BM014-3-3-DMKG

Individual Assignment and Marking Scheme

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Module: Decision Making Assignment The Learning Outcome for this module is to acquire in-depth skills in applying the various financial theories and tools for informed decision-making. In this particular assignment, students are required to provide various decision-making strategies both from the non-financial and financial aspects for purpose of solving an organisations problem. Towards this purpose, a specific industry has been chosen in the form of Revlon Inc, one of the worlds leading cosmetics and beauty product manufacturer. A. Revlon Revlon Inc was incorporated in 1932. The vision of Revlon was essentially to provide glamour, excitement and innovation to customers through high quality products at affordable prices. Revlons success was contributed by the foresightedness and visionary planning of Charles and Joseph Revson together with another individual Charles Lachman. The latter, together with the 2 brothers, Charles and Joseph were the primary force behind Revlon and responsible for the continued success of the Company to what it is today. With humble beginnings from a single product, nail enamel, Revlons products has included an array number of choices including cosmetics, skincare, fragrances, personal care and professional offerings. Today, the Companys products can be seen on the shelves of many department and drug stores not just in the US, but world over in destinations such as Asia, Australia, Middle East, and Europe. Current Conditions Due to the emergence of the recent global crisis, The Company is struggling to contain the financial storm which has enveloped many companies worldwide. With high debts of approximately $2 billion, and fallen revenues, Revlon share price performance has underperformed. As result, the Company has decided a number of options including to discontinue various unprofitable operations. Demographic and Social Trends In general there are host of issues surrounding the cosmetics and personal care industry; essentially demographic evolution such as aging population as well as the change in proportions of racial and ethnic groups. 75 million American baby boomers provide ample opportunities to companies like Revlon in terms of high level of disposable income and greater spending power. The Brief

Level 3

UCTI Asia Pacific University College of Technology & Innovation

012012

BM014-3-3-DMKG

Individual Assignment and Marking Scheme

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In addition, the increase in population growth of minorities such as Hispanic and Asian American communities will also provide additional growth to the industry. Competition Competition is intense in this industry. In the past, the retail cosmetics industry was dominated by sales of cosmetics in specialty stores and department stores which were carried out by beauty consultants. Today women prefer to purchase their beauty products from other channels of distribution such as drugstores, supermarkets, mass retailers such as Wal Mart and K-Mart, doorto-door sellers such as Avon, and also through the internet. Aside from these, Revlons competitors include other global brands including Procter & Gamble, Estee Lauder, LOreal, Unilever, and Johnson and Johnson. It is estimated that the market worth of cosmetics and personal care industry to be around US$200 billion. Marketing Advertising continues to be a key marketing tool and the Company continues to allocate spending towards this purpose. Revlon enlists a number of Hollywood actresses who acts as the Companys brand ambassadors including personalities such as Cindy Crawford, Halle Berry,Shania Twain, Cybil Sheperd. In spite of the tough conditions, Revlon will further enhance its brand advertising campaign to create greater awareness amongst consumers. Production Global scenario has further compelled Revlon to consider consolidating its manufacturing and distribution efforts to a more optimal size. This has resulted in increased operating efficiency and better use of capital assets. The number of production facilities has been reduced and centralised to cover core regions. Reference Source: David R F, (2001): Strategic Management, Concept and Cases Prentice Hall, Upper Sadler, New Jersey Financial Plans for the Coming Year Plan 1 Revlon is contemplating a major capital investment to purchase new machineries in order to improve its product offerings. The details on the investment are as follows

Level 3

UCTI Asia Pacific University College of Technology & Innovation

012012

BM014-3-3-DMKG

Individual Assignment and Marking Scheme

Page 3 of 7

Machinery A ($) Year 1 Year 2 Year 3 300,000 1,000,000 400,000

Machinery B ($) 600,000 600,000 600,000

The opportunity cost of capital for both investments is 10%. Ignore issues of taxation and depreciation. The Plan 2 Revlon is considering building a new cosmetic factory in Malaysia which costs RM5.0 million. The following foreign currency exchange rates for the current year have been made available to you. Month January February March April May June July August September October November December USD1 to 1 Ringgit 2.9902 3.0222 3.2000 2.9960 2.9800 3.1202 3.1504 3.2030 2.9084 2.9102 2.9105 2.9208

B.

The Assignment

Part A- Non Financial Decision Strategies (1500 words) (50%): Decide for each of the caption (save for current conditions and financial plans) as provided in the above case study, appropriate non financial decisions to be taken on behalf of Revlon. Any decisions which you arrive at should provide significant benefits to the Company in the near future.

