Strategic Plan: Revlon, Inc.

1.0 Vision & Mission Statement Analysis

1.1 Current Combined Vision/Mission Statement

The case states Revlon has one statement on its website: "Revlon is a global color cosmetics, hair color, beauty tools, fragrances, skincare, anti-perspirant deodorants and beauty care products company whose vision is Glamour, Excitement and Innovation through high-quality products at affordable prices.” (p. 566)

1.2 Evaluation of Current Statement (as a Mission)

Component	Status	Comment from Case Study
1. Customers	Missing	Does not specify whether it targets mass-market consumers, professional salons, or a specific demographic.
2. Products/Services	Present	Explicitly lists its product categories (color cosmetics, hair color, etc.).
3. Markets	Present	Identifies itself as a "global" company.
4. Technology	Present	"Innovation" is mentioned as a key part of the vision.
5. Survival/Growth/Profitability	Missing	There is no mention of financial goals, growth, or profitability.
6. Philosophy	Present	"Glamour, Excitement and Innovation" serves as the company's core values or philosophy.
7. Distinctive Competence	Missing	Does not state what Revlon does better than its 3,000+ competitors.
8. Public Image	Missing	No mention of community, social, or environmental responsibility.
9. Employees	Missing	There is no mention of employees or the company culture.

1.3 Proposed Vision Statement (Future-Oriented)

"To be the world’s most iconic beauty brand, empowering individuals everywhere to express their unique glamour and confidence."

Justification: This statement is inspirational, concise, and futuristic, focusing on the desired end-state ("most iconic brand") and the ultimate value provided to customers ("empowering expression").

1.4 Proposed Mission Statement (Business-Focused)

"For individuals and beauty professionals worldwide (1, 3), Revlon delivers a diverse portfolio of high-quality, innovative cosmetics, hair care, and beauty products (2, 4) at accessible prices. We are committed to achieving sustainable, profitable growth (5) by leveraging our rich heritage and brand equity (7), fostering a creative and responsible corporate culture (6, 9), and enhancing the well-being of the communities we serve (8)."

Justification: This mission is comprehensive, including all nine components and providing a clear, actionable guide for strategic decision-making.

2.0 HR - Organizational Structure Analysis

2.1 Existing Organizational Structure (Audit)

Based on Exhibit 1, Revlon uses a **divisional structure** with two primary divisions: **Professional** and **Consumer**. This structure was finalized after the 2013 acquisition of the Colomer Group.

Problems with Existing Structure:

Lack of a COO: The case notes that "Like about half of the Fortune 500 companies, Revlon does not have an executive with the title COO" (p. 567). This creates a potential leadership vacuum between the CEO and the two divisional presidents, possibly leading to poor coordination.
Siloed Divisions: The structure separates Professional and Consumer channels. While logical, this can create silos that prevent synergies, such as using insights from professional stylists to innovate for the consumer market.
Unclear Reporting Lines: The case presumes "that the two divisional presidents report to the CAO because sometimes that is another name for the COO position" (p. 567). This ambiguity is a structural weakness.

2.2 Proposed Organizational Structure: Divisional by Region

To better align with its global presence and address regional market nuances, a shift to a divisional-by-region structure is proposed. This would provide clear accountability for performance in key markets like the Americas, EMEA, and Asia-Pacific.

1. President & CEO - Lorenzo Delpani

2. CFO 3. Chief Marketing Officer 4. Chief Supply Chain Officer 5. Chief HR Officer

6. President, Americas 7. President, EMEA 8. President, Asia-Pacific

Justification: This structure creates clear geographic P&L responsibility. Since the case notes that U.S. and international sales are a key performance metric (p. 568), this aligns the structure directly with strategy. It also allows for more tailored marketing and product strategies for each distinct global region.

