Colgate-PalmoliveBrice Babbs, Andrew Dickerson,

Courtney Droege, Emily Krokstrom, Lauren Viets

About Colgate-Palmolive

Household and Personal Products● Oral Care● Personal Care● Home Care● Pet Nutrition

NAICS: 325611 SIC: 2844

Industry Products ● Personal Products

o Hair Careo Deodoranto Soap

● Household Productso Laundry

Detergentso Cleanerso Fabric Conditioners

Financials

ROE, NPM, ROA (2014)

Competition

Market Share

Procter and Gamble ● Differentiator ● Price Leadership● Reducing COGS● Divestiture-focus on core brands (80

products/90% of sales)o Ex. Pampers/Tide

● Innovation

Kimberly Clark● Differentiator (Professional Products)● Ex. Work gloves/tissues● Divestiture of healthcare products● Focus on professional, consumer care, consumer

tissue● Environmental Sustainability● Innovation

Clorox ● Differentiator (Concentrating Health and

Wellness)● Environmental Sustainability● Divestiture (Auto-Care)● Innovation● Diversification of suppliers● Cleaning (bleach) and House Products

Strategies and Factors

Business Level Strategy ● According to Michael Porter’s Business Level Strategies one would

consider Colgate-Palmolive to be a DIFFERENTIATOR.o Name Brand Strategyo Large Number of Productso Innovative

● The Miles and Snow strategy would classify Colgate-Palmolive as both a defender and prospector which means they consider Colgate-Palmolive to be an ANALYZER.o Always advancing current productso Efficient

Corporate Level Strategy● Related Diversification

o Many in store brand nameso Hill’s Science Diet Pet Foodo Colgate Toothpasteo Palmolive Dish Soap

o Many products are similar in raw materials.

Distinctive Competence● Diversified geographic operation● Leading market position● Large product and brand portfolio● Continuous Improvement

Critical Success Factors● Offering high quality products at a lower

price● Positive Environmental Values ● Offers a variety and depth of products

catering to every buying group

Stakeholders● Shareholders● Employees● Directors ● Local Communities ● Customers (End Users)● Distributors● Suppliers● Business Partners

SWOTStrengths

● Expansive Global Presence ● Large market presence ● Diverse Product lines ● Purchasing Power● Inventory Turnover

Weaknesses● High Debt to Equity ● Product Recall ● Dependence on international

markets

Opportunities● Increase in disposable income ● Asian Market Expansion

o Under developed countries and areas

● Increase in societal standard ● increased pet industry spending

Threats● Economic barriers ● Unstable political structures ● Competition ● Legal and Regulatory risks ● Low barrier to entry ● Political Instability

Strengths/Opportunities Strengths

How will we use our strengths to take advantage of our

opportunities?

S1: Expansive Global Presence S2: Large market presence S3: Diverse Product lines S4: Purchasing PowerS5: Inventory Turnover

Opportunities

O1: Increase in disposable income O2: Asian Market Expansion- Under Developed countries O3: Increase in societal standard O4: Increased pet industry spending

Maxi-Maxi Strategy1. Colgate-Palmolive should use its affluence to expand into more foreign markets, and grow its global brand (S1, O2)

2. Expanding the company’s product line to include more pet care items as well as re branding one of its current products (S3, O4)

S/O Implementation● Using its already established global company, Colgate-Palmolive needs to focus its efforts

on expanding its reach to the emerging small towns and cities that are currently arising in Asia. The increased demand from these areas provides an excellent opportunity for growth and expansion efforts. If the company acts quick, they will be able to gain a majority share in these currently developing areas and have a foothold when the population increases and expands. Colgate products in this area will be offered in smaller, refillable sizes, and value packs to make the products more affordable and attainable for this market.o Implement Colgate’s Program of “Bright Smiles, Bright Futures” (BSBF). Through the

program, children in need receive free dental screenings and education to help build healthy habits, self-esteem and a foundation for success. Also include programs based on dental health and proper handwashing practices

● Colgate-Palmolive already has a wide range of dog food products available, all with a scientific feel to the names, but none with a large share of the market. Colgate-Palmolive needs to get rid of the current Science Diet named dog food due to bad PR and lack of a following. A re-branding and a re-naming of the product will excel the dog food to new heights, and the stigma of bad products will be removed from the pet food sector of Colgate-Palmolive. Deepening their dog food lines to include more treats and toys will capture the increased spending in pet products in the United States

