This memo analyzes the strategic position of Global Household Brands in the household product market. The current strategies and practices lead us to turn out the right move that management should make in order to gain the market share and largest long term growth for the company. I have evaluated GHB in order to develop useful recommendations and possible strategies in the future. I have gathered information regarding industries, financial statements, internal and external factors in GHB competitive structure. My analysis will be based on a SWOT analysis, Michael Porter’s five forces model and strategic intent in order to achieve the best strategies in the market ...view middle of the document...
The corporate strategy is long-run strategy, and it should be made by CEO and the Board of Directors. The new CEO, Mr. Bill McCoy, was hired, and he worked with a management team who were included some very talented Block people. This was a good idea for GHB’s corporate strategy because the former employees of Block had detailed knowledge of GHB’s goals and vision. In addition, McCoy hired a relative to head of operations and purchasing, but this was not a good strategy because the chain of command did not work out well for GHB due to McCoy’s relative. As it turned out he was not capable a handling such an important position, the most of the talented manufacturing help left the company. Furthermore, GHB were faced with the problem of waste and production. Accompanied with the purchase of Block, GHB became highly leveraged, and the bank gave the certain stipulation that GHB had to achieve certain financial results. A corporation that borrows too much money might face bankruptcy during a business downturn, so GHB may face bankruptcy during a sharp decline of sales. Sales were to increase $50, $55, and $70 million form year 1 to year 3. EBITDA goals were to grow to $11 million within three years. However, sales were declined, and EBITDA was also down to $5million after the first year of the buyout. Moreover, the profit margins are dropped by 6%. This lack of solvency is a big problem for GHB now, and it is possible that the banks may call for all loans early by breach of the stipulation. McCoy was fired by the Board of Directors because of his terrible strategies, and the Board of Directors brought Mr. Stone, who was a consultant for Block. Mr. Stone should also consider current industry situation in order to solve these situations for GHB faces.
Global Household Brands is in a market where new companies are difficult to enter. GHB’s major threat is the entering large companies such as Clorox, S.C. Johnson, Arm and Hammer. These large competitors are much bigger companies than GHB, so these competitors potentially rival GHB’s products. From 1995 to 1998, these large competitors have increased market shares. The household cleaning product industry is now mature, and has passed the growth phases of industry growth. The industry tends to become a consolidated industry, and it is possibly dominated by a few large companies. GHB develops strong distribution channels and good quality products throughout the industry. GHB should concentrate on a core competency for developing new and unique items throughout high quality products. This strategy will help to expand market and grow sales. As GHB is smaller than their competitors, “differentiation” is better strategy than “low-cost” strategy for GHB. SWOT analysis will help what GHB has now strengths and weaknesses.
* Well recognized quality products
* Great marketing department (Unique and Talented Vice President)
* Great research and development...