Introduction

Throughout the international marketing plan project for Clorox, I found great opportunity for Clorox in Mexico and Panama above Colombia. Mexico offers a large population in need of cleaning products like Clorox as the area becomes more and more urbanized making it the top market for Clorox to expand. I chose Panama second because they have had an average of 39% increase in imports for bleach cleaner meaning that the demand is rising significantly where Clorox needs to jump in to gain the majority of the market share. Colombia provides opportunity as well with a steady economy that will gradually demand more bleach as the country emerges in the future which is why it is the third market. Clorox faces a challenge of having the same competitors in all three countries which can threaten the market share of Clorox in each country. Mexico and Colombia pose great risk in IPP because they lack enforcements, but Panama is on the path to enforce IPP. Clorox should keep a close eye on the Latin American region as the countries begin to emerge and offer potential for many companies.

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1Company and Region Overview, Preliminary SWOT Analysis (20 points)

Select a company to research for your International Marketing Plan project. Write an overview of your company, including a brief company history, primary products, and potential competitors. In addition, include the region of focus for your project, with three countries within a regional market, such as Africa, Asia, Europe, Latin America, or the Middle East. Draft a preliminary SWOT analysis, discussing your company’s possible strengths, weaknesses, opportunities, and threats when pursuing this market.

Overview of company6 points

Brief company history, primary products, and potential competitors (in the US and your region)

Region/countries 3 points

Region and three countries selected

SWOT analysis7 points

Consider potential strengths, weaknesses, opportunities, and threats for the company in this region (minimum four items per quadrant)

Mechanics 4 points

The text is written in complete sentences, not bullet points

The text is written with no errors in spelling or grammar

Valid sources are used and citedThe Clorox Company

For my International Marketing Plan Project I have chosen The Clorox Company. The Clorox Company was started in Delaware around 1913 with five investors that had no experience in chemistry. By 1914 they sold their first 750 shares of stock which returned $75,000 to bring up their business. Unfortunately the business nearly died due to lack of marketing expertise. Luckily, a Scottish husband and wife from a nearby grocery store decided they weren’t going to see the company fail as they had invested their life savings into the company. The couple worked to reorganize the company by working with banks and handing out samples that spread advertising through word-of-mouth. The company gained control once again and began expanding into several different countries by changing the languages on the packages.

The Clorox Company is mostly comprised of cleaning products, house hold products, and lifestyle products, professional and international products. Their most popular brands are 409 Cleaner, Clorox, Pine-Sol, Kingsford, Glad, Hidden Valley, Burt’s Bees, and many more. Currently Clorox competes, within the US, against COLGATE-PALMOLIVE COMPANY, The Procter & Gamble Company, and S. C. JOHNSON & SON, INC.

I have chosen Clorox cleaning products to market into Latin American countries which are Mexico, Panama, and Colombia. Clorox would still have to compete with the same competitors (COLGATE-PALMOLIVE COMPANY, The Procter & Gamble Company, and S. C. JOHNSON & SON, INC) for all three Latin American regions as they also have a large presence in all three countries.

While performing a SWOT analysis on Clorox for Latin America I found the following:

Strengths:Clorox has a fierce and working presence in Latin America established since 1975 with its first plant in Puerto Rico. Clorox is a globally known brand and is recognized as one of the top cleaners and household disinfectants. Clorox has a plant in Mexico, Panama, and Colombia. It is also very easy for products to be distributed into Latin America through NAFTA. As a well-established company R&D for Clorox is very easily acquired for these regions.

Weaknesses:Clorox competes with large scale cleaning brand worldwide brands such as COLGATE-PALMOLIVE COMPANY, The Procter & Gamble Company, and S. C. JOHNSON & SON, INC. Clorox is also highly dependent on its US market with no concentration anywhere else other than just a presence. Clorox has no consumer concentration. Biggest customers such as Walmart make up 45% of revenues.

Opportunities:Clorox is entering emerging markets that are continually growing which allows them to grow as well. Clorox can introduce organic cleaning products to Latin America. Burt’s Bee is a recent acquisition of Clorox that can be marketed into the Latin American markets. Latin America is a growing market of focus for Clorox.

Threats:Clorox prices are much higher than competing brands. Government intervention could increase risk in Latin America as the countries are not fully stable and very corrupt. Private label brands could decrease sales of Clorox. Intense competition also threaten Clorox.

Clorox en el Mundo. (n.d.). Retrieved March 22, 2016, from http://clorox.com.mx/cms/index.php/

clorox-en-el-mundo

The Clorox Company. (n.d.). Retrieved March 22, 2016, from https://www.thecloroxcompany.com/products/

our-brands/

The Clorox Company Competition. (n.d.). Retrieved March 22, 2016, from http://www.hoovers.com/

company-information/cs/competition.The_Clorox_Company.3a1eb826c958c874.html

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2

Economic Environment Analysis (26 points)Provide an overview of the economies in your target region. Include if the countries are developed or emerging economies, as well as GDP and GDP growth rates. Also include any regional trade agreements and/or free trade agreements with the US. Classify your company’s primary product with a harmonized tariff code, then research the import duties for your countries. Include a brief overview of any non-tariff barriers that may impact your company’s industry in each of your countries.Tariff classification: http://hts.usitc.gov/Import duties: http://export.customsinfo.com/ (Log in with sdragotta@wctc.edu)Non-tariff barriers: https://ustr.gov/about-us/policy-offices/press-office/reports-and-publications/2015/2015-national-trade-estimate

