ORGANIZATIONAL POLICY & STRATEGY

PROGRAM COURSE

MASTER OF BUSINESS ADMINISTRATION ORGANIZATIONAL POLICY & STRATEGY

CASE STUDY REVLON

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Acknowledgement This paper was undertaken during enrollment of master degree of business administration and it is a great opportunity to share this paper for an academic knowledge and development as well as self-improvement management skills.

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Executive Summary Revlon was founded in 1932 by brothers Charles (Joseph Revson and Charles Lachmann) with a $300 investment from nail products to beauty products. In 1937, Revlon successful started selling products in department stores and drug stores. Revlon was taken public in 1996 traded on the New York Stock Exchange.

Today, Revlon is the global company which offering the products over 100 countries and products focus on skin care, cosmetics, personal care, fragrance and professional products.

In this case study, the strategic management is focusing on the following: Identify the firms vision, mission, objectives and strategies Develop the statement of vision and mission of the firm Identify external opportunities and threats Construct Competitive Profile Matrix (CPM) Construct External Factor Evaluation (EPE) Identify internal strengths and weakness Construct Internal Factor Evaluation Prepare Strengths-Weakness-Opportunies-Threats Matrix (SWOT), Strategic Position and Action Evaluation Matrix (SPACE), Internal-External Matrix (IE), Grand Strategy Matrix, Quantitative Strategic Planning Matrix (QSPM) with advantages and disadvantages of alternative strategies. Should Revlon concentrate its efforts on international market, given the low value of the dollar and competitive pressure? Which countries should Revlon focus on? Should Revlon diversify its operations or develop joint ventures with other cosmetics companies? Would jewelry be good industry to enter given the aging society? Does Revlon have too many brands? Should the company keep brands such as ColorStay and get rid of brands such as Mitchum? Should Revlon agree to sell itself to Perlman or to a rival firm? What is Revlon worth on the market?

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The firms vision, mission, objectives and strategies

Revlon Perspectives To create and develop the most consumer-preferred brands; To be the most valuable partner to our retail customers; To profitability grow the business and its value for our stakeholders.

The statement of vision and mission of the firm Revlon does not have visible vision and mission but emphasize on company perspective. It is disadvantage to Revlon because the direction of the company is fully depending on the leader, Chief Executive Officer. Because of the company led by leader, it is put the company on risk which each leader has different strategy and it may not relate the core value of the company.

Therefore, it is suggested the vision and mission for Revlon due to enhancing the primary objective of the company function and business particularly products penetration to customer needs and wants:

Vision To be consumer-preferred brands and valuable business partners of growing the business to maximizing the value for the stakeholders.

Mission To be premier beauty global company To be the best choice of customers products To be the best place to work

The vision is defined the core values of Revlon that the business model focus on the brand and offering product by utilize the resources and contribute the time value of money. This vision is the company direction towards branding and quality products which offering to the customer needs and wants. Thus, it is giving the lifestyle long term goal for the company to build potential business for the continuously profit making. In order to achieve this vision, the missions are needed to define. Premier beauty global company is defined the growth of business model and structure that continuously focus on core products such as beauty products penetrate the international market and product developments to satisfy the customer needs. The best choice of customers products is defined the quality of the offering products which giving the highest satisfaction for customer especially branding that build the strengths and opportunities to compete in the competitive market and rivals. The best place to work is defined the important of human capital and development that focus on quality productivity for the maximization of output and welfare of the employees so that proud of belonging could be built to minimize the labour turnover and motivate the employees for better productivity especially rewards and incentive.

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External opportunities and threats External Opportunities Well established of distribution channels that it is ability to serve the market and customers ISO 9000 certification contribute the product quality assurance to compete globally Unique organization chart giving an advantage of effective decision making locally and globally Meeting the demand and supply of online business Brand awareness through participation of womens health programs Beauty market is lucrative and continuously growth

External Threats Differentiation of culture and population aging affecting the brand and products offering Lack of effective research marketing and product penetration resulted loss of market share Consecutive financial losses resulted low confidence of investor and low motivation of employees

Justification Revlon developed the distribution channel that serving the customers over 100 countries which it is giving external opportunities to introduce new products easily. And Revlon also achieved ISO 9000 certification that giving an advantage to enter the new market and boost the trust of customers who believe the quality product. Furthermore, Revlons organization chart is restructured to manage the business and operation efficiently and serve the speed of decision making. In beauty market, Revlon only achieved low market share which it is the potential of growing the market share to meet the demand and supply.

