Flow (12.7) 100.5 (17.6)
Net Financing Cash Flow (97.6) (112.3) 24.6
Net Change in Cash 1.7 7.7 11.4
Depreciation & Amortization 60.1 91.9 3.3
Capital Expenditures (15.2) (20.7) (20.0)

Financial Strength:

  Company Industry Sector

Quick Ratio 0.83 1.37 1.05
Current Ratio 1.21 1.73 1.40
LT Debt to Equity -- 19.71 34.89
Total Debt to Equity -- 31.18 53.27
Interest Coverage 1.31 1.03 0.78

Profitability Ratios:
  Company Industry Sector
Gross Margin 63.61 6.24 7.43
Gross Margin - 5 Yr. Avg. 62.25 56.66 34.99
EBITD Margin 16.92 -- --
EBITD - 5 Yr. Avg 8.36 13.10 9.55
Operating Margin 12.49 1.52 2.79
Operating Margin - 5 Yr. Avg. 6.65 8.35 6.32
Pre-Tax Margin 4.11 1.50 2.58
Pre-Tax Margin - 5 Yr. Avg. -3.50 8.39 6.46
Net Profit Margin 2.93 0.97 1.86
Net Profit Margin - 5 Yr. Avg. -4.42 5.26 4.16
Effective Tax Rate 28.71 3.08 5.52

Efficiency:

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   Company Industry Sector S&P 500
Revenue/Employee 270,438 1,293,032 2,678,755 587,392
Net Income/Employee 7,917 156,251 75,411 69,569
Receivable Turnover 7.90 0.80 6.29 8.27
Inventory Turnover 3.52 0.31 1.32 6.42
Asset Turnover 1.67 0.13 0.20 0.50

Management Effectiveness:

  Company Industry Sector S&P 500

Return on Assets 4.90 1.46 1.53 5.30
Return on Assets - 5 Yr. Avg. -6.41 5.92 4.33 5.33
Return on Investment 8.07 2.08 2.22 6.79
Return on Investment - 5 Yr. Avg. -10.91 8.69 6.38 6.84
Return on Equity -- 4.32 4.80 14.73
Return on Equity - 5 Yr. Avg. -- 12.55 9.54 10.11

Environmental analysis:

(a).1.Internal Analysis:
The Revlon Company’s goal is to provide glamour, excitement and innovation to consumers
through high quality products at affordable prices. Lately the company has been experiencing many
challenges to their success. Some of these challenges are global economic problems, increasing
competition, and debt concerns from within the company. Despite all of these challenges Revlon has
seen some strong growth but have also been experiencing some strong challenges. Revlon has many
different categories of which it sells products and they are skincare, cosmetics, personal care, fragrance,
and professional products. Revlon has many recognizable names within these categories and the
company’s ultimate goal is to emerge as the dominate cosmetics and personal care firm through the
twenty-first century.

2.Current Corporate and Business Strategies:

Revlon’s believe is in individual values and the integrity of the firm and its actions. The company
established a strong team of experienced managers that work to achieve leadership in the cosmetics
and skincare industry. The company established the Revlon Learning Center and training programs to
communicate its principles to employees.

(b).External analysis:
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 Opportunities:

 There is a lot of room for international expansion. revlon is a well-known brand, and
therefore once it enters new markets it should be able to establish itself without
much difficulty.
 revlon owns several brands, which allows it to reach out to customers of all income
ranges. Furthermore, it supplies everything from makeup to fragrances to hair
products.
 revlon is a successful company, and can afford to take additional brands under its
wings. This can prove to be especially beneficial if it buys out brands in foreign
markets, such as China and Africa, to be able to increase its market share.
 revlon has the prestige and brand loyalty, to be able to expand further into the
fashion industry, by introducing products like handbags or jewellery
 Revlon’s reputation and credibility allows it to sell products at a higher price,

 Threats

Intense competition is the major thereat for revlon. Therefore, it needs to be aware of
what the competitors are doing, and respond accordingly to retain its market share.
 Inadequate research and development, and testing can result in lawsuits, if a product
impacts customers adversely.
 Because revlon sells products in different parts of the world, restrictive trade policies of
other countries may become an issue. Also, exchange rate fluctuations can impact the
company’s bottom line profit considerably.

