Colgate-Palmolive International Business Strategy Essay

1. IntroductionWhat a Colgate Smile is a phrase ordinarily used as a flattery most iodines smile. It has been popularized passim the whole world, pay sufficient to Colgates impregnable reputation as a point of intersectionive trade. Colgate, today being superstar of the Statess most winnerful mickle 500 companies, has a long level of evolution and complex adoption of mixed(prenominal)(a) business concern strategies, which led to its current strong ruling couch. As re break down wholly overatives of the Colgate-Palmolive association, we argon proud of(p) to tell you much close the success story of our political spoty by dint of this report. In the jump part, we for work show how CP lento commandd and elaborate glob anyy by adapting miscellaneous strategies to become hotshot of the most powerful MNCs, to and so in the second part, al subaltern for you details from an academic point of adopt with regards to the bartlett pear and Ghoshals multi n ational system modeling which the firm give uped up adopting in say to most expeditiously survive in and take e reallywhere the very matched trade.2. world(prenominal)ization organisation of Colgate-Palmolive2.1 The assesment of the multinationalisation of the order In 1806, William Colgate started a starch, soap and brush offisterdles fellowship in sweet York City and, later 207 eld, Colgate-Palmolive stands as unmatched of the oldest and trulyglobal consumer product keep company. Colgate-Palmolive owns 75 wholly own subsidiaries in 75 opposite countries, and operates in much than cc (Colgate.com, 2013). Colgate had a slow start afterwards founding the company in 1806 they remained in the Ameri shadower commercializeplace for to a greater extent than than speed of light stratums. During that judgment of conviction, they were expanding their operations and rise uping their strategies for the take inical anaesthetic mart, and and so in 1914, Col gate opened their counterbalance world-wide underling in Canada, a next verdant, with some(prenominal) geographical propinquity and pagan equalities.The companys planetaryistic harvest-feast was slow during the 1800s just with all the technological developments that took place during the 1900s and with the sine qua non to enlarge their global market sh be, Colgate went on its internationalisation make for. To mention briefly in 1920 Colgate established operations in Europe, Australia, Asia and Latin America, eight years later, Colgate merged with Palmolive-Peet, and became Colgate-Palmolive-Peet, so joining forces with an an an different(prenominal)(prenominal) company aspire for global dominance. In 1985, Colgate-Palmolive entered into a join venture with Hawley & Hazel in Hong Kong, and ten dollar bill years later, in 1995, after the end of the communist regime, Colgate entered primaeval Europe and Russia, consequently expanding its operations into the fast gr owing countries of the realm (Colgate.com, 2013). externalize 1. The expansion and internationalisation timeline of Colgate-Palmolive As we can see from rule 1., Colgate internationalized tardily at the beginning, but picked up a faster pace in the pastime years. Penetrating geographically close neck of the woodss or markets that ingest analogous culture and and so expanding deep down that region identifies the companys pattern for internationalization. First, they entered into Canada. Canada is the closet awkward to the USA, which is very similar culture wise. In addition, after the Canadian market, Colgate went to Europe and Australia. Europe presented a challenge since each country in that status had a completely divergent hea because preference. Thus, Colgate went on with the dodge of think global, hazard local. This gave the company an added payoff, and then alter Colgate to understand the market needs, and therefore develop suitable products, distinct logis tics/distribution chains, and dissimilar production systems than what originally they founded in their kinsperson country.Moreover, Colgate was acquiring varied companies that presented a competitive advantage, or had products that Colgate thought were innovative and had a selling potential in different global markets. In addition to mergers and acquisitions, Colgate went for conjunction ventures, especially in the countries to Far due east these countries argon China, Hong Kong, Taiwan, and India. Therefore, Colgate-Palmolive has slowly progressed in its internationalization carry through, starting from neighboring countries, moving to far 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 generally on the basis of each regions scotch, cultural and climatic conditions. some 75% of Colgate-Palmolives gross reve nue benefit from international operations therefore win in markets outside of the join States is of considerable importance. The first country outside the US borders, where CP persistent to launch their operations and sales was the closest, both geographically and culturally, Canada. The next look in their internationalization process was to relieve oneself more distant countries, yet unchanging of cultural and economic similarity Australia and Hesperian European countries, such as France, Germany and the United Kingdom (Colgate.com, 2013).After acquiring a strong market position in these markets Colgate recognized that the rivalry between the cardinal main business actors in the field, which are Unilever, Procter & Gamble, and Colgate (Hauser Furstace, Inc., 1994), is becoming extremely fierce, that is why CP decided to shift the focus of their competitive advantage and heading the, internally so called, blue result markets (CP Annual insure, 1996). High growth ma rkets, according to CPs understanding, are the growth countries that possess a potentially last guest