Conduct External And Internal Audit (IFE Or EFE/CPM) 2. Iden

Conduct external and internal audit( IFE or EFE/CPM) 2. Identify the main issues/opportunities in case

Based on the Revlon case study, the first step involves conducting a thorough external and internal audit of the company's strategic position. The internal audit, using tools such as the Internal Factor Evaluation (IFE) matrix or Competitive Profile Matrix (CPM), assesses Revlon’s internal strengths and weaknesses. This includes evaluating factors like brand equity, product diversification, financial resources, operational efficiency, R&D capabilities, and supply chain management. Conversely, the external audit, using tools like the External Factor Evaluation (EFE) matrix, examines opportunities and threats in the wider market environment, including consumer trends, competitive dynamics, economic conditions, and technological changes affecting the cosmetics industry.

Revlon's internal strengths include its renowned brand recognition, a diverse product portfolio, and extensive distribution channels. Weaknesses involve high debt levels, over-reliance on North American markets, and lagging innovation compared to competitors. Externally, opportunities exist in emerging markets, increasing demand for natural and organic products, and digital marketing channels. Threats include intense competition from brands like L'Oréal, Estée Lauder, and emerging private labels, as well as changing consumer preferences and economic downturns affecting discretionary spending.

Identify the main issues/opportunities in case

The primary issues identified from the audits revolve around Revlon’s declining market share and profitability driven by outdated branding, insufficient innovation, and overdependence on mature markets. The company faces stiff competition that erodes its market share, particularly in the premium segment. Opportunities include expanding into emerging markets, leveraging social media and e-commerce platforms for digital marketing, and responding to trends favoring natural and sustainable beauty products. Additionally, strategic alliances and product diversification could serve as avenues to revive growth and improve competitive positioning.

Develop alternate solutions to solve problems or capitalize on opportunities

To address these issues and leverage opportunities, three relevant strategic tools are employed: SWOT matrix, BCG matrix, and IE matrix. These tools assist in generating viable strategic options tailored to Revlon’s context.

1. SWOT Matrix

The SWOT matrix integrates internal and external factors, generating strategic options. For Revlon, strengths such as brand equity and product diversity can be matched with external opportunities like emerging markets and digital channels. Weaknesses such as debt and limited innovation should be mitigated by strategies like investing in R&D or cost restructuring. Threats like intense competition should prompt strategies such as product differentiation and strategic alliances.

2. BCG Matrix

The BCG matrix evaluates Revlon’s product lines based on market growth and market share. Core mature products in saturated markets are classified as Cash Cows, generating steady cash flow but requiring minimal investment. Emerging product lines, such as natural and organic beauty products, may fall into the Question Marks quadrant, needing investment to grow market share. Strategic focus would be to invest in question marks with potential to become Stars, or divest from declining Cash Cows if they no longer contribute significantly.

3. IE Matrix

The IE (Inside-Outside) matrix combines the IFE and EFE scores to position Revlon within a strategic grid. Given Revlon’s moderate internal strengths and external opportunities, the company is likely positioned in the Hold and Growth cells, suggesting strategies such as market penetration, product development, or market development depending on specific position within the matrix. This reinforces the importance of aligning internal capabilities with external opportunities for sustainable growth.

EPS/EBIT analysis

Earnings per Share (EPS) and Earnings Before Interest and Taxes (EBIT) analyses provide financial insights into Revlon’s profitability and operational efficiency. A declining EBIT margin indicates operational issues, such as high costs or ineffective marketing. Improving EBIT through cost-cutting, pricing strategies, or efficiency gains can positively impact EPS, which directly affects shareholder value. Analyzing trends over multiple periods helps determine if proposed strategic initiatives are likely to enhance financial performance.

Implementation of your recommended strategy and control mechanisms

The recommended strategic approach involves diversifying product lines into natural, organic, and sustainable cosmetics, expanding into emerging markets, and strengthening digital marketing channels. Implementing these strategies requires specific controls such as key performance indicators (KPIs) for sales growth in new segments, market share improvements, and brand awareness metrics. Additionally, financial controls should monitor cost reductions and return on investment for R&D and marketing initiatives. Regular strategic reviews and feedback loops are essential to adapt the strategy dynamically based on market response and internal progress.

Conclusion

Revlon can rejuvenate its brand and enhance its competitive position by conducting comprehensive internal and external audits, identifying core issues and opportunities, and deploying strategic tools such as SWOT, BCG, and IE matrices. These methods facilitate the development of targeted strategies like product diversification, market expansion, and innovation while ensuring financial health through EPS/EBIT monitoring. Effective implementation coupled with rigorous control mechanisms will enable Revlon to navigate industry challenges successfully and sustain profitable growth.

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