Time to Rethink the Portfolio
A case report prepared for
MG 495 Business Policy
Spring 1 2013
3 February 2013
CHURCH & DWIGHT: TIME TO RETHINK THE PORTFOLIO
A. Executive Summary
1. Summary statement of the problem: Church & Dwight, more commonly known by its brand name “Arm & Hammer,” has held a commanding lead in the sodium bicarbonate product market for over 160 years with virtually 99 percent of all consumer products in households within the United States. However, in order to promote growth and diversity while maintaining a steady profitability rate of three - five percent per year, the company has expanded uses of sodium bicarbonate products so that it is no longer the only focus. The acquisition of a diverse group of consumer products in international markets has been viewed as a viable option to sustain the profitability margins well into the 21st century (Wheelen & Hunger).
2. Summary statement of the recommended solution: Since Church and Dwight is a relatively small company, when compared to competitors in household and personal care product markets they must recognize the challenges of growing sales through acquisitions to promote growth and competitiveness within those markets. Church & Dwight must incorporate additional acquisitions of solid brands and products in order to grow market share through an expansion of product lines into a variety of “personal care, deodorizing and cleaning, and laundry products” as well as “specialty chemicals, animal nutrition, and specialty cleaners” (Wheelen & Hunger). In addition, to maintain its position in the world market place, Church & Dwight must expand into international markets and gain footholds in product markets through acquisition of manufacturing assets. Simply shipping domestic product lines overseas is cost prohibitive. Foreign manufacturing assets will allow product recognition by local consumers in foreign countries and markets.
B. The Situation
After 160 years, Church & Dwight is a giant in the household domestic product market with brand name recognition more commonly associated with “Arm & Hammer” products. However, this achievement in the market only nets $2.5 billion in annual sales worldwide. The company’s brand portfolio includes over 80 popular brands and competes for market share with other giants including Colgate-Palmolive, Clorox, and Proctor & Gamble, which have combined sales of over $100 billion. The company has also expanded over the past decade into other household product lines through acquisitions of consumer brands including Mentadent, Pepsodent, Aim, and Close-up, as well as Trojan. Church & Dwight has a core of specialty products primarily based on its successful sodium bicarbonate line of products. It currently holds 75% of the sodium bicarbonate market share. Expansion in the domestic markets has proven successful because of the “company’s pristine balance sheet”. Growth into the foreign markets has proven more challenging than domestic markets. Foreign market net sales in 2009 were only $393 million compared to domestic net sales of $1.8 billion (Cook). II. ANALYSIS
A. Analysis of the Situation
1.Management – The Church & Dwight Company has continued a tradition of slow and steady leadership with a solid focus on long-term goals. The steadiness of the company’s leadership can be primarily attributed to the fact that 25 percent of outstanding common stock is owned by descendants of the company’s original cofounders, a tradition that continues today. In addition, the management of the company over the past 160 years has been handed down from generation-to-generation until recently when Dwight C. Minton passed on the position of Chief Executive Officer in 1995 to an outsider, Mr. Robert A. Davies, III (Wheelen & Hunger). This focused leadership style has enabled Church &...