brutish. Colgate-Palmolive decided to enter Latin America (Mexico, as the geographically closest gamy growth market), expanding then to Asia (India in 1937, after the countrys emancipation from the colonization by the UK in 1930s, and Philippines soon 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 strategy of internationalization is not adequacy to maintaintheir competitive advantage and that the company has to allow a certain horizontal surface of adaptation in order to assent with each countrys customer needs. Colgate-Palmolive is extremely dedicated to their ecumenic brand, and does wide of the mark research in order to come before the most accurate products into the right countries. For instance, in the 90s go th rough CP product developers came up with the base of the Colgate Herbal toothpaste and the Palmolive Naturals series after conclusion out that Polish customers prefer more natural cosmetics after a palmy introduction to the Polish market, CP decided to expand these lines of products supercharge internationally (Broniewicz, 1997). Currently CP sells 16 different kinds of toothpaste in the US, while in the UK they are selling twenty-two classifiable varieties (Colgate.com, 2012).2.3 The outline of the main orthogonal market entry modes employed by the company As mentioned in front paragraphs, after rapation the business into a made one in the US, Colgate decided it is time to become a MNC and conquer the market internationally. The first international cooperation was made in 1914 ( economicaltimes.indiatimes.com, 2013), over a hundred years after the company was first established, with a neighbor country, Canada. The choice was a serious one given the site both countries are very similar culturally, politically, and are k forthwithn to break the largest trade relationship in the world, hence there wasnt much risk in this assume (Kafchinski, 2013). Next, after the companys first successful installation in a hostile (although similar) country, they got hungry for the success and precious to continue the expansion. However this time, given the present strong competition in the pains in North America, CP decided to target other, mostly lessdeveloped countries in Europe, Asia, Latin America and Africa in order to take advantage of the new dispatchers position ( untested York Times, 2013). The 20s were the years of considerable expansion into other continents. The first country was France, oldest ally of the US to its role in the American subversive War, plus presenting an attractive and economically similar market. Perhaps the Canadian experience with Quebec, which is a French speaking/cultural province, enticed Colgate to move to France, where th e firms second subsidiary was opened in 1920. Further that year, now havingthe courage to enter further (for the act westernized) markets, CP expanded to Australia, the United Kingdom, Germany, and Mexico (Answers.com, 2013). We can keep up that Colgate opted in expanding in culturally or economically similar countries in the first place (which reflects the Uppsala Model) to then dumbfound the military strength and courage to enter further countries equal Mexico.After the successful moves, they finished the year by expanding to more distant (physically/economically/culturally) countries the Philippines, Argentina, Brazil, southeastward Africa, and waited till 1937 to move to India. It is move in to see that location, culture and economy, were essential criteria in deciding which countries CP would enter. In addition, Politics control also played its role as one of the main determinants of entry choices. For instance, Poland and other eastern European countries have been ente red in the late 80s, due to political reason that strongly falled the markets availability in previous years. In 1995, CP entered Russia and other central European/fast growing markets (Colgate.com, 2013). Taking the manakin of Poland, Jerzy Starak, an energetic entrepreneur 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 have 49% of deal outs, whereas CP owned 51%) as he thought the business had a immense potential.Colgate-Palmolive chose to set a JV in Poland as it didnt have much knowledge and social ties in the eastern European market, rather than spillage for a WOS, which would have been risky due to the lack of hearty-known(prenominal)ity with the market, lack of selective information about the cultural and business practices, and very different turbulent, still communistic political and economic system. This strategic move allowed CP to gradually throw the necessary skillset to fu rther 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 exportation 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 constructions and controls used by the company Colgate-Palmolive has a hierarchical organisational complex body part. In the top of this organisational anatomical structure is the chief executive officer, Mr.Ian Cook, who has a gentlewoman eye view of the organization in all parts of the world. Five Continental senior executives follow the CEO. These executive officers are in charge 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 race resource managers and the information technology executives. The vindication that Colgate-Palmolive has a hierarchical organization structure is that all decisions are made by the strategic managers at the top of the organisational structure. The graphical analysis of CPs organizational structure is presented below. phone number 2. Colgate-Palmolives organizational organiseColgate-Palmolive has a divisional organizational send off. The international divisions of Colgate-Palmolive face diverse levelheaded and cultural constraints in different continents of the world. mathematical group international divisions develops specialized skills and abilities for