Colgate Palmolive Company Case Study Solution
Introduction:
The following memo includes information regarding the toothpaste manufacturing industry, the anticipated growth of the industry, main players in the industry and the main markets for the industry. The memo also includes the history and background of Colgate Palmolive Company, the main products of the company and the main target market of the company.
In addition to this, the report also includes the main adverse issues that exists in the operating environment of Colgate and the main strength, weakness, opportunities and threats of the company along with the recommendations in order to mitigate the consequences and future occurrence of the above-stated issues.
Industry Information:
It can be said that the global oral care industry is growing at an extremely good pace, the industry is dominated by few key players such as Colgate Palmolive, GSK and P&G. However, there are many local players as well who are operating in almost every local market. It is estimated that the annual sales would reach to almost $14 billion by 2020.(Global industry Analyst, 2015)
The major factor which is responsible for increasing the global demand of the oral healthcare products is the increasing awareness regarding the oral healthcare issues and continuously decreasing prices of the products. The prices of the toothpaste and dental creams are reducing day by day due to increased production and competition which led to the increasing demand of the products. The population of the world is also increasing drastically which is another reason for the increase in the global demand and demand for the toothpaste in the U.S. as well.(Global Industry Analysts, 2015)
Almost all the industry giants of the toothpaste manufacturing industry are running aggressive marketing strategies and they are also running the awareness campaign regarding the use of toothpaste and their benefits, it can be said that these awareness campaigns are responsible for increasing the revenues of the companies along with the high brand awareness. It can be said that toothpaste manufacturing industry is quite important for the U.S. economy, the industry is responsible for providing almost 2.8 million jobs which represents 1.6% of the total jobs in the U.S. On the other hand, the industry contributes approximately 1.4% directly and indirectly to the GDP of U.S.
Company background:
Colgate Palmolive Company was initially founded in 1806 by William Colgate, the initial name of the company was William Colgate & Company and the main source of revenue of the company was the manufacturing of starch, soap and candles. After the death of the original founder of the company, the name of the company was changed to Colgate & Company and takeover by his son. In 1873 the company first launched Colgate Toothpaste which proved to be very successful. Since then the company pursued various growth strategies which included both organic and inorganic growth. In the early 1990s, the company acquired various companies under its brand name which is considered as one of the key success factor for the company. And in the 1928 Colgate merged with the Palmolive-Peet and form Colgate Palmolive Company.
Currently Colgate is operating in more than 200 countries around the globe which is considered as one of the main characteristic of Colgate which is possessed by very few companies in the world. It can be said that Colgate is one of the few companies in the world which is spending heavily on the social causes. In the year 2015, Colgate was included in the prestigious list of top ten ethical companies in the world.(Adams, 2015)And the bright smiles bright future oral healthcare program is still consider one of the biggest social work by a profit making organization. Colgate market its products under different brand names however, still the main product of the company is Toothpaste.
Issues:
The main issue which the Colgate Palmolive Company is facing in the U.S. is the continuously reducing revenues and profit margins, the revenue of Colgate from Latin America is reduced by 12% in the last year. Although the population and need for the toothpaste and other oral healthcare products is increasing in the U.S. but Colgate is unable to capitalize these favorable movements in the U.S market. Furthermore, the raw material and other costs are also increasing which are causing reduction in the profit margins of the company.(Morgan, 2016)
Another significant issue which Colgate is facing is the increasing pressure from media and regulatory authorities regarding the consequences of the chemicals used by Colgate in their products. It was found in 2014 that main chemical (Triclosan) which is used in Colgate Total can cause cancer, (Jennings, 2014)although the FDA have approved the formula of Colgate Total in 1978 but it was discovered a couple of years back and as a result a lawsuit is also filed against the company as well.(Warren, 2014)
As Colgate is operating in more than 200 countries of the world, the management is facing severe conflicts of various governments and political parties. Poor relations between one or more countries are affecting the operations and distribution of the company drastically. Not only this, Colgate is also facing substantial financial consequences of these poor relation between the governments of various countries as well...................
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