I. INTRODUCTION
A. Executive Summary
1. Summary statement of the problem: Church and Dwight is a company that was founded over 160 years ago and found an enormous amount of success. The company made their large impact in the American consumer market with a sodium bicarbonate product. During the Church and Dwight’s massive growth through the years, they have been able to continue to stay profitable by acquiring smaller companies or particular products from other companies. An issue that faces Church & Dwight is finding more uses for sodium bicarbonate and also continue to acquire successful products from smaller companies. Last, the company has largely struggled to expand their international brand for two reasons. The issues of name recognition and exporting costs are the largest issues that hinder Church & Dwight in their international market.
2. Summary statement of the recommended solution: The issues that face Church & Dwight must be resolved as quickly as possible in order to preserve the success of the company moving forward. The company could cancel funding for the research that is being used to find new uses for sodium bicarbonate. Instead of finding new uses, spend that money to help better educate the general population on the enormous amount of uses that are already available
for sodium bicarbonate. Church & Dwight should continue to acquire smaller companies with name recognition internationally and use these acquisitions to roll out their Church & Dwight products to the acquired companies already existing consumers.
B. The Situation
Church & Dwight was founded over 160 years ago and made revolutionary impact with the use of one product, Baking Soda (sodium bicarbonate). The iconic brand of Arm & Hammer has been a staple product in most households, since the introduction in 1878. “From the company’s founding until 1970, it produced and sold only two consumer products: Arm & Hammer Baking Soda and a laundry product.” (Wheelen & Hunger, p. 35-6). The growth that Church & Dwight experienced after 1970 was due to the newly researched uses for baking soda. The vast amount of baking soda uses include: “dentifrice, a chemical agent to absorb or neutralize odors or acidity, kidney dialysis element, environmentally friendly cleaning agent, swimming pool pH stabilizer, and pollution-control agent.” (Wheelen & Hunger, p. 35-2). The expanded uses of baking soda allowed Church & Dwight to take a widely recognizable brand and widen the amount of products they off, such as: toothpastes, deodorants, cleaning supplies, and chewing gum.
After expanding their product line with multiple uses of baking soda, Church & Dwight began acquiring new strong brands in order to gain a share in the household and personal care market. These acquisitions proved to be successful and included brands, such as: Mentadent, AIM, Trojan, Spinbrush, Oxiclean, Orajel, Brillo, First Response. Church & Dwight experienced a large amount of success in North America, however struggled to gain a strong foothold in the international market. In order to gain a stronger international presence, they acquired DeWitt International Corporation and Carter-Wallace. These acquisitions led to 19% of revenue in 2009 were derived from outside of the United States (Wheelen & Hunger, p. 35-11). For Church & Dwight to continue their success they began to streamline and become extremely frugal. Instead of using five separate facilities for the production of laundry detergent, Church & Dwight built one large facility so the entire process can be completed in one location. (Case Authors: Hunger,
J, p. 34-1) II. ANALYSIS
A. Analysis of the Situation
1. Management – The management of Church & Dwight has remained stable throughout the long history of the company. The stability largely comes from the “fact that about 25% of the outstanding shares of common stock were owned by descendants of the company’s co-founders.” (Wheelen & Hunger, p. 35-2). This allowed for the “family” to control many decisions and continue focusing on the long-term goals. Additionally, a direct descendant by the name of Dwight C. Minton was the CEO from 1969 – 1995. Once Church & Dwight began to make the strong push for an international market share they began to hire elite and experienced top management.
If rated on the BCG Growth-Share Matrix, the management of Church & Dwight could absolutely be characterized as a star for the company.
To remain profitable and relevant for over 160 years is no easy task for any management to overcome. The decisions made by management to begin the acquisitions of strong brands proved to result in enormous increase in revenue, which proves that the management should be, considered a star.
2. Operations – The operations for Church & Dwight has two large aspects within their company. The first and largest operation for Church & Dwight is the production and packaging of manufactured goods. Church & Dwight produces and packages an enormous amount of products in the Household and Personal Care markets and the company has consistently been looking for strategic ways to save money during these operations. An example of this is the “completion of a 1.1 million square foot manufacturing plant for laundry detergent, the company consolidated into one facility the functions that had previously been completed in five separate facilities.” (Wheelen & Hunger, p. 35-12). This decision was made based on the slowing global sales of laundry detergent in the recent years.
The second largest operation of Church & Dwight is the extraction and mining of sodium bicarbonate. The company invested “about $20 million to expand and modernize it’s sodium bicarbonate plants.” (Jarvis). The operation of extracting sodium bicarbonate is essential to the Church & Dwight Company
because of the massive amount of the mineral being used in the products. Church & Dwight controls approximately 75% of the sodium bicarbonate in the United States and has mining plants in Green River, Wyoming and Old Fort, Ohio.
