Church & Dwight: Time to Rethink the Portfolio Essay

2920 Words May 4th, 2012 12 Pages
Church & Dwight: Time to Rethink the Portfolio

I. INTRODUCTION

A. EXECUTIVE SUMMARY

1. Summary statement of the problem: Church & Dwight Co. Inc. is a 160 years old company that has been working to build a market share on a brand name that is rarely associated with its name. In spite of having this status in the eye of consumers its product can still be found among several consumer products in 95% of all U.S. households. Because of its rapid growth brought by its several acquisitions it is now facing new challenges. It must now rationalize the firms expanded consumer products portfolio of 80 brands into the existing corporate structure while continuously seeking new opportunity for growth. Another issue that is evident is
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From one brand earning less than $1 billion annually 10 years ago to a huge well-balanced portfolio of leading household and personal care brands with earning capability of $2.5 dollars annually (Wheelen & Hunger, pp.35-1). The President and CEO James Cragie strategy of acquisition has a long-term objective of maintaining the company’s track record of delivering outstanding TSR relative to that of S&P 500. Their long-term business model is based on annual organic growth of 3-4%, gross marginal expansion, tight management of overhead cost and operating margin improvement of 60-70 basis points resulting in sustained earning growth of 10-12% excluding acquisition. They have added a $1 billion in sales for the past 5 years while reducing the total head count by 5% (Wheelen & Hunger, pp.35-2). From less than $500 million in 1995 to over $1 billion in 2001, then $1.7 billion in 2005 and finally a huge earning of $2.5 billion in 2009 (Wheelen & Hunger, pp.35-6).

5. Administration (Human Resources) – The Company’s leadership at the top has remained a stable hallmark of the company. The Boards of directors are structures into three classes with four directors in each class serving staggered period of three year term (Wheelen & Hunger, pp.35-2). This strategy has given the board the needed control to maximize the its output to benefit the shareholders. Because of its continuous exposure to would-be suitors the company has entered into an employee severance

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