However, different people cultural and aging of geographical will impact the offering products. Example, youngster is preferable skin care products instead of cosmetic products. Revlon did not perform effectively on new products perhaps the marketing research information is not fully evaluated and studied. Thus, low confidence from investor in this company because it is suffering losses for 8 consecutive years.

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Competitive Profile Matrix (CPM)

Revlon Critical Factors Weight 0.14 0.11 0.10 0.06 0.09 0.09 0.05 0.05 0.06 0.06 0.07 0.12 1.00 Rating 2.00 3.00 2.00 3.00 3.00 4.00 3.00 3.00 3.00 3.00 3.00 3.00 35.00 Score 0.28 0.33 0.20 0.18 0.27 0.36 0.15 0.15 0.18 0.18 0.21 0.36 2.85 L'Oreal Rating 4.00 4.00 4.00 3.00 4.00 4.00 3.00 3.00 3.00 3.00 3.00 3.00 41.00 Score 0.56 0.44 0.40 0.18 0.36 0.36 0.15 0.15 0.18 0.18 0.21 0.36 3.53 Estee Lauder Rating 3.00 4.00 3.00 3.00 4.00 4.00 3.00 3.00 3.00 3.00 3.00 4.00 40.00 Score 0.42 0.44 0.30 0.18 0.36 0.36 0.15 0.15 0.18 0.18 0.21 0.48 3.41

Market share Marketing Financial position Product quality Customer loyalty Sales distribution Global expansion Production capacity Organization structure Customer service Price competitive Management experience Total

Justification In CPM, Revlon is gauged by LOreal and Estee Lauder because they are fully focuses on beauty markets and products. Therefore, CPM can generate the reliability analysis.

In beauty markets and business, market share, marketing and management are essential because this factors the fundamental business model. Example, demand comes from customers (market) and supply will be provided by informing the customers (marketing). Managing this business is challenging because the management needs to understand the customers needs and wants (management experience). In addition, to survive this business is depending on financial status (bottom line objective from stakeholders).

In CPM, Revlon scored low point in market share and financial position because it is only capture average 3% market share (refer to appendix iv) and continuously losses. The others factors are moderate because it is just scored the acceptance compare with rivals (LOreal & Estee Lauder) except sales distribution. Sales distribution is scored high because Revlon serving over 100 countries. The total CPM Score for Revlon is 2.85 which it is reasonable (refer to appendix iv for benchmarking).

Last and not least, the weaknesses can be transformed to strengths of the company if the management is ability identify the causes of issues/problems which it will lead the know-how solution.

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Construct External Factor Evaluation (EPE)

Key Factors External Opportunities Well established of distribution channels that it is ability to serve the market and customers ISO 9000 certification contribute the product quality assurance to compete globally Unique organization chart giving an advantage of effective decision making locally and globally Meeting the demand and supply of online business Brand awareness through participation of womens health programs Beauty market is lucrative and continuously growth Subtotal External Threats Differentiation of culture and population aging affecting the brand and products offering Lack of effective research marketing and product penetration resulted loss of market share Consecutive financial losses resulted low confidence of investor and low motivation of employees Subtotal Total Weight Rating Score

0.15 0.12 0.10 0.08 0.10 0.05 0.60

4.00 4.00 3.00 2.00 3.00 3.00 19.00

0.60 0.48 0.30 0.16 0.30 0.15 1.99

0.10 0.10 0.20 0.40 1.00

3.00 3.00 2.00 8.00 27.00

0.30 0.30 0.40 1.00 2.99

Justification The weight score of external opportunities is high for the following: Well distribution channel ISO 9000 certification Online business potential Brand awareness Ability to serve customers over 100 countries Quality products is entrusted the customers trust New untapped market for products expansion Partnership brands to create the existing of products (customer mind set)

The weight score of external threats is high for the following: Financial losses Because of debts and over cost, it is burden the company expansion and competition such as product development need fund.

