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Colgate-Palmolive Company: SWOT Analysis

Introduction

Colgate-Palmolive (CP) is a multinational publicly-traded company headquartered in the United States. Its axes of activities include the distribution and production of dental care products, other healthcare/household goods, and pet health products. This paper is aimed at discussing the organization’s current situation with the help of the SWOT technique.

Strengths

The company’s financial information reveals a series of internal strengths. Firstly, with a 41.1% market share, the organization remains a world leader in the toothpaste market (Colgate-Palmolive Company, 2020). Secondly, with more than fifty years of steady dividend increases, the business remains an attractive low-risk option for investors from different countries (Colgate-Palmolive Company, 2020). Thirdly, the organization is widely recognized as a reliable and responsible manufacturer. Recent external sustainability evaluations conducted by the Dow Jones Foundation demonstrate CP’s leadership in the household industry (Colgate-Palmolive Company, 2020). Fourthly, the company’s worldwide presence and successful entrance into emerging markets (44% of net sales are attributed to developing markets) add to recognition, which has implications for its competitive advantage (Colgate-Palmolive Company, 2021). Next, the business uses IT advancements for profit generation in a successful manner. In 2019, its global electronic commerce sales grew by 26%, with the largest increases taking place in North America (Colgate-Palmolive Company, 2021). Finally, oral care products still account for more than 45% of CP’s net sales (Colgate-Palmolive Company, 2020). Thus, the company’s ability to retain its initial specialization and focus is another strength.

Weaknesses

A few weaknesses can be retrieved based on CP’s official financial statements. To start with, the growth of the company’s profitability is inhibited by the increasing costs of packaging and raw production materials. Due to that reason, CP’s gross profit margin decreased by 0.1% between 2018 and 2019 (Colgate-Palmolive Company, 2020). Next, the company has recently experienced a 4% decrease in operating profits (Colgate-Palmolive Company, 2020). This situation might have stemmed from the organization’s inability to ensure the growth of its customer base or adjust pricing strategies to address the effects of unstable operating costs.

Opportunities

Consumers’ growing awareness of environmental and sustainability-related concerns presents a set of opportunities for CP that deal with research and development activities. The decreasing demand for more sophisticated home-based oral care solutions has been reflected in recent drops in the sales of powered toothbrushes in Europe (Colgate-Palmolive Company, 2020). This situation might be indicative of the need for prioritizing over natural or eco-friendly solutions rather than less affordable options based on advanced cleaning technology. Relevant opportunities include investing in the development of manual toothbrushes with bamboo handles. The creation of reusable or biodegradable toothpaste packaging and increasing the use of organic ingredients in toothpaste and mouth rinse products could also be advantageous.

Threats

CP is currently facing some external threats that might reduce its competitive advantage in the future. The company has seen decreases in the sales of powered toothbrushes in Europe (Colgate-Palmolive Company, 2020). Thus, despite increasing investments in advertising, CP fails to promote its electric toothbrushes with maximum effectiveness, which might give rise to further declines in demand. Next, the popularization of online commerce has been profitable for CP’s local and multinational competitors, thus adding to their opportunities for new business models’ implementation (Colgate-Palmolive Company, 2020). For CP, this situation increases the threat of new entrants with more substantial internal resources or more attractive prices.

Conclusion

Finally, CP’s financial statements are indicative of its rather strong and stable position in the global market for personal care items. Despite numerous strong points, CP is affected by packaging and production expenses and declining operating profits. To address threats related to competition and changing consumer preferences, the company can increase the use of natural and biodegradable materials.

References

Colgate-Palmolive Company. (2020). Accelerating growth: 2019 annual report.

Colgate-Palmolive Company. (2021). Financial highlights. Web.

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Essay4Business. (2022, July 22). Colgate-Palmolive Company: SWOT Analysis. Retrieved from https://essay4business.com/colgate-palmolive-company-swot-analysis/

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1. Essay4Business. "Colgate-Palmolive Company: SWOT Analysis." July 22, 2022. https://essay4business.com/colgate-palmolive-company-swot-analysis/.


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Essay4Business. 2022. "Colgate-Palmolive Company: SWOT Analysis." July 22, 2022. https://essay4business.com/colgate-palmolive-company-swot-analysis/.

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Essay4Business. (2022) 'Colgate-Palmolive Company: SWOT Analysis'. 22 July.

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