Clorox Case Analysis

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THE WAY FORWARD
Recommendations for Leveraging Sustainability and Optimizing Existing Green Lines

Instructor: Kim Bates Course: Integrative Weekend – W2012 Date: March 4, 2012 Consultants: Deborah Sue Chee Eva von Biehler Mehdi Tahuri Serhiy Rudak S.Mehmood Ul-Hasan Vern Puchoon

Executive Summary In the face of consumer changes and current economic conditions, Clorox must make several key decisions regarding resource allocation and strategic focus across its product divisions. Specifically, there has been a strong focus since 2006 on product sustainability and green initiatives. As such, Clorox needs to determine if this is the right strategy to pursue for the long-term and if it needs to be green organization-wide, not just toward a few products. In recent years, many changes have been made to start shifting public perception of Clorox toward being an eco-friendly supporter. Due to this strategy and consumer trends, Clorox should stay the path of being an eco-friendly, green organization. Current consumer preferences support the notion that green sustainability is a megatrend, not a passing fad. To achieve the Centennial Strategy goal of double-digit profit growth in 2013 and to implement green initiatives and best practices across all Clorox product divisions, small changes in strategy and an increase of approximately $18 million in marketing and advertising needs to happen in the short run. The tweak in strategy will open new growth opportunities in other consumer segments, which will allow Clorox to capitalize on consumer trends and increase revenue. Advertising will support and educate these new segments and is based on the original advertising campaigns that were launched for these divisions in previous years. Research and development will continue in the medium and long run to ensure Clorox innovates products and takes advantage of growth trends outside of the domestic U.S. market. Implementing the “Clorox Clarity” program will centralize resources to the eco office, allowing more efficient distribution and communication with Clorox’s corporate office. More importantly, the eco office will implement a framework to foster knowledge sharing, information distribution and skills transfer from the three current green divisions - Burt’s Bees, Brita and Green Works - across the entire organization. This program will be key in making Clorox a truly eco-friends, sustainable organization for the foreseeable future. The proposed recommendations provide a detailed framework and timelines to ensure that Clorox takes advantage of a corporate advantage through sustainability while still achieving the original profit goals targeted in the Centennial Strategy.

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Introduction After many consecutive years of revenue growth across multiple divisions and product lines, Clorox is now faced with stagnant forecast projections and is in endanger of not achieving its goal of double-digit profit growth for its Centennial Strategy by 2013. Problem Statement How should Clorox allocate its resources among its brands and products in order to achieve its Centennial Strategy targets while continuing to increase its sustainability efforts? Critical Issues Clorox is currently facing several issues. First, it needs to determine whether the “sustainability” trend is viable in the long term and if it offers ample opportunity for growth. Specifically, the company has to assess the potential of the “green” or “sustainable” market and the return on investment that can be achieved by penetrating this market. The second issue facing Clorox is the disproportionate revenue generated by its product portfolio. While there is a significant push for a sustainability strategy, the three product lines in this category make up only 10% of the company’s revenue. The remaining 90% of revenue comes from Clorox’s large portfolio of cleaning and household products, many of which are in declining markets. To put this into perspective, in 2010 $4.98 billion...
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