Country details10 points

Developed or emerging economies, GDP (official exchange rate), GDP growth rates (2014 and 2015), and trade agreements

Trade barriers12 points

HS tariff classification, import duties per country (for specific product by HS tariff code) and non-tariff barriers

Mechanics 4 points

The text is written in complete sentences, not bullet points

The text is written with no errors in spelling or grammar

Valid sources are used and cited

MEXICO, PANAMA, AND COLOMBIA

Clorox Bleach solution has been classified as 34022090.

MEXICO

Mexico is an emerging economy as it is part of the BRIC countries. Mexico’s GDP is currently $1.161 trillion (2015 est.) with a GDP growth rates of 2.3% (2015 est.), 2.1% (2014 est.), 1.4% (2013 est.). Mexico has a free trade agreement with the US called the North American Free Trade Agreement (NAFTA) since 1994.(https://www.cia.gov/library/publications/resources/the-world-factbook/geos/mx.html)

Import duties for 34022090 into Mexico from the US include a general rate of 6% and a VAT Standard Tax of 16%. (http://export.customsinfo.com/GlobalTariffs/Default.aspx#)

The non-tariff barriers to trade I found on USTR.GOV were lack of notification to procedural changes, inconsistent interpretation of regulatory requirements at each border post, and inconsistent enforcement of Mexican standards and labeling rules. There is also a risk of IPP violations as there is lack of enforcement or penalties for violations.

(https://ustr.gov/sites/default/files/files/reports/2015/NTE/2015%20NTE%20Mexico.pdf)

PANAMA

Panama is an emerging economy. Panama’s GDP is currently $47.47 billion (2015 est.) with GDP growth rates of 6% (2015 est.), 6.2% (2014 est.), 8.4% (2013 est.). Panama has a free trade agreement with the US called the US-Panama Trade Promotion Agreement since 2012. (https://www.cia.gov/library/publications/resources/the-world-factbook/geos/pm.html)

Import duties into Panama from the US include a possible customs fee and an ITBM tax of 7%. ((http://export.customsinfo.com/GlobalTariffs/Default.aspx#))

The non-tariff barriers to trade I found on USTR.GOV were concerns on how the government of Panama establishes and evaluates the criteria used to select a procurement winner since political interests often influence procurement decisions and concerns on corruption where anticorruption mechanisms have not been applied rigorously. (https://ustr.gov/sites/default/files/files/reports/2015/NTE/2015%20NTE%20Panama.pdf)

COLOMBIA

Colombia is an emerging economy. Colombia’s GDP is currently $274.2 billion (2015 est.) with GDP growth rates of 2.5% (2015 est.), 4.6% (2014 est.), 4.9% (2013 est.). Colombia has a free trade agreement with the US called the US-Colombia Trade Promotion agreement since 2012. (https://www.cia.gov/library/publications/resources/the-world-factbook/geos/co.html)

Import duties into Colombia from the US include a general rate of 15% followed by a VAT Tax of 16%. (http://export.customsinfo.com/GlobalTariffs/Default.aspx#)

The non-tariff barriers to trade I found for Colombia on USTR.GOV were delays in shipments from the US because of the third-party customs observers and violations of IPP. (https://ustr.gov/sites/default/files/files/reports/2015/NTE/2015%20NTE%20Colombia.pdf)

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3

Political/Legal Environment Analysis (22 points)Provide an overview of the political systems and level of political risk for each of your countries. Address the level of intellectual property risk in your countries. Check if your company has operations already established in your countries (manufacturing, sales, etc.)

Political Risk Rating: CountryWatch database in WCTC LibGuide http://www.wctc.libguides.com/globalbusiness (Articles tab)Intellectual Property Risk: Country Commercial Guides (“Protecting Intellectual Property”) http://export.gov/ccg/ and National Trade Estimate Reporthttps://ustr.gov/about-us/policy-offices/press-office/reports-and-publications/2015/2015-national-trade-estimate

Political Systems4 points

Democracy, authoritarian regime, etc. per country

Risk14 points

Political risk level per country, intellectual property risk level per country, and company operations already in your countries

Mechanics 4 points

The text is written in complete sentences, not bullet points

The text is written with no errors in spelling or grammar

Valid sources are used and cited

Mexico, Panama, Colombia

Political Systems

Mexico is a federal republic with a civil law system with US constitutional law influences. Colombia is a republic with a civil law system. Panama is a constitutional democracy with a civil law system. (https://www.cia.gov/index.html)

Political Risk Scores

(*Note: A score of 0 marks the highest political risk, while a score of 10 marks the lowest political risk.)

