Colgate Case Study Case Study

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Colgate Case Study

Colgate is a consumer product company that is well-known and has its base in New York. Colgate had a strong presence in the international presence traditionally.it was operational in Latin America, Australia, France, Canada, and Germany. Previously Colgate had made detailed analysis of the international markets for demand. Colgate made a decision of buying a 50% partnership in the Hawley and Hazel group worth $50million in August 1985.the main reason for making this decision was the fact that Colgate wanted to gain a strong share in the Asian market .They wanted to achieve this without necessarily having to build their own production plant. Part of the agreement stipulated that Colgate possessed no management prerogative. This meant that Hawley and Hazel were the ones with the right to make any major decisions in the organization. This partnership turned out very lucrative for Colgate with annual sales of double digits millions.

There were several strategic issue involved in this decision first Colgate wanted to enter the market without having to build a plant there and hence they had to come up with a strategy on how they would achieve this. This led to the strategic decision of 50% ownership. However with this partnership Colgate surrendered all the management rights to its partners. This was a very poor strategic decision as it would affect Colgate later when it comes to making important decisions.

The only product of note for Hawley and Hazel was the Darkie toothpaste. The toothpaste featured a Blackman with a toothy smile as an advertisement.

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However this brought about a wave of dissatisfaction with the name and the logo from U.S. minorities and civil rights groups. This advertisement was thought to be unethical by those who were against it. Their problem was that this product darkie was racially offensive. However Colgate distanced themselves from any intentions of promoting racial stereotypes in the third world through this product. This ethical issue brought so much pressure to Colgate from back home especially due to the fact that Colgate lacked management prerogative.

Question 2

This problem could have easily been avoided if Colgate had not given the entire management prerogative to Hawley and Hazel. If they could have some management rights then immediately this claims started they could have made a decision to rebrand and change the advertisement immediately .since they did not have these rights the problem escalated and was too deep for them to solve promptly. Initially Colgate had no intention of making Hawley and Hazel change their product .the management at Colgate stated that oversees products should not have any effects on the company's image locally. The corrective action to this situation would have been effective if Colgate would have shown concern and interest in the issue immediately it began. Hawley and Hazel termed this issue as a U.S. issue and that it was not affecting them in any way. Further more the Asian market did not show any offense….....

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