Title of the Context: Revlon, Inc Time Context: 1932 - 2008 Abstract: Revlon is a global company offering high-quality

color cosmetics, hair color, beauty tools, fragrances, skincare, anti-perspirant or deodorants and beauty care products at affordable prices to women. The companys products are sold in more than 100 countries around the globe. It was taken public in 2006 and traded in New York Stock Exchange. From year 2005 until 2007, the company is in the state of decline, net sales are decreasing, debts are increasing, numerous lay-offs and cost-cutting and continuously incurring loss. Revlon is a company in trouble for the recent years. However, despite the struggles, Revlon still continue to innovate and develop its products. During 2008, there has been a substantial recovery of the company from the $320,000 net loss of 2007 to the net income of $1,130,000 of 2008. The long-term mission of the company is to emerge as the dominant cosmetics and personal care firm in the twenty-first century by appealing to young or trendy women, health conscious women (skin care), and older women with its variety of brands. Revlons vision is glamour, excitement and innovation through high-quality products at affordable prices. The Corporate Social Responsibility framework is stated as follow: Safety provide our consumers with high-quality, safe, and efficacious products and our valued employees with a safe workplace. Social enhance womens loves through our products and philanthropic efforts. Ethical conduct business in an ethical manner. Environmental reduce the environmental impact of our operations. Regulatory ensure that our products and operating facilities meet or exceed all applicable standards, globally. Revlon has supported womens health by devoting financial and employees resources in support of medical research programs, physician training, clinic care, as well as education and awareness initiatives. Since 1990, Revlon has helped raise over $75 million toward these programs. They support the Look GoodFeel Better, Revlon Run/Walk for Women, National Breast Cancer Coalition, Rex Health, and others. The company has received numerous awards and achievements for the past few years. Revlons recent awards include Allures Magazine, Breakthrough Product of the Year and Best Beauty Product. From Cosmo Magazine, it has garnered the Best Of and Kiss of Approval awards. It has also earned the five Best Beauty Products awards at Allure Magazines annual breakfast ceremony. Also, from the 1|Revlon, Inc. What Now?

same magazine it has received the Best of Beauty, Best Eyeliner, and Best Lipstick from Revlons various products. I. Statement of the Objective: The objectives of Revlon are stated below: 1. Build and leverage our strong brands, particularly Revlon brand. 2. Improve the execution of our strategies and plans, and provide for continued improvement in organizational capability. 3. Continue to strengthen our international business. 4. Improve our operating profit margins and cash flow. 5. Improve our capital structure.

II. Central Problem: How can Revlon maintain improving its overall profitability and corporate stability and flexibility despite its current situation?

III. Areas of Consideration Strengths 1. Continuing research and development despite the downturn of operations 2. Allocating more than $25 million for its CSR programs. 3. Save $34 million a year in reduced expenses due to restructuring of the organization. 4. New product development even in bad financial times. 5. Allocating approximately $120 million for advertisement. 6. Globalization of the companys manufacturing and distribution efforts enables consolidation of production facilities and increase efficiency of capital assets. 7. Manufacturing plants have ISO-9000 certification. 8. Strong brand recognition. 9. Continual launching or reintroducing new product lines. Weaknesses 1. Decrease in asset and increase in liabilities. 2. Long-term debt of almost $2.3 million. 3. High restructuring costs of almost $29 million. 4. Employee layoff by 8%. 5. Less diversified products compared with its competitors. 6. Higher selling prices than its competitors.

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Opportunities 1. Increase in mini baby boomer who have highlevel of disposable income and brand-loyal consumers. 2. Aging baby boomers who are significant market for cosmetic/personal care industry. 3. Increase in mature market that is wealthier and willing to spend on cosmetics. 4. Increase in US teen market of almost 20 million. 5. Growth of Hispanic population in the US. 6. Asian market still not yet penetrated by Revlon. 7. Mens usage of cosmetics. 8. Potential sales of personal care products globally is higher than the US alone. 9. Increase in demand for hair color. 10. Rapid interest in cosmetics and fragrances in China, India, and Middle East.

