Revlon Strategic Plan Essay Sample free essay sample

I. BACKGROUND OF THE STUDY Revlon Inc. is a universe leader in cosmetics. It was formed in 1932 by brothers Charles and Joseph Revson and Charles Lachmann with a $ 300 investing. During Revson’s clip. a close monopoly on beauty parlour gross revenues was developed brought about by door-to-door gross revenues of nail gloss. He expanded into the lipstick market with the slogan â€Å"Matching Lips and Fingertips† . Thus. after six old ages the little nail Enamel Company transformed into one of the most recognizable trade names and companies in the universe. After the decease of Charles Revson. Michel Bergerac took over and built up the pharmaceutical side of the concern. As a consequence of this. Revlon lose its land in cosmetics. Thereafter. Ronald Perelman. president and CEO of MacAndrews and Forbes. made five offers to buy Revlon. took over the company for $ 1. 8 Billion and placed it back to its roots as a maker and marketer of cosmetics and aromas. We will write a custom essay sample on Revlon Strategic Plan Essay Sample or any similar topic specifically for you Do Not WasteYour Time HIRE WRITER Only 13.90 / page As of now. Revlon is in hazard and is trying to cut down disbursals but continued to fight with their debt making about $ 2. 3 Billion. II. STATEMENT OF THE PROBLEMThe research workers aim to find the undermentioned jobs faced by Revlon: 1. What industry does Revlon belong to?2. What must be done to better the Research and Development Division of Revlon? 3. How to better the fiscal status. specifically the debts. of the company? 4. Which market section must Revlon mark in the Philippines? 5. What are the applicable and effectual selling schemes for the Filipino market? III. OBJECTIVE ( S ) This survey aims to turn to the aforesaid jobs by supplying information about menaces. chances. failings and strengths of Revlon and doing usage of this information to accomplish the followers: 1. Identify the industry where Revlon belongs to establish on the demands of the consumers. 2. Better the Research and Development of the Company within the following two ( 2 ) old ages. 3. Better the Debts of the Company within the following five ( 5 ) old ages. 4. Strengthen Revlon’s Brand Recognition in the Philippines within the following five ( 5 ) old ages. IV. INDUSTRY ANALYSIS A. Analysis OF THE MACRO-ENVIRONMENT1. Demographic/Social/Cultural EnvironmentThe beauty and personal attention industry is impacted by major alterations in the demographic composing of the Philippines every bit good as the societal consciousness of most of its people. Women. more than of all time. experience the demand to be camera-ready at all times. thanks chiefly to cellphone cameras. Social media like Facebook. Twitter. Multiply. among eternal list of others. besides is feeding a subculture of â€Å"getting ready. † where dressing and training before a large event can sometimes dominate the event itself. â€Å"You have to be in a demographic where adult females care about make-up and attention about their expressions and attention about the whole bundle. † says Allison Conrad. president of Blushington. In the oncoming of the new millenary where adult females outnumbered work forces in footings of population and adult females started to take their topographic points in the concern universe. cosmetics and personal attention merchandises became more of a necessity. In the 2012 Philippine Demographic Profile conducted in the Philippines. ages 15-64 comprise the 61. 1 % of the entire population of the Philippines ( male 31. 103. 967/female 31. 097. 203 ) . There is a possible big market for beauty and personal attention merchandises in the Philippines as more and more adult females on this age scope are considered career adult females in which cosmetics is a necessity. 2. Political/Legal/Governmental Environment Filipino Government regulates operations of any concern entity in the state. It is besides one of the states around the Earth to enforce high revenue enhancement rates. Therefore. any entity wishing to import or export any goods must acquire clearance from Bureau of Customs ( BOC ) . Revlon. being an American establishment is capable to the regulations and ordinances of the BOC and besides to the Bureau of Internal Revenue for income that could be derived by the house in the state. Before Revlon merchandises could be imported to the Filipino industry. 7 % import responsibilities must be paid so that Revlon could get down operations and a farther 12 % gross revenues revenue enhancement rate shall be imposed to their gross revenues. 