Colgate PESTLE Analysis

Published in Companies category by MBA Skool Team

Colgate PESTLE (or PESTEL) Analysis assesses the brand on its business tactics across various parameters. PESTLE Analysis of Colgate examines the various external factors like political, economic, social, technological (PEST) which impacts its business along with legal & environmental factors. Let us start the Colgate PESTLE Analysis:

Political Factors:

The political factors in the Colgate PESTLE Analysis can be explained as follows:

The political factors that may affect the company’s sales and overall business is quite diverse. Colgate being spread across the globe, it may get affected depending on the political stability of the regional government. Since being a multinational company, number on the local government’s issues may affect Colgate business, but also the inter-country trade deals or trade agreements can affect the Colgate's business.

The political stability of the country, laws of the land such as law regarding the prohibition of certain chemicals or powder, trade barriers, the threat of military invasion, political control of the labor unions at places and laws regarding compulsion of labor wages would harm or boost Colgate's business.

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Economic Factors:

Below are the economic factors in the PESTLE Analysis of Colgate