Colgate-Palmolive International Business Strategy Essay

1. IntroductionWhat a Colgate Smile is a phrase commonly utilize as a compliment close to ones smile. It has been popularized without the whole world, repayable to Colgates good reputation as a successful agate line. Colgate, today existence one of the Statess intimately successful Fortune 500 companies, has a long history of exploitation and complex adoption of various headache strategies, which led to its current sequential powerful slope. As representatives of the Colgate-Palmolive Company, we be pleased to tell you more about the success story of our attach to through this report. In the scratch part, we result show how CP tardily globoseized and expanded glob all in ally by adapting various strategies to sprain one of the most powerful MNCs, to accordingly in the second part, make it you details from an academic point of view with regards to the bartlett and Ghoshals trans interior(a) scheme material which the firm ended up adopting in influence to mo st efficiently survive in and take over the really competitive commercialize.2. Internationalization Strategy of Colgate-Palmolive2.1 The assesment of the internationalization of the caller-out In 1806, William Colgate started a starch, soap and gagedles alliance in bleak York City and, afterwards 207 years, Colgate-Palmolive stands as one of the oldest and trulyglobal consumer product fraternity. Colgate-Palmolive owns 75 wholly possess subsidiaries in 75 polar countries, and operates in more than cc (Colgate.com, 2013). Colgate had a slow start after founding the company in 1806 they re main(prenominal)ed in the Ameri lot market place for more than 100 years. During that time, they were expanding their trading operations and develop their strategies for the topical anesthetic anaesthetic market, and then in 1914, Colgate opened their prototypal international subsidiary in Canada, a neighboring state, with both geographical proximity and heathen uniformities.The companys international growth was slow during the 1800s but with all the technological developments that took place during the 1900s and with the need to enlarge their global market share, Colgate went on its internationalization process. To mention briefly in 1920 Colgate established operations in europium, Australia, Asia and Latin America, eight years novelr, Colgate merged with Palmolive-Peet, and became Colgate-Palmolive-Peet, thus link forces with another company aspiring for global dominance. In 1985, Colgate-Palmolive demeaned into a conjunction venture with Hawley & Hazel in Hong Kong, and ten years later, in 1995, after the end of the communist regime, Colgate entered Central Europe and Russia, thus expanding its operations into the tumultuous growing countries of the persona (Colgate.com, 2013).Figure 1. The elaborateness and internationalization timeline of Colgate-Palmolive As we washbowl see from Figure 1., Colgate internationalized slowly at the beginning, b ut picked up a faster pace in the following years. Penetrating geographically stringent domains or markets that adopt similar culture and then expanding indoors that region identifies the companys pattern for internationalization. First, they entered into Canada. Canada is the clo commemorate country to the USA, which is actually similar culture wise. In addition, after the Canadian market, Colgate went to Europe and Australia. Europe presented a challenge since each country there had a completely dissimilar cultural electence. Thus, Colgate went on with the schema of think global, act local anesthetic. This gave the company an added vantage, thus enabling Colgate to understand the market take, and therefore develop suited products, different logistics/distribution chains, and different production systems than what originally they founded in their base of operations country.Moreover, Colgate was putting different companies that presented a competitive advantage, or had products that Colgate thought were advanced(a) and had a selling potential in different global markets. In addition to mergers and acquisitions, Colgate went for joint ventures, especially in the countries to Far East these countries are China, Hong Kong, Taiwan, and India. Therefore, Colgate-Palmolive has slowly progressed in its internationalization process, starting from neighboring countries, moving to win geographical locations that had similar cultural preferences, and expanded accordingly.2.2 The assessment of geographical characteristics of internationalisation Colgate-Palmolives geographic segmentation is formed mainly on the hindquarters of each regions economic, cultural and climatic conditions. Approximately 75% of Colgate-Palmolives sales derive from international operations therefore win in markets exterior of the United States is of ample importance. The first country outside the US b nightclubs, where CP decided to launch their operations and sales was the clo sest, both geographically and culturally, Canada. The next step in their internationalization process was to reach more distant countries, yet excuse of cultural and economic similarity Australia and westbound European countries, such as France, Germany and the United Kingdom (Colgate.com, 2013).After acquiring a starchy market locating in these markets Colgate recognized that the tilt between the three main business actors in the