Revlon Inc. Case Study:

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 polish market, soon after expanding into lipstick. Over the past six years,

Revlon has consistently lost 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.

Revlon was founded in 1932, by Charles Revson and his brother Joseph, along with

achemist, Charles Lachman, who contributed the "L" in the REVLON name. Starting

with a single product nail enamel unlike any before it - the three founders pooled their

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 drug stores. 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. Following the war, Revlon launched twice-yearly nail enamel and lipstick

promotions tied to seasonal clothing fashions. Revlon also turned to television

sponsorship to boost sales. In December 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 line up.

In the 1990's, Revlon revitalized its cosmetics business and strengthened its in

dustry leadership role. Revlon introduced the first transfer resistant lip color which led

to a full Color Stay TM 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.

STATEMENT OF THE PROBLEM

Present Conditions:

Revlon is struggling to recover and collect debt of almost $2.3 billion. The research and

development department is also struggling to offer new products to the market. In

recent years Revlon launched Vital Radiance, a cosmetic line for older women with 100

products and it was the largest launch since Color Stay in 1994. However the product

was not well received 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 current stockholders. 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 competitors are Proctor and Gamble, Avon Products, Estee

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.

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 and therefore we are going to analyze the external and internal environments of

Revlon first then we 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 America the young migrants increasing year by year but the competitive

position of Revlon is not strong because the competitors are Proctor & Gamble,

Unilever, Avon Products, Inc’ which is very strong and have popular brand names.

Therefore according to Grand Strategy Matrix the Revlon lies in quadrant II.

According to this quadrant the Revlon needs strategies like

Market development, Market penetration, Product development, Horizontal

integration, Divestiture, and Liquidation. One of these strategy is important for

Revlon.

The Grand Strategy Matrix for Revlon Inc.

Rapid market growth

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 the recent years. After applying the tools and techniques of strategic

management our conclusion is 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

horizontal integration.

5) The company should sell some unprofitable division.

6) The last option is liquidation. If the company fails to follow the above strategies

then it should liquidate the business.