Case 35 – Church & Dwight: Time to Rethink the Portfolio?
A case report prepared for MG 495 Business Policy
(Spring II Term)
Michael XXXXXXXXXX April 8, 2012
CASE 35 – CHURCH & DWIGHT: TIME TO RETHINK THE PORTFOLIO? I. INTRODUCTION 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 3-5 percent per year, the company has expanded uses of sodium bicarbonate products so that it is no longer the sole focus. In fact, 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, p. 35-12, 2012). 2. Summary statement of the recommended solution: The relatively small company, as compared to competitors in household and personal care product markets 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, p. 35-6, 2012). 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 costprohibitive and 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 a 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, Cloriox, and Proctor & Gamble, which have a combined sales of over $100 billion (Wheelen & Hunger, p. 35-1, 2012). Church & Dwight is also the largest producer of sodium bicarbonate products primarily focused in expanded uses of its sodium bicarbonate brand. 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 and Oxiclean. The company has also a core of specialty products primarily based on its successful sodium bicarbonate line of products. It currently achieves 75% of the sodium bicarbonate market share. (Wheelen & Hunger, p. 35-6, 2012). Expansion in the domestic markets has proven successful because of the “company’s pristine balance sheet” (Wheelen & Hunger, p. 35-5, 2012). However, growth in the foreign markets has proven more challenging than domestic markets as
net sales in 2009 were only $393 million compared to domestic net sales of $1.8 billion (Wheelen & Hunger, p. 35-5, 2012). Finally, the company has achieved some success in foreign markets as 19% of revenue is now received through international market sales; primarily in consumer products (Case Author: Cook, R. A., p.35-1 – 35-12, 2012). 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...
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