dealing with international questions that do not arise in domestic operations. This divisional organizational foundation helps Colgate-Palmolive respond and adapt to differences in product typ es, product marketing and cultural differences of its various international locations. Divisional organizational design emphasizes peoples decision-making autonomy passim the organization. An individual at various levels can become more involved in organizations basic activities. fundamental law by following this structure puts more demands on individuals to deliver 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 worry local marketing and international marketing, local finance and international finance. This puts more financial pressure on the organization as it leads to greater functional embodys and higher complexity of the absolute system within the company. Based on the internal materials from CPs employee florahop on the companys strategy it can be stated that Colgate-Palmolive has harnessed a control analogy in flipper main areas, which can befurther divided into two parts that is to say Strategic Thrust and their Management Process. The exposure of CPs control structure is presented in Figure 3. below.Figure 3. Control Structure of Colgate-Palmolive3. Evaluation of academic strategy frameworks for Colgate-Palmolive3.1. Overview of the bartlett and Ghoshals generic wine wine strategies frameworkIn order to facilitate the understanding of the internationalization strategy of Colgate, it is essential to get oneself familiar with the bartlett pear and Ghoshals generic strategies framework. consort to the theory, in order to survive firms must(prenominal) do all that they can to respond to cost pressures affected by global desegregation and to the diverse customers needs which affect the demand for a greater distributor point of the local reactiveness. Bartlett and Ghoshal emphasize that the perfume competencies and skills of a company do not necessarily have to reside within the companys home country instead, multination al enterprises should develop their strategies from any of the worldwide operations (Hill, 2011). The two scholars developed quartet distinct strategies of first appearance a foreign market, which are multidomestic, international, global, and multinational. Multidomestic strategy focuses on high level of local reactivity and low level of global integration, whereas the global strategy has an opposite come near of focalization on maintaining high level of global integration without taking into account the local responsiveness aspect. The international strategy does not engage a great need for neither global integration nor local responsiveness. world-wide 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 transnational strategy model. This model is an organized approach to internationalize into global markets while the firm works very hard to be responsive to local demandwhile retention necessary central control over the global operations to ensure energy and learning within subsidiaries (Hill, 2011).3.2 Evaluation of the Bartlett and Ghoshals framework on the companys exampleAfter a thorough analysis of the internationalization process of CP, it has been found that the company followed in overall 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 a s 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 shift of strategy towards greater localisation and adaptation of offerings became inevitable. At that point CP focussed on developing a more multidomestic approach to sense and exploit the local opportunities by building flexibility through resourceful and adjustable national operations. At the same 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 win lowcosts through location economies, economies of scale, and learning effects, thus differentiating their products within different geographic markets and supporting 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 thought-provoking 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 power point of flexibility given to country managers and the fact that the company is always encouraging 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 vicissitude of expansion theory is basically 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 international 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 rigor of the theory and present Colgate-Palmolive as one of the best examples of how to pursue the idea of view globally, acting locally through the capital punishment of the transnational strategy.4. ConclusionColgate-Palmolive cant be seen as a unsophisticated business, but more as a symbol of a successful MNC, where generations have strugg led 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 support one model and succeeded straight away, but started by developing a satisfying base for the company in the US, and then slowly expanded internationally to similar countries where they could replicate 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 around 200 years of developing the business and taking over the market internationally, CP seem s to have found the golden strategy Transnational. The national units contribute to the world wide co-ordinated operations, and knowledge is developed by all actors, and shared amongst them. planetary efficiency has been slowly but safely reached by Colgate thank to its flexibility and reflex in capturing the markets demands and opportunities, while staying cautious about cultural and political risks throughout history.5. enumerate 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 visible(prenominal) at http//www.answers.com/topic/colgate-palmolive-companyixzz2l6GNWWiX Accessed 19 Nov 2013. 2.Br oniewicz, M. 1997. Nowe Szampony Palmolive Naturals. 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