PEST and PORTER’S

FIVE FORCES
ANALYSIS
 COLGATE
COMPANY
 
• Colgate company is a
consumer products
company. The company
manages its business in
two product segments:
oral, personal, and home
care; and pet nutrition
 POLITICAL
FACTORS
• Political factors play a significant role in determining the factors that can
impact Colgate Company’s long term profitability in a certain country or
market. Colgate Company is operating in Personal Product in more than
dozen countries and expose itself to different types, of political
environment and political system risk. The achieve success in such
Personal Product industry across various countries is to diverse the
systematic risks of political environment.
 ECONOMIC
FACTORS
• Now a days country is experiencing inflation where in the supply of
every commodities is decreasing while the prices are increasing . And so
the Colgate company consider this kind of problem where in the
company provide Colgate's in a very affordable price.
 SOCIAL
FACTORS
• Colgate has recently set a new goal of 100 percent recyclability of
plastics in packaging across all it’s product categories by 2025. As part
of it’s system ability, corporate and social responsibility goals, Colgate
aims to be using 100% sustainable palm oil by the end of 2018.
• The company stated that it recognizes it’s responsibility to work with
industry groups suppliers, governments and other to ensure it’s sources
palm oil and it’s derivative's in ways that do not harm the environment
or exploit workers.
 TECHNOLOGICAL
FACTORS
• Technology is a factor whose value cannot be ignored. Technology vary
with the passage of time in all industries and so we made our techniques
and methodologies up to date for keeping our product preferable in the
market.
• Since we are in the 21st century wherein most of the teenagers uses most
of their times in social media and so the company decided to advertise
their product through youtube, facebook, and etc. Through this the
company can compete globally.
Pest.webm
 PORTER’S FIVE FORCES
ANALYSIS
• Gaining Power of Suppliers
One of the five forces which Porter formulated for an organization to look into in order
to form a competitive advantage is gaining power of suppliers. The global reach and
diverse portfolio of assets attract numerous investors. Colgate-Palmolive and other major
competitors are both viewed by investors as home and oral care companies which have
considerable positive investment strengths. Most often the comparison is always with P&G.
Although, Colgate is viewed by many as at par with its competitors, yet, what was lacking
in their management is the ‘lack of perceived differentiation’ which somehow impaired the
investment decision-making process. Moreover, even though Colgate has ‘no strategy that
is unique or differentiating relative to the other companies’, the threat of bargaining power
of suppliers is low due to partnership, supply chain management, training, and dependency.
 BARGAINING POWER OF CUSTOMERS

Customers are the lifeblood of the business. The existence and growth of a business company is
dependent on customers. CP (Colgate-Palmolive) is serving globally with 25 million customers a day in
over 200, 000 plant around the globe. There is a cohesive loyalty among buyers and sellers of energy in
Colgate-Palmolive for several reasons like the attractive incentives and value added, partnering and
supply chain management. Moreover, investors and stakeholders expressed their satisfaction on the
services offered by the company. Again, this can be reflected on the 2001 case study interview which
was recorded verbatim, in which two elements emerged fundamental to the satisfaction of customers –
technology and its diversified presence. One owns Colgate-Palmolive because of its strong diversified
presence and good technology while another one noted that it is because it is cheaper, yet with a high
quality of products and high returns over the course of the cycle compared to other major companies.
Moreover, significantly noted were two comments. On one hand, the reasons why many were satisfied
with the performance because of its huge asset base, financial and political clout that was why they
successfully covered operations in places like China, Russia, and the Middle East. On the other hand,
CP’s management restructuring that reduced costs focus on profitability, financial discipline and its way
for shares repurchase.
 THREAT OF NEW ENTRANTS

In the home and oral care industry primarily on the soap and natural products and reserves, the
companies’ management strategy reduced the friction of threat among its new competitors in
the business by increasing minimum efficient scales of operations, its cohesive and good status
with suppliers/distributors, retaliation tactics, protection of property and establishing a
competitive and trustful image to its customers. Moreover, the role of advanced technology set
them at par with other entrants in the business. In 2001, technology had differentiated CP from
its competitors. Leadership in promising toothpaste from solid to gel technology that delivers
new brushing sensations. There reputation was leveraged in order to establish a solid
foundation against threats of the new entrants. The leverage of their reputation is build solidly
on their total strengths both tangible and intangible like technology, products, adherence to
business ethics, code of conduct, and corporate social responsibility that encourages
consumers to brand loyalty.
 THREAT OF SUBSTITUTES

The threats of substitutes in which customers switch product references are primarily caused
by several external and internal factors. One of the factors in which customers tend to switch
their preferences is the price cost of a product. If a product raises its cost value, customers may
have a second thought of sticking into as his/her preference; therefore, the tendency is that the
shift and switch of preference occurred. Most often, in this kind of business like marketing an
energy reserves, the threat of substitution of customers come in the instability of a price. The
price cost of a product if it increases due to social and political factors, it stand to be a threat
for the company. However, the Colgate-Palmolive good strategy like increasing switching
costs, alliances, customer surveys to learn about their preferences, accentuated differences and
the entrance of substitute market, these reduced the threat of substitutes.
 COMPETITIVE RIVALRY

Competitive rivalry between existing players In any business price

competition is significant because it attracts customers, the less you price
a product, the more customers you gain, yet, in competitive rivalry, in
order to reduce it, avoidance to price competition is necessary in which
the Colgate-Palmolive observed. Their competition is not on price but on
how to manage strategy that would best leverage a product. CP uses
different strategies to market their product and be competitive.