Political risk scores for the countries I chose are as follows from Country Watch; Mexico scored a 6.5, Panama scored 7.5, and Colombia scored a 7. (http://www.countrywatch.com.ezproxy.wctc.edu)

Intellectual Property Risk

Intellectual Property Risk for the countries I chose are as follows through research on USTR.GOV:

Colombia scores the highest in violations and lack of provisions. The US found the need for consistency in protections and process, including public notice and opportunity for opposition and cancellation, and transparency in decision making, in particular the need for transparency and clarity with regard to the determinations and the scope of coverage of protection.

Mexico has been on the watch list for pirated and counterfeited goods. Mexico suffers from weak coordination among federal, state, and municipal officials, limited resources for prosecutions, the lack of long-term sustained investigations targeting high- level suppliers of counterfeit and pirated goods, and the lack of sufficient penalties to deter violations.

Panama is the country working the hardest to enforce IPP. The have updated legislative framework in order to implement the the requirements of the TPA and have begun implementing a committee for IPP.

Company Operations

Clorox has subsidiaries in both Mexico and Colombia but Panama is managed through Costa Rica. (https://www.thecloroxcompany.com)

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4

Cultural Environment Analysis (22 points)

Describe the primary cultural elements of your countries (languages, religions, etc.), highlighting differences that may impact the 4 Ps for your company. Compare the Hofstede cultural dimensions for the home country of your company, and the target countries. Issues to consider may include product adaptation, and the marketing message.

Hofstede comparisons: http://geert-hofstede.com/countries.html (Cultural Tools, Country Comparison)

Cultural elements11 points

Languages and religions of your countries, Hofstede cultural dimensions comparisons overview per country

Implications7 points

Potential modifications needed to 4 Ps due to cultural differences

Mechanics 4 points

The text is written in complete sentences, not bullet points

The text is written with no errors in spelling or grammar

Valid sources are used and cited

Cultural Elements- Language and Religion

Mexico

Mexico’s languages have a primary base of Spanish making up around 92.7%, Spanish and indigenous languages which total 5.7%, indigenous only 0.8%, and unspecified at 0.8%. Mexico’s religious groups are separated into seven categories; Roman Catholic 82.7%, Pentecostal 1.6%, Jehovah's Witnesses 1.4%, other Evangelical Churches 5%, other 1.9%, none 4.7%, unspecified 2.7% (2010 est.).

Colombia

Colombia is not as diverse in languages as Mexico with Spanish being its only and official language. As for their religions Colombia consists of only Roman Catholic making up 90%, and other 10%.

Panama

Panama by far has the most diverse languages such as Spanish (official), indigenous languages (including Ngabere (or Guaymi), Buglere, Kuna, Embera, Wounaan, Naso (or Teribe), and Bri Bri), Panamanian English Creole (similar to Jamaican English Creole; a mixture of English and Spanish with elements of Ngabere; also known as Guari Guari and Colon Creole), English, Chinese (Yue and Hakka), Arabic, French Creole, other (Yiddish, Hebrew, Korean, Japanese). They also have a side note stating that many

Panamanians are bilingual. There are only two noted religions in Panama which are Roman Catholic consisting of 85%, and Protestant only 15%.

Cultural Elements- Hofstede & 4Ps Modifications

Power Distance

Individualism Masculinity Uncertainty Avoidance

Long term Orientation

Indulgence

Mexico 81 30 69 82 24 97Colombia 67 13 64 80 13 83Panama 95 11 44 86 0 0USA 40 91 62 46 26 68

When examining Hofstede’s rating for my countries I added the USA as a reference to compare against. Starting with Power Distance defined it means “The extent to which the less powerful members of institutions and organizations within a country expect and accept that power is distributed unequally (Hofstede,2016).” Panama and Mexico are very high in rating for this category and Colombia is almost 50/50 but just a little over. This could affect pricing strategies for a premium product as these countries tend to have very wealthy or very poor with no middle class. Question that arise are, who exactly do we want to sell to if there is no middle class? Will the wealthy purchase our product? The poor could be able to use our product more, etc.,

Next, individualism is defined as “The degree of interdependence a society maintains among its members (Hofstede, 2016).” All three Latin American countries scored low because they are collectivistic countries meaning they work for the whole of the group and not just for personal success. On the other side of the spectrum the US scored very high with a 91 meaning they are extremely individualistic people. When promoting in Latin America Clorox should target families with their product as family is very valued by all Latinos.

Thirdly, Masculinity is defined as “What motivates people, wanting to be the best (Masculine) or liking what you do (Feminine) (Hofstede, 2016).” Mexico is almost identical to the USA for being competitive but still not focusing on it enough to ruin their happiness in what they do. Colombia and Panama are not very competitive countries and this could stem from them still being developing countries who are not in position to compete like the USA and Mexico. Product distribution would be something Clorox would not struggle with as all countries are not extremely competitive and offer diversity with each service and great customer service would top the actual service.

Fourthly, Uncertainty avoidance is defined as “The extent to which the members of a culture feel threatened by ambiguous or unknown situations and have created beliefs and institutions that try to avoid these (Hofstede, 2016).” All Latin American countries scored in the 80s because there is a lack of political organization and an abundance of corruption. They are all working hard to establish rules to prevent ambiguity. The USA compared with a score of 46 shows that the USA has established a country with set rules, procedures, enforcements, and consequences for violations. Picking a place to establish a

company or product will be difficult in the Latin American region due to so much uncertainty with regards to government regulations and lack of protections.