External opportunities, Revlon scored high for well distribution and ISO 9000 because they are ready to serve the customers globally offering quality products. However, they scored low for beauty market because they only penetrated 3% market share against rivals (refer to appendix iv).

External threats, Revlon scored high for financial losses because they are not making profit. Thus, it is also influence the productivity such as more profit more bonus payout.

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Internal strengths and weakness Internal Strengths Ability to serve the customers over 100 countries Cost control management to minimize resources wastage Restructure management functions and divisions for effective productivity Quality standard accreditation contribute the product quality to satisfy the customers expectation Manageable debtors aging

Internal Weakness Product line is limited to beauty Lack of innovative and creativity of product development High debt equity ratio resulted risk-taking firm Deficit retain earning result low confidence for firm share and investment

Justification In internal strengths Revlon is ability to serve customers globally with offering ISO 9000 certified products. Thus, they are successful managing debtors aging (refer appendix iii) resulted turnover cashflow is effective. In addition, cost control measure is important since Revlon is suffering losses. Nevertheless, management functions and divisions are restructured to further strengthening the company position. Based on this experience, Revlon should able to come back in profit once the organization structure is fully completed and gauge the performance index effectively. In internal weakness, Revlon only focusing on beauty products resulted alternative market share is untapped. In addition, some new products are not doing well due to it may lack of specialization/expertise of knowhow customer needs and wants. As a result, it is giving return on losses in stead of return on investment. Moreover, product development funds are wasted if the products rejected by customers and markets.

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Internal Factor Evaluation

. Internal Strengths Ability to serve the customers over 100 countries Cost control management to minimize resources wastage Restructure management functions and divisions for effective productivity Quality standard accreditation contribute the product quality to satisfy the customers expectation Manageable debtors aging Subtotal Internal Weakness Product line is limited to beauty Lack of innovative and creativity of product development High debt equity ratio resulted risk-taking firm Deficit retain earning result low confidence for firm share and investment Subtotal Total 0.10 0.10 0.10 0.15 0.45 1.00 3.00 3.00 3.00 3.00 12.00 28.00 0.30 0.30 0.30 0.45 1.35 3.19 0.15 0.08 0.05 0.12 0.15 0.55 4.00 2.00 3.00 4.00 3.00 16.00 0.60 0.16 0.15 0.48 0.45 1.84 Weight Rating Score

Justification The weight score of internal strengths is high for the following: Well distribution channel ISO 9000 certification Low debtors aging Ability to serve customers over 100 countries Quality products is entrusted the customers trust Debtors collection is manageable resulted strong cashflow

The weight score of internal weakness is high for the following: Financial earning deficit Low confidence level by shareholders and investors resulted low funding and investment Internal strength, Revlon scored high because they is already serving over 100 countries resulted logistic of products are effective especially new product (easier to pursue customers purchasing power). Others scored moderate except cost control management. Cost control management is not able to justify the positive financial result and this exercise is still ongoing. In internal weakness, Revlon scored high for financial deficit because this factor influences the productivity and company business. Example, management is only able to offer nominal salary increments instead of promotion salary. Last and not least, the challenges / issues are must be identified so that correction of business model, strategy and solution can be achieved.

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Strengths-Weakness-Opportunities-Threats Matrix (SWOT) Strengths Product quality assurance through ISO 9000 certification Product distribution and worldwide network (over 100 countries) Continuously sales growth Unique organization chart and functions for effective management and productivity Debtors aging is manageable

Weakness Products line is limited to beauty Lack of innovation and research product development Debt risk taking High inventory aging

Opportunities Continuously demand of beauty products Branding for products penetration and market segmentation New market segment of online channel that untapped

Threats Strong competition from rivals Products price competitiveness resulting low profit margin Fluctuation of cost rising low purchasing of beauty products

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Strategic Position and Action Evaluation Matrix (SPACE)

FS
Conservative Aggressive

CA

IS

Defensive

Competitive

ES

Internal Strategy Position Financial Strength (FS) Return on investment Leverage Liquidity Working capital Cashflow Inventory turnover Earnings per share Price earnings ratio Average Financial Strength Competitive Advantage (CA) Market share Product quality Product life cycle Customer loyalty Competition's capacity utilization Technological know-how Control over suppliers and distributors Average Competitive Advantage X-Axis = -2.89 + 2.25 = -0.64 Y-Axis = 2.57 - 2.86 = -0.32 Coordinate (-0.64, -0.32)