3. Economic Environment The handiness of economic system trade names in the market significantly strengthened the strong growing in colour cosmetics amid the tighter economic conditions in the Philippines. In 2009. an increasing figure of middle-income consumers shifted to more low-cost trade names in order to get by with the economic lag in the state. However. the increased prominence of lower-priced merchandises may take to a not-so favourable market for high priced beauty merchandises as Revlon. B. COMPETITIVE ANALYSIS INTENSITY OF COMPETITIVE RIVALRY| High | Low| Intensity of Competitive Rivalry|No. of competitors| | | High|Industry Growth rate| | | Low|Product Differentiation| | | High|Switch overing Cost| | | High|Exit Barrier| | | High|Strategic Stakes| | | Low| Using the above tabular array as a usher. the research workers found out that the strength of competition among bing rivals of Revlon in the Philippines is high sing both international and local companies offering beauty and personal attention merchandises. The presence of strong international and local beauty companies in the Filipino market led to a high strength of competition. International rivals like Avon and Estee Lauder are major participants in the Filipino market ; local companies such as Belo. Ever Bilena and Careline are besides deriving a just portion of the market. THREAT OF NEW ENTRANTS | High | Low| Threat of New Entrants|Product Differentiation | | | Low|Capital Requirements| | | Low|Switch overing Costs| | | High|Incumbent controls of distribution channels| | | High|Incumbents proprietary knowledge| | | Low|Incumbent entree to raw materials| | | Low|Incumbent entree to authorities subsidies | | | High| There is a low menace of new entrants for the beauty and personal attention industry because of the high barrier of entry such as the capital demand in this industry. Furthermore. people now are more wellness witting as of all time. they are sceptics on the rise of new decorative merchandises. As such. new participants seeking to perforate the market are holding a difficult clip lasting in the market unless the consumers perceived the value and safeties of the merchandises as attested by experts. Menace OF SUBSTITUTE PRODUCTS| High| Low| Threat of replacement products|The distinction of replacement products| | | High|Rate of betterment in price-performances Relationship of replacement product| | | High | There is a high menace of merchandise replacement in the beauty and personal attention industry as grounds by the great figure of major participants in the market. These participants offer comparatively the same merchandises that it is really easy for the consumers to exchange from one merchandise to another. Bargaining Power OF Buyers | High| Low| Bargaining power of buyers|Concentration of purchasers relative to suppliers| | | Low| Switching costs| | | High|Product distinction of suppliers| | | High|Menace of backward integrating by buyers| | | Low|Extent of buyers’ profits| | | High|Importance of the supplier’s input to quality of buyers’ concluding product| | | High| The bargaining power of purchasers is high due to the presence of a batch of viing participants in the market. Competing beauty companies runing in the Philippines has a low differentiated merchandises therefore exchanging costs are reallylow. With this state of affairs. purchasers have a high bargaining power as viing companies seek ways to entice consumers to sponsor their merchandises. BARGAINING POWER OF SUPPLIERS| High| Low| Bargaining power of suppliers|Concentration relation to purchaser industry| | | Low|Handiness of replacement products| | | Low|Importance of client to the supplier| | | Low|Differentiation of the providers merchandises and services| | | High| Threat of forward integrating by supplier| | | Low|Switch overing cost of the buyer| | | High| The bargaining power of providers in the market is low due to the presence of the viing participants in the market. Suppliers could non afford to increase monetary values as they please because they have to take into consideration the monetary value competence of their merchandises. or the handiness of merchandise replacements in the market as compared to other merchandises of rivals. V. ENVIRONMENTAL ANALYSISTOWS ANALYSIS* Menaces* Tighter economic system in the Philippines* Local beauty and personal attention merchandises with much lower monetary values * Consumer concern about merchandise safety* Strong competition in the industry* Opportunities* Large figure of adult females population in the Philippines as possible clients * Human perceptual experience of the necessity of being presentable and made up. therefore doing beauty and wellness attention merchandises a demand * People’s blare for quality merchandise * Failings* Inadequate and non-aggressive selling scheme of Revlon that made it less popular among in-between category and lower category section of the society * Huge sum of long term debts* Lack of fiscal resources* Not-so effectual Research and Development division* Higher monetary values of merchandises as compared to rivals* Minimum diversified merchandises as compared to rivals* Slow