Colgate-Palmolive (COLG) SWOT Analysis / TOWS Matrix / MBA Resources
Personal & Household Prods.
Strategy / MBA Resources
Introduction to SWOT Analysis
SWOT Analysis / TOWS Matrix for Colgate-Palmolive (India)
Based on various researches at Oak Spring University , Colgate-Palmolive is operating in a macro-environment that has been destablized by – there is backlash against globalization, there is increasing trade war between United States & China, digital marketing is dominated by two big players Facebook and Google, competitive advantages are harder to sustain because of technology dispersion, talent flight as more people leaving formal jobs, increasing transportation and logistics costs, supply chains are disrupted by pandemic ,
customer relationship management is fast transforming because of increasing concerns over data privacy, increasing inequality as vast percentage of new income is going to the top 1%, etc
Introduction to SWOT Analysis of Colgate-Palmolive
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University, we believe that Colgate-Palmolive can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Colgate-Palmolive, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Colgate-Palmolive operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Colgate-Palmolive can be done for the following purposes –
1. Strategic planning of Colgate-Palmolive
2. Improving business portfolio management of Colgate-Palmolive
3. Assessing feasibility of the new initiative in India
4. Making a Personal & Household Prods. sector specific business decision
5. Set goals for the organization
6. Organizational restructuring of Colgate-Palmolive
Strengths of Colgate-Palmolive | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Colgate-Palmolive are -
Cross disciplinary teams
– Horizontal connected teams at the Colgate-Palmolive are driving operational speed, building greater agility, and keeping the organization nimble to compete with new competitors. It helps are organization to ideate new ideas, and execute them swiftly in the marketplace.
Highly skilled collaborators
– Colgate-Palmolive has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive Personal & Household Prods. industry. Secondly the value chain collaborators of Colgate-Palmolive have helped the firm to develop new products and bring them quickly to the marketplace.
Effective Research and Development (R&D)
– Colgate-Palmolive has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in – Colgate-Palmolive staying ahead in the Personal & Household Prods. industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Digital Transformation in Personal & Household Prods. industry
- digital transformation varies from industry to industry. For Colgate-Palmolive digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Colgate-Palmolive has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
Diverse revenue streams
– Colgate-Palmolive is present in almost all the verticals within the Personal & Household Prods. industry. This has provided Colgate-Palmolive a diverse revenue stream that has helped it to survive disruptions such as global pandemic in Covid-19, financial disruption of 2008, and supply chain disruption of 2021.
Analytics focus
– Colgate-Palmolive is putting a lot of focus on utilizing the power of analytics in business decision making. This has put it among the leading players in the Personal & Household Prods. industry. The technology infrastructure of India is also helping it to harness the power of analytics for – marketing optimization, demand forecasting, customer relationship management, inventory management, information sharing across the value chain etc.
Strong track record of project management in the Personal & Household Prods. industry
– Colgate-Palmolive is known for sticking to its project targets. This enables the firm to manage – time, project costs, and have sustainable margins on the projects.
Sustainable margins compare to other players in Personal & Household Prods. industry
– Colgate-Palmolive has clearly differentiated products in the market place. This has enabled Colgate-Palmolive to fetch slight price premium compare to the competitors in the Personal & Household Prods. industry. The sustainable margins have also helped Colgate-Palmolive to invest into research and development (R&D) and innovation.
Superior customer experience
– The customer experience strategy of Colgate-Palmolive in Personal & Household Prods. industry is based on four key concepts – personalization, simplification of complex needs, prompt response, and continuous engagement.
Innovation driven organization
– Colgate-Palmolive is one of the most innovative firm in Personal & Household Prods. sector.
High switching costs
– The high switching costs that Colgate-Palmolive has built up over years in its products and services combo offer has resulted in high retention of customers, lower marketing costs, and greater ability of the firm to focus on its customers.
Ability to lead change in Personal & Household Prods.
– Colgate-Palmolive is one of the leading players in the Personal & Household Prods. industry in India. Over the years it has not only transformed the business landscape in the Personal & Household Prods. industry in India but also across the existing markets. The ability to lead change has enabled Colgate-Palmolive in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Weaknesses of Colgate-Palmolive | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Colgate-Palmolive are -
Slow to strategic competitive environment developments
– As Colgate-Palmolive is one of the leading players in the Personal & Household Prods. industry, it takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the Personal & Household Prods. industry in last five years.
Workers concerns about automation
– As automation is fast increasing in the Personal & Household Prods. industry, Colgate-Palmolive needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
High operating costs
– Compare to the competitors, Colgate-Palmolive has high operating costs in the Personal & Household Prods. industry. This can be harder to sustain given the new emerging competition from nimble players who are using technology to attract Colgate-Palmolive lucrative customers.
High cash cycle compare to competitors
Colgate-Palmolive has a high cash cycle compare to other players in the Personal & Household Prods. industry. It needs to shorten the cash cycle by 12% to be more competitive in the marketplace, reduce inventory costs, and be more profitable.
Skills based hiring in Personal & Household Prods. industry
– The stress on hiring functional specialists at Colgate-Palmolive has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
Employees’ less understanding of Colgate-Palmolive strategy
– From the outside it seems that the employees of Colgate-Palmolive don’t have comprehensive understanding of the firm’s strategy. This is reflected in number of promotional campaigns over the last few years that had mixed messaging and competing priorities. Some of the strategic activities and services promoted in the promotional campaigns were not consistent with the organization’s strategy.
High dependence on Colgate-Palmolive ‘s star products
– The top 2 products and services of Colgate-Palmolive still accounts for major business revenue. This dependence on star products in Personal & Household Prods. industry has resulted into insufficient focus on developing new products, even though Colgate-Palmolive has relatively successful track record of launching new products.