During the review of operations, Church & Dwight must acknowledge the Porter’s Five Forces. The supplier power is regulated by control particular agreements with each supplier, in order to keep loyalty. The buyer power must be addressed and contractually bind large purchases order to a certain set cost. Competitive Rivalry is limited due to controlling 75% of the sodium bicarbonate in the United States. The threat of substitution is limited due to there not being any other product similar to baking soda. Last, the threat of new entry is limited once again because of the strong hold onto the production of sodium bicarbonate.
3. Marketing – The marketing for Church & Dwight has largely been a success in the promotion of their products. The promotion of condoms had previously never been broadcasted on prime-time television until they began to air Trojan commercials. These controversial yet attention-grabbing commercials became a success and Church & Dwight began marketing aggressively with several strong brands. Although, Arm & Hammer is a strong brand name the concern of attaching to many products to its name is a realistic fear. However, if the executions of the Arm & Hammer commercials are completed with clear and concise information the brand may not become “watered-down”.
According to the BCG Growth-Share Matrix, marketing can easily fit under the classification of “star” or “cash cow”. The distinguishing factor between these two classifications is the success strength of the marketing campaign, and most of Church & Dwight’s campaigns have been stars.
4. Finance – The strong financial stability of Church & Dwight is the result of strong and well planned strategic moves. Since the consolidation of Austin Church and John Dwight in 1896, the company carried on a slow but stable climb to the top. A large reason on how they were able to keep a strong financial company was the fact that 25% of shareholders were descendants of Church & Dwight. The unity of the shareholders allowed them to keep focused on long-term goals and warrant off brand buy-outs. Instead, Church & Dwight began making calculated business moves and acquired several strong brand names.
These strong moves transformed Church & Dwight “into a diversified packaged Goods Company with a well-balanced portfolio of leading household and personal care brands delivering over $2.5 billion in annual sales worldwide.” (Wheelen & Hunger, p. 35-1). The smart strategic moves made by Church & Dwight has resulted in financial stability and continued growth, which is extremely difficult for any company to accomplish.
5. Administration, especially Human Resources – The Human Resource department is an important department in any large organization. Although Church & Dwight started as a small company with a niche brand (Arm & Hammer), they began to expand exponentially when they started their acquisition spree. “Church & Dwight’s acquisition of Carter-Wallace in 2001 added significant product lines and manufacturing capability. The $739 million purchase, also doubled Church & Dwight’s employee population.” (Wells). As a result of the employee population doubling, Church & Dwight had to put an enormous amount of attention towards their Human Resource department to ensure everything was properly converted and taken care of.
Due to the large amount of attention needed in this important department, BCG Growth-Share Matrix can characterize it as a “star”.
6. SWOT a. Strengths – The Church & Dwight company has many strengths within their company. “Church & Dwight products can be found among a variety of consumer products in 95% of all U.S. Households.” (Wheelen & Hunger, p. 35-2). The large consumption of Church & Dwight products is absolutely their biggest strength. Also, Church and Dwight has numerous brands that are ranked #1 in their particular market, such as: Arm & Hammer, Trojan, Oxiclean, Spinbrush, First Response, Nair, Orajel, and Xtra detergent. Last, the control of 75% of the United States capacity of Sodium Bicarbonate is an enormous strength. Collectively, the BCG Growth-Share Matrix easily characterizes all three of these strengths as stars.
b. Weaknesses – Although Church & Dwight has had a large amount of success, they also do have some weaknesses. Church & Dwight has largely struggled to spread their brands on an international level. The exportation of sodium bicarbonate is strong in Asia; however, Church & Dwight struggles to export
to them due to large prohibitive transportation costs (Wheelen & Hunger, p. 35-11). Another weakness is the lack of proper education on sodium bicarbonate to the consumers. Arm & Hammer explains that their baking soda has a vast amount of uses, however those uses are easily explained to the general public. In many cases, the BCG Growth-Share Matrix could characterize these weaknesses as Dogs.
c. Opportunities – The opportunities continue to be bright for Church & Dwight. The history of stability and smart brand acquisitions allows for continuous opportunities. The opportunities could be more discovered uses for the Arm & Hammer Baking Soda, or the endless opportunities of any of Church & Dwight’s market leading brands. Combining proper research with potential opportunities will give the Management the necessary information needed to make a strategic decision. According to the BCG Growth-Share Matrix, all of the opportunities have the potential for stars, however they also can become cash cows if they are not implemented correctly.
