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1.

Mission
At Church & Dwight our aim is to provide principles of management practice, leadership
and training by which our company can provide safe and effective products for their
household, commercial, institutional and industrial customers and consumers. We
will supply customers quality Arm & Hammer Sodium
Bicarbonate and related products, while performing in the
top quarter of American businesses. We are committed to advancing
human health, and environmental quality, social well-being and economic growth.

2. Objectives

• To improve financial performance.


• To increase market shares: (1) laundry products, (2)
carpet deodorizers, and (3) deodorant.Stop declining
market shares.
• To increase sales in U.S. markets
• To acquire new businesses to help increase sales revenue
• To Focus on consumers, customers, suppliers, and competitors
• To protect the environment with baking soda products

3. Strategies
Concentric diversification - The stated strategy for the 80's
and 90's is "selling related products in different markets all
linked by common carbonate and bicarbonate technology.
• Effective Leadership through: Energizing – High energy and passion; able to
energize group/team to achieve stretch objectives Entrepreneurial – Visionary and
courageous; bold, intelligent risk-taking. Enable – Improves the performance of
others through coaching/mentoring; removes barriers, provides the right resources
• Analytical and Strategic Thinking: Think analytically and thoughtfully about the
business, identify and solve problems, be “on top” of his/her area of responsibility
and competitive environment. Identify strategies that build advantage
• Acquire new businesses through acquisitions and mergers

4. Policies
• Sustainable development through creating a balance between the economic,
environmental and social aspects of business
• Commitment to the enhancement of human health and quality of life through the safe
and effective formulation, production and sale of products and ingredients that
provide desirable benefits for household, commercial, institutional customers and
consumers
• Commitment to provide for a healthy and safe workplace
• Commitment to conducting operations in an environmentally responsible manner
while striving to sustain the goals of the company
SUMPTOMS,FACTS OPINIONS AND ISSUES (YEH KERNA HAI)

FINANCIAL ANALYSIS

The financial health of Church & Dwight can be characterized


as being a mixed picture. It is highlighted by the strong
upward trend in net profit margins and return on equity.
However, when attention is turned to other key ratios, the
picture becomes cloudy. Both the current and quick ratios
have drifted downward. In addition, the inventory turnover
ratio, after showing some improvement, has also drifted
downward. Overall, a brief review of the financial ratios
listed indicates that there continues to be room for
improvement.

Fiscal Year Ending 12/31/97 12/31/96 12/31/95 12/31/94


Current Ratio 1.18 1.37 1.23 1.23
Quick Ratio 0.70 0.88 0.80 0.68
Inventory Turnover 9.38 10.8 11.75 8.92
Net Sales/Total Assets 1.64 1.71 1.66 1.67
Total Liabilities/Total Assets 0.49 0.46 0.48 0.48
Times Interest Earned 43.42 95.24 13.98 11.93
Long-Term Debt/Equity 0.04 0.05 0.05 0.05
Net Profit Margin 0.04 0.04 0.02 0.01
Return on Equity 0.14 0.13 0.07 0.04
Return on Assets 0.07 0.07 0.03 0.02

The sociocultural environment is changing, leaning toward


environmental issues and health-conscious issues which are
ideologically consistent with the products Church & Dwight makes.
The political-legal environment is also consistent with the mission
of Church & Dwight. The Superfund Act, Clean Water Act, and the
Clean Air Act help provide markets for cleaning products. The
technological environment revolves around the development of new
products for industry and animal feed products. The economic
environment has changed. There are more two-earner families, more
health conscious consumers, as well as more environmentally
conscious consumers. Inflation is in check and the growth of the
economy is moderate, and interest rates have declined, making
economic conditions conducive for growth. The sociocultural
environment is most important. It represents the opinions of the
general public - the prime customers of Church & Dwight.
A. Societal Environment
1. Economical Trends
a.) Downturn in U.S. economy- Threat (MerrillLynch.com)
b.) Upturn in World economy- Opportunity (MerrilLynch.com)
c.) Interest rates unstable and climbing- Threat (MSN Money)
2. Technological Trends
a.) Baking soda is good for pollution control- Opportunity (City of Norman)
b.) Emergence of wide use of internet to purchase consumer goods- Opportunity/Threat
c.) New uses for sodium-bicarbonate are being explored- Opportunity
3. Political-Legal Trends
a.) Acquisitions of other companies becoming common- Opportunity
4. Socio-cultural trends
a.) Consumers want safe cleaning products- Opportunity
b.) Consumers are more concerned with the health of the environment- Opportunity
c.) Consumers want to be clean and keep their homes free from germs-
Opportunity/Threat
B. Task Environment
High degree of rivalry is evident in the toothpaste industry. Church & Dwight is losing market share
against brands in all products except Mentadent. Rival firms are starting to see the potential in sodium
bicarbonate products as well.
The industry competition is driven by the consumer’s desire to keep their homes clean and themselves
clean. Consumers want to be free of disease and have fresh smelling clothing, refrigerators, breath, and
homes. Consumers want to look good also. Laundry detergent companies fight over who can get stains out
of clothing the best. These factors do vary globally. Underdeveloped countries are less interested in
keeping everything around themselves clean and free of dirt. Underdeveloped countries are meeting needs
lower on the hierarchy of Maslow’s needs.
Five competitive forces
a.) Threat of new entrants- Low because the market is saturated with competitors.
b.) Bargaining power of buyers- The bargaining power of buyers is high because there
are so many choices for consumers. There are at least 10 different types of toothpaste on
the supermarket shelves.
c.) Threat of substitute products- This is high for many of Church and Dwight Co.’s
products such as laundry detergent and toothpaste. But the threat of substitute products is
low for anyone looking for a baking soda based product because Arm & Hammer is the
leader in this forte.
d.) Bargaining Power of suppliers- This is low because for Arm & Hammer has so many
competitors selling very similar products.
e.) Rivalry among competitors- Rivalry is high in the household cleaning products
segment. There are many substitute products and prices are relatively low among all of
them.
III. External Environment: Opportunities and Threats (SWOT)