2.00 2.00 2.00 3.00 3.00 2.00 2.00 2.00 2.25

External Strategy Position Environment Stability (ES) Technological changes Rate of inflation Demand variability Price range of competing products Barriers to entry into market Competitive pressure Ease of exit from market Price elasticity of demand Risk involved in business Average Environment Stability Industry Strength (IS) Growth potential Profit potential Financial stability Technological know-how Resource utilization Ease of entry into market Productivity, capacity utilization Average Industry Strength

-2.00 -3.00 -3.00 -3.00 -3.00 -3.00 -3.00 -3.00 -3.00 -2.89

-3.00 -3.00 -3.00 -3.00 -2.00 -3.00 -3.00 -2.86

3.00 2.00 3.00 3.00 2.00 2.00 3.00 2.57

Justification Based on all evaluations and matrix, SPACE is described.

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Internal-External Matrix (IE)

Justification It is based on the score of EPE and IFE.

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Grand Strategy Matrix

Rapid Market Growth

Strong Competitive Position

Quadrant 3 Retrenchment Related diversification Unrelated diversification Divestiture Liquidation

Quadrant 4 Related diversification Unrelated diversification Joint ventures

Slow Market Growth Note Quadrant 1: (Many internal Strengths, Many external Opportunities) - Calls for an aggressive strategy Quadrant 2: (Many internal Strengths, Grave external Threats) - Calls for a diversification strategy Quadrant 3: (Critical internal Weakness, Grave external Threats) - Calls for a defensive strategy Quadrant 4: (Critical internal Weakness, Many external Opportunities) - Calls for a turn around style strategy.

Justification Based on all evaluations and matrix, Grand Strategy Matrix is described.

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Weak Competitive Position

Quadrant 1 Market development Market penetration Product development Forward integration Backward integration Horizontal integration Related diversification

Quadrant 2 Market development x Market penetration x Product development Horizontal integration x Divestiture Liquidation

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Quantitative Strategic Planning Matrix (QSPM)

Strategy 1 Market Penetration AS TAS 4.00 3.00 2.00 1.60 1.05 0.50 3.15 1.20 1.05 0.75 3.00 Strategy 2 Product Development AS TAS 4.00 4.00 3.00 1.60 1.40 0.75 3.75 1.20 1.05 0.75 3.00 Strategy 3 Backward Integration AS TAS 2.00 3.00 2.00 0.80 1.05 0.50 2.35 1.20 1.40 0.75 3.35

Key Factors Opportunities Continuously demand of beauty products Branding for products penetration and market segmentation New market segment of online channel that untapped Threats Strong competition from rivals Products price competitiveness resulting low profit margin Fluctuation of cost rising low purchasing of beauty products Strengths Product quality assurance through ISO 9000 certification Product distribution and worldwide network (over 100 countries) Continuously sales growth Unique organization chart and functions for effective management and productivity Debtors aging is manageable Weakness Products line is limited to beauty Lack of innovation and research product development Debt risk taking High inventory aging

Weight 0.40 0.35 0.25 1.00 0.40 0.35 0.25 1.00

3.00 3.00 3.00

3.00 3.00 3.00

3.00 4.00 3.00

0.25 0.30 0.10 0.20 0.15 1.00 0.40 0.30 0.20 0.10 1.00 4.00

4.00 3.00 2.00 2.00 3.00

1.00 0.90 0.20 0.40 0.45 2.95 1.20 0.90 0.60 0.20 2.90 12.00

3.00 3.00 2.00 2.00 2.00

0.75 0.90 0.20 0.40 0.30 2.55 1.60 0.90 0.40 0.20 3.10 12.40

3.00 2.00 2.00 3.00 2.00

0.75 0.60 0.20 0.60 0.30 2.45 0.80 0.60 0.60 0.30 2.30 10.45

3.00 3.00 3.00 2.00

4.00 3.00 2.00 2.00

2.00 2.00 3.00 3.00

Total

Justification Based on all evaluations and matrix, QSPM is described.