S/O Evaluation ● Within one year of expanding, the company will measure the sales after the

implementation of its products. Since this will be a new area of expansion, previous sales numbers will be unavailable for the specific area. In order to measure the effectiveness of the market expansion, Colgate-Palmolive will have to use data from similar markets in order to measure their reach in these new areas. If specific goals aren’t met, then a different positioning strategy may be needed. Colgate has previously expanded into parts of China using cheaper costs and acquiring local brands in order to keep some familiarity for its new markets, data from this area may be used.

● The change in name and increased advertising for the “new” dog food product should cause a jump in sales for the new product, and the toys and treats associated with the new name should grow as well. In order to determine the change in amount of profit from these new items, its necessary to compare previous years profits to the ones after rebranding. A comparison to the other dog food brands in Colgate-Palmolive’s line is recommended since it will provide a better idea of the market share of the rebranded product line.

Strengths/Threats Strengths

How will we use our strengths to minimize our

threats?

S1: Expansive Global Presence S2: Large market presence S3: Diverse Product lines S4: Purchasing PowerS5: Inventory Turnover

ThreatsT1: Economic barriers T2: Unstable political structures T3: Competition T4: Legal and Regulatory risks T5: Low barrier to entry T6: Political Instability

Maxi-Mini Strategy1. Colgate-Palmolive should continue to

grow its expansive global presence and expand into more countries to minimize its threat of politically unstable countries. (S1,T2)

2. Colgate-Palmolive should capitalize on its diverse product line to continue to beat the competition in innovative products. (S3, T3)

S/T Implementation

● Since Colgate-Palmolive is a market leader and it has the assets to grow and expand, it should increase its global network into newly developing countries and new economies. Expanding into a multitude of countries mitigates the risk it experiences through diversification. Colgate-Palmolive has the capital and the expertise to expand into these markets and use a combination of existing products and market-specific offerings to develop a presence there.

● In addition, the development of new and innovative products can occur concurrently with this market expansion due to exposure to new markets. It would be profitable for Colgate-Palmolive to invest in new product development, especially in developing countries.

S/T Evaluation ● Hedging risk through multiple investments in a variety of markets will

help ensure progressive and stable growth, despite risky political environments and changing public policies in certain developing countries.

● New markets provide research and development opportunities, expansive demographics to learn new market dynamics from, and acquisitions that can bring new talent and intellectual capital into the organization. All of these factors contribute to the success of a global expansion strategy for Colgate-Palmolive, allowing it to minimize risk while developing its innovative product line and increasing its competitive advantage and market stability.

Weaknesses/Opportunities Weakness

How will we minimize weaknesses by taking

advantage of opportunities?

W1: High debt-to-equity W2: Product Recall W3: Dependence on international markets

Opportunities

O1: Increase in disposable income O2: Asian Market Expansion- Under Developed countries O3: Increase in societal standard O4: Increased pet industry spending

Mini-Maxi Strategy1. Increase focus on U.S. markets,

especially the pet industry, to lessen damage if international markets decline (W3, O1, O4).

2. Use increased revenue from the rise in disposable income and societal standard in the U.S. to retain earnings and pay debt (W1, O1, O3).

W/O Implementation ● Continue striving for international growth, but focus on having

the U.S. market represent a larger percent of total sales in order to minimize risk. This can be achieved by expanding the product line in the U.S., especially the pet food sector.

● The rise in societal standard for health and beauty will increase demand for personal care products. This, in addition to customers having more disposable income to spend on the products, indicates that Colgate-Palmolive’s sales will most likely grow in the future. The company could then use the profits to build equity for the use of future expenses and rely less on debt.

W/O Evaluation

● Aim for percentage of net sales to be at least 10% higher for North America than other markets within Colgate-Palmolive. Total sales should continue growing for all segments.

● Colgate-Palmolive should have lower debt-to-equity ratios in the future. Even though they are using the debt to fund growth, they should be closer to half their current DTE.

Weakness/Threats Weakness

How will we minimize our weaknesses to combat against

our threats?