The company's opportunities and threats can be summarized as


follows:

Opportunities

•Potential expansion into international markets.

• Expanded uses of company's basic raw materials for


pollution control and potable water applications as
stricter environmental legislation is enacted.

• Potential use as a paint stripping compound and an


industrial cleaner based on the low abrasion qualities and
environmental safety of sodium bicarbonate.

• Diversification of product line to include related


consumer products using the ARM & HAMMER brand as well as
other brand names, similar to The Dial Corp. acquisitions.

• Expand use of sodium bicarbonate-based products to


meet demands for environmental safety.

• Potential medicinal (pharmaceutical) applications of


sodium bicarbonate formulations.

Threats

• Competitors with greater marketing and financial


strength entering the company's traditional markets.

• Operations in many mature markets with limited growth


potential.

• New or increased domestic production of the company's


basic raw materials by other potential producers.

• Potential consumer confusion through overuse of the


family branding line extension strategy which could
eventually weaken the ARM & HAMMER brand name.

• Retaliatory reactions as the company enters into new


consumer product markets.
• Potential substitutes for current products.

EFAS, IFAS AND SFAS EXHIBITS

EFAS (External Factor Analysis Summary)

External Strategic Factors Weight Rating Scale Comments

Opportunities
Pollution control concerns .12 4 .48 Growing concern about
pollution

Replacing chlorofluorocarbon brand .10 3 .30 Ozone-friendly cleaning


cleaning system products

Baking soda has become .10 4 .40 The product's reputation is


synonymous with environmental secure and advantageous to
safety C&D

Appears to be room for growth in .08 4 .32 Health-conscious society likes


dental care it

Industrial and animal feed products .10 4 .40 Special Products Division
industry niche

International expansion .11 3 .33

Threats

Overseas markets are still product- .10 3 .30 Sociocultural environment is


driven, not market-driven different

More competition in domestic .09 3 .27 Substitute products are being


markets introduced.

Toothpaste market is becoming .15 3 .45 Losing market share to


more competitive competition.

Mature domestic markets .05 4 .60 Must battle for market share

TOTAL SCORES 3.85

The company's strengths and weaknesses can be summarized as follows:

Strengths

• Over 150 years of experience as a sodium bicarbonate


producer and marketer.

• Fifty percent of the outstanding shares of common


stock are owned by descendants of the company's co-
founders.
• Company controls approximately 75% of the sodium
bicarbonate production in the U.S. and is also the only
producer of ammonium bicarbonate and potassium carbonate.

• Company controls 85% of the baking soda market.

• Extensive consumer brand name recognition and loyalty


(in 95% of U.S. households) which allows the company to
promote multiple products using a single brand name.

• Anti-takeover defenses including a board of directors


with staggered terms of office and voting rights that are
weighted in favor of long-term shareholders.

• Controlling the production of raw materials, the


manufacturing and processing facilities, and the primary
marketing functions allows the company to price its
products below those of competitors - thus creating a
barrier to entry.

Weaknesses

• Company's lack of financial strength (although


borrowing is possible) and international marketing and
management expertise are hampering expansion outside of
North America.

• Primary focus on the ARM & HAMMER brand name has left
the company with a void in product promotion experience
that may be needed in the highly competitive consumer
products field or international expansion.

• Inability to determine the strategic fit of Specialty


Products Division into overall company operations.

• Lack of financial strength to launch aggressive


marketing campaigns for new products.

• Top management turnover.


IFAS, EFAS AND SFAS EXHIBITS

Exhibit 2
IFAS (Internal Factor Analysis Summary)

Internal Strategic Factors Weight Rating Score Comments

Strengths
World's largest producer of sodium .10 4 .40 Approximately 60% of the
bicarbonate products sodium bicarbonate capacity
in the U.S.

Experienced top management .05 4 .40 Been with C&D for a long time

Specialty Products Division .10 3 .30 Expanding public and


corporate int.

Arm & Hammer name and logo .10 4 .40 Known in the U.S. as "the
yellow box"

Protected from hostile takeover .05 5 .25 Golden parachutes for upper
management

Marketing .15 3 .45 Marketing needs to advertise


actively
Financial – poor performance .20 2 .40

Weaknesses
Shift in upper management .05 3 .15 Need leadership and
structure direction!