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Should Revlon adopting Avons door-to-door sales tactics? Do you think that is good strategy or not and why? If yes, to what extend should this new forward integration strategy be pursued? If China, why not put salespersons on the ground in other countries such as India and even the United States?

Revlon should adopting door-to-door sales strategy in China that it is similar with Avon because of the following: Effectiveness to communicate with customers directly and closer understand their expectations so that product and service improvement can be achieved Minimize the operation cost via utilize the Multi-Level-Marketing Concept so that win-win situation can be achieved. Example, people get job as business instead of employment and customers get the best economic benefits (less involvement of third-party resulted low cost). Easier to build customer loyalty via using word of mouth strategy. It is easier to serve one-to-one because marketer is able to focus customer needs and wants.

Revlon should use 5s P Marketing Strategy for the new forward integration strategy in China. The 5s P Marketing Strategy is consisting of Proposal, Product, Price, Promotion and Place.

Proposal is the business start-up plan that the person can become sales agent based on the conditions as follows: Fully compliance of domestic regulations Fully attend the training courses such as sales, sole proprietorship, product and hospitality

Products are the goods from Revlon to the customer that sales agent know-how to demonstration and advise the application usage. Revlon will be offered the product training to sales agent so that direct selling can be started. Any challenges/issues during personal selling shall refer to Revlon so that solution can be provided. Thus, it will giving advantage for both that sales agent can use the solution and Revlon can further understand the customer behavior, expectation and perceive. As a result, brand and customer royalty can be built.

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Price is the cost of the products that customer can enjoy as well as sales agent can make profit. Revlon should set the reasonable pricing so that customer can enjoy the value of money and sales agent can earn more money (product profit margin). In addition, price incentive can be introduced based on the conditions: Larger volume purchase by sales agent can enjoy additional discount Annual volume purchase by sales agent can enjoy the cash bonus and premium insurance package

Promotion is the sales incentive that sales agent and customer can be enjoyed. Example, Revlon cosmetics product can be offered 30% discount at retail value of $1000 if the customer purchase more than $1000 products from all brands.

Place is the products distribution channel. Sales agent will deliver the product to customer directly which the sales amount below $500. Any purchase amount is more than $500, Revlon will utilize the courier service to delivery the purchased product. Therefore, it is giving the sales agent to focus directly to customer with fully utilize working hours. In addition, Revlon can offer online commerce to sales agent and customer for the following purposes: Sales agent o Online request products for personal selling o Online request delivery of products to customer directly resulted saving costs o Online seek product information, announcement and training

Customer o Online purchase product o Online seek product information especially promotion

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Should Revlon concentrate its efforts on international market, given the low value of the dollar and competitive pressure? Which countries should Revlon focus on? Revlon should concentrate the international market because it is contributing half revenue although low value of dollar in the competitive situation. Revlon should focus the following countries because of the following: China (Shanghai) 1. Population is about 18 millions and GDP per capita is about US$12,529 (nominal) 2. High demand for cosmetics and fragrances 3. Gross domestic products continuously growth resulted growth of customer purchase power 4. Competitors are not fully penetrate the market segment and customer group 5. Revlon can utilize Shanghai for Chinese Regional Sales and Distribution. Example, sales expansion to Taiwan, Korea, Japan, Hong Kong and Macau due to cost effectives and similarity customer behavior which ease to market the products

South Africa 1. Population is about 40 millions and GDP per capita is about US$5,684 (nominal) 2. Competitors are not fully penetrate the market segment and customer group 3. Resources availability and lower business cost for plant investment to supply international market 4. Majority African is English educated resulted communication effectiveness for employment, business opportunities such as Multi-Level-Marketing, etc 5. Revlon can utilize Cape Town for Africa Regional Sales and Distribution. Example, sales expansion to Equatorial Guinea (GDP Per Capita US $14,941), Seychelles (GDP Per Capita US $10,112), Gabon (GDP Per Capita US $9,987), Botswana (GDP Per Capita US $7,554) and Mauritius (GDP Per Capita US $6,872)

Middle East (United Arab Emirates) 1. Population is about 6 millions and GDP per capita is about US$55,028 (nominal) 2. High demand for cosmetics and fragrances 3. Large market for halal products and less halal certified competitors 4. Revlon can utilize Dubai for Middle East Regional Sales and Distribution. Example, Bahrain (GDP Per Capital US $20,500), Egypt (GDP Per Capital US $4,400), Jordan (GDP Per Capital US $4,800), Kuwait (GDP Per Capital US $22,800), Oman (GDP Per Capital US $13,400), Saudi Arabia (GDP Per Capital US $12,900), Tunisia (GDP Per Capital US $7,600) and Turkey (GDP Per Capital US $7,900)

Source : http://en.wikipedia.org for economic statistics Page 17 of 24

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Should Revlon diversify its operations or develop joint ventures with other cosmetics companies? Would jewelry be good industry to enter given the aging society?

