Colgate pursues low cost strategy

Colgate pursues low cost st locategyCP has a large and efficient dissemination net escape. Its distribution channels argon located each(prenominal) e genuinelywhere Pakistan (Moore, E.R)It caters to a broad node base. It has break downed itself in al about all the categories which argon accessoryd with nodes on the daily basis.Colgate pursues low cost strategy. Its fix is automated. Only superstar plant is utilised for the manucircumstanceuring of three different detergents equal bonus, express, briteThe whole unconscious process is repeated for each of the detergent.By automating the plant, CP is able to save a hatful of cost. CP value deliin truth net bat does not earn any delays in it which helps CP to save cost.CP tar descends all segment, it has products for the lower class, middle class and the upper class. Its price is done accordingly. It has cost drawship in the detergent and the surface caveat categoryCP forecasting is very accurate which helps them to redu ce cost because if estimated argon accurate then it helps the familiarity to avail cost advantagesCP is allowed to deviate plainly 5% from its forecast both upwards and downwardsCP has concentrated much on process efficienciesCP has access to large capital that is required to even pop out signifi push asidet investment. CP never compromises on the suppuration expenditure. It is always ready to alter its production processes.Being a low cost producer it helps CP to part compete to its rivals.Being the low cost producer it has helped CP to insulate themselves from regnant suppliers who nowadays demand increasing prices due to rising inflation.Being he low cost producer, it has as well as helped to attract mogulful buyers whom CP sells directly like MAKRO, DMART, IMITAZ, AGHAS, and NAHEED etc (Moore, E.R). frugal FactorThe overall economy of the country is showing a stable harvest-home. and so this attention is overly showing a growth of 10%. But the inflation is growing rapidly which is not a good sign for the young entrants. variety show in the interest rate alike affects the industry. Hence the bran-newborn entrants are also threatened by the increasing interest rates.Economic factors do influence the bar chance oning berth of buyers as inflation is the major factor that is affecting the consumers enceinte.Economic factors do not affect the availability of substitutes. But since inflation is growing, so it is hard for the poor hatful to switch to more modern products like slipstream powder, tooth paste. They would rather prefer oil to clean their clothes and use miswak to lave their teeth.Economic factors do have an affect on the bargaining power of suppliers as inflation is rising fast. Suppliers demand that they would provide the necessary earthy material at a higher price. Ex diverge rate fluctuations also affect the cost of raw material.Economic factors do affect the ambition among the competitors as all the players in the indust ry want to have cost leadership. The economic factors are favoring penetrative contention from the last five years. passel have more gold at their disposal. Also Pakistan is a use of goods and services oriented society (Hiatt, Jeff.).Quantitative Strategic Planning Matrix (QSPM) system 1STRATEGY 2WeightsASTASASTASSTRENGTHSMarket leader in surface caution with 90% grocery share0.15 best Leadership0.06Employee commitment0.1230.3620.24Cooling crystal unembellished0.1Accurate forecast with respect to demand0.0740.2820.14 heights EPS0.0830.2420.16Strong advertisement and promotional campaign0.0820.1630.24WEAKNESSESIT not used optimally0.1340.5220.26No ecommerce0.130.320.26No proper use of forward integrating0.0520.130.15They are not exporting their products to other countries0.061OPPORTUNITIESExploring into new categories like shampoo, hand wash , body wash, shower gelatin0.1420.2840.56Rural population switching from miswak to toothpaste0.06Gap in tooth brush market0.0820.1630.2 4Implementation of ERP(SAP)0.1440.5620.28People becoming hygiene and beauty conscious0.120.230.3No layoffs0.07THREATS(T)Raw material and energy prices are increasing0.1230.3620.24Inflation in the country0.0730.2120.14Competitors re launching their products0.120.230.3Competitors increasing their marketing budgets0.0620.1230.18Unstable law and order conditions.0.061TOTAL4.053.69Rivalry among active competitorsYes (+)No (-)The industry is growing rapidly.The industry is not cyclical with intermittent overcapacity.The fixed costs of the business are relatively low piece of ground of total costs.There are significant product differences and brand identities in the midst of the competitors.The competitors are diversified rather than excessized.It would not be hard to get out of this business because on that point are no specialized accomplishments and facilities or long-term contract commitments etc.My customers would incur significant costs in switching to a competitor.My product i s complex and requires a detailed disposition on the part of my customer.My competitors are all of approximately the same size of it as I am.7LOWMEDIUMHIGH expositionThreat of competitors is high because the product is not unique as at that place are no product differences. Same products are available with all competitors like Unilever, Procter and Gamble, Shield, Oral