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

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Colgate-Palmolive Company Analysis

A Case Analysis Presented by: Cassidy Barrios Chelsea Becnel Samantha Hollingsworth Janneth Villagrana

Oral Care, Personal Care, Home Care, & Pet Nutrition Industries

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.

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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)

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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

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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

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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

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Internal Analysis

• Size
• Market share
• Product Segments
• Geographic scope
• Sales
• Goal
• Advertising

Internal Analysis

• Values

○ Caring ○ Global Teamwork ○ Continuous Improvement

• Capabilities

○ Customer Satisfaction ○ Selection

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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

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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

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Performance Appraisal: Efficiency

Total Asset Turnover 12/31/16 12/31/17 12/31/18 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

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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

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Performance Appraisal: Profitability

Return on Asset (ROA) 12/31/16 12/31/17 12/31/18 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

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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

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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

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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

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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.

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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