Introduction Colgate-Palmolive is a leading consumer products - PDF document

5/14/19 Colgate-Palmolive Company Analysis Oral Care, Personal Care, Home Care, & Pet Nutrition Industries A Case Analysis Presented by: Cassidy Barrios Chelsea Becnel Samantha Hollingsworth Janneth Villagrana Introduction Colgate-Palmolive is a leading consumer products company whose products are marketed in over 200 countries. Colgate- Palmolive competes in the Oral Care, Personal Care, Home Care, & Pet Nutrition Industries with 31 different brands of products. 1

5/14/19 Brands Analysis of the General Environment Current & Potential Changes/Trends Increase in Disposable Income (Economic) ● Increasing Economic Growth (Economic) ● Banning of Triclosan in the US (Political/Legal) ● US-China Trade War Potential End (Political/Legal) ● Millennials Requirement Organic & Healthy Pet Products (Demographic) ● Emerging Sense of Environmental Awareness (Sociocultural) ● Increasing Awareness in Personal Hygiene (Sociocultural/Global) ● Rise in Production of Counterfeit Products (Global) ● ● Increased Interest in Innovative Oral Care Products (Technological) 2

5/14/19 Industry Analysis Threat of New Entrants - Low - Increases Industry Attractiveness ● Product Differentiation (Branding) ○ ○ Access to Distribution Channels Economies of Scale ○ Industry Analysis ● Intensity of Rivalry - High - Decreases Industry Attractiveness Number of Competitors in the Industry ○ ○ Cost Structure of the Industry ○ Power of Buyers 3

5/14/19 Industry Analysis ● Threat of Substitutes - Low - Increases Industry Attractiveness ○ Necessities Industry Analysis ● Power of Suppliers - Low - Increases Industry Attractiveness ○ Low Switching Cost Uniqueness of the Input ○ Number of Firms Supplying Resources ○ 4

5/14/19 Industry Analysis Power of Buyers - High - Decreases Industry Attractiveness ● Size of the Orders ○ Number of Buyers ○ Threat of Integrating Backwards ○ Industry Analysis • Overall Attractiveness - The industry is attractive based upon: ○ Low Threat of New Entrants ○ Low Threat of Substitutes ○ Low Power of Suppliers 5

5/14/19 Internal Analysis ● Size ● Market share ● Product Segments ● Geographic scope ● Sales ● Goal ● Advertising Internal Analysis ● Values Caring ○ Global Teamwork ○ Continuous Improvement ○ Capabilities ● Customer Satisfaction ○ Selection ○ 6

5/14/19 Competitor Analysis 1. Procter & Gamble Strengths Brand Equity ● Economies of Scale ● Multi-National Product Presence ● ● High Gross Profit Margin Distribution Channels ● ● Research & Development Weaknesses Slow Decision Making/Organization Structure ● ● Low Organic Growth Competitor Analysis 2. Kimberly-Clark Strengths Strong Leading Products/ Strong Brand Recognition ● Multi-National Product Presence ● ● Sustainability ● High Level of Customer Satisfaction Weaknesses ● Research & Development ● Organization Structure ● Counterfeit Products 7

5/14/19 Performance Appraisal: Liquidity Current Ratio 12/31/16 12/31/17 12/31/18 Colgate-Palmolive 1.31 1.36 1.14 Kimberly-Clark 0.89 0.89 0.77 Procter & Gamble 1.1 0.88 0.83 Performance Appraisal: Liquidity Quick Ratio 12/31/16 12/31/17 12/31/8 Colgate Palmolive 0.83 0.89 0.64 Kimberly-Clark 0.53 0.5 0.41 Procter & Gamble 0.58 0.65 0.59 8

5/14/19 Performance Appraisal: Efficiency Total Asset 12/31/16 12/31/17 12/31/18 Turnover Colgate Palmolive 1.26 1.25 1.25 Kimberly-Clark 1.24 1.23 1.25 Procter & Gamble 0.51 0.53 0.56 Performance Appraisal: Efficiency Inventory Turnover 12/31/16 12/31/17 12/31/18 Colgate Palmolive 5.19 5.06 5.05 Kimberly-Clark 6.91 5.06 7.11 Procter & Gamble 6.98 7.04 7.23 9

5/14/19 Days in Inventory Days in Inventory 12/31/16 12/31/17 12/31/18 Colgate Palmolive 3.98 3.91 3.91 Kimberly-Clark 2.56 2.51 2.53 Procter & Gamble 3.35 3.31 3.3 Performance Appraisal: Leverage Debt-to-Equity 12/31/16 12/31/17 12/31/18 Colgate Palmolive 384.29 27.07 32.31 Kimberly-Clark 64.72 8.42 -162.08 Procter & Gamble 0.53 0.57 0.59 10