field, which are Unilever, Procter & Gamble, and Colgate (Hauser Furstace, Inc., 1994), is get extremely fierce, that is why CP decided to sacque the focus of their competitive advantage and fanny the, indwellingly so called, high growth markets (CP one-year overcompensate, 1996). utmost growth markets, according to CPs understanding, are the developing countries that possess a potentially high customer base. Colgate-Palmolive decided to enter Latin America (Mexico, as the geographically closest high growth market), expanding then to Asia (Ind ia in 1937, after the countrys independence from the colonization by the UK in 1930s, and Philippines currently the 5th biggest Colgate market in Asia), Africa and Central and Eastern Europe (Poland, Baltic States).Colgate was one of the pioneers in recognizing that following the multi-domestic or international dodging of internationalization is not enough to maintaintheir competitive advantage and that the company has to allow a certain academic degree of adaptation in array to comply with each countrys customer needs. Colgate-Palmolive is extremely give to their worldwide brand, and does broad research in order to introduce the most accurate products into the right countries. For instance, in the 90s round off CP product developers came up with the root word of the Colgate Herbal toothpaste and the Palmolive Naturals serial after finding out that Polish customers prefer more natural cosmetics after a successful introduction to the Polish market, CP decided to expand these lines of products further internationally (Broniewicz, 1997). Currently CP sells sixteen different kinds of toothpaste in the US, while in the UK they are selling twenty- both characteristic varieties (Colgate.com, 2012).2.3 The outline of the main foreign market entry modes employed by the company As mentioned in previous paragraphs, after developing the business into a successful one in the US, Colgate decided it is time to fuck off a MNC and conquer the market internationally. The first international cooperation was made in 1914 ( sparingtimes.indiatimes.com, 2013), over a hundred years after the company was first established, with a neighbor country, Canada. The choice was a safe one given(p) the fact both countries are very similar culturally, politically, and are cognize to have the largest trade relationship in the world, hence there wasnt oft risk in this move (Kafchinski, 2013). Next, after the companys first successful installation in a foreign (although similar) cou ntry, they got empty for the success and wanted to continue the expansion. However this time, given the present strong competition in the industry in North America, CP decided to target other, mostly less develop countries in Europe, Asia, Latin America and Africa in order to take advantage of the new entrants position (New York Times, 2013). The 20s were the years of consider equal to(p) expansion into other continents. The first country was France, oldest ally of the US to its role in the American subverter War, plus presenting an attractive and economically similar market. Perhaps the Canadian intimacy with Quebec, which is a French speaking/cultural province, enticed Colgate to move to France, where the firms second subsidiary was opened in 1920. Further that year, now havingthe courage to enter further (for the moment westernized) markets, CP expanded to Australia, the United Kingdom, Germany, and Mexico (Answers.com, 2013). We can play along that Colgate opted in expanding in culturally or economically similar countries in the first place (which reflects the Uppsala Model) to then have the strength and courage to enter further countries like Mexico.After the successful moves, they finished the year by expanding to more distant (physically/economically/culturally) countries the Philippines, Argentina, Brazil, southwestward Africa, and waited till 1937 to move to India. It is unmortgaged to see that location, culture and economy, were necessity criteria in deciding which countries CP would enter. In addition, political sympathies have also played its role as one of the main determinants of entry choices. For instance, Poland and other eastern European countries have been entered in the late 80s, due to political reason that strongly affected the markets availability in previous years. In 1995, CP entered Russia and other telephone exchange European/fast growing markets (Colgate.com, 2013). Taking the example of Poland, Jerzy Starak, an energetic enterpriser played a key role in developing the business in that new part of the world. He agreed to set a Joint Venture with CP (Starak initially owned 49% of shares, whereas CP owned 51%) as he thought the business had a huge potential.Colgate-Palmolive chose to set a JV in Poland as it didnt have much companionship and social ties in the eastern European market, rather than acquittance for a WOS, which would have been risky due to the lack of familiarity with the market, lack of development about the cultural and business practices, and very different turbulent, still communistic political and economic system. This strategic move allowed CP to gradually attain the inevitable skillset to further penetrate the CEE countries when CP decided to enter the Baltic states (Estonia, Latvia, Lithuania), the company was able to establish a wholly owned subsidiary in Riga, Latvia and