The desire on the part of the Colgate company to extend its product line is related to concerns that the company is vulnerable in today's marketplace. Reuben Mark took over as CEO of Colgate-Palmolive in 1984. From the beginning, Mark has dedicated himself to preventing corporate raiders from taking over the company, and as Grigsby (1989) notes, this has not been an easy task. Mark managed to increase net margins at $4.7 billion-in-sales from 1.1 percent to 5.6 percent, achieving the highest margin in 25 years. He also achieved a return on equity from 4.1 percent to 22.5 percent. By 1988, corporate earnings had increased 18 percent per share.
Colgate-Palmolive has managed to retain its position as number three worldwide in the personal and household products business as a whole, a position it has had for decades. However, it was clear to Mark, as Grigsby notes, that Colgate-Palmolive had to increase its product line to maintain its position: ". . . it's clear that if Colgate is to avoid the sawdust trail, it must not only buttress its traditional market leaders but also develop new ones with 'global force'--meaning first or second place" (p. 23). To increase the market share, Mark planned a combination of acquisitions and joint ventures. The company formed a joint venture with a French company for bleach to share the running of a company Colgate had acquired, the French company Cotelle. Mark also purchased Klorin, the number one bleach in Scandinavia. In the process, Colgate has become more global so that now two-thirds of sales and profits come from outside the United States. Since Mark has also been relentlessly paring the company back to its core businesses in the United States, the company has been getting stronger outside the United States than inside (Grigsby: p. 24).
Business Week also noted that the company has been doing better outside the country than inside and finds as well that the apparent success of...