To: Mr. Stone, CEO, Global Household Brands
From:, Analyst, BMF Consulting Firm
BMF consulting has evaluated the structure of Global Household Brands, in order to give recommendations for possible growth and stability for the future of the company. In this analysis, I have gathered information regarding financial statements, internal and external factors in Global Household Brands competitive structure, and strategic priorities in order for the company to grow in the household product industry.
The analysis of the internal factors shows that Global Household Products have strong distribution throughout the industry and have a core competency for developing quality products. This analysis allows for GHB to expand past their previous four product lines, and possibly develop synergies with other smaller companies like Glad, to differentiate products such as 2000 flushes and Carpet Fresh.
With Global Household Products being in a mature industry, completion and threat of new entrants are low, which would allow GHB to strive on their strong product quality. The need for restructuring inside the supply chain is necessary in order to limit cost and waste that has developed from previous year’s lack of efficiency.
Financially, GHB is financed mostly on debt, making it highly leveraged and with great financial risk. This is a problem because with the decreasing sales and profit margins from previous years, the banks are threatening to call the loans that financed the company. This is a problem that has developed with the previous management team, and requires negotiation for restructuring of the terms of the loans. This will allow newly implemented strategies to incorporate themselves into the company and develop results.
In this analysis, I have come to the conclusion that GHB must begin to create a Research and Development, marketing, and cost strategy. The V.P. of Marketing is well known for his experience and unique talents, which should bode well for a marketing strategy which will help bring market share back to the four major products of GHB: 2000 Flushes, X-14 Mildew, X-14 Soap Scum, and Carpet Fresh. The threat of bigger companies, such as Clorox, S.C. Johnson, and Arm & Hammer, have hampered sales from these products, but with a supply chain management strategy to cut costs, and a strong marketing strategy to develop defenses against competition, Global Household Brands should gain and sustain a competitive advantage in the future.
Block Drug Company was a successful producer of Polident, powdered aspirin, household cleaning products and a few other brands. These items were generating great profits in its respective markets, but when other, bigger, such as Arm and Hammer and Clorox entered the market, Block decided not to market their products at the pace of the bigger competition. This strategy led to a decrease of around 40% of sales from 1995-1998. After sales dropped below $75 million, Block decided to find buyers for their brands, and a leveraged buyout group and a small venture capital firm invested around $50 million to acquire the firm’s brands. The new firm was called Global Household Brands. Inside Analysis
To begin the analysis of Global Household Brands, we must first look at the corporate strategy that has been implied by the new CEO Mr. Bill McCoy. Mr. McCoy was hired to put together a management team, to help get Global Household Brands sales back growing. McCoy used several of the former employees of Block, which was a good idea, because they have a good feel for the corporations’ goal, and the market, but he also hired a relative to head the operations and purchasing sectors. This move did not work out well for GHB, as the task of leading these divisions proved to be to challenging for McCoy’s relative. Most of the talented manufacturing help left the company because of the operations manager, and waste and production are now...