then export CP products to Estonia and Lithuania through local distributors all this could be possible due to the learning process of operating in the eastern European region (Ludzie.wprost.pl, 2013).2.4 The overview of the enterprise twists and controls used by the company Colgate-Palmolive has a hierarchical organizational structure. In the top of this organizational structure is the chief executive officer, Mr.Ian Cook, who has a bird eye view of the organization in all move of the world. Five continental senior executives follow the CEO. These executive officers are in file of different continental block Market, which are European, North American, African, Asian, and South American. Below the continental managers are the country managers who are in charge ofrespective countries in which Colgate-Palmolive has a presence. The companys organization structure has also the human resource managers and the information technology executives. The justification that Colgate-Palmolive has a hierarchical organization structure is that all decisions are made by the strategic managers at the top of the organizational structure. The graphical analysis of CPs organizational structure is presented below.Figure 2. Colgate-Palmolives Organizational constructionColgate-Palmolive has a divisional organizational institution. The international divisions of Colgate-Palmolive face diverse legal and cultural constraints in different continents of the world. Grouping international divisions develops specialized skills and abilities for dealing with international questions that do not arise in domestic operations. This divisional organizational design helps Colgate-Palmolive respond and adapt to differences in product types, product market and cultural differences of its various international locations. Divisional organizational design emphasizes tidy sums decision-making autonomy throughout the organization. An individual at various takes can become more involved in organizations underlying activities.Organization by following this structure puts more demands on individu als to refund the highest level of business performance. On the other hand, the divisional organizational design has its shortcomings it very often leads to repetition of services like local marketing and international marketing, local finance and international finance. This puts more financial public press on the organization as it leads to greater operational costs and higher(prenominal) complexity of the entire system within the company. Based on the internal materials from CPs employee workshop on the companys schema it can be stated that Colgate-Palmolive has harnessed a control analogy in five main areas, which can befurther divided into two parts namely Strategic Thrust and their Management Process. The depiction of CPs control structure is presented in Figure 3. below.Figure 3. Control Structure of Colgate-Palmolive3. Evaluation of academic strategy posers for Colgate-Palmolive3.1. Overview of the bartlett pear and Ghoshals generic wine strategies frameworkIn order to facilitate the understanding of the internationalization strategy of Colgate, it is essential to get oneself familiar with the Bartlett and Ghoshals generic strategies framework. According to the theory, in order to survive firms must do all that they can to respond to cost pressures affected by global integration and to the diverse customers needs which affect the demand for a greater degree of the local responsiveness. Bartlett and Ghoshal emphasize that the core competencies and skills of a company do not of necessity have to reside within the companys home country preferably, multinational enterprises should develop their strategies from any of the worldwide operations (Hill, 2011). The two scholars developed four distinct strategies of entering a foreign market, which are multidomestic, international, global, and multinational. Multidomestic strategy focuses on high level of local responsiveness and low level of global integration, whereas the global strategy has an opposit e approach of focusing on maintaining high level of global integration without taking into account the local responsiveness aspect. The international strategy does not require a great need for neither global integration nor local responsiveness. International strategy can bee seen mainly in the paper, textiles and machinery industries (Hill, 2011).Figure 4. Bartlett and Ghoshals generic strategies framework (Hill, 2011)Part of Bartlett and Ghoshals theory on multinational enterprises strategies, which we would like to focus on is the international strategy model. This model is an nonionized approach to internationalize into global markets while the firm works very hard to be responsive to local demandwhile place necessary central control over the global operations to determine dexterity and learning within subsidiaries (Hill, 2011).3.2 Evaluation of the Bartlett and Ghoshals framework on the companys exampleAfter a complete(a) analysis of the internationalization process of CP , it has been found that the company followed in general three out of four generic strategies, namely international, multidomestic, and transnational. At first, CP operated within the international strategy. CP entered markets which were of geographic or cultural proximity (Canada, France, Australia, etc.) in order to reduce the cost