B. Therefore competition is also increasing as demand in the economy has also change magnitude for the last 5 to years. Majority of the competitors are MNCs which means that they have the necessary resource and skill (Hiatt, Jeff).Government FactorsGovernment regulations do have an affect on the rivalry among the competitors.Political factorsPolitical factors do not affect the rivalry among the competitorsEconomic factorsEconomic factors do affect the rivalry among the competitors as all the players in the industry want to have cost leadership. The economic factors are favoring intense competition from the last five years. People have more money at their disposal. Also Pakistan is a consumption oriented society (Hiatt, Jeff).sociable trendsSocial trends have changed, buyer are more aware of their purchases. So the players in the industry are always trying hard to increase their market share (Hiatt, Jeff).Technological changeTechnology is helping the companies to gain a competitive advantage over their rivals. Also research and development plays an essential role in this (Hiatt, Jeff).KEY SUCCESS ACTORS FOR COMPETIVE SUCCESS downcast cost production efficiency. CP has plants installed that take only 30 minutes for the plant to shift from the production of one product to the other.High quality manufacturing of products with very few defects.A strong network of wholesale distributors.Gaining ample blank space on retailer shelves. (Examples Naheed, Aghas, Makro and other small shops.)Attractive packaging and styling. technical length of product lines.Attractive commercials and advertising.Go od reputation in the industry along with favorable reputation with buyers.Market penetrationColgate can do market penetration by increasing its advertising, peck always associate Colgate with tooth paste and have no awareness that it produces personal and surface care products as well. They should show their logo on all its products so that people know the producers and this leave behind increase customer loyalty and also when people will come to know that Colgate is the producer then new customers will also buy the product (Hiatt, Jeff).They should also increase their promotion efforts by going to school and doing health awareness programs, also they should go to residential areas and chafe women aware of their surface care and fabric care products such as max, bonus and express etcProduct developmentColgate can also do product development by introducing new takes in their already existing brands. They can improve their tooth brush quality and features by introducing flexi too th brushes for special oral care. Also they can chime in whitening features in their feature in their tooth paste different colors of tooth paste can also be introduced to attract the kinds market. In their fabric care they can introduce in special features of protecting the color of the cloth objet dart slipstream and also whitening enhancing surfs to give a good shine to while clothes (Hiatt, Jeff).develop systems to involve appropriate stakeholders in the introduction of changeSIX THINGS REQUIRED TO EFFECTIVELY IMPLEMENTING A STRATEGYAccording to Porter, to action a strategy effectively six things should be followed nominate a formal planDistributor metre Item Price Negotiation, account Reporting, Stock Details, Payment TermsHR ModuleInventory / injectSales ModuleSales ModuleStock DetailsQuantity itemPrice negotiation, inventory pass overing, ex stock details, payment wrongFinance ModuleCredit terms, payment procedures,Stock in out effectInflow outflow of raw materialsP rocurement ModuleCreate a multifunctional teamTo effectively experience ERP, Colgate must first remove an independent resource firm.Acquire licensing for SAP Implementation.Establish an independent IT building block for the monitoring of ERP. This department will coordinate with all the other departments (Robbins S, Mukerji). talk of strategy inside and outsideAll employees in the company should be made aware of the new automated system. Each employee must be provided a minimal insight of SAP but those employees who have to work on SAP the most should of function be provided with proper training course of SAP. These acceptFactory ManagerManager accountsWarehouse Manager dissemination teamConsumer insight departmentOutside the company the strategy to implement ERP should be communicated properly to all the local and foreign suppliers of Colgate Palmolive (Hagberg).Consistency over timeAs Information Technology is progressing day by day, new changes in ERP are expected after cert ain time periods. Therefore it would become very important for Colgate to cope up with the changes in the software. For this exercise it would need to update it employees by providing training whenever any change takes dedicate in SAP (Hagberg).Use proper measurementsOther measures, not on the nose financial measures would be required to test whether the system is working properly. These measures includeWhether the system is accurately forecasting demand, sales, price changesWhether or not there are any deviations in the actual versus projected sales posture of the internal processes after the strategy implementation (Robbins S, Mukerji).Test the strategy entreat employees and senior management in all departments whether they are satisfied with the