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Revlon Inc. Case Study:
I. Introduction
History:
Revlon is a universal company that sells products for skin care,
cosmetics, personal care,fragrance and professional products. It was
founded in 1932 and began in the nail polishmarket, soon after
expanding into lipstick. Over the past six years, Revlon
has consistentlylost revenue and struggled with debt. Even though they have
eliminated executive positions,reduced staffing and consolidated sales and
marketing functions to save an approximate $33million, the company is still in
serious trouble.Rev lon was founded in 1932 , by Char les Revson and
h i s bro ther Joseph , a long wi th a chemist, Charles Lachman, who
contributed the "L" in the REVLON name. Starting with a s ing le
produc t na i l enamel un l ike any before i t - the three founders
pooled the i r meager resources and developed a unique manufacturing
process.The company began its success with opaque long-lasting
nail enamel sold to beauty salons.Revlon sold its nail enamel
through department stores and selected drugstores.Revlon contributed directly to
the war effort, by manufacturing first aid kits and dye markersfor the navy. At
war's end, Revlon began to produce manicure and pedicure instruments.Following
the war, Revlon launched twice-yearly nail enamel and lipstick promotions tied
toseasonal clothing fashions. Revlon also turned to television
sponsorship to boost sales. InDecember 1955, Revlon first offered stock
to the public. At the end of the following year,Revlon was listed on the
New York Stock Exchange.Revlon laid the ground work for its highly
successful international presence in the 60's, bringing the "American
Look" to the rest of the world through advertising featuring
U.S.models.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
lineupIn the 1990 ' s , Rev lon rev i ta l i zed i t s cosmet ics bus iness and
s t rengthened i t s indus t ry leadership role. Revlon introduced the first
transfer resistant lipcolor which led to a fullColorStayTM 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.
II. Statement of the Problem
Present Conditions:
Revlon is struggling to recover and collect debt of almost $2.3 billion.
The research anddevelopment department is also struggling to offer new
products to the market. In recentyears Revlon launched Vital Radiance,
a cosmetic line for older women with 100 productsand it was the largest
launch since ColorStay in 1994. However the product was not
wellreceived by the market because other competitors already provide the
products and the prices
of the Revlon product was also very high as compare with rivals.
Revlon discontinued the brand in September 2006. Revlon planned to launch a
new prestige fragrance called Flair in2006, but delayed the launch until debt
could be restructured. The company issued $185million in stock in 2006
to raise money to reduce debt. MacAndrews and Forbes Holdings agreed
to purchase a portion of the stock and to purchase nay stock not purchased by
currentstockholders. MacAndrews also extend a line of credit of $87
million to Revlon which can help the Revlon in the recovery of losses.
Competitors:
The Revlon’s major compet i tor s are Proc tor and Gamble , Avon
Produc ts , Es tee Lauder Companies, L’Oreal, and Unilever. Other
competitors include samall companies such asUrban Decay, Specialty
stores such as Bath and Body Works, Body Shop, and Victoria’s secret.
III. Alternative Courses of Action
Analysis:
After studying the case of Revlon Inc’ now we are going to analyze it that what
type of strategy they need to follow in the coming years. The Revlon is in troubles
in these days andtherefore we are going to analyze the external and internal
environments of Revlon first thenwe will suggest with the help of different tools
and techniques an appropriate strategy for them.
The Strategic position and action evaluation(space) Matrix
The Grand Strategy Matrix for Revlon
In the case study of Revlon we saw that the market is growing world wide even in
Americathe young migrants increasing year by year but the competitive
position of Revlon is notstrong because the competitors are Proctor & Gamble,
Unilever, Avon Products, Inc’ whichis very strong and have popular brand names.
Therefore according to Grand Strategy Matrixthe Revlon lies in
quadrant II.
According to this quadrant the Revlon needs strategies like
M a r k e t d e v e l o p m e n t , M a r k e t p e n e t r a t i o n , P r o d u c t
d e v e l o p m e n t , H o r i z o n t a l integration, Divestiture, and Liquidation
. One of these strategy is important for Revlon
The Grant Strategy Matrix for Revlon Inc.
Rapid market growth
IV. Conclusion
Conclusion
As we saw in the case study of Revlon which was actually written in 2007 that the
companyis in great troubles. The financial position is also very weak and it
generates losses in therecent years. After applying the tools and techniques of
strategic management our conclusionis as follow.
1)
. The company should develop new markets, which is not tapped by the
competitors.
2)
. The company should improve the quality of products as well as the price
minimization effort should be taken.
3)
. The company also need to increase sales through increasing marketing efforts.
4).
The other strategy option is the integration it may be forward, backward or
horizontalintegration.
5)
. The company should sell some unprofitable division.
6).
The last option is liquidation. If the company fails to follow the above strategies
then itshould liquidate the business.
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