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SWOT analysis:
Strengths:

 Cost advantage
 Asset leverage
 Effective communication
 High R&D
 Innovation
 Online growth
 Loyal customers
 Market share leadership
 Strong management team
 Strong brand equity
 Strong financial position
 Supply chain
 Pricing
 Real estate
 Reputation management
 Unique products

Weeknesses:

 Bad communication
 Diseconomies to scale
 Not innovative
 Not diversified
 Poor supply chain
 Weak management team
 Weak real estate
 Weak, damaged brand
 Ubiquitiouegory, products, service

Opportunities:
 Acquisitions
 Asset leverage
 Financial markets (raise money through debt, etc)
 Emerging markets and expansion abroad
 Innovation
 Online
 Product and services expansion
 Takeover

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Threats:

 Competition
 Cheaper technology
 Economic slowdown
 External changes (government, politics, taxes, etc)
 Exchange rate fluctuations
 Lower cost competitors or imports
 Maturing categories, products, or services
 Price wars
 Product substitution

Strategy formulation framework:

1. Input stage:
i). CPM-Competitive Profile Matrix:

  Revlon L’Oreal Estee lauder

Critical Weight Rating Weighted Rating Weighted Rating Weighted
Success Score Score Score
Factors
Price 0.15 3 0.45 4 0.60 3 0.45
Financial 0.10 3 0.30 4 0.40 4 0.40
Position
Consumer 0.10 4 0.40 4 0.40 3 0.30
Loyalty
Advertising 0.10 3 0.30 3 0.30 4 0.40
Product 0.10 4 0.40 3 0.30 4 0.40
Quality
Innovation 0.15 3 0.45 3 0.45 3 0.45
Market Share 0.10 4 0.40 2 0.20 3 0.30
Management 0.06 3 0.18 3 0.18 3 0.18
Global 0.15 3 0.45 4 0.60 4 0.60
Expansion
Total 1   3.33   3.43   3.48

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ii). External Factot Evaluation (EFE) Matrix:

External key Weight Rating Weighted score

factors
Opportunities
Ist mover .10 4 .40
advantage

New executive .08 3 .24

team appointed to
boost sales
Improved cash .05 2 .10
flow
Create uniform .08 3 .24
images
Product and .10 4 .40
service expansion

Threats Weight Rating Weighted score

Competition .15 3 .45

Cheaper .15 2 .30

technology
Improved cash .10 2 .20
flow
Price war .12 3 .36

Exchange rate .07 3 .21

fluctuation
Total 1.00 2.9

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iii). Internal Factor Evaluation (IFE) Matrix:

Key Internal Factors Weight Rating Weighted Score

Strengths
Strong brand name, image and 0.10 4 0.40
reputation.
Large market share. 0.10 3 0.30

Strong global presence. 0.05 2 0.10

Revlon Plan to Win focuses on 0.12 4 0.48

people, products, place, price
and promotion

Strong financial performance 0.08 3 0.24

and position.
Introduction of new products. 0.10 4 0.40
Customer focus 0.15 4 0.45
Weaknesses
Diseconomies to scale 0.10 3 0.30

Weak management team 0.15 2 0.30

No innovation 0.05 3 0.15
Total 1.00 3.12

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 2. MATCHING STAGE:
i).SWOT Matrix:

Strengths Weaknesses
1. Strong brand name, image and 1.Customer losses due to
reputation. fierce competition.
2. Large market share.
2.Diseconomies to scale
3. Strong global presence. .
3.Weak management team
4. Revlon Plan to Win focuses on
people, products, place, price and
promotion
5. Introduction of new products.
6. Customer focus
7. Strong performance in the global
marketplace.

Opportunities S-O Strategies W-O Strategies

1. Low cost that will 1. Expansion in market share by more 1.Customer looses because of
attract the customers. investments in Asia (S2, O1). fierce competition.(O1,W1)
2. Ist mover advantage. 2. Focus on Plan to win to attract
3. New executive team to customers and expansion in other
boost sales. countries (S4,S5 O4).
4. Product and service
expension.
5. Improved cash flow.