pressures, benefit from adapting and leveraging parent company competencies and have greater control over the foreign subsidies. The level of local responsiveness was relatively low, since the foreign customer base had similar taste and preferences, as well as the economic, legal and political structure of the host countries did not differ significantly from the ones in United States.As the competition in the industry was growing, CP realized that in order to maintain their strong position on the market they had to tap the market of high growth countries instead of focusing only on the developed ones, thus the shifting of strategy towards greater loca lization and adaptation of offerings became inevitable. At that point CP focused on developing a more multidomestic approach to sense and exploit the local opportunities by building flexibility through resourceful and adjustable national operations. At the said(prenominal) time, Colgate-Palmolive never resigned from their international approach and headed slowly towards being a truly transnational business entity. After Colgates initial development in foreign markets through the international and multidomestic strategy, they eventually followed the transnational strategy where the company tried to achieve lowcosts through location economies, economies of scale, and learning effects, thus differentiating their products within different geographic markets and funding the flow of information and skills between subsidiaries within the firms global network (Hill, 2011). CP recognized that entering the high growth markets is more dispute and simply replicating the companysproducts will not suffice, but a huge MNC like Colgate-Palmolive could not allow a complete shift from international to multidomestic strategy, that is why in order to develop global efficiency Colgate-Palmolive had to adapt the transnational model. We can observe that strategy in the degree of flexibility given to country managers and the fact that the company is always back up employees to share their ideas. A good example of that are the Colgate Herbal toothpaste and the Palmolive Naturals series introduced by Polish specialists on the Polish market and then introduced further worldwide.Figure 5. Bartlett and Ghoshals strategy framework of Colgate-PalmoliveTo conclude this part, in Bartlett and Ghoshals model the transition of expansion theory is fundamentally from multidomestic to transnational OR international to transnational or global. In Colgate-Palmolives case the situation presents itself differently. The transition of CPs internationalization strategy started from the shift from inte rnational strategy to the multidomestic one and then transformed naturally to the transnational strategy. Even though the company did not follow exactly the same scheme as presented in the Bartlett and Ghoshals framework, we can still assume the validity of the theory and present Colgate-Palmolive as one of the dress hat examples of how to pursue the idea of thinking globally, acting locally through the capital punishment of the transnational strategy.4. ConclusionColgate-Palmolive cant be seen as a simple business, but more as a symbol of a successful MNC, where generations have struggled throughout history with changes in the market, politics, and different economies, in order to adopt the most suited strategy that permitted the company to get where it is now. We saw that Colgate didnt just apply one model and succeeded straight away, but started by developing a solid base for the company in the US, and then slowly expanded internationally to similar countries where they could bend their initial western products, to then expand further into other countries and continents by adopting a more locally aware strategy. After the second expansion phase, the company couldnt just replicate itsproducts internationally as the cultures, and political systems of the other nations were too different CP had to sense and exploit local opportunities.The production and management demanded more local awareness, hence the shift towards a multinational strategy. After over almost 200 years of developing the business and taking over the market internationally, CP seems to have found the booming strategy Transnational. The national units contribute to the world wide integrated operations, and knowledge is developed by all actors, and shared amongst them. Global efficiency has been slowly but safely reached by Colgate thanks to its flexibility and reflex in capturing the markets demands and opportunities, while staying cautious about cultural and political risks throughout hist ory.5. List of FiguresFigure 1. The expansion and internationalization timeline of Colgate-Palmolive (page 4)Figure 2. Colgate-Palmolives Organizational Structure (page 7)Figure 3. Control Structure of Colgate-Palmolive (page 8)Figure 4. Bartlett and Ghoshals generic strategies framework (Hill, 2011) (page 9)Figure 5. Bartlett and Ghoshals strategy framework of Colgate-Palmolive (page 10)6. Bibliography1.Answers.com. 2013. Colgate-Palmolive. online for sale at http//www.answers.com/topic/colgate-palmolive-companyixzz2l6GNWWiX Accessed 19 Nov 2013. 2.Broniewicz, M. 1997. Nowe Szampony Palmolive Naturals. Internal Memo. Colgate-Palmolive, Pl. Inwalidw 10, 01-553 Warsaw, Warsaw. 3.Colgate-Palmolive. 1994. 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