Fifth, Long Term Orientation is defined as “How every society has to maintain some links with its own past while dealing with the challenges of the present and future (Hofstede, 2016).” Panama was not rated in this category but all other countries scored very low making them all very normative societies who like to maintain traditions and view societal changes with much suspicion. Promotion will be difficult to implement in these countries if Clorox develops a new product because Latin America and the USA do not adapt to change easily and take time to hear reviews before they jump on the next fad.

Lastly is the category of Indulgence defined on Hofstede’s as “the extent to which people try to control their desires and impulses.” Panama was not rated in this category but both Mexico and Colombia scored very high meaning they enjoy having a good time and a great quality of life with lots of importance towards leisure. USA scored lower than Colombia and Mexico meaning they like to “work hard and play hard” in a sense. Because Latin Americans are very indulgent it could be an easy way to incorporate how Clorox is a premium product and worth every penny for those who struggle to afford or have to make a decision between private label or premium Clorox products.

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Discussion of Ethics (22 points)

Review your company’s web site for their Code of Conduct or other Corporate Social Responsibility or Sustainability report. Describe international issues addressed in their materials. Discuss your countries’ potential corruption levels reviewing the Corruption Perceptions Index and the Country Commercial Guides (CCG).

Corruption Perceptions Index: http://www.transparency.org/country/

CCG: http://export.gov/ccg/ (select country, review Corruption section under Investment Climate)

Code of Conduct7 points

International issues addressed in Code of Conduct

Corruption Issues11 points

Corruption Perceptions Index rating and rank for each country, Country Commercial Guide reference to corruption issues in each country

Mechanics 4 points

The text is written in complete sentences, not bullet points

The text is written with no errors in spelling or grammar

Valid sources are used and cited

Code of Conduct-International Issues

Clorox has an extensive Business code of conduct located here. Throughout their report they mentioned top international issue topics such as: Protecting human rights of workers and treating all workers with dignity, creating safe working conditions and a healthy work environment for all workers, safeguarding the environment and reducing the environmental impact of operations, establishing high standards of ethical conduct and complying with fair business practices and applicable laws.

Corruption Issues- Corruption Perceptions Index

Mexico

All scores were reviewed on Transparencyinternational.org. Mexico ranked 95th out of 168 countries. Their score was 35/100. Their control of corruption stands at 44%.

Colombia

Colombia ranked 83rd out of 168 countries with a score of 37/100. They have a 43% control of corruption.

Panama

Panama ranked 72nd out of 168 countries with a score of 39/100. They have a 45% control of corruption.

When dealing with corruption all three countries ranked in the middle numbers of all countries meaning they are corrupt but not as much as 80+ other countries. Their scores were rather low in the 30s which allows them to be seen as moderately corrupt countries where there should be sufficient due diligence to prevent any incidents. Their control on corruption has not reached 50% which is concerning to many foreign companies as more than 1 in 2 corrupt practices are constantly happening.

Corruption Issues- Country Commercial Guide

Mexico

Investment climate was unavailable for Mexico, however, corruption was available on Export.gov. Within the corruption report a major concern for Mexico was within this sentence, “In perhaps corruption’s most dangerous form, government officials are allegedly work with drug cartel rings and organized crime, sharing information and shielding the criminal organizations and members from law enforcement activity or prosecution and in exchange receiving money or, in the case of those officials who are intimidated, receiving guarantees of safety for themselves and their families.” Within Clorox code of conduct, they mentioned “establishing high standards of ethical conduct and complying with fair business practices and applicable laws.” Mexico’s lack of transparency between government official and the cartel threaten the intent of Clorox’s code of business conduct. The cartel manages to intimidate many and control businesses.

Colombia

Investment Climate was also unavailable for Colombia, however, corruption was available on Export.gov. Within the report Colombia’s corruption was the biggest problem for doing business as it ranked 123 rd out of 144 countries. Their corruption score has been stagnant for the past 3 years with very minor improvements. The president has made various efforts to diminish corruption in the country but no concrete results have been noted or seen. The corruption seen in Colombia poses a threat to the enforcement of Clorox’s Business Code of Conduct. It is extremely easy for bribes to occur if Clorox violates any regulation on accident. One such case was seen when the president of the court systems bribed an oil company for $200,000 in exchange for the removal of a multi-million dollar fine. The president was removed from the court systems after being caught, but this is just one example of how corruption in Colombia threatens businesses.

Panama

Both Colombia and Panama share a spot around the 94th out of 168 countries for corruption. One major problem in Panama is “The Panamanian judicial system continues to pose a problem for investors due to poorly trained personnel, case backlogs, and a lack of independence from political influence.” President Varela has made great improvement to eliminate corruption despite so many corrupt practices occurring constantly. “The fight against corruption is also hampered by the GOP’s refusal to dismantle

Panama's dictatorship-era libel and contempt laws, which can be used to punish whistleblowers, while those accused of acts of corruption are seldom prosecuted and almost never jailed.” Clorox Business code of conduct wants to create an environment where anyone can report violations to their code of conduct, but with Panama having a “dictatorship-era” where whistleblowers are punished, it may be very difficult for corruption to come out into the light within Clorox business practices.

