Colgate-Palmolive Company Case Solution & Answer

Colgate-Palmolive Company Case Solution


Colgate Palmolive is a multinational company, which has its headquarter in New York. It was established in 1806 by William Colgate. After the demise of its pioneer; the company was named Colgate and Company.The company started producing toothpaste initially, after which it expanded its production line. However, Palmolive was established in 1966 and initiated its production with dish-washing liquid. In 1928, the Colgate had a merger with Palmolive and they both started working strategically and changed the company’s name as Colgate-Palmolive Company.  It deals in the manufacturing and distribution of the basic house hold items, health and personal care. It is one of the top companies in the world,which operates to serve general goods for the consumers. The company has categorized its products in 3 classes: oral care, personal care and home care. The company has its branches in America, Switzerland, Belgium, France and many others. It has high market capitalization of 78.55 billion approximately. The company has a prominent market image as it held different campaigns for health relevant issues mainly for children’s dental checkups It also works as philanthropically for the welfare of the society. The main competitors of Colgate Palmolive are: Johnson& Johnson, P&G and Unilever.

Organizational Structure

The company has a hierarchical organization structure from top management to the lower management. It has a broader research and development department, which analyses the market demand and the obstacles in preventing the health issues, such as: dental issues and manufactures the products according to the current scenario. However, the company has also successfully achieved employees’ retention, which makes its employees motivated and productive.

Major Events

Colgate Palmolive has been ranked No1 trusted brand all over the world and has contracted famous protagonist as its brand ambassador. Moreover, the company has higher market capitalization and brand equity among its rival companies

Business Strategy

The business strategy of Colgate Palmolive is highly efficient, which creates effective results. However, the company has an economies of scale concept, which decreases its cost and maximizes its profit. It has a number of brand strategies and innovative ideas. Moreover, since past few years; the company has been working on different projects and on the development of different products.

Financial Statement Analysis

Liquidity Ratios

Liquidity ratios are important factors of financial standards, which are used to know a debtor’s ability to pay back his current debt obligations. Standard withdrawal rates include: fast rate, current rate and outstanding day sales. It includes Current and Quick Ratio. And by comparing the Current Ratio of both the companies; Colgate’s current ratio is 0.9 in 2020, with the Johnson & Johnson Company having the current ratio of 1.56, which means Johnson & Johnson Company  has more current assets then the Colgate& Palmolive Company.

Efficiency Ratio

Efficiency measures are indicators, which are used to evaluate an organization’s ability to productively use its resources, such as:assets and resources, to generate revenue. Proximity-serves as a contrast of the costs incurred on revenue. It shows how much the company is getting by utilizing its resources in its business. Looking at the company’s turnover asset of three years; it shows a value of 1.03, as it had the sales of $16471m, which is greater than the value of its assets. And all the three years’ ratios of total Assets Turnover are good for the Colgate Firm in comparison to the Johnson& Johnson Firm…………………….

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