W1: High debt to equityW2: Product RecallW3: Dependence on International Markets

ThreatsT1: Economic BarriersT2: Unstable political structuresT3: CompetitionT4: Legal and Regulatory RisksT5: Low Barrier to Entry

Mini-Mini Strategy1. To battle the threat of legal and regulatory

risks, Colgate Palmolive should institute product quality controls as well as a task force to properly and efficiently handle product recalls (W2, T4).

2. To battle the threat of unstable political structures, Colgate-Palmolive should decrease their dependence on foreign factories and produce in their host country (W3, T2, T4)

W/T Implementation ● The increase in class action lawsuits and mass torts against companies has

created a threat and weakness within Colgate-Palmolive. In order to effectively minimize the threat from public dissatisfaction. Colgate Palmolive shouldo Keep a tighter control over their supply chaino Utilize a product quality campaigno Create a Public Representation task force to efficiently handle recalls

without public harm● Colgate Palmolive’s dependence on international markets has created a

dependence on a country’s stability and government. To protect against losing assets abroad from unstable governments Colgate Palmolive shouldo Ingrain themselves within the country through public goodwill campaignso Withdraw assets from high risk areaso Diversifying assets over several different countrieso Create more products within the host country

W/T Evaluation● To keep a greater control over their supply chain Colgate Palmolive should acquire

producers as well as move factories from abroad to their host country.o Quality Control Program

create a quality control task force within each country to have an effective control on product quality

random checks on suppliers and producers to minimize risk of product deficiency

● Public Representation Task Forceo create a task force to keep a good public connection with Colgate Palmolive through

media representationo have efficient product recall standards to effectively minimize public harm through

speed of recall, acceptance of responsibility, and public reimbursemento Create an account to deal with product recall issues

● International Dependence Strategieso Remove factories and production facilities (assets) from high risk areas such as the

middle east, sub-saharan Africa, Central America and South America.(ex. Honduras, Somalia, Syria, and Ukraine).

o Ingrain company into countries through public goodwill programs such as environmental responsibility and promotional advertising and giveaways.

o Create a campaign to move more production back into stable countries such as U.S., U.K. and Western Europe

Resources ● http://www.colgate.com/app/Colgate/US/Corp/LivingOurValues/Sustainability/HomePage.cvs

p● http://www.colgate.com/Colgate/US/Corp_v2/LivingOurValues/Sustainability_v2/Colgate_Sus

tainability2012_Markets.pdf● https://hbr.org/2005/03/expanding-in-china● http://news.morningstar.com/classroom2/course.asp?docId=145087&page=3&CN=● http://www.primermagazine.com/2011/learn/15-hygiene-habits-that-you-shouldnt-miss-in-y

our-daily-routine● http://www.mergentonline.com/companyfinancials.php?pagetype=ratios&compnumber=18

55,

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● http://www.statementstudies.org.proxy.mul.missouri.edu/IndustryResources.aspx● http://investor.kimberly-clark.com/releasedetail.cfm?ReleaseID=892623● http://www.colgate.com/app/Colgate/US/Corp/Governance/BoardofDirectors/

BoardMembers.cvsp

Resources Continued ● http://www.colgate.com/app/Colgate/US/Corp/History/1806.cvsp● http://www.colgate.com/app/Colgate/US/Corp/LivingOurValues/CoreValues.cvsp● https://global-factiva-com.proxy.mul.missouri.edu/pis/default.aspx● http://www.pg.com/en_US/ ● https://global-factiva-com.proxy.mul.missouri.edu/ar/default.aspx● http://seekingalpha.com/article/2630005-what-can-we-take-home-from-colgate-palmolives-r

ecent-earnings-announcement● http://www.thestreet.com/story/13029762/1/colgate-palmolive-cl-earnings-report-q4-2014-c

onference-call-transcript.html● http://biz.yahoo.com/e/150219/cl10-k.html● http://investors.thecloroxcompany.com/ ● http://www.bidnessetc.com/business/the-household-and-personal-products-industry-dark-cl

ouds-on-the-horizon/

● http://callisto.ggsrv.com/imgsrv/FastFetch/UBER1/301832_GDCPG40382FSA● http

://www.colgate.com/app/Colgate/US/Corp/Governance/BoardofDirectors/BoardMembers.cvsp

Questions?