Revlon should diversify its operations at international such as Regional Center of Sales and Distribution because of the following: To serve the customer better by understanding their needs and wants especially cultural differentiation. Example, Chinese-China, Chinese-Taiwan, Chinese-Macau and Chinese-Hong Kong are having similar purchasing behavior and cultural. Therefore, if Revlon products and business model are successful in China, it can be diversified to Taiwan, Macau and Hong Kong easily.

Localized management and decentralized the decision making so that they can get closer with customer needs and wants and ease develop the new product and penetrate the market segment. Example, African customer enjoy the nail product instead of cosmetics and skin cares resulted Revlon can further study the potential nail development such as most favorable nail color, style, etc so that sales and profit can be potentially growth and expand to African countries.

International plant is more cost effective than United States result the potential of saving operation and business cost. Example, China Plant can supply the products to United States, Dubai Plant can supply Middle East, etc. Therefore, it is developing the strategy distribution channel and cost effectiveness to serve the customer efficiently (On Time Product Availability).

Revlon current situation is not suitable for joint ventures because this company is suffering debts and losses. Joint ventures may result Revlon losing the brand if it is not successful and high risk.

Jewelry is unrelated business to Revlon which it is not a good option to penetrate at this moment because of the following: Jewelry business is new experience to Revlon result 50%-50% ratio successful. However, introduce new brand and product are needed large fund which Revlon difficult to source due to high debts. Revlons customer is bonding with beauty brands and products result they may not keen on jewelry. Jewelry business is too competitive due to fast changeable fashion and design resulted huge cost which Revlon could not fulfill.

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Does Revlon have too many brands? Should the company keep brands such as ColorStay and get rid of brands such as Mitchum?

Yes, Revlon have too many brands that losing the focus on the customer needs and wants especially those are not making profit. Revlon should downsize the brands by eliminating the products lines of losing profitability so that cost savings can be achieved to survive the business. In addition, Revlon should re-study the brands for the following objectives: Fast moving product lines will be continued to serve the market and speed replenishment the products so that it is always available for customer to buy. High profit margin product lines but serving niche market should aggressive advertise for brand awareness and its application usage advantage so that this product can growth the market share Re-size the product line so that more customer is affordable to buy so that it can boost the sales and profitability Re-Engineering the brand value so that customer loyalty can be retained and growth. Example, cosmetics for beauty differentiate instead of cover-up unbeautiful, fragrance is for refreshment lifestyle, etc. Last and not least, Revlon should keep ColorStay and Mitchum because of the following: Develop a brand and product lines are taking long period and huge investment. Therefore, Revlon should re-engineering the application usage so that it can suit the customer needs and wants Revlon is suffering losses and debts which re-engineering business model is more relevant and re-utilize the resources especially brands to boost sales and profitability Demand for ColorStay is potential and Mitchum is just beginning to growth the market share. As a result, it is an opportunity to serve the market with re-strategy the business model so that these brands can growth well

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Should Revlon agree to sell itself to Perlman or to a rival firm? What is Revlon worth on the market?

