Point of View: The analysis of the Revlon’s case and the recommendation provided is based on the company’s consultant’s point of view.
Problem: Since the CEO of Revlon started to minimize the cost of operation by consolidating the functions of the departments which can be combined and eliminating other management positions in order to reduce its expenses, it can also the reason why the company experienced decreasing sales and operating losses because there is a possibility of having problems in one of the department that is not being properly addressed since there is no sufficient number of department heads and personnel who can work together for immediate resolution. Areas of Consideration:
Revlon has been in the industry since 1932 where the brand has been known worldwide as a beauty products provider which started from nail polish to lipsticks and other cosmetics and skin care product. Since the company was able to enter different countries across the globe, this is an indicator that the company produces quality products to its consumers. Revlon’s research and development team is dedicated in developing products to beautify, enhance and maintain the young and pleasing appearance of women which has been evidently successful in the addition of their cosmetic and personal care products from its nail polish.
Throughout the years in the business, Revlon was able to continue its operation not only in the United States but also in other foreign countries. Based on the sales reported, Revlon continuously increase the sales percentage outside US which is an indicator that its products has penetrated foreign markets. Although the company was able to increase their sales in the countries outside US, Revlon’s overall sales decrease. The company also incurred operating loss and debts in the past three years resulting to the CEO’s decision to cut cost by means of reducing its workforce and consolidating functions.
The rise of gas and oil prices has been also one of their challenges since most of their consumer are prioritize their needs rather the wants for the cosmetics and beauty products. This economic situation does not only provide business challenge but also an opportunity for Revlon to focus on a particular product line which is the personal care and cosmetic line for older women who are more willing to spend on these product since they have more disposable income. With this opportunity, Revlon spend two years of research and development to come up with a new product targeting the mentioned consumers above.
However, it did not lasts long and discontinued producing in less than a year since the price Revlon offered is more expensive than other brands in the market which creates a negative impact of hundreds of millions. The company did not also strategize well on how to increase its market share instead they created different product line and brands competing with other companies without considering product differentiation and selling price to strengthen their position in attempting to get a good market share. Alternative Courses of Action: Since Revlon incurred continuous losses in the past years despite of the cost reduction made, the company’s management should consider restructuring their organization that enables them to better manage every department in the company. This will allow constant communication which is necessary in making sound business decision. – Revlon may consider buying other reputable local brands in the foreign country.
This way it will be easier for Revlon to get higher market share and better chance to be a leading cosmetic provider in other country. The management should limit its product category and brand production since some of their product has a very low market share and focus on the development of product lines and brands that have higher market share and are more saleable. – Feasibility studies must be made prior to execution of the actual product research and development whether the product to be develop is saleable and different from the products currently available in the market. Diversify Recommendation: To strategize the business needs the minds of competent and qualified people that are positioned in a well- structured company.
Revlon’s restructuring of its organizational chart has an impact in the company’s operation. Although the cost for the employee’s salary and benefits were reduced, Revlon continued having losses from its operation indicating that it is not the salaries that makes the losses present but the business strategy that they have. The current organizational chart of Revlon may create further problems since the department heads directly reports to the CEO which may be difficult for the CEO to check potential problems since he is occupied with other departments.
Although the CEO has technical competencies he cannot pay attention to all these departments and has the tendency to over-look other problems. It is better to have vice-presidents who are experts in the operations and can pay attention in a particular department. With a well-structured organizational chart, there will be a constant communication within every department which can be relayed with other departments concerned or bring to the upper management if there’s a necessity for further and more thorough discussion.
Potential problems can easily be determined and immediate actions can be done without much effect on the company if there were enough personnel in every department. And through the managers and vice-presidents , the company will be able manage and strategize its business operations since there will be different point of views coming from different departments to be consider. Michille L. Macanas 5BSA Business Ethics are the practices which should be observed in conducting business operation that are good, desirable, lawful and do not violate standards provided by the regulatory board and government.
Strategic Management is the manager’s analyzation on how to manage and improve the business strategy of the company in order to have a sound business decision which will make the company’s operation profitable and successful. Business strategy and military strategy have a common thing where both of them plans based on their own strength and weakness and strategize considering their competitors or enemies action and performance. Business Ethics is very important in Business Strategy because it allows the company’s management strategize and act based on the best possible options without violating the standards and laws given.
Business ethics should be practice by the company’s management in strategizing which will establish positive and professional reputation in the industry. It is also important to strategize well by knowing your own strength so that you may use it as a weapon in the business operation and the weakness so that the company can work and improve on. External factors are also important in strategizing the business such as what the target consumer needs and wants; and the competitor’s business competencies so that the management knows how to compete and strategize based on the competitor’s strengths and weaknesses.