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6

Initial Market Research (20 points)Compare 2014 and 2015 US export levels for your product to each of your countries. Use the 6-digit HS tariff code researched earlier in the project.

Research one competitor that your company will need to be aware of in your region. It could be one of the companies you mentioned in the Chapter 1 portion of your research, or another company you find active in the region from more recent research.

What are the activities of that competitor in the countries you are researching? Determine at least three potential market segments for your company in your region.

See instructions for the Global Trade Atlas database in Blackboard.

Exports4 points

2015 US exports of your HS tariff code to your countries

Competitor4 points

Activities of at least one competitor in the countries you are researching

Market segments8 points

Discuss at least three potential market segments for your product in your region

Mechanics 4 points

The text is written in complete sentences, not bullet points

The text is written with no errors in spelling or grammar

Valid sources are used and cited

U.S. State Export to World (Transport Mode: All Transport Modes) Via State: All StatesCommodity: 340220, Surface-Active Preparations, Washing Preparations And Cleaning

Preparations Nesoi, Put Up For Retail SaleYear To Date: January - December

Partner CountryUnited States Dollars % Share %Δ

15/142013 2014 2015 2013 2014 2015

World122255731

0 1165550891114214391

0 100 100 100 -2.01

Canada 892811701 839013602 803970745 73.0371.9

8 70.39 -4.18Mexico 45239940 50028419 50996949 3.7 4.29 4.47 1.94Japan 41239347 31241357 29581765 3.37 2.68 2.59 -5.31Korea, South 23939531 26591366 28123205 1.96 2.28 2.46 5.76United Kingdom 6630550 12645998 20177815 0.54 1.08 1.77 59.56Russia 25601058 25028964 20091610 2.09 2.15 1.76 -19.73Netherlands 21033939 21910436 18441621 1.72 1.88 1.61 -15.83Australia 14990778 15829965 18329649 1.23 1.36 1.6 15.79Taiwan 19649757 16324272 17459262 1.61 1.4 1.53 6.95Germany 7104002 8383885 10309409 0.58 0.72 0.9 22.97China 5404120 7420187 8887028 0.44 0.64 0.78 19.77Colombia 6997262 7754773 7886673 0.57 0.67 0.69 1.7Brazil 15827238 10746490 7643022 1.29 0.92 0.67 -28.88Venezuela 5335817 6691536 6352004 0.44 0.57 0.56 -5.07France 5620277 4449681 5706117 0.46 0.38 0.5 28.24Singapore 2040747 2501788 4842267 0.17 0.21 0.42 93.55Chile 4724341 5280675 4180058 0.39 0.45 0.37 -20.84Hong Kong 2188837 2263008 3815977 0.18 0.19 0.33 68.62Bahamas 2314576 2702971 3804888 0.19 0.23 0.33 40.77United Arab Emirates 2665859 3469012 3758750 0.22 0.3 0.33 8.35Belgium 3530581 4335969 3309580 0.29 0.37 0.29 -23.67Panama 2331625 2394634 3146409 0.19 0.21 0.28 31.39

Exports

The United States exports the most amount of Clorox product to Mexico, but their increase from 2014 to 2015 was only 1.94%. Mexico is a solid market Colombia is second after Mexico and they have had minor percent increases in the past three years for US exports of Clorox company. The 2014-2015 percentage increase was only 1.7%, only 2% less than the US. This market needs a boost as they have not increased majorly and are not one of the top customers. The US has a drastic increase in exports to Panama of 31.39%. Panama is a booming market for Clorox, but the amount being exported is still relatively low.

Competitor

Colgate-Palmolive is an active competitor with Clorox in Latin America. According to Colgatepalmolive.com they have $4,329 US Million in sales for 2105 in the Latin American region. Quoted directly from the Colgate Palmolive website, “Clustering single-country subsidiaries into more efficient regional hubs is leading to smarter and faster decision making on the ground. Another key initiative is extending Colgate’s business service centers located in Warsaw, Poland, Mumbai, India and Mexico City, Mexico to streamline our global functions. All three centers are fully operational and are providing best-in-class service across an expanding range of functions to Colgate’s subsidiaries and hubs spanning 83 countries,” Colgate is creating bigger and better service centers, one of which is in Mexico, to help manage all the subsidiaries around the world. Colgate-Palmolive is working on simplifying and strengthening their processes in Latin American countries. Their headquarters are here, Av. Ejército Nacional Mexicano #843-B, Miguel Hidalgo, Granada, 11520 Ciudad de México, D.F., Mexico.

Market Segments

The first market segment Clorox can be divided into is Demographics. Targeting women and men with large families and a concern for healthy living would work for Clorox as Latin Americans care deeply for family above all and a great lifestyle. Secondly, business segmentation could work for hospitals, restaurants, hospitality groups, schools in Latin America where disinfectants and cleanliness is a must. In this segment buyers could be repetitive and long-term. Lastly, benefit segmentation could help pick out those who are concerned about germs and diseases in Latin America. Clorox can show how Clorox disinfects, cleans, protects, and prevents germs and diseases from spreading.

