Case Study of Strategic Management for Technological Improvement in Colgate Essay Example

the business landscape. According to BNET Business Dictionary, strategic analysis involves conducting research on the external or business environment of the organization to develop a strategy.

In Professor Les Worrall's view, strategic analysis involves understanding an organization's environment and how it relates to the organization in order to improve efficiency and effectiveness. This is achieved by enhancing the organization's ability to intelligently deploy and redeploy resources.

SWOT analysis

Plague analysis

Porter's five forces analysis

Analytic tools are used to ensure the sustainability and reliability of the proposed analysis. These tools have reached a mature state and are widely understood and used, allowing organizations to enhance their operations. However, when using these analytical methods, companies must consider the following: The chosen tool or method should be able to address any questions raised by the organization. The benefits derived from using the tool or method should be clearly defined and stated. In order to conduct a successful analysis, organizations need a thorough understanding of the chosen tool.

The effectiveness of the proposed tools is enhanced when used collaboratively within the company. It is also important to allow individuals involved to adapt to the analysis, which requires time and effort. Decision-making boards and shareholders should remain flexible during the implementation stage and provide necessary support. The goal of utilizing an analytical tool is to conduct thorough analysis and achieve a more balanced and systematic approach. Furthermore, all analytical tools rely on historical data for better understanding future needs. However, it is crucial to be cautious when interpreting results as external pressures can influence the outcome towards a specific strategy.

Analysts need to understand which tool or technique is appropriate for a given context. Currently,

Colgate-Palmolive manufactures and sells shampoo and toothpaste, accounting for 80% and 15% of their products respectively. Their remaining products consist of home care items such as softeners. In the domestic market, Colgate-Palmolive holds a leading position in shampoo and is the second leading brand in toothpaste. They face competition from brands like Head & Shoulders and Pantene in the shampoo market, and Signal in the toothpaste market.

Colgate-Palmolive also operates in various consumer goods markets including Personal Care and Home Care. In the oral care market, they offer Tonigencyl and Colgate toothpaste as well as Colgate toothbrushes. Moreover, they have a strong presence in the shampoo market with brands like Cadum, Alert, and Palmolive.

Colgate History: In 1806, William Colgate, a soap and taper shaper, established a store in New York called "William Colgate & Company" where he sold candles, soap, and various cosmetics. In the 1840s, the company began selling uniform weight energetic bars. In 1857, Samuel Colgate inherited the business after his father's passing, and the company was subsequently renamed "Colgate & Company" under his leadership.

The famous soap known as Palm-Olive (Palmolive) was created by B.J. Johnson in 1898, using only palm and olive oil. The "B.J. Johnson Company" in Milwaukee was responsible for this renowned soap. Over the years, Palmolive gained immense popularity due to its unique recipe.

From 1928 to 1953, significant changes occurred with the partnership between "Peet Brothers" and Palmolive. This collaboration led to the establishment of Palmolive-Peet. Eventually, Colgate-Palmolive-Peet Company was formed when Palmolive-Peet acquired the Colgate company from Samuel Colgate.

Colgate-Palmolive, originally called "Colgate-Palmolive Company," changed its name in 1928 and still uses it today. It has always been a competitor

of the world's largest soap and detergent manufacturer. However, after World War II, Procter & Gamble (P&G) decided to introduce various products under the brand TIDE. This led many customers to switch from Colgate-Palmolive to these new offerings. Additionally, P&G's introduction of fluoride toothpaste presented another challenge for Colgate-Palmolive, as it was an unprecedented achievement at that time. Consequently, Colgate-Palmolive lost its leading position in the toothpaste market. To regain their market share and compete with P, they employed television advertising - an innovative approach back then - and sponsored several shows.

In 2006, Colgate-Palmolive had plans to purchase a majority stake in Tom's of Maine for $100 million. At present, Colgate-Palmolive has global factories and subsidiaries, with its products being utilized in more than 200 countries.

Strategic Analysis of Colgate

The PEST Analysis is essential for the enduring prosperity and competitiveness of any corporation. It entails navigating and functioning within a rigid "macro-environment" that encompasses aspects such as the general economy, population patterns, governmental regulations, societal principles, and technological progressions.

Understanding the importance and impact of the external environment on a company's business model, objectives, strategy, and overall situation is crucial. It is essential to categorize and evaluate these factors to determine their relevance to the business. Once their significance has been assessed, these external factors can be classified into four main categories using the PEST or PESTLE Analysis.

Political Factors

The first component in the acronym refers to Political factors, which include issues that affect how business operations are conducted. These may involve government-imposed trade policies or the political stability of the country where the business operates. Additionally, political matters can also pertain to taxes and labor laws enforced

by both governments and labor unions.

Additionally, regulations can also be implemented to promote fair competition and prevent abusive actions among competitors in various industries. Furthermore, political factors can involve regulations imposed by the government to preserve the environment in which a company operates. These types of regulations may address concerns such as pollution or the quality standards of products and services provided to customers.

Economic Factors

The second letter in the acronym pertains to Economic factors, which encompass subjects related to the general condition and stage of growth of the economy.