3.0 External & 4.0 Internal Assessments

External Factor Evaluation (EFE) Matrix

Opportunities (10 Factors)	Weight	Rating	Score
1. Lipstick industry growing at nearly 6% annually.	0.12	4	0.48
2. Hair care, skin care, and cosmetics industry growing at 4% annually.	0.10	3	0.30
3. Skincare is expected to become the largest product category.	0.08	2	0.16
4. Men's skincare and grooming is a growing segment.	0.07	3	0.21
5. Major rival Avon is performing poorly (declining revenue, bribery fine).	0.07	3	0.21
6. Consumers are willing to try new brands and products.	0.06	2	0.12
7. Increased R&D and marketing by firms can attract new buyers.	0.05	2	0.10
8. Growth of mass merchandisers and drugstores as key sales channels.	0.05	4	0.20
9. Growing interest in "no makeup" look can be an opportunity for skincare.	0.04	1	0.04
10. The "Love is On" campaign is the first global campaign in over 10 years.	0.04	3	0.12
Threats (10 Factors)	Weight	Rating	Score
1. Intense competition from over 3,000 firms, including L'Oreal and Estee Lauder.	0.10	2	0.20
2. Decreasing customer brand loyalty and increased "commoditization."	0.08	2	0.16
3. Rival L'Oreal is highly acquisitive and benefits from a strong dollar.	0.07	2	0.14
4. Increased consumer sensitivity to harsh metals and chemicals.	0.06	2	0.12
5. Growing influx of imported products from Europe, Mexico, and China.	0.05	2	0.10
6. Rising R&D and marketing expenses are negatively impacting profits.	0.04	2	0.08
7. Celebrities posting "no makeup" photos online.	0.04	1	0.04
8. Rival Estee Lauder aggressively expanding into men's skincare.	0.03	2	0.06
9. Revlon's stock price declined 12% in 2015 due to investor concerns.	0.02	1	0.02
10. Rumors that the majority owner may sell the company.	0.01	2	0.02
TOTAL	1.00		2.58

EFE Interpretation: A total score of 2.58 indicates Revlon is performing slightly above average in responding to external factors. It is well-positioned to leverage its mass-market channels (O8) and the growth in its core markets (O1), but it is struggling to defend against intense competition (T1) and eroding brand loyalty (T2).

Internal Factor Evaluation (IFE) Matrix

Strengths (10 Factors)	Weight	Rating	Score
1. Strong brand portfolio (Revlon, Almay, SinfulColors, Mitchum).	0.15	4	0.60
2. Strong presence in mass merchandiser channels (Walmart, CVS).	0.12	4	0.48
3. Acquisition of Colomer Group added professional brands and geographic diversity.	0.10	3	0.30
4. Successful celebrity endorsements (Halle Berry, Emma Stone).	0.08	4	0.32
5. Revenues increased in Q2 2015 to $482M, up from $438M.	0.07	3	0.21
6. U.S. and international sales were both up substantially in 2014 over 2013.	0.06	3	0.18
7. History of innovation, being the first to offer nail enamel in different colors.	0.05	3	0.15
8. Positive net income of $41M in 2014, an improvement over a $5M loss in 2013.	0.05	3	0.15
9. Owns production facilities in North Carolina and South Africa.	0.03	3	0.09
10. Consumer segment accounts for 74% of revenue.	0.02	3	0.06
Weaknesses (10 Factors)	Weight	Rating	Score
1. Negative retained earnings of ($1.411B) in 2014.	0.15	1	0.15
2. Highly leveraged, with long-term debt of $1.8B vs. total assets of $1.9B.	0.12	1	0.12
3. Divested all Chinese operations in 2014, exiting a $20B market.	0.08	1	0.08
4. Net income in Q3 2015 was down to $6.2M from $14.6M in prior year.	0.07	2	0.14
5. Lacks a COO in top management team.	0.06	2	0.12
6. Professional division only generated $5.2M in profit in 2013.	0.06	2	0.12
7. Still losing ground to major competitors in the 1980s (historical context).	0.05	2	0.10
8. Small market share in US lipstick (5%) vs. Estee Lauder (16%) and P&G (10%).	0.04	2	0.08
9. R&D spending of $32M is low for the industry.	0.03	2	0.06
10. Left department stores to become a mass-market brand.	0.02	2	0.04
TOTAL	1.00		2.85

IFE Interpretation: A total score of 2.85 indicates a strong internal position. Revlon's key strengths are its powerful brand equity (S1), mass-market distribution (S2), and celebrity marketing (S4). However, these are severely threatened by its critical financial weaknesses, particularly the negative retained earnings (W1) and high debt (W2).