Revlon should agree to sell itself to Perlman because of the following: Perlman understood Revlon core value of business and beauty market since 1985 which bought all stock from public shareholders. In addition, Perlman bailouts Revlon by buy non-purchase stock in 2006 result Perlman keen on this beauty business. Revlon has 75 years history of providing high-quality products at affordable prices over 100 countries result it is a strong and potential company that the business shall continue and rise. Revlon is smallest beauty company compare with LOreal, Avon and Estee Lauder result it is worth buyout for the lucrative market and Revlon is still ability to growth the market share especially halal market (over US billions value of demand) Based on financial statement (refer to appendixes), Revlons value computation as follows:
Class B Stock 31,250,000 Class A Stock 390,001,154 344,472,735 Grandtotal EPS 21.43 EPS 21.43 21.43 Revlon Market Worth 31,250,000 x 21.43 = 669,687,500 Revlon Market Worth 390,001,154 x 21.43 = 8,357,724,730 344, 472, 735 x 21.43 = 7,382,050,711 16,409,462,941

Class B Stock 31,250,000 Class A Stock 390,001,154 344,472,735 Grandtotal

P/E 2.49 EPS 2.49 2.49

Revlon Book Value 31,250,000 x 2.49 = 77,812,500 Revlon Book Worth 390,001,154 x 2.49 =971,102,873 344,472,735 x 2.49 =857,737,110 1,906,652,484

Based on this computation, the market value for Revlon is shown as below:
Revlon Market Worth Revlon Book Worth Revlon Debts Estimate Value Offer Value at 80% 16,409,462,941 1,906,652,484 2,161,700,000 12,341,110,458 9,872,888,366 (a) (b) (c) (a) - (b) - (c)

Generally, Buyer will only offer at maximum 80% price to buy the company which it is similar with insurance compensation scheme (maximum 80% of market value).

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Appendix I Income Statement

Revlon 2005 1,332.30 508.10 824.20 0.00 0.00 757.80 1.50 759.30 64.90 0.00 -5.80 0.00 0.50 -0.50 130.00 6.90 9.00 140.10 -75.20 59.60 8.50 -83.70

Total revenue Cost of revenue Gross profit Operating expenses Research & development Selling, gen. & admin Restructuring cost & others Total operating expenses Operating income / loss Income from cont oper Interest income Equity Income Exchange gain/loss Other expense Interest expense Amortization debt costs Loss early extinguishment of debt Total Others Income before tax EBIT Income tax expense Net income

2006 1,331.40 545.50 785.90 0.00 0.00 808.70 27.40 836.10 -50.20 0.00 -1.10 0.00 -1.50 3.80 148.80 7.50 23.50 181.00 -231.20 -52.80 20.10 -251.30

2004 1,297.20 485.30 811.90 0.00 0.00 717.60 5.80 723.40 88.50 0.00 -4.80 0.00 -5.20 2.00 130.80 8.20 90.70 221.70 -133.20 78.50 9.30 -142.50

Gross Profit Margin Operating Profit Margin Net Profit Margin Key Performance Against Last Year Revenue Cost Gross Profit Operating Income EBIT Net Income Sales by Geographic US International Sales by Products Cosmetics, skin care & fragrance Personal care

59% -4% -19% 2006 0% 7% -5% -177% -189% -200%

62% 5% -6% 2005 3% 5% 2% -27% -24% 41%

63% 7% -11% 2004

57% 43%

59% 41%

61% 39%

62% 38%

68% 32%

67% 33%

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Appendix II Income Statement

2006 Assets Current assets Cash & cash equiv Short-term invest Net receivables Inventory Other current assets Total current assets Long-term investments Property, plant & Equip Goodwill Intangible assets Accumulated amortization Other assets Def long-term asset charges Total Assets Liabilities Current Liabilities Account payable Short/Current Long-term debt Other current liabilities Total Current Liabilities Long-term debt Other liabilities Deferred long-term Liability charges Minority interest Negative goodwill Total Liabilities Stockholders' Equity Common stock Retained earnings Treasury stock Capital surplus Other stockholders' equity Total stockholders' equity Total Liabilities and SE Working Capital Note of stockholders breakdown Class B common stock Class A common stock Additional paid-in capital Treasury stock Acc. Deficit Acc other comprehensive loss Total stockholders' deficiency 2005 2004

35.40 0.00 207.80 186.50 58.30 488.00 0.00 115.30 186.20 0.00 0.00 142.40 0.00 931.90

32.50 0.00 282.20 220.60 56.70 592.00 0.00 119.70 186.00 0.00 0.00 146.00 0.00 1,043.70

120.80 0.00 200.60 154.70 69.70 545.80 0.00 118.70 186.10 0.00 0.00 149.90 0.00 1,000.50