These factors should be considered for their potential impact on business operations. Directors should assess the state of the economy and its trends. They should also monitor changes in taxes on products and services. Additionally, they should consider economic driving forces such as the purchasing power and consumer preferences of their target market, as well as unemployment and wage levels. For companies involved in international trade, directors need to take into account duties, exchange rates, and import/export ratios in the relevant country.

Socio-Cultural Factors

The third letter of the acronym refers to socio-cultural factors that every company must consider from the perspective of the general population.

The sentiment and attitude of the populace towards a company's products are crucial in building its image among different constituencies. It is important for companies to maintain constant communication with the media through press releases and providing access, in order to create a widely recognized brand image. Socio-cultural factors are also relevant in relation to advertising campaigns and promotions, as well as demonstrating social responsibility by participating in significant events. Social factors are inclusive of the diversity of the company's workforce, which

may include hiring individuals with disabilities or elderly individuals to promote integration within society.

In summary, companies need to value and address ethical concerns to avoid offending any minority in society.

Technological Factors

The last part of the acronym refers to Technological factors. These factors have transformed the way businesses operate. With the implementation of different technologies, companies can streamline their operations and achieve enhanced performance. Technology has played a role in enhancing various aspects across all business levels, including the selection process, productivity, and research and development.

(Jana F. Kuzmicki, 2007) Figure 1: Business Environment (PEST analysis, 2009)

Porter's five analysis:

Deriving Power of Suppliers

One of the five forces that Porter identified for organizations to consider in order to gain a competitive advantage is the deriving power of suppliers. The global reach and diverse assets portfolio attract numerous investors. RDSGC and other major competitors are both seen as energy companies with significant investment strengths. Most often, comparisons are made with ExxonMobil and BP. However, RDSGC is perceived by many as equal to its rivals, but the lack of perceived distinction in their management has somehow hindered the investment decision-making process.

Furthermore, despite RDSGC lacking a distinctive scheme compared to other companies, the risk of suppliers having bargaining power is low due to partnerships, supply chain management, training, and dependence.

Dickering Power of Customers

Customers play a crucial role in determining the success of a business. The survival and expansion of a company rely on customers. With a global presence, Royal Dutch Shell (RDSGC) serves over 25 million customers daily through more than 56,000 service stations worldwide.

Buyers and sellers of energy in RDSGC are strongly united due to

various factors, including attractive incentives, value added partnering, and efficient supply chain management. Moreover, investors and stakeholders have expressed their contentment with the services offered by the company. This satisfaction is clearly evident in a 2001 case study interview where two key factors emerged as vital for customer satisfaction - technology and the extensive presence of the company. One individual selects RDSGC because of its diverse presence and advanced technology, while another emphasizes its affordability, top-notch products, and impressive returns compared to other major companies.

Additionally, there were two significant remarks made. Firstly, many were satisfied with the performance of the company because of its large asset base, financial and political influence, which allowed for successful operations in countries like China, Russia, and the Middle East. Secondly, Shell's management restructuring focused on reducing costs, prioritizing profitability and financial discipline, and implementing share repurchase strategies.

A Threat of New Entrants

In the energy industry, specifically in the oil and gas sector, the company's management strategy aimed to minimize competition from new entrants by increasing the minimum efficient scales of operations, maintaining good relationships with suppliers and distributors, employing retaliatory tactics, protecting its assets, and establishing a competitive and trustworthy reputation with customers. Furthermore, the use of innovative technology positioned them similarly to other new entrants in the industry.

In 2001, Shell's engineering expertise set it apart from competitors. Their leadership in developing Gas to Liquids engineering for ultra-clean fuels, liquefied natural gas installations for remote offshore Fieldss, and deepwater engineering for accessing new militias gave the company a unique advantage. They used their strong reputation to establish a solid foundation against potential threats from new entrants. This

reputation was built on their various strengths, such as their engineering capabilities, products, commitment to business ethics, code of conduct, and corporate social responsibility, all of which encourage consumer brand loyalty.

Menace of Substitutes

The threat of substitutes, where customers switch product preferences, is primarily caused by internal and external factors. One factor that leads customers to change their preferences is the price of a product. If a product becomes more expensive, customers may reconsider sticking to their preference, resulting in a shift and switch in preferences. In businesses such as marketing energy reserves, the threat of customer substitution often arises from price instability.

The increase in the monetary value cost of a merchandise due to societal and political factors can pose a threat to the company. However, the RDSGC employs various strategies such as increasing exchanging costs, forming alliances, conducting customer surveys to understand their preferences, emphasizing differences, and entering the replacement market. These measures have reduced the risk of substitutes.

Competitive Rivalry between Existing Players

In any business, price competition is crucial as it attracts customers. The lower the price of a product, the more customers it attracts. However, in order to reduce competitive rivalry, it is necessary to avoid price competition as observed by RDSGC. Their competition is not based on price but on devising strategies that offer the best purchasing experience. RDSCG utilizes different marketing strategies to remain competitive.

The distinction and separate product divisions between them create a boundary, while their positive communication with competitors adds to the competition. This competition should be seen as business and professional, rather than personal. RDSGC has a competitive advantage not only because of these reasons, but also because of

their strong management of the entire business process. Effective financial management and a diverse range of businesses attract significant customers and stakeholders.