5.0 TOWS Matrix

	Strengths (S)	Weaknesses (W)
Opportunities (O)	SO Strategies (Aggressive) SO1: Heavily promote the Revlon ColorStay and PhotoReady brands (S1) through mass-market channels (S2) to capture share in the growing US lipstick market (O1). SO2: Use celebrity endorsers Emma Stone and Olivia Wilde (S4) in a new marketing campaign targeting men's skincare and grooming products (O4). SO3: Leverage the Colomer Group acquisition (S3) to expand the professional division into skincare (O3), which is set to become the largest category. SO4: Launch new, innovative lipstick colors and formulas (S7) to take market share from the struggling Avon (O5).	WO Strategies (Turnaround) WO1: Divest non-core assets or brands to pay down long-term debt (W2) and improve the balance sheet to fund growth in the expanding lipstick market (O1). WO2: Create a new line of skincare products (W7 - historically weak in this area) to capitalize on its high-growth potential (O3). WO3: Re-enter the Chinese market (W3) through a joint venture to reduce risk and capitalize on the growing demand for beauty products there. WO4: Hire a COO (W5) to streamline operations and improve profitability, allowing the company to better compete with rivals (T1).
Threats (T)	ST Strategies (Defensive) ST1: Emphasize the Revlon brand heritage and quality (S1, S7) in marketing to build customer loyalty and counter the trend of "brand polygamy" (T2). ST2: Use the strong mass-market distribution network (S2) to ensure prominent shelf space and defend against the influx of imported products (T5). ST3: Increase marketing spend for the "Love is On" campaign (O10) to create a stronger global brand identity and better compete with L'Oreal (T1). ST4: Develop and market a line of "clean" or "natural" cosmetics (S1) to address consumer concerns about harsh chemicals (T4).	WT Strategies (Defensive) WT1: Reduce operating expenses and improve efficiency to improve the negative retained earnings (W1) and better withstand intense price competition from rivals (T1). WT2: Focus R&D spending (W9) on creating unique, hard-to-copy products for the professional salon market to reduce the threat of commoditization (T2). WT3: Issue new stock to pay down debt (W2) and reduce financial risk, making the company less vulnerable to a takeover (T10). WT4: Launch an affordable, high-quality skincare line to counter the "no makeup" trend (T7) while addressing the company's historical weakness in this area (W7).

Strengths (S)

Weaknesses (W)

Opportunities (O)

SO Strategies (Aggressive)

SO1: Heavily promote the Revlon ColorStay and PhotoReady brands (S1) through mass-market channels (S2) to capture share in the growing US lipstick market (O1).
SO2: Use celebrity endorsers Emma Stone and Olivia Wilde (S4) in a new marketing campaign targeting men's skincare and grooming products (O4).
SO3: Leverage the Colomer Group acquisition (S3) to expand the professional division into skincare (O3), which is set to become the largest category.
SO4: Launch new, innovative lipstick colors and formulas (S7) to take market share from the struggling Avon (O5).

WO Strategies (Turnaround)

WO1: Divest non-core assets or brands to pay down long-term debt (W2) and improve the balance sheet to fund growth in the expanding lipstick market (O1).
WO2: Create a new line of skincare products (W7 - historically weak in this area) to capitalize on its high-growth potential (O3).
WO3: Re-enter the Chinese market (W3) through a joint venture to reduce risk and capitalize on the growing demand for beauty products there.
WO4: Hire a COO (W5) to streamline operations and improve profitability, allowing the company to better compete with rivals (T1).

Threats (T)

ST Strategies (Defensive)

ST1: Emphasize the Revlon brand heritage and quality (S1, S7) in marketing to build customer loyalty and counter the trend of "brand polygamy" (T2).
ST2: Use the strong mass-market distribution network (S2) to ensure prominent shelf space and defend against the influx of imported products (T5).
ST3: Increase marketing spend for the "Love is On" campaign (O10) to create a stronger global brand identity and better compete with L'Oreal (T1).
ST4: Develop and market a line of "clean" or "natural" cosmetics (S1) to address consumer concerns about harsh chemicals (T4).

WT Strategies (Defensive)

WT1: Reduce operating expenses and improve efficiency to improve the negative retained earnings (W1) and better withstand intense price competition from rivals (T1).
WT2: Focus R&D spending (W9) on creating unique, hard-to-copy products for the professional salon market to reduce the threat of commoditization (T2).
WT3: Issue new stock to pay down debt (W2) and reduce financial risk, making the company less vulnerable to a takeover (T10).
WT4: Launch an affordable, high-quality skincare line to counter the "no makeup" trend (T7) while addressing the company's historical weakness in this area (W7).

6.0 Financial Ratio Analysis (2013 vs. 2014)

Ratio	2013	2014	Trend & Interpretation
Current Ratio	1.44	1.66	Improving. The ability to cover short-term liabilities has improved, which is a positive sign of better working capital management.
Debt-to-Assets	1.30	1.33	Deteriorating. The company is extremely leveraged, with more debt than assets. This indicates a very high-risk financial structure.
Net Profit Margin	-0.33%	2.11%	Improving. A significant turnaround from a net loss to a net profit is a major strength and shows the new CEO's strategy may be working.
Return on Equity (ROE)	N/A	N/A	Not Applicable/Critical Weakness. ROE cannot be calculated because Total Equity is negative for both years. This is a critical red flag, meaning the company has a negative net worth.

