Case Study Revlon

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Introduction

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Revlon ('the company') is engaged in the production, marketing and selling of an array of cosmetics, hair color, beauty tools, anti-per spirants/deodorants, fragrances, skincare and other beauty care products. Its major products are Revlon Ultima 2, ColorStay, Almay, Charlie, Flex, Mitchum, Jean Nate, and ColorSlike. The company operates in North America, Asia-Pacific, Europe, Africa, and Latin America. It is headquartered in New York City, New York and employs 4,900 people. The company recorded revenues of $1,321.4 million during the financial year ended December 2010 (FY2010), an increase of 2% over FY2009. The operating profit of the company was $199.8 million in FY2010, an increase of 17% over FY2009. The net profit was $327.3 million in FY2010, as compared to a net profit of $48.8 million in FY2009.

Executive Summary

Revlon is a company leader in the cosmetic and personal products industry. The company produces goods under Revlon, Almay, and Ultima brand names.   Product categories are skin care, cosmetic and personal products. Revlon has implemented an aggressive R&D investment. This has resulted in positive aspects for the company such us brand recognition and increase in sales. It focuses on global expansion. Therefore, the firm is successful in markets like Africa and Latin America. However, the competition is intense. The company's top competitors are Procter & Gamble, L'Oreal, Estee Lauder, and Avon. These competitors represent a major threat for Revlon. They sell their products in international markets and have aggressive strategies to increase revenues. Revlon have struggled with debt in recent years. Its net sales decreased by $1332 billion to $1331billion. The company is not financially stable. The net income has been negative for the last eight years. Its growth rates are below the industry rates. The strategic analysis shows that the company has some internal and external issues. The company has low competitive advantage compared to top competitors. This means that the company will be in a poor position to change with the market. Revlon has a low rate of return and cash flow problems. 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. The Boston Consulting Matrix demonstrates that the company's market share is in a medium position relative to the industry market share.  

SWOT Analysis

Strengths:

1. Aggressive advertising worth $120 million

2. Market Share Leadership

3. Unique Products

4. Great operating efficiency and use of capital assets

5. Quality manufacturing standards and having ISO-9000 certification

6. Strong brand recognition

7. Rapid new product development (Innovation)

8. Strong social responsibility programs (Loyal Customers)

9. Strong research and development program

10. Large mass merchandisers and chain drug stores (Supply Chain)

Weakness:

1. A large amount of long term debts (Over Leveraged Financial Position) 2. High prices
3. Lack of financial resources
4. Poor Supply Chain
5. Week Management Team
6. Minimum diversified products compared with competitors 7. High restructuring costs ($17.9 million, 2006)

8. Less diversified products compared with competitors

9. Constant organizational restructuring

Opportunities:

1. Increase in US teen market i.e. the young migrants to America are increasing. Growth in Hispanic population.

2. Asian markets with 60% world’s population still uncovered.

3. Expansion in hair coloring market amongst youth.

4. Men also using the cosmetic products

5. Increase in online retailing

6. Women in China, India and Middle East are rapidly Growing interest in purchasing more cosmetics

7. Latin America represents a growth opportunity

8. The older age women entering to the...
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