Global Business Case Studies

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Colgate toothpaste in Asia

1. Identify the major strategic and ethical issues faced by Colgate in its partnership with Hawley and Hazel.

In 1985, Colgate purchased a fifty percent ownership of the company Hawley and Hazel, a leading manufacturer of toothpaste in Singapore, Taiwan, China, Malaysia, and Thailand, in order to gain a foothold in the Asian market. This was an important business decision as Colgate felt Hawley and Hazel had valuable strategic assets, such as brand loyalty, customer relationships, distribution systems, and production systems (Hill, 2014, p. 224). It was easier and less of a capital risk for Colgate to acquire the firm in order to establish a presence in Asia without having to spend the resources to build their own manufacturing plant. This was sound thinking as Colgate had a well-established reputation in the European markets, and the company saw an excellent opportunity to form a partnership with Hawley and Hazel to expand their market share and sales.

The main product of Hawley and Hazel, “Darkie” toothpaste initiated the ethical uproar faced by Colgate. The product logo, fashioned after comedian Al Jolson, who used to paint his face black during his comedy routines, was considered by many minority and civil rights groups in the United States to be racist and inappropriate.

2. What do you think Colgate should have done to handle the situation? Justify your answer.

Colgate was so anxious to expand their holdings that they neglected to consider the implications of the product and the ramifications of the acquisition. Colgate should have conducted an in-depth study to evaluate the positives and negatives that the product offered prior to completing the merger. When it formed the partnership with Hawley and Hazel, Colgate did not take into consideration what the views of home consumers would be regarding foreign products and markets. Unfortunately, the company neglected this aspect of business operations to the detriment of consumer loyalty at home.

3. Is it possible for Colgate and Hawley and Hazel to change the toothpaste’s advertising without sacrificing consumer brand loyalty? Is that a possible reason for Colgate’s not responding quickly to domestic complaints?

Unfortunately, the company was reactive to the situation instead of proactive. If Colgate had done a proper evaluation at the onset of the merger, they would have possibly initiated a campaign that utilized public relations, various advertising mediums, and sales to promote the product in the home and foreign markets.
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