Threats 1. Competition in the cosmetic industry is intense.

2. Competitors have more diverse products offered to consumers. 3. Decrease in disposable income of Americans. 4 .Consumers concerns about product safety and use of animal testing. 5. Decrease in the value of dollar.

6. Older people tend to spend less on cosmetics. 7. Reduced inventory levels on major retailers.

IV. Alternative Courses of Action These are the possible solutions to the problems with corresponding advantages or disadvantages: 1. Reduction of costs of goods sold, general and administrative expenses and sales returns. Advantages 1. It will improve their sales and profit. Disadvantages 1. There might be a possible trade-off between the reduction of expenses and costs with the quality of products. 2. Cutting-off administrative expense might adversely affect the operations of the company such as marketing of the product. 3. Reduction of general expense might have a negative impact on the safety of employees and maintenance of the assets.

2. The company will improve its cash flow, thereby more cash to pay-off its debts. 3. By creating more profit and giving incentives to the employees will motivate them.

2. Penetrating and strengthening the companys product in international market. Advantages 1. The product will gain more market share and popularity in the cosmetic industry. Disadvantages 1. Establishing a product will require a massive amount of investment and expenses, seeing the current situation, having large debt, it would be difficult. 2. It would contribute in increasing the companys 2. It would require a thorough study of the market sales and overall profitability. being penetrated another cash outflow. 3|Revlon, Inc. What Now?

3. It would develop new product more applicable and suitable for its market.

3. There is a possibility that the product will not be patronized by consumers due to its moderately high selling price compared to other local brands.

3. Strengthen the loyalty of its current consumers and market further to its current market/country by constant market positioning and developing and offering new and innovative products. Advantages 1. Current consumers support and patronization of the product will be much greater. 2. Less marketing costs and expenses to be incurred because the consumers already have enough knowledge about the product and its quality. 3. Strong bond ties will form between the consumers and the product, thereby generating more sales and profit for Revlon. 4. Consumers loyalty will constructively affect the company not just the current time, but also the future. Disadvantages 1. Focusing on improving its current market will have a trade-off with penetrating other possible international market. 2. Also, it would have an opportunity costs of what might have been generated profit from the other un-penetrated international market.

V. Strategy Formulation: I therefore conclude that the best solution to the problem is alternative number 1 which is strengthening the loyalty of its current consumers and market further to its current market or country by constant market positioning and developing and offering new and innovative products because by doing such the company will incur less costs and expenses for the reason that the company has enough knowledge regarding its consumers, it needs, preferences and wants about the product, thus saving them the trouble from having extensive study and marketing research. However, despite the strong market loyalty, there must always be a constant market positioning to retain present customers and continuous improvement of products to satisfy their changing needs and demands. This strategy will make them competitive and fortify their product in a specific market and it will gain a positive effect on its corporate image and overall profitability.

VI. Plan of Action: 1. Provide constant advertisement in television, magazines, billboards, internet, and others. 2. Provide consumers with excellent and superb customer service and relations. 3. Continuous research and development of products. 4. Study of demographics to know the needs and preferences of the different age groups. 4|Revlon, Inc. What Now?

VII. Potential Problems 1. What if the competitors have more effective marketing strategy such as Avons door-to-door sales tactics? 2. What if there is a limited budget for research and development due to its massive debt and financial instability? 3. What if Revlons constant consumers favor or find favor towards competitors products?

VIII. Contingency Plan 1. The company should also adopt their sales tactics and put some innovation on it, such as door-to-door strategy with also free make-up teaching session and other freebies. Also, there must be a constant follow-up on customers to develop a strong bond relationship between the sales agent and the customers. 2. Revlon must learn to live and function within its means. Incurring additional obligations again for research and development would not be a wise choice. Rather, employing the right people and managing effectively, using limited budgets and resources efficiently can bring about the same purpose and objective. What is essential is the effective, efficient and right management. 3. Revlon must study what makes the customers favor the other products, what makes the competitors product unique. And from that study, conduct a research and development or innovate a current product that could possibly cater the preference and needs of the consumers and can possibly compete with the competitors product.

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