d. Threats – Ever company has potential threats that can affect their company. A potential threat for Church & Dwight would be the shortage of sodium bicarbonate. This threat would be significantly costly because of how heavily they rely on the production of sodium bicarbonate. Another threat that could directly impact the profitability of Church & Dwight could be the unfortunate situation of a product resulting in an adverse reaction and then results in a large settlement. 7. Products or Services – A consistent objective in Church & Dwight has always been the continued research to discover more uses for sodium bicarbonate. Due to the large control of raw materials for baking soda, any new product or use from the sodium bicarbonate is an additional revenue stream. B. Problem Definition
1. State the problem symptoms: The problem that faces Church & Dwight is their need for continued growth domestically, profitable expansion internationally, all while keeping expenses down and being cost effective. Church & Dwight’s business growth objectives are: 1. Find additional uses for Sodium Bicarbonate, 2. Properly educate the consumer of the numerous uses of baking soda, 3. Create a different group of consumer products for
the international market, 4. Continue the acquisitions of strong brands. In order for Church & Dwight to remain profitable these objectives must be accomplished. The symptoms for these problems of growth would result in a large dwindling in the tough international market, and the potential for current acquired brands to begin to level off and fail to grow. 2. Define what is intended to be accomplished by correcting the problem: If the problems listed above are corrected then Church & Dwight will continue to be the strong and stable company we know today. The problems that face Church & Dwight can be resolved by properly educating the general consumer, funding the proper research, and continuing the acquisition process of the past. If these steps are properly followed, then Church & Dwight will continue their growth and historic success. 3. Examine the causes of the problem: The problems that face Church & Dwight challenge many companies are crossroads. The need to properly educate their products to their consumers can often times be a difficult and expensive challenge. With that said, properly educating these consumers will result in an increase in products sold due to the consumer using the product more often. The first cause of a lack of education is because of the historic nature of this product. Baking soda has been a staple in many homes in the United States, however they have not properly explained all of the great uses to younger generations. III. SYNTHESIS
A. Alternative Solutions
The most important and critical subject that needs to be resolved is the ability and need for growth. The slow and steady growth plan was successful in the past with Church & Dwight, however ever since the acquisitions spree in the late 1990’s they have began more aggressive tactics. Church & Growth may spark growth by continuing their process of strong brand acquisitions that fit into their market spaces. By acquiring brands that already fit into those market places, Church & Dwight may able to lower the cost of production due to the existing factories and distribution. If the acquisitions of new brands are not possible, an alternative solution is to create additional products for the already existing acquired brands. For instance, Church & Dwight can develop a new toothbrush model for Spinbrush, or a new condom for Trojan. In the past, Church & Dwight was able to grow
drastically due to acquisitions, however the alternative solution may be to develop new products within the acquisitioned brands.
Another alternative solution Church & Dwight may want to develop is the selling of their mined sodium bicarbonate. If Church & Dwight began to sell sodium bicarbonate to independent companies under certain restrictions and contractual agreements, they could be profiting from each product they sell and also the competitor. Church & Dwight could limit where their sodium bicarbonate goes and to what products it is used for, therefore they are still not losing any control.
Another critical alternative solution for Church & Dwight is the streamlining and conservative spending within the company. The progress and research of many products are necessary, however the top executives must strategically and carefully determine which are necessary. If they company is able to save as much money as possible, while still producing growth on current products they will then have more opportunities of gaining successful acquisitions. B. Recommendations and Conclusions
The best solution for the problems that face Church & Dwight is to face them head on. The company has been in existence for over 160 years and was built with solid business objectives. Those business objectives brought forth a stable, focused, and successful company.
The company must restrict the amount of funding going towards research for new uses of sodium bicarbonate. Instead of spending that many on finding new uses, Church & Dwight should properly educate their consumers. Sodium Bicarbonate has an extensive list of uses that are not evenly widely known about in the general public. If Church & Dwight begins to educate the general public about the enormous amount of uses, then the demand for the product will rise. Although much of the money needs to go to educating the public, some research funding should still be used for the search for additional uses.
During the expansion into international markets, Church & Dwight must rely
on products that have been successful in those locations. The prohibitive transportation costs of sodium bicarbonate may be high, however Church & Dwight has found success with different products. Continue to build the international relationships with strong independent brands, for distributing needs or even for an acquisition potential.
The current portfolio has proven to be strong at the time being, however the market can always change and the product growths can subside. In order to stay competitive in the market, Church & Dwight must stay relevant by continually adding products to their strong brands.
I recommend, that Church & Dwight follow these steps to help with their continued growth and success: 1. Restrict the research funding for new uses of sodium bicarbonate and use that funding to properly educate their consumers on the already numerous. 2. Build strong international relationships for easier distribution of international products. 3. Continue to create new products with the current portfolio of strong brands. In Conclusion, Church & Dwight has been an instrumental company in the household and personal care market. The historic strength and financial stability that they have shown is a strong testament that the future will continue to be positive. In the next few years we will see stable growth and successful international expansion for Church & Dwight.
References
“History.” History. Church & Dwight, n.d. Web. 10 Nov. 2013. Jarvis, Lisa. “Church & Dwight Builds Sales Through Strength in Bicarbonate.” ICIS.com. N.p., 10 Apr. 2000. Web. 10 Nov. 2013. Wells, Susan J. “HR Magazine: Merging Compensation Strategies .” HR Magazine: Merging Compensation Strategies. Society for Human Resource Management, 1 May 2004. Web. 10 Nov. 2013. Wheelen, Thomas L., and J. David Hunger. Strategic Management and Business Policy: Toward Global Sustainability. Upper Saddle River, NJ: Pearson Prentice Hall, 2012. Print.