Need for greater diversity
– Colgate-Palmolive has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Colgate-Palmolive supply chain. Even after few cautionary changes, Colgate-Palmolive is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Colgate-Palmolive vulnerable to further global disruptions in South East Asia.
Increasing silos among functional specialists
– The organizational structure of Colgate-Palmolive is dominated by functional specialists. It is not different from other players in the Personal & Household Prods. industry, but Colgate-Palmolive needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Colgate-Palmolive to focus more on services in the Personal & Household Prods. industry rather than just following the product oriented approach.
Aligning sales with marketing
– From the outside it seems that Colgate-Palmolive needs to have more collaboration between its sales team and marketing team. Sales professionals in the Personal & Household Prods. industry have deep experience in developing customer relationships. Marketing department at Colgate-Palmolive can leverage the sales team experience to cultivate customer relationships as Colgate-Palmolive is planning to shift buying processes online.
Colgate-Palmolive Opportunities | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities of Colgate-Palmolive are -
Loyalty marketing
– Colgate-Palmolive has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Developing new processes and practices
– Colgate-Palmolive can develop new processes and procedures in Personal & Household Prods. industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Leveraging digital technologies
– Colgate-Palmolive can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Colgate-Palmolive in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Personal & Household Prods. industry, and it will provide faster access to the consumers.
Building a culture of innovation
– managers at Colgate-Palmolive can make experimentation a productive activity and build a culture of innovation using approaches such as – mining transaction data, A/B testing of websites and selling platforms, engaging potential customers over various needs, and building on small ideas in the Personal & Household Prods. industry.
Creating value in data economy
– The success of analytics program of Colgate-Palmolive has opened avenues for new revenue streams for the organization in Personal & Household Prods. industry. This can help Colgate-Palmolive to build a more holistic ecosystem for Colgate-Palmolive products in the Personal & Household Prods. industry by providing – data insight services, data privacy related products, data based consulting services, etc.
Buying journey improvements
– Colgate-Palmolive can improve the customer journey of consumers in the Personal & Household Prods. industry by using analytics and artificial intelligence. It can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Redefining models of collaboration and team work
– As explained in the weaknesses section, Colgate-Palmolive is facing challenges because of the dominance of functional experts in the organization. Colgate-Palmolive can utilize new technology in the field of Personal & Household Prods. industry to build more coordinated teams and streamline operations and communications using tools such as CAD, Zoom, etc.
Learning at scale
– Online learning technologies has now opened space for Colgate-Palmolive to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Manufacturing automation
– Colgate-Palmolive can use the latest technology developments to improve its manufacturing and designing process in Personal & Household Prods. sector. It can use CAD and 3D printing to build a quick prototype and pilot testing products. It can leverage automation using machine learning and artificial intelligence to do faster production at lowers costs, and it can leverage the growth in satellite and tracking technologies to improve inventory management, transportation, and shipping.
Finding new ways to collaborate
– Covid-19 has not only transformed business models of companies in Personal & Household Prods. industry, but it has also influenced the consumer preferences. Colgate-Palmolive can tie-up with other value chain partners to explore new opportunities regarding meeting customer demands and building a rewarding and engaging relationship.
Low interest rates
– Even though inflation is raising its head in most developed economies, Colgate-Palmolive can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Changes in consumer behavior post Covid-19
– consumer behavior has changed in the Personal & Household Prods. industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Colgate-Palmolive can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Colgate-Palmolive can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Threats Colgate-Palmolive External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats of Colgate-Palmolive are -
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Colgate-Palmolive in the Personal & Household Prods. sector and impact the bottomline of the organization.
Increasing wage structure of Colgate-Palmolive
– Post Covid-19 there is a sharp increase in the wages especially in the jobs that require interaction with people. The increasing wages can put downward pressure on the margins of Colgate-Palmolive.
Easy access to finance
– Easy access to finance in Personal & Household Prods. industry will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Colgate-Palmolive can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Shortening product life cycle
– it is one of the major threat that Colgate-Palmolive is facing in Personal & Household Prods. sector. It can lead to higher research and development costs, higher marketing expenses, lower customer loyalty, etc.
High level of anxiety and lack of motivation
– the Great Resignation in United States is the sign of broader dissatisfaction among the workforce in United States. Colgate-Palmolive needs to understand the core reasons impacting the Personal & Household Prods. industry. This will help it in building a better workplace.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Colgate-Palmolive will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Technology acceleration in Forth Industrial Revolution
– Colgate-Palmolive has witnessed rapid integration of technology during Covid-19 in the Personal & Household Prods. industry. As one of the leading players in the industry, Colgate-Palmolive needs to keep up with the evolution of technology in the Personal & Household Prods. sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Regulatory challenges
– Colgate-Palmolive needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Personal & Household Prods. industry regulations.
Stagnating economy with rate increase
– Colgate-Palmolive can face lack of demand in the market place because of Fed actions to reduce inflation. This can lead to sluggish growth in the economy, lower demands, lower investments, higher borrowing costs, and consolidation in the Personal & Household Prods. industry.
High dependence on third party suppliers
– Colgate-Palmolive high dependence on third party suppliers can disrupt its processes and delivery mechanism. For example -the current troubles of car makers because of chip shortage is because the chip companies started producing chips for electronic companies rather than car manufacturers.
Environmental challenges
– Colgate-Palmolive needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Colgate-Palmolive can take advantage of this fund but it will also bring new competitors in the Personal & Household Prods. industry.
Weighted SWOT Analysis of Colgate-Palmolive Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers at Colgate-Palmolive needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of Colgate-Palmolive is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of Colgate-Palmolive is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Colgate-Palmolive to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Colgate-Palmolive needs to make to build a sustainable competitive advantage.