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Advance strategic management. Consumerism Essay

1. What is consumerism?

Consumerism can be defined in two different ways;
1. Consumerism is a theory which states that buying and consuming goods and services in a large amount are more beneficial to the economy. Thus this theory appreciates gradually increased consumption of goods and services.

2. Consumerism means ‘consumer protection’. It is a movement or policy that protects the interests of consumers via truthful packaging, honest advertisement, improved safety standards and product guarantees. Consumerism involves policies that regulate methods, products and services, standards, selling and advertising in the interests of the consumers.

These protect buyers from defective products, misleading advertising, unfair practices etc. Such policies can be mandatory, legislative, institutional or voluntarily accepted by the industry. e.g., consumers’ interests can be harmed by mispricing, adulteration, artificial demand etc.

Consumerism encourages economic growth by providing good quality goods and services to the customers.

Increased consumption by the customers shows the economic growth level. Increased demand would lead to increased production thus raising the gross domestic production.

It helps to make informed decisions through truthful advertising, environmental and safety standard laws. Thus consumerism provides protection to buyers.

Implementation of consumer protection laws shield consumers against exploitation, discourage anti-social activities and unfair trade practices, provide complete and latest information to the customer which aids in buying decision making process.

2. What IS STRATEGY? Why it is important?
Choose a company, study its strategy and then make its competitive analysis. DEFINITION
1. Strategy is business game plan used by management to stake out market position, conduct its operations, attract and please customers, compete successfully and achieve organizational objectives.

2. It is a process through which a company concentrated its resources on optimal opportunities to achieve short term and long term goals and other competitive advantages. IMPORTANCE
Strategy answers three central questions about the company (i) where are we now? (ii) where do we want to go? (iii) how will we get there? Strategy tells about the current position of the company, its future plans and the approaches it will follow to achieve its objectives.

Strategy encompasses actions to attract customers, actions to deliver value at optimal price and cost equilibrium, actions to respond to changing market environment, approaches to pursue available opportunities and plans to gain competitive edge.

A powerful strategy makes a company distinctive and provides sustainable and durable competitive advantage in creating, producing, distributing and marketing the company’s products/services.

An effective strategy results in best possible business performance in terms of financial profitability and market position.

Strategies are desperately needed to direct the activities of the company in a way that its goals and objectives are achieved in a right way through right approaches and at the right time.

An excellent strategy that is excellently implemented is a good measure to evaluate the management competencies and performance.

A strategy-focused company has a strong performance, profitable earnings, revenue growth and favourable return on investment.

Colgate Palmolive has $17.1 billion consumer products and serves people around the world with renowned brands by offering four types of products/services: oral care, personal care, home care and pet nutrition products. This company operates globally and approximately 75 percent of its sales are from outside the home country while majority of its products are manufactured in its own facilities.

Colgate-Palmolive 2011 to 2015 Strategy
The main focus of Colgate-Palmolive’s five year strategy is on people, performance and planet with measurable goals in accordance with the company’s business objectives. 1. Promoting Healthier Lives

The objective was to promote health and wellness in order to minimize employee health risks by 15 percent, to achieve 5 percent reduced health costs by improving on time diagnosis and treatment of diseases and to focus on safety of employees.

2. Contributing to The Communities Where We Live and Work

This parameter of the strategy aims to increase the impact of company on the community by $300 million. For this purpose five objectives were set which will provide greater focus to the company’s contribution towards the community.

Partnership is done with dental professions to improve the oral care of the community. A program of “Bright Smiles, Bright Futures” is scheduled to contact 1 billion children by 2020. To provide hand-washing awareness to over 50 million households. To work with 250 thousand veterinarians to educate pet owners and provide over $100 million pet food. Continue to provide company’s products after natural disasters and to invite more volunteers in this community program.

3. Delivering Products That Delight Consumers and Respect Our Planet

The objective is to increase the sustainability of all the products by (i) ensuring that ingredients continue to meet the standards of safety, health and quality (ii) reducing the impact of environment on the products and packaging. This is achieved by increasing the use of recycled contents and more usage of sustainable materials.

4. Making Every Drop of Water Count

The strategy aims to reduce the consumption of water during manufacturing by 24 percent. The objective also aims to take steps to promote access of clean water and water conversation awareness among over two billion consumers.

5. Reducing Our Impact on Climate and Environment

The intention was to reduce energy consumption and carbon emission during the manufacturing process by 20 percent.

The stated strategy of the company can be analysed on the bases of three broad terms. The following stated questions will determine the goodness of the strategy implemented by Colgate-Palmolive i.e. whether the strategy was able to improve the market position and financial performance of the company or not, how good was the company at handling the environmental dynamics and gaining competitive advantage. 1. How well does the strategy fits with the company’s situation?

The main competitor of Colgate-Palmolive is Procter & Gamble with the same strategy of sustaining products and environmental safety but Colgate-Palmolive has got a competitive advantage in the year 2011 and 2012 by having strong presence in personal care products and emerging markets in different geographical areas. Due to broad operation bases globally the
company has got the strength to lead the market.

2. Is the strategy helping the company achieve a sustainable competitive advantage?

Yes the strategy implemented by the company has made it to be a global leader in oral care. Colgate-Palmolive’s market is the single largest market by value shares and is insulated from the downturns. The company’s strategy focuses to meet market challenges, committed to increase product sustainability and focuses on segmentation by function. Colgate-Palmolive has improved sustainability profile in 24 percent of products.

3. Is the strategy helping in better company performance?

The strategy has helped the company in attaining better financial and ethical performance. Colgate-Palmolive has shown best environmental performance in past years and is able to sustain its past competitive advantage. The company had $17.1 billion worldwide sales in 2012.

Its gross profit margin was 58.4 percent in fourth quarter of 2012. Colgate-Palmolive won 100% Code of Conduct Certification, stood No. 1 in beauty and personal care products and was announced No. 1 at ‘Most Admired Companies in 2013’ by Fortune World. Colgate-Palmolive had operating profit of $4.02 million in 2012. 35 percent of its packaging material is from the recycled material thus fulfilling its goals of safeguarding the environment and reducing costs.

Three different products of Colgate-Palmolive have won title of ‘Product of the Year 2012’ and Ethisphere magazine has given the company title of ‘ 2013 World’s Most Ethical Companies’ US E.P.A declared the company to be ‘Designed for the Environment’ for many of its home care products. The above analysis shows the strengths and the competitive advantage earned by the company due to its best performance and leading activities. Surely the above mentioned performance is only attainable because of an excellent strategy and its excellent execution. _________________________________________

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