Market share down .10 2 .20

No focus from within .10 2 .20 Corporate culture is vague

TOTAL SCORES 1.00

IV. INTERNAL ENVIRONMENT

A. Corporate Structure:

1. The corporation is a divisional structure composed of the


Arm & Hammer Division and the Specialty Products
Division. The organizational authority implied in the
case is more centralized than not. It is based on
products and projects and finding out what the customer
wants.
2. It is divided into two divisions, which is appropriate
for the strategy of going into new markets with different
product lines. The policies and objectives of the two
divisions are not consistent with the strategy. There
are no quantifiable goals stated for each division.

B. Corporate Culture:

1. The culture isn't defined very well; there's not an


abundance of uniform beliefs or expectations that can be
derived from the case. There is one exception in the
current mission statement, though, "to be in the top
quarter of American businesses." Another inference that
can be drawn is that Davies may be starting a tighter
culture; see Minton's comment that "Davies’ presence with
us today is seen in an improved marketing focus and
tighter cost structure."

2. The culture needs to be modified to meet the objective of


being in the top quarter of U.S. businesses. Management
needs to lead, give direction, and inspire their people
to accomplish what needs to be done.

C. Corporate Resources:

1. Marketing: They are starting to stress marketing by


using a segmentation approach and engaging in market
research. They need to utilize marketing more
effectively to get better recognition and to increase
sales. This would help to facilitate their stated
strategy.

2. Finance: They have been investing and divesting back and


forth in related markets and businesses. I don't think
that they have a clear direction that they want to go
with finance, and that is reflected in their financial
statements. The ROI is down, their payable turnover is
enormous, etc.

3. R&D: This area may be their niche if they can make their
functional areas work together to promote some of the
products that they are developing and ultimately to place
their environmentally friendly products in the hands of
their customers.

4. Operations: The firm has U.S. toothpaste-manufacturing


facilities in Greenville, South Carolina, and about one-
half of Church & Dwight assets are owned Property, Plant
and Equipment, which is reflected in the 1994 balance
sheet.

5. Human Resource Management: There isn't much information


about the human resource department. The corporation is
committed to upper management by adoption of the board
resolutions in 1986.
6. Management Information Systems: Again, there isn't much
said about MIS in the case. The firm should evaluate it,
however, to make sure that each division's upper
management is getting a clear picture from its functional
areas, like R&D.

V ANALYSIS OF STRATEGIC FACTORS


SFAS, EFAS AND IFAS EXHIBITS

Exhibit 3
SFAS (Strategic Factor Analysis Summary)

Duration
Strategic Factor Analysis Summary Weight Rating Score S I L Comments

World's largest producer of sodium .08 4 .32 X Need to keep this niche
bicarbonate products

Specialty Products Division .09 3 ..27 X Need to make viable


prod.

Financial – poor performance .15 2 .30 X X 1994-97 weak

Arm & Hammer brand name .10 4 .40 X Keep its reputation up

Marketing .12 3 .36 X Need to utilize this

No focus from within .10 2 .20 X Need quantifiable obj.

Baking soda has become .05 4 .20 X Make products to suit


synonymous with environmental public's needs
safety

Industrial & animal feed products .05 4 .20 X Expand to inc. sales
industry

Competition/market share .15 3 .45 X X Declining market share

International expansion .11 3 .33 X X X Future growth

TOTAL SCORES 3.03

VI. STRATEGIC ALTERNATIVES AND RECOMMENDED STRATEGY

A. Strategic Alternatives

1. Continue Present Efforts: By continuing the present


efforts they will probably remain on a course that results
in financial hardship. They don't seem to have any
objectives or policies that relate to their suggested
strategy.
2. Retrench: They could cut some product costs and personnel,
as well as their overall size, and concentrate on a
specific area of the industry.

3. Growth Through Horizontal Integration: They could expand


the firm's range of products offered into the current
markets. They are set to do this, and they could do this
very well if they had consistent strategies, policies, and
objectives throughout their two divisions.

B. Recommended Strategy
I recommend that they try to grow through horizontal
integration by offering new products into existing markets.
They need to establish policies on how to use the functional
areas of marketing and R&D, as well as some objectives for the
two divisions to shoot for. The Arm & Hammer Division should
use the market research to keep the name Arm & Hammer
respected. They should also use it to promote new
developments from the Special Products Division.

VII. IMPLEMENTATION

Upper management needs to take the lead and state the policies
and objectives to the managers and personnel. They need to
state some objectives for the divisions to reach so that they
can evaluate them in an objective fashion. They have to battle
for market share in highly competitive markets, so objectives
would allow upper management the ability to evaluate the
effectiveness of new products sent to the market.

VIII. EVALUATION AND CONTROL

The divisional structure should allow for easy evaluation of the


corporation as a whole. The information system wasn't
mentioned, but I assume that it is adequate enough for
facilitating the control of the plan. If they would implement
this growth through horizontal integration, the vagueness and
ambiguous objectives and policies that they have currently
should clear up and they could, quite possibly, reach sales
growth like they had in the 80's.