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7

Foreign Market Selection Matrix (26 points)

Develop five relevant indicators to estimate demand for your company’s products in your three countries. Complete the template provided by instructor. Describe your process for selecting, scoring and weighting the indicators (why are some more important than others). Discuss whether the final ranking was as you expected.

Market selection template16 points

Five relevant indicators, scored and weighted, with final points per country (template from instructor)

Discussion6 points

Why you selected those indicators and weighted them as you did, and was the final ranking as you expected

Mechanics 4 points

The text is written in complete sentences, not bullet points

The text is written with no errors in spelling or grammar

Valid sources are used and cited

I ranked my indicator as the following from most weight to least; US Exports of HS#340220 in USD, GDP-Household Consumption, GDP (official exchange rate), Urban Population, and Total Population. I chose the exports for the most weight because I had to know what country was already receiving the product and how much of it was being received to determine a current demand for Clorox Bleach. Second, I chose GDP-Household consumption in order to determine how much of the money the countries were making was spent on household items since my product will be targeted to end consumers home use. Third, I picked GDP because I wanted to know how much the country made as a whole in order for household consumption to make sense and to have a more numeric view of the markets. Fourth, Urban Population helped me determine what percent of the countries population was urbanized and open to products like Clorox. Lastly, Total Population gave me a better understanding of the numbers for the indicator Urban Population and also helped me have an idea of how many people are in the country. The results were as expected because Mexico is a large country and it is very hard for Panama or Colombia to compete with Mexico. They were ranked properly but I noticed that the size of the country really brought the results.

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8

Selection of Entry Modes (24 points)

Considering the issues summarized in Table 8-1 of the text, discuss if FDI in your region is a recommended market entry mode. The use of FDI may be impacted by your countries’ political risk levels and openness to foreign investment, which can be determined using the Country Commercial Guides. Discuss your recommendations for entry mode by country.

Country Commercial Guides: www.export.gov/ccg, select country, review Openness to Foreign Investment in the section on Investment Climate

FDI10 points

Discuss this potential entry mode for your countries, considering political risk (already researched for chapter 3 of the project) and openness to FDI (from CCG)

Recommendations10 points

Discuss your entry mode recommendations for your company by country (justify your recommendations)

Mechanics 4 points

The text is written in complete sentences, not bullet points

The text is written with no errors in spelling or grammar

Valid sources are used and cited

Mexico

Mexico scored a 6.5 out of 10(no risk) for political risk. The number attributes to corruption within the country and lack of trust within Mexican national who may be corrupt. This number should not discourage foreign direct investment(FDI) as it has little effect on larger foreign corporations. Mexico is ranked second as an FDI destination in Latin America and is very open to foreign investment according to their Country Commercial Guide on Export.gov. Mexico takes part in the North American Free Trade Agreement (NAFTA) in order to promote greater trade with its partner countries the US and Canada. They have websites and experts to help facilitate the process of any FDI. Any business under $165 million and not on the reserved sector lists, does not require government approval and can commence investment immediately. Because Mexico is so open to FDI I would recommend that The Clorox Company commence a Greenfield Acquisition to enter the Mexican Market. The Clorox Company has well established finances and reputation in the US which can easily be transferred to Mexico along with its standardized product. The product would clearly only need a language translation as Mexico is over 85% Spanish speaking. Being that a Greenfield Acquisition is the riskiest form of entry, Mexico proves to want these types of investments and provides resources for companies to complete them along with fair treatment between foreign and national businesses. (http://apps.export.gov/article?id=Mexico-Openness-to-and-Restriction-on-Foreign-Investment)

Colombia

Colombia has a lower political risk score of 7 compared to Mexico’s 6.5. The concern lies largely in part with it’s corruption judicial system. Regardless of it’s risk, Colombia is currently the fourth FDI destination in Latin America which is something very attractive! Colombia is now in a free trade agreement with the US called the CTPA which helps layout a plan for foreign investment in Colombia and promotes protections for foreign investors. They do however require more registration processes than Mexico and favor national investment over foreign. Because of this I would be cautious about the entry The Clorox Company should make and suggest an entry method through direct exporting with FDI. It is important to secure Clorox and its interests in a country where FDI is not seen as equal to national investment, but we should not be discouraged by it. By having the product exported to a Clorox location in Colombia we can rest assured that it will arrive at the right place and that the Clorox owned distribution will prevail all preferences to national companies. Although the process is very complex, it can help Clorox establish a solid presence in Colombia that can not be easily deteriorated. (http://apps.export.gov/article?id=Colombia-Openness-to-Foreign-Investment)