Overall Financial Health: Revlon's financial situation is a story of **fragile, high-risk recovery**. While the return to profitability in 2014 is a huge positive, the company remains dangerously leveraged with negative equity. This means any operational misstep could have severe consequences.

7.0 Competitive Profile Matrix (CPM)

Critical Success Factor	Weight	Revlon (Rating/Score)	Avon (Rating/Score)	L'Oreal (Rating/Score)
Brand Reputation	0.20	4 / 0.80	2 / 0.40	4 / 0.80
Financial Strength	0.15	1 / 0.15	1 / 0.15	4 / 0.60
Global Market Penetration	0.15	3 / 0.45	4 / 0.60	4 / 0.60
Product Quality	0.15	3 / 0.45	2 / 0.30	4 / 0.60
Mass-Market Distribution	0.10	4 / 0.40	1 / 0.10	4 / 0.40
Customer Loyalty	0.10	2 / 0.20	2 / 0.20	3 / 0.30
Marketing & Advertising	0.10	3 / 0.30	2 / 0.20	4 / 0.40
TOTAL	1.00	2.75 (Average)	1.95 (Weak)	3.70 (Strong)

Interpretation: Revlon (2.75) is in a significantly better competitive position than the struggling Avon (1.95) but is severely outmatched by the industry leader, L'Oreal (3.70). Revlon's strength lies in its brand and mass-market distribution, but its financial weakness is a major competitive disadvantage.

8.0 Marketing Issues

Inconsistent Global Strategy: The "Love is On" campaign was Revlon's "first global marketing campaign in over 10 years" (p. 567). This indicates a long period of fragmented, non-cohesive marketing, allowing global rivals like L'Oreal to build a stronger, more consistent brand image worldwide.
Channel Conflict: Revlon relies heavily on mass merchandisers like Walmart and CVS (56% of US sales). However, its acquisition of Colomer Group gives it a Professional division aimed at salons. These two channels often require different marketing strategies, pricing, and product formulations, which can create internal conflict and brand confusion.
Eroding Brand Loyalty: The case notes a major industry trend of "less customer loyalty and increased commoditization" (p. 570). Revlon's marketing must shift from just promoting products to building a deeper, more resilient relationship with customers to combat this threat.

9.0 Grand Strategy Matrix

RAPID MARKET GROWTH SLOW MARKET GROWTH WEAK COMPETITIVE POSITION STRONG COMPETITIVE POSITION

Quadrant II

Revlon

Quadrant I

Quadrant III

Quadrant IV

Conclusion: Revlon is in Quadrant II.

Market Growth (Rapid): The lipstick and cosmetics industries are experiencing solid annual growth of 4-6% (p. 571-572).
Competitive Position (Weak): Revlon has a small market share (5% in lipstick), severe financial weaknesses (negative equity), and is competitively outmatched by L'Oreal, as shown in the CPM.

Strategic Implications: As a Quadrant II company, Revlon must undergo a significant strategic re-evaluation. It cannot continue with its current strategy. The primary goal is to improve its competitive position through intensive strategies like **market penetration** and **product development** in its strongest niches. **Retrenchment** (like the China divestment and layoffs) is also a necessary Quadrant II strategy to improve financial stability before attempting more aggressive growth.

How-To Guide: Performing a Financial Ratio Analysis

Financial ratio analysis is a quantitative method for gaining insight into a company's liquidity, leverage, and profitability. Here’s how to do it step-by-step using the Revlon case.

Step 1: Gather the Necessary Financial Data

You need the company's financial statements for the periods you want to compare. For this analysis, we use **Exhibit 5 (Income Statement)** and **Exhibit 6 (Balance Sheet)** to get data for 2013 and 2014.

Key data points from the exhibits (in millions of USD):

2014: Current Assets: $774, Current Liabilities: $465, Total Liabilities: $2,588, Total Equity: ($644), Net Income: $41.
2013: Current Assets: $799, Current Liabilities: $553, Total Liabilities: $2,613, Total Equity: ($596), Net Income: ($5).

Step 2: Select Key Ratios and Know Their Formulas

Choose ratios that tell a story about the company's health.

Current Ratio (Liquidity): Current Assets / Current Liabilities
Debt-to-Assets (Leverage): Total Liabilities / Total Assets
Net Profit Margin (Profitability): Net Income / Revenue
Return on Equity (ROE) (Profitability): Net Income / Total Equity

Strategic Management Plan