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McGill University Desautels Faculty of Management
Markets and Globalization: Take Home Assignment Strategy Section
Section 1 260319626
however the substantial growth in the traditional cleaning industry may put the Clorox in direct competition with two major companies (P&G and Unilever). This presents opportunity for company’s traditional cleaning products. however Green Works products are still not that well established brands and face competition from Seventh Generation and Methods. however in “green” products. the economic conditions are weak. The weak economic conditions may increase the rivalry among competitors in all the segments Threat of new entrants (low): Economic conditions are weak.Student No: 260319626 1(a) Macro environment Analysis using PESTEL and Industry Analysis: At the time of the case. However the market for “green products” is strong and is expected to grow since more people are becoming oriented towards “sustainability” especially the younger generation. Clorox has a already well established brand and has good distribution network (essential for sustainable products). Bargaining power of suppliers (moderate to high): Limited supply of natural or organic materials increases suppliers powers. Further Analysis of company’s environment can be done by evaluating Porter’s five forces. company’s main competitors are Seventh Generation and Methods. The company’s main competitors in traditional products are P&G and Unilever. there aren’t many substitutes. Brita and Burt Bees are leading brands ( i.e they have good brand equity). thereby decreasing the incentive for new players to enter the market. there are many substitutes and switching costs is lower since traditional cleaning products are cheaper than natural cleaning products. whereas in traditional cleaning products there are many 2 .Threat of substitutes (moderate to high): In traditional products. whereas it’s a significant threat for company’s green products. Clorox is already a established brand in traditional cleaning segment. Threat of Rivalry (low to moderate): As per information in the case. whereas in natural cleaning segment.
Bargaining power of customers (High): Most of the customers of Clorox are large retailers such as WalMart. Donald 3 . we will evaluate how it changed the strategy of the company and how it affected the “Enterprise”. an influential environmental organization and also came under watch of several other environmental organizations. 2a) By analyzing “Executives” component of 4-E fit model. 1b) The influence and expectations of non-transacting stake holders increased after Clorox adopted Centennial Strategy. expecting not only to continue and grow the green products but also to adopt sustainability measures into its traditional cleaning products ( which constituted around 90% of the company’s revenues). but it started to take measures such as reducing solid waste. It is pertinent to mention that company’s strategy was never to be fully “green” company. In September 2006. use of water. It implemented this strategy to take advantage of growth opportunities in this segment while maintaining the mainstream segment of traditional cleaning products. greenhouse gas emissions. etc. Overall company has good fit with the environment since it has a well established brand in both traditional cleaning products as well as “green products”. Even though the company didn’t completely converted its traditional cleaning products into green products. etc to meet the expectations of eco-friendly people and environmental organizations. Traders Joe. and hence due to their size they have high bargaining powers. thereby reducing the bargaining power of suppliers in that segment. However the expectations grew to do more and therefore Clorox decided to implement some sustainability measures into mainstream products in order for its green products to be perceived as “green” and to sustain sales. with major emphasis on major global consumer trends such as health and wellness and environmental sustainability.Student No: 260319626 suppliers. Whole Foods. enabling company to form alliance with Sierra Club.
4 . This strategy not only focused on “green” products line but also affected mainstream business in the sense that measures were taken to reduce the waste in those businesses as well and eco criteria was added into executive performance scorecard and into the goals and business plans of the individual business units and it also made significant changes in operations of the business i. Through the same strategy (focusing more on sustainability). where he had dealt with sustainability issues like health. water use and bottle waste.e. Soon after he joined the company. Hence the centennial strategy was not only changing the revenue mix of the company. Furthermore he came to Clorox knowing the global consumer megatrends i. company came up with centennial strategy. Clorox was able to turn around the growth of its Brita business from “stagnant or no growth” to “high growth business”. health and wellness and environmental sustainability. the leading premium brand in natural care and by leveraging its expertise on cleaning business. it came up with natural cleaning products by the name of “Green Works”. The strategy was such that company will continue its mainstream business of traditional cleaning products. operations and relations with non-stake holders.Student No: 260319626 Knauss joined the Clorox after serving 12 years in Coca-Cola. but the growth in business or the revenues of the company will come from “greener” products. These three major events served the company’s growth plan from 2007 to 2010 since most of the growth in revenues came from “green” or “sustainable” businesses and hence were consistent with the centennial strategy. accelerated growth by focusing on incorporating global consumer megatrends. it was changing the whole enterprise by changing the culture. By following this strategy company acquired Burt Bee. providing roadmap for long term.e logistics and operations.
Hence company faces three options (1) To continue spending on natural products and push the growth by creating the demand in the local market (2) To stop spending on natural products and concentrate on mainstream traditional products ( flagship products of the company) (3) To expand in other markets. however its main strategic challenge appears to be how it wishes to grow. whereas analysis of environment suggest that growth in natural products due to weak economic conditions will be difficult. since the economic conditions may not increase the sales of premium products (natural products). it is not clear what the company mission is. Furthermore company should be spending some portion of revenues in R&D of natural products 5 .e strong brand equity of Clorox) its growth. I suggest that company start expanding in other markets starting from Latin America since Clorox has lots of infrastructure there and natural category is just emerging. In the short term I suggest that company focus on its mainstream products. hence by focusing one or two main natural products will be sufficient as company has lower threat of losing its market share against competitors. Analysis of executives reflects that this desirable. furthermore competitors are also not spending that much on advertising.Student No: 260319626 2(b) Considering the 4-E fit model and porter’s five forces. however its corporate strategy currently in relation to products to sell both mainstream and natural products in primarily US market. Analysis of enterprise suggests that it has strengths on which to build ( i. Furthermore any significant advertising may not yield substantial increase in sales or profits. In the long run. company doesn’t seem to be facing any urgent problems. whereas analysis of expectations suggest that growth must be consistent with sustainability. From the information in the case. whereas business strategy is to differentiate itself in terms of efficacy in both traditional and “green” products.
Student No: 260319626 to innovate. since the next generation is very health and sustainability conscious and hence differentiated natural products will enable the company to gain substantial market share. 6 .
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