Panama

Panama scored the lowest in terms of political risk with a 7.5. They are one of the countries in Latin America working hard to establish regulatory enforcements with IPP. Panama is very largely made up of FDI and strongly promotes it. The US- Panama Trade Promotion Agreement(TPA) helps set the stage for trade, but there are some stronger forces that work against it. The investment environment is largely clouded by lack of judicial transparency and corruption. There have been various complaints on court rulings favoring nationals. Panama does also set a limit on foreign control of their retail sector which is a sector that The Clorox Company falls a part of. Within the CCG they mention the best way to enter the retail sector is through franchise or licensing. Because of the lack of openness to the retail sector I believe the only way to enter this market would be through a licensing agreement. Within the contract it will be very important to note the choice of forum clause and the choice of law clause as it is highlighted within the CCG that the country’s judicial system is ineffective. Overall, an escape clause will have to be well reviewed to ensure that The Clorox Company does not jeopardize its opportunity within this market. (http://apps.export.gov/article?id=Panama-openness-to-foreign-investment)

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9

Product Policy (18 points)

Using Table 9-1 in the text, identify which factors regarding standardization vs. adaptation are the most relevant for your company. Based on this analysis, and considering your countries, which strategy do you recommend for your company and why? Think of one new product idea that may be successful for your company in your region (reviewing prior chapter research may help with this).

Strategy9 points

Standardization or adaptation and why

Product development5 points

New product idea

Mechanics 4 points

The text is written in complete sentences, not bullet points

The text is written with no errors in spelling or grammar

Valid sources are used and cited

The Clorox Company provides a product that can be extended throughout my region. Mexico, Colombia, and Panama have the same basic need for Clorox as the US. The competitors in the US are also exactly the same in all three countries chosen. Clorox bleach is a product available to all scale economies as it is a premium product with an affordable price. The only modifications this product would require is language labeling because all 3 countries have Spanish as their primary language. Because Clorox bleach can be used universally I recommend that Clorox maintains itself standardized and modifies language to suit the foreign markets.

Mexico maintains an urban population of 79.2%, Colombia is 76.4%, and Panama is 66.6% according to the World Factbook. An urbanized nation can be educated on the importance of bacteria and the spreading of diseases within a household or in the streets. A new product that can help establish and spread anti-bacterial awareness could be small boxes of Clorox wipes that can be carried in a purse or car to help disinfect shopping carts, tables, bathrooms, or any place that is publicly available. By introducing these small cleaning wipes with a Clorox label these countries can both promote cleanliness and the Clorox brand at the same time.

(cia.gov)

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10 Branding and Promotion (22 points)

Review the brand names of your company. Provide a list and discuss which you are focusing on for this project. Determine and discuss the US market share for your company, and how your company’s brand is perceived. Find an advertisement for your company in the region of the world you are researching (or another region/country if needed).

Brands3 points

Brand names

Market share9 points

US market share for your company, and brand perception

Advertisement6 points

Find and include an advertisement your company has used in your region (or another if needed)

Mechanics 4 points

The text is written in complete sentences, not bullet points

The text is written with no errors in spelling or grammar

Valid sources are used and cited

The Clorox Company

Brand

The following are recognized brands that belong to The Clorox Company: Clorox, Poett, Greenworks, Burt’s Bees, Brita, Hidden Valley, KC Masterpiece, GLAD, Arco Iris, and Mistolin. For this project I will be focusing on Clorox Bleach liquid cleaner for retail sales. (https://www.thecloroxcompany.com)

Market Share

The US market share for The Clorox Company is 56.7%. Clorox cleaning wipes made up 43.5% market share (Lazich 2016). Clorox is very dominant in its market within the US for both their bleach product and their bleach wipes. Clorox Bleach makes up a little over half the market share.

The Clorox Company is perceived as a “strong arm with a soft touch” as they are included as one of the many cleaners within a feature in Healthcare Purchaser News. Clorox bleach whether in liquid or wipe form can disinfect effectively and most importantly very safely. The wipes are so easy to use and improved disinfecting rates among healthcare facilities. http://web.a.ebscohost.com.ezproxy.wctc.edu/bsi/pdfviewer/pdfviewer?sid=fdc7a2c9-56e0-4043-b76d-bd2f9e929014%40sessionmgr4003&vid=21&hid=4209

https://www.youtube.com/watch?v=nxZz-a7_dc0

This ad was taken from a very funny Spanish commercial on youtube.com in which a guy sets up a very cute chocolate fondue in his kitchen for his girlfriend and next thing you know the fondue goes crazy and chocolate gets EVERYWHERE! Very funny Clorox cleaner commercial. The purpose of this ad is to show that Clorox is a “powerful cleaner” especially for big messes like chocolate.

Lazich, R. S. (Ed.). (2016). Market Share Reporter (26th ed., Vol. 1). Farmington Hills, MI:

Cengage.

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12 Pricing (14 points)

Which pricing strategy do you recommend for your company in the region you are researching; market share pricing, pricing at a premium, pricing on a cost-plus basis, or target pricing? Would you recommend the same strategy across all three countries, or should the strategy vary for different countries? Explain why.List the currencies of your three countries, and the current exchange rate with the US Dollar.

Strategy7 points

Pricing strategy recommended and why, consider region and countries individually

Currencies3 points

Three countries’ currencies, current exchange rate with US Dollar

Mechanics 4 points

The text is written in complete sentences, not bullet points

The text is written with no errors in spelling or grammar

Valid sources are used and cited

Strategy

Clorox should use premium brand pricing in the Latin American region. The reasoning behind this is because Clorox bleach owns the majority of market share for liquid cleaner bleach and they are the best product on the market compared to private labels. It is important to consider quality vs. private labels when pricing for Clorox bleach.