Threats S-T Strategies W-T Strategies

1.Excahnge rate 1.Provide new product and keep 1.Return on investment reduces.
fluctuation. innovation (S5, T2). (W2,T1)
2.Competition
3.Price war
4.Cheaper technology

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ii). SPACE Matrix:

Financial Strength Rating Environmental Stability Rating

Return on investment 4 Rate of inflation -2
Leverage 3 Demand Changes -3
Net Income 4 Price Elasticity of demand -1
EPS 4 Competitive pressure -4
ROE 3 Barriers to entry new -2
markets
Cash Flow 4 Risk involved in business -2
Average 3.67 Average -2.33
    Y-axis 1.37
Competitive Advantage Rating Industry Strength Rating
Market share -1.00 Growth potential 5
Product Quality -1.00 Financial stability 5
Customer Loyalty -2.00 Ease of entry new markets 4
Brand and image -3.00 productivity 3

average -1.75 average 4.25

  X-axis 2.5

Directional vector point is :( 2.5, 1.37)

FS
Conservative Aggressive

CA IS

Defensive Competitive

ES

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iii).Grand Strategy Matrix:

Rapid Market Growth

Quadrant II Quadrant I

Weak Strong Competitive

Competitive Position
Position

Quadrant III Quadrant IV

Slow Market Growth

The Internal and External Strategic Position and Action Evaluation shows that the company has a
weak competitive position, a negative growth in a stable industry.

iv).The Boston Consulting Group (BCG) Matrix:

Relative Market Share Position

Industry
Sales Stars Question Marks
Growth
Rate
Revlon

Cash Cows Dogs

The Boston Consulting Matrix demonstrates that the company's market share is in a medium
position relative to the industry market shar

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v).The Internal-External (IE) Matrix:

The IFE Total Weighted Score

Strong Average Weak

3.00 to 4.00 2.0 to 2.99 1.0 to 1.99

4.0 3.0 2.0 1.0

High

3.0 to 4.0 I II III

3.0

Medium IV V VI

2.0 to2.99 Revlon

2.0

Low VII VIII IX

1.0-1.99

1.0

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3. DECISION STAGE:
The Quantitative Strategic Planning Matrix (QSPM):

StrateStrategy 1 e Strategy 2

Building strong Developing

brands. organizational
capability loping
organizational
capability
Key Internal Factors Weight AS TAS AS TAS
Strengths 
Strong brand name, image and 0.10 4 0.40 4 0.40
reputation
Large market share 0.10 3 0.30 2 0.20
Strong global presence 0.05 3 0.15 2 0.10
Strong financial performance and 0.10 2 0.20 3 0.30
position
Introduction of new products 0.10 3 0.30 4 0.40
Customer focus 0.15 4 0.45 4 0.60
focuses on people, products, place, 0.10 4 0.40 3 0.30
price and promotion
Weaknesses:
Diseconomies to scale 0.10 1 0.10 3 0.30
Weak management 0.15 2 0.30 2 0.45
No innovation 0.05 3 0.15 3 0.15
SUBTOTAL 1.00 2.75 3.2

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 Strategy 1 Strategy 2

Developing
Building strong organizational
brands. capability

Key External Factors Weight AS TAS AS TAS

Opportunities
Ist mover advantage 0.10 2 0.20 3 0.30

Product and service expension 0.12 4 0.48 3 0.36

Emerging markets and expansion abroad 0.15 3 0.45 2 0.30
Growth of the industry 0.10 3 0.30 3 0.30
Threats
Exchange rate fluctuation 0.10 2 0.20 2 0.20
Price war 0.09 3 0.27 3 0.27

competition 0.12 3 0.36 4 0.48

Cheaper technology 0.10 2 0.20 2 0.20
Product substitution 0.12 2 0.24 2 0.24
SUBTOTAL 1.00 2.7 2.65
SUM TOTAL ATTRACTIVENESS SCORE 5.45 5.85

Suggestion:
The company should continue to build strong brands by focusing on innovative, high-quality,
consumer-preferred brand offering,appropriate levels of advertising and promotion; and superb
execution with retail partners.they should also develop organizational capability through
attracting, retaining and rewarding highly capable people and through performance management,
development planning, succession planning and training.

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