merchandise invention* Strength* Strong trade name acknowledgment* Quality of merchandises* Human perceptual experience of comparing quality with high monetary values VI. GENERIC STRATEGIESFocusMore than 13 million or about 30 % of the entire population of the Philippines belong to the adult females with the age scope of 15-64 old ages. These are the old ages where adult females take more witting attempt to heighten their beauty while still caring for their tegument. Among this possible market. it is still to be divided as harmonizing to their positions. Age Range| Status| 15-20| Teenagers|20-30| Young Professionals|30-60| Career Women ( married or non ) |60-64| Retiring age| While all of these adult females use beauty and personal attention merchandises. non all are willing and capable to buy beauty merchandises with higher monetary values if it can be bought in a much lower monetary value. Adolescents. for illustrations. don’t have yet the agencies to sponsor Revlon merchandises. Meanwhile. adult females from retiring age may non be as beauty witting as when they were younger. therefore. they lessen their purchase of beauty and personal attention merchandises. It is logical for Revlon to concentrate their market to the immature professionals and the calling adult females who are at the prime of their age and calling. These types of adult females are at the point of their lives where society dictates them to be presentable ; their turning consciousness of heightening their beauty without prejudicing the personal attention demands of their tegument ; and they have the agencies to buy. VII. ALTERNATIVE COURSES OF ACTION Financial Ratio AnalysisLIQUIDITY RATIO| 2006| 2007| Analysis|Current Ratio| 1. 293743| 1. 36507| Current ratio indicates that for every $ 1 of current liabilities there is 1. 29 of current assets on 2006 and 1. 36 on 2007. This means that the company is pull offing its short term duties rather good. | Quick Ratio| 0. 799311| 0. 913453| This ratio indicates the extent to which it can run into its short term duties without trusting on the gross revenues of its stock list. This ratio is below 1 which refers to the fact that the company relies rather a batch on its stock list to run into its short term duty. | Working Capital ratio| 0. 118897| 0. 153267| | Entire Asset Turnover| 1. 31474| 1. 501318| This ratio measures the ability of a company to utilize its assets expeditiously generate gross revenues. This means that the company expeditiously using their assets. | Inventory Turnover| 6. 380251| 7. 763203| This ratio states the figure of times company’s stock list is sold and replaced over a period. The lower the ratio ( as compared to the industry norm which is 11. 54 ) the better it is for the company. | Ave. no. of yearss to sell| 57. 20778| 47. 01668| This means that the company is taking 58 yearss on 2006 and 47 yearss in 2007 to sell off its stock list. | AR Turnover| 5. 300816| 6. 767822| This indicates how many times the company collected its receivables. | Ave. Collection Period| 68. 85732| 53. 93168| This means that the company is taking 69 yearss on 2006 and 54 yearss in 2007 to roll up its histories receivable. | Current plus turnover| 2. 820741| 2. 85332| | PROFITABILITY RATIOS| | | |Gross net income Margin| 0. 593671| 0. 630093| There is a border of 63. 01 % for the company to cover its operating disbursals and still give a net income. | Operating Net income Margin| 1. 04004| 0. 913393| This means that the company is passing more than they sold. | Net Net income Margin| -0. 1935| -0. 01178| This value indicates a negative sum of net net income for every $ 1 of net gross revenues. This means that the company is incurring a net loss. | ROA| -0. 26966| -0. 0181| For every $ 1 of assets the company yields a net income of $ -0. 26966 on 2006 and $ -0. 0181 on 2007. | ROE| 0. 204342| 0. 023804| For every $ 1 of assets. $ . 2043 is contributed by the proprietors in 2006 and it decreases tp $ 0. 0238 in 2007. | LEVERAGE RATIOS| | | | Debt Ratio| 2. 319669| 2. 206567| This means that the company is really insolvent since they have a greater liability than plus. | Time involvement earned ratio| ( 0. 35 ) | 0. 87| A metric used to mensurate a company’s ability to run into its debt duties. This means that the company is holding a difficult clip in the payment of the involvement of the debt of the company. | times fixed charges earned| -0. 33419| 0. 860465| This step of a company’s ability to pay its fixed disbursals. This means that the company is non able to cover its fixed disbursals of the company. | With the predominating fiscal status of the company. the research workers would wish to suggest the undermentioned alternate classs of action: Selling1. Revlon should be more aggressive in publicizing their merchandises here in the Philippines thru commercials. hoardings. and on-line advertizements wherein named actors/actresses are to be used as theoretical accounts. 