Mexico. Colombia, and Panama are all emerging countries with an increase in imports for cleaner bleach. The countries are also urbanized compared to the amount of rural areas so cleanliness is important to these countries. Mexico can afford the premium price of bleach as their GDPPC is $18,500 as of 2015 and they spend most of their earnings, 67.3%, on household consumption. Colombia is a smaller country than Mexico but their GDPPC of 2015 was $14,000 which is a great number to afford a premium priced bleach brand as they too spend most of their money, 62.2%, on household consumption. Panama is a significantly smaller country compared to both Mexico and Colombia but they can also afford premium bleach brands since they hold a GDPPC of $20,900 and spend their money primarily on household consumption products at a rate of 52.3% which is the largest portion of their spending.

Currencies

Mexico currently uses the Peso and the exchange rate as of 05/03/16 is 1.00 USD = 17.5154 MXN.

Colombia currently uses the Colombian Peso and the exchange rate as of 05/03/16 is 1.00 USD = 2,833.68 COP

Panama uses both the Panamanian Balboa and the US dollar. The exchange rate for 05/03/16 is 1.00 USD = 1.00000 PAB.

Sources:

XE.COM, CIA WORLD FACTBOOK

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14 Strategy considerations and SWOT (18 points)

Discuss your company’s possible standardization vs. adaptation across the 4 Ps in your region (product, price, place, promotion). Review some of your earlier research to summarize in this section.

For the Chapter 1 portion of the project you drafted a preliminary SWOT analysis. Prepare a new SWOT, incorporating information you have learned from your research. Include at least four items per quadrant.

Strategy8 points

Strategies for standardization vs. adaptation across the 4 Ps

Currencies6 points

SWOT analysis

Mechanics 4 points

The text is written in complete sentences, not bullet points

The text is written with no errors in spelling or grammar

Valid sources are used and cited

Strategy:

The only main adaptation would be language and measurement labels for Clorox Bleach.

Product can remain largely standardized in Latin America as they serve the same purpose in all markets which is to clean and disinfect. The only minor adjustment would be to change the language labels and measurements to the correct form required in the region.

Price can remain largely standardized as a premium priced product. Clorox has gained the majority of market share for liquid bleach and has proven to be the best Clorox Bleach Cleaner which has earned it the authority of pricing itself as a premium product for the Latin American region. After assessing Latin American GDPPC and household consumption percentages for Mexico, Colombia, and Panama, I found that Latin Americans in these three regions make between 14,000-21,000 per capita and they spend over 50% of their earning on household consumption making them perfect markets for a premium priced Clorox Bleach brand.

Place can remain largely standardized as Clorox is already present in all 3 markets with subsidiaries in Mexico and Colombia and a subsidiary for Panama located in Costa Rica.

Promotion can remain largely standardized for all three countries as there are little to no restrictions on promotion methods. Clorox Bleach can be found advertised today in the countries through TV commercials and ads. Clorox Bleach has been found to make comical commercials for their product which can be seen in Latin American commercials as well as American commercials.

SWOT

While re-performing a SWOT analysis on Clorox for Latin America I found the following:

Strengths:Clorox holds a 56.7% market share in the US which has labeled it a premium brand Internationally.Clorox has several brands present in Latin America today and subsidiaries in Mexico and Colombia.Mexico is the second largest receiving country of Bleach exports. Clorox bleach is easily affordable in all 3 countries after analyzing GDPPC and household consumption rates.

Weaknesses:Clorox bleach has mild export increases from US to Latin America.There is no direct subsidiary in Panama.Clorox has many brands not present in Latin America due to cultural diversity.Clorox can not control all corrupt decisions in Latin American countries from distributors or company employees.

Opportunities:Clorox is entering a family orientated culture which promotes health and wellness and is a perfect market for Clorox Bleach. Clorox is able to promote in Latin America as it does in the US, therefore saving on promotion costs.Mexico, Colombia, and Panama are majorly urbanized regions in need of disinfectants.Clorox is able to grow with these Latin American countries as they emerge into scale economies.

Threats:Clorox Bleach competes with the same companies worldwide.Private label prices may be much cheaper than Clorox thus creating fierce competition. Corruption is high in Latin America which could affect exports.IPP is not fully enacted in Colombia and Mexico which can be a risk for the Bleach formula.

Sources: CIA World Factbook, Global Trade Atlas, Clorox.com, CountryWatch

Conclusion

Mexico, Colombia, and Panama proved to be strong markets for Clorox to continue doing business. Mexico has provided a large population along with a large GDP, Colombia is a steady market that can offer potential in the future, and Panama is in need for bleach more than the other two countries with a 39% increase in imports from 2014 to 2015. Expansion is needed in Mexico as there are currently only a limited number of offices for such a large country. Colombia should be kept on a watch list for when the country begins to emerge quicker. Panama may be small but they are growing fast and trading more. The Latin American region is filled with potential for Clorox today and tomorrow.