95.10 9.60 0.00 272.50 377.20 1,501.80 175.70 107.00 0.00 0.00 0.00 2,161.70

133.10 9.00 0.00 328.40 470.50 1,413.40 162.40 93.30 0.00 0.00 0.00 2,139.60

95.20 36.60 10.50 283.20 425.50 1,308.20 286.70 0.00 0.00 0.00 0.00 2,020.40

-1,229.80 0.00 0.00 0.00 0.00 0.00 931.90 110.80

-1,095.90 0.00 0.00 0.00 0.00 0.00 1,043.70 121.50

-1,019.90 0.00 0.00 0.00 0.00 0.00 1,000.50 120.30

0.3 3.8 884.9 -1.40 -1,993.20 -124.20 -1,229.80

0.3 3.4 764.8 -0.80 -1,741.90 -121.70 -1,095.90

0.3 3.4 510.3 0.00 -1,658.20 124.30 -1,019.90

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Appendix III Key Index

2006 1,331 546 786 -50 -251 -53 149 0.59 -0.04 -0.19 0.16 56.97 2.92 124.79 -0.27 -0.06 -0.28 1.29 0.80 2.32 0.82 -0.35 21.43 2.49 8.61 52% 48% 100% 40% 191% -132% 100% 2005 1,332 508 824 65 -84 60 130 0.62 0.05 -0.06 0.21 77.31 2.30 158.47 -0.08 0.06 -0.11 1.26 0.79 2.05 0.97 0.46 20.85 2.57 8.11 57% 43% 100% 45% 160% -105% 100% 2004 1,297 485 812 89 -143 79 131 0.63 0.07 -0.11 0.15 56.44 3.14 116.35 -0.14 0.08 -0.28 1.28 0.92 2.02 1.64 0.60 20.02 2.16 9.27 55% 45% 100% 43% 159% -102% 100%

Net Sales COGS Gross Profit Operating Income Net Income EBIT Interest Charges Gross Profit Margin Operating Profit Margin Net Profit Margin Receivable Turnover Receivable Collection Period Inventory Turnover Inventory Turnover Days Return on Assets Return on Total Assets Return on Equity Current Ratio Quick Ratio Debt Total Assets Ratio Debt Equity Ratio Times Interest Earned Ratio P/E EPS P/E Ratio Current Assets Fixed Assets

Current Liabilities Long-Term Liabilities Equity

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ORGANIZATIONAL POLICY & STRATEGY

Appendix IV Key Competitive Matrix

Financial Information (in $ Millions) 2004 1,297 89 1,001 1,355 514 Revlon 2005 1,332 65 1,044 1,516 769 2006 1,331 -50 932 1,618 889 2004 19,097 2,925 5,705 2,195 16,555 L'Oreal 2005 20,346 3,172 6,352 3,104 20,520 2006 22,106 3,557 6,786 4,661 20,474 2004 7,748 1,229 4,148 866 750 Avon 2005 8,150 1,149 4,761 767 794 2006 8,764 761 5,238 1,171 790 Etee Lauder 2004 2005 5,742 6,280 649 727 3,708 3,886 462 680 1,734 1,693 2006 6,464 620 3,784 698 1,622

Sales Operating Profit/Loss Total Assets Loans & Debts Shareholders' Equity

Key Performance Index Against Previous Years Revlon 2004 2005 2006 Sales 3% 0% Operating Profit/Loss -27% -177% Total Assets 4% -11% Loans & Debts 12% 7% Shareholders' Equity 50% 16%

2004

L'Oreal 2005 7% 8% 11% 41% 24%

2006 9% 12% 7% 50% 0%

2004

Avon 2005 5% -7% 15% -12% 6%

2006 8% -34% 10% 53% -1%

Etee Lauder 2004 2005 9% 12% 5% 47% -2%

2006 3% -15% -3% 3% -4%

Sales Growth Analysis Revlon L'Oreal Avon Estee Lauder Total Market Growth

2004 1,297 19,097 7,748 5,742 35,888

% 4% 53% 22% 16% 100%

2005 1,332 20,346 8,150 6,280 38,113

% 3% 53% 21% 16% 100%

2006 1,331 22,106 8,764 6,464 40,671

% 3% 54% 22% 16% 100%

Note : Procter & Gamble and Unilever are excluded because their core business is not focus on beauty industry.

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