2. It should patronize events ( e. g. Fashion events ) . make-up workshops. 3. Revlon should besides increase its distribution channels in the Philippines to do the merchandises offered by the house known by the populace. 4. It should besides make its ain motto to do known to the populace the value it offers through a one-liner statement of who Revlon truly is. Research and Development 1. Revlon should increase its capital investings for Research and Development because this functional country plays a critical function in the success or failure of a merchandise invention that every house needs in order to cover with the stiff competition in the market. 2. It should besides engage immature research workers to instill fresh thoughts in the merchandise development. Finance1. To somehow better the fiscal status of the company. peculiarly the debts of the house. alternatively of widening or increasing the debt of the company by increasing loans. Revlon should choose to publish more stocks.VIII. CONCLUSION/RECOMMENDATION DecisionThrough the instance analysis made by the research workers in consideration with the given information and some information taken independently. the research workers conclude that Revlon should belong to the beauty and personal attention industry instead than the cosmetics industry. The research workers believe that in taking a suited industry. the demand of the consumers must be taken into consideration. The consumers needed something beyond cosmetics ; they needed beauty and personal attention. Besides. the research workers conclude after the analysis that Revlon’s focused market section in the Filipino market must be the professionals. both the immature and in their ulterior old ages. This group of adult females has the demand of beauty and personal attention as they present themselves at work. You are what you wear as the expression goes. Womans who take attention of themselves have the added assurance to confront their occupation and their co-workers. Besides. they are the best market as they have the agencies to sponsor Revlon’s merchandise monetary values. Finally. the research workers conclude that. after thorough analysis. the Research and Development Division of Revlon is non so effectual. as evidenced by the floating-point operation of its merchandise line Vital Radiance. The research workers agreed that Revlon is passing lesser than necessary to its R A ; D Division with $ 24. 4 million in 2006 as compared to the $ 100+ million it spends on advertisement. It is true that advertisement is really of import but R A ; D to measure the market before launching is besides every bit of import. Revlon must non besides rest on its awards as one of the taking decorative trade names. It must ever be aggressive to rule the market. Therefore. necessary selling schemes must be implemented to win the larger portion of the Filipino market. RecommendationThe research workers recommend a Vertical Integration scheme specifically the Forward Integration. Revlon already has its name recognized internationally but is really uncommon to the major part of the Filipino market. This is because the monetary value of their merchandise limits their market to the upper category work forces of the Philippine society more than the in-between category or the lower category. Forward integrating or the acquisition of distributers can supply advantages for the operation of Revlon like leting Revlon to restrict its exposure to gross revenues and concentrate its resources on efficient fabricating techniques ; it besides becomes the duty of the distributers to happen retail mercantile establishments for merchandises. The maker can broaden its retail exposure through distribution without holding to pass more money or affect more company resources in gross revenues ; Revlon besides can turn the duty of covering with international trade Torahs. transporting through imposts and managing the Torahs and civilizations of foreign states over to the distributers ; and Revlon can turn over the duty of administrating client service responsibilities to its distributers and cut down the manufacturer’s demand to put in a client service section. therefore. reduces the administrative duties of the maker and lowers runing costs. Revlon is in a tight fiscal status. This is the best clip to do optimal usage of its available resources. Filipino market is a possible big market for beauty and personal attention merchandises as more and more adult females give better intervention to their egos. The mission of Charles Revson as he pioneered Revlon is a great cause. It is clip that this mission be more made known and be expanded to a bigger market doing more and more adult females be motivated. pushed and enticed to construct an thought of who they truly are and express their fabulous muliebrity.