5/14/19 Performance Appraisal: Profitability Return on Asset 12/31/16 12/31/17 12/31/18 (ROA) Colgate Palmolive 21.33 17.15 21.03 Kimberly-Clark 15.2 15.31 9.95 Procter & Gamble 7.89 8.47 8.33 Revenue Revenue 12/31/16 12/31/17 12/31/18 Colgate Palmolive $15.2B $15.45B $15.54B Kimberly-Clark $18.29B $18.35B $18.49B Procter & Gamble $65.3B $65.1B $66.8B 11

5/14/19 Operating Profit Operating Profit 12/31/16 12/31/17 12/31/18 Colgate Palmolive 26.03 23.98 23.76 Kimberly-Clark 18.49 18.3 12.06 Procter & Gamble 20.58 21.45 20.52 Net Income Net Income 12/31/16 12/31/17 12/31/18 Colgate Palmolive 76.37 -17.08 18.58 Kimberly-Clark 113.82 5.17 -38.1 Procter & Gamble 49.35 45.85 -36.38 12

5/14/19 SWOT Analysis Strengths Skilled Workforce ● High Level of Customer Satisfaction ● ● Multi-National Presence High Performance in New Markets ● Large Market Share ● Strong Brand Recognition/Oral Care Leader ● Free Cash Flows ● Research & Development/Innovative Products ● SWOT Analysis Weaknesses Limited Brands in Comparison to Competitors ● Non Core Products Weak Position ● Saturation in the Market ● High Costs of Operations ● 13

5/14/19 Swot Analysis Opportunities ● Increase Penetration in Urban & Rural Markets ● Mergers & Acquisitions ● Millennials Requirement for Organic & Healthy Pet Products ● Increased Interest in Innovative Oral Care Products SWOT Analysis Threats Intensity of Rivalry among Branded Products ● Competition from Unbranded & Local Products ● ● Outcome of Trade War with China Product Development among Competitors ● Banning of Triclosan in the US ● Counterfeit Products ● 14

5/14/19 Current Strategies Business Level- Integrated Low Cost/Differentiation Strategy Products are priced similar or slightly higher than competitors ● Superior products are offered to a broad scope ● 31 different brands and numerous products are offered ● Corporate Level- Related Diversification Compete in different industries: Oral Care, Personal Care, Home Care, ● & Pet Nutrition ● Economies of Scope: Sharing of activities & core competencies. Strategic Recommendations 1. Horizontal Acquisition Buy out a competitor to reduce competition 2. Related Acquisition Buy out a smaller distributor to decrease costs 3. Acquire New Resources Hire professionals in each industry to assist with the development of products. 15

5/14/19 References Demographic Changes: The Impact on Beauty and Personal Care Packaging. (2018, February 15). Retrieved from https://blog.euromonitor.com/demographic-changes-the-impact-on-beauty-and-personal-care-packaging/ Our Economic Impact. (n.d.). Retrieved from https://www.personalcarecouncil.org/about-us/economic-impact-study/ Gross Domestic Product, Fourth Quarter and Annual 2018 (Initial Estimate) | U.S. Bureau of Economic Analysis (BEA). (n.d.). Retrieved from https://www.bea.gov/news/2019/initial-gross-domestic-product-4th-quarter-and-annual-2018 Oral Care Market Size, Share & Trends | Industry Report, 2018-2025. (n.d.). Retrieved from https://www.grandviewresearch.com/industry- analysis/oral-care-market Packaged Facts. Retrieved from https://www.packagedfacts.com/Content/Blog/2017/02/07/1-in-3-US-Pet-Owners-Millennials-What-it-Means- for-the-Pet-Food-Market Personal Consumption Expenditures Price Index, Excluding Food and Energy. (n.d.). Retrieved from https://www.bea.gov/data/personal- consumption-expenditures-price-index-excluding-food-and-energy Purtill, C., & Purtill, C. (2019, February 02). Colgate eliminated triclosan from its toothpaste. Could a ban be on the way? Retrieved from https://qz.com/1540815/colgate-eliminated-triclosan-from-its-toothpaste-could-a-ban-be-on-the-way/ United States GDP Growth Rate. (n.d.). Retrieved from https://tradingeconomics.com/united-states/gdp-growth 16