new system of working. Talk to suppliers and distributors whether they want any more improvements in the new system of working (Hagberg).EIGHT PILLARS OF STRATEGY IMPLEMENTATIONAllocating resourcesColgate has to invest well-nigh 50mn f or which they have to make a separate IT department in which 1 trained personnel have to be hired so that it can be implemented in an efficient way.building capable organizaion later on the implementation of SAP, a capable organization would be established. It would help the company to coordinate all activities. CP can then expand into new markets and would develop innovative products.Exercising strategic leadershipSAP implementation will require an annual strategic audit to check whether the desired objectives have been achieved or not. This means a visionary leadership is required. Leadership should be exercised strategically in such a way that it helps the company to halt its competitive advantage.Tying rewardsRewards in maintaining the best MIS, highest no of transactions, successful employee in training face should be given in terms of recognition, increased in salary and gift vouchers.Installing support systemIt is important to maintain MIS with in different department so the y can work in a best possible wayBenchmarkingIn Pakistan very few organizations has implemented SAP. PSO and National Foods are some of them. Since PSO has very successfully implemented SAP so Colgate benchmarks them.Strategic supportive policiesThey have to make strategies in which maintaining an MIS should be mandatory. There should be digital culture. They should have a centralize entropy base through which all department are interlinked and any transaction can be tracked down by any department. Every department should have access to only relevant information.Shaping corporate cultureColgate should implement paperless. Digital culture where the records must be maintained through MIS and not manually .even communication should be done electronically.KEY DRIVING FORCESIndustry growthNow most of the people have knowledge about the different products and its advantages. The intense competition in industry and high demand enables the new entrants to compete in this market (Hagberg).P roduct innovationInnovation in product, as Colgate has however introduced Max fresh in which the coolant crystals are present which none of the competitors has espouse yet. There is also room in innovation in rinse detergents (Hagberg).Changing societal concerns, attitudes and lifestyleSince social issues are really effecting the use of product just like the use of Miswak which is the Islamic mode of cleansing the teeth (Hagberg).Use of E-commerce and InternetUsage of online ordering and maintaining the stock aim through e-commerce can be driving force in the industry. By using that they can provide products to customer which is value addition for them (Hagberg).This report is purely based on the finding from the Colgate expert and the secondary data analysis, and the reason for writing the whole report is to find the obstacle / parapet a business men face and how the organization can calumniate it through implementing the different strategies and analysis.The whole report re search draws attention tothe fact that any problem can be eliminate if proper probe and consideration can be observed the success is easy to get, Pakistan market is mature market and the competition is tough here because most of the customer is price conscious and act like butterflies, so targeting this kind of customer is quite difficult, but on the other hand it can be managed if the you can understand the market effectively and efficiently (Robbins S, Mukerji).Hiatt, Jeff. The definition and storey of change management. http//www.change-management.com/tutorial-definition-history.htm.Filicetti, John (August 20, 2007). Project focusing DictionaryMoore, E.R., (accessed 1 April, 2001), Creating organisational Cultures An Ethnographic Study, Eastern Academy of Management Virtual Proceedings,Moore, E.R., (accessed 1 April, 2001), Creating organizational Cultures An Ethnographic Study, Eastern Academy of Management Virtual Proceedings,, R. Ph.D. Heifetz, D.Ph., 2000 (accessed 4 Apr il, 2001), embodied Hagberg Culture/Organisational Culture UnderJerryding and Assessment,Robbins S, Mukerji D (1994). Managing organisations. Prentice Hall of Australia, McPhersons Printing Group, Australia.Sergiovanni, T.J. (1984) educational Leadership, Leadership and excellence in schooling, Volume 41, Number 5, United States of America, knave 4-13Kent State University 2000 (accessed 28th March, 2001), Kent State University Cultural Self-StudyInternal Communication of lurchBy Dagmar ReckliesCircling the Pyramid Building Lasting Commitment to switch (pdf-file)by Edmond MellinaWhat Makes a Good Change Agent?by Dagmar ReckliesThe Role of the Change Master From Change Agent to Change MasterBy shame TearleManaging Change Definition and Phases in Change Processesby Oliver ReckliesProblems in Managing Changeby Oliver ReckliesAuditNet.org provides a downloadable PDF of change management best practices.Fred Nickols wrote Change Management 101 A Primer.SearchCRM.com provides resourc es on handling change management following a CRM upgrade.Neglecting your change control process can kill an IT contingency recovery plan.