Level 3

UCTI Asia Pacific University College of Technology & Innovation

012012

BM014-3-3-DMKG

Individual Assignment and Marking Scheme

Page 4 of 7

Part B Financial Decision (500 words) (50%): For each of the plans presented, you are required the following tasks: 1. Financial Plan 1 Decide on the appropriate financial tools which you are familiar with and decide on whether to proceed or reject the investment decision proposed. 2. Financial Plan 2 Discuss the timing of this investment suitable to Revlons needs. The assignment must adhere to standard academic documentation standards:

Please use appropriate citation and reference according to the Harvard Name Referencing System in order to avoid plagiarism. Font type should be Times New Roman. Font size should be 12 pts. Vertical / line spacing should be 1.5-line spacing. You must use enough of your own words to convince the examiner that you understand what you are writing and are not just cutting and pasting. Normally your own words should be no less than 80% of the total word count. The assignment should be a formally written document and the contents of which should be about 1500 to 2000 words (excluding appendices) for the written portion of your report. You may include diagrams, figures, tables etc without word penalty. A sliding scale of penalties for excess length will be imposed according to the amount by which the limit has been exceeded. For limit excess: 11 - 20% 21 30% 31% + 10% reduction in the mark 25% reduction in the mark the work will be capped at a pass i.e. 50%

Point to note: maximum penalty for exceeding the word limit will be a reduction to a pass grade. C. Assignment Structure

Your document should incorporate the following items: i)

Level 3

PART A
UCTI Asia Pacific University College of Technology & Innovation 012012

BM014-3-3-DMKG

Individual Assignment and Marking Scheme

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ii) iii) iv) D.

PART B Appendices References Documentation Requirements

Cover Page The assignment cover page should contain information as stated below in order: Logo Module Name and Code Assignment Title Assignment Description (Individual Assignment) Intake Number Hand out and Hand in dates Lecturers Name Table of contents. The table of contents should follow the title page. It must list the sections and the page on which each section starts. The table of contents may be one or more pages long. The table of contents page(s) will not be numbered. Body of the written entry. The body of the written entry begins with the main document and continues in the sequence outlined above. The first page of the body is numbered 1 and all following pages are numbered in sequence. The numbered pages continue through the appendix. Part A of your document will outline the non financial decisions. It should be no longer than 1500 words and will carry 50% of your marks. Part B of your document will contain the financial decisions to be taken. It should be no longer than 500 words and will carry 50% of your marks. All fact(s) must be accompanied with the relevant footnotes, e.g.: annual general meetings of KLSE companies as 10 minute affairs with a handful of people seems apt.29

29

. Quoted in Financial Times, August 15, 2000, pg.40

Level 3

UCTI Asia Pacific University College of Technology & Innovation

012012

BM014-3-3-DMKG

Individual Assignment and Marking Scheme

Page 6 of 7

You are encouraged to follow this outline when you write your assignment. Each section must be titled, including the References and the appendix. References All the references used in the assignment should be given in this page and must be in Harvard Name Referencing formats. You are recommended to make reference from the following referencing sources:
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Gitman J Lawrence; Madura J. (2001): Introduction to Finance Addison Wesley Inc. Madura J (2003): International Financial Management. South Western Thomson Learning Brealey A R, Myers C S (2003): Principles of Corporate Finance, Mc Graw Hill

MARKING CRITERIA Your assignment will be assessed as per information given below: PART A This section should contain decisions to be made from the non-financial perspective. Students will be evaluated on reasonableness of the decision to be taken in terms of, demographic, marketing, production and competition aspects. Students should demonstrate their knowledge which they have accumulated in the past and apply the relevant strategies possible. This portion of the assignment carries 50 marks. PART B This section should contain the financial decisions of Revlons plans. Students should demonstrate a good grasp of relevant financial theories and tools to provide them with a sound judgement acceptable to Revlons management. This portion of the assignment carries 50 marks. A total of 10% of the marks will be allocated for clarity of language, grammar, spelling and overall use of language. Failure to comply with the requirements for references OR failure to give proper references will result in an automatic 10% of the total mark.

Level 3

UCTI Asia Pacific University College of Technology & Innovation

012012

BM014-3-3-DMKG

Individual Assignment and Marking Scheme

Page 7 of 7

Assignment Assessment Criteria The criteria below detail the areas, which will be taken into account when the assignment is marked. Each piece of assessed work will be awarded a percentage between 0 and 100%. The grades awarded will be marked according to the following criteria: 75% + This would be equivalent to a Distinction and will represent outstanding performance. The work should show a thorough understanding of the issue together with a high degree of analysis and critical evaluation. 65 74% This will be equivalent to a Credit. This will represent extremely good work demonstrating an in depth understanding of material and sound analysis and conclusions. This would be equivalent to a Pass. Work in this category should demonstrate good application of the main Principles to the question set and provide a well-balanced view. This would represent a failure to pass demonstrating a poor command of the knowledge of subject area combined with an inability to interpret the question.

50 64%

49 0%

Please pay particular attention to the following:

Ensure that the contents page precisely reflects the whole content of the report including the appendices. Page numbering: Ensure that the contents page accurately reflects the position of the contents. Page numbers prior to the introduction should be roman numerals. From the introduction onwards page numbering should be Arabic. References should be listed according to the Harvard convention with the authors listed in alphabetical order. Authors should be accurately referenced within the report according to the Harvard convention.

If you have any problems with report formats please do not hesitate to contact me. *** All the Best ***

Level 3

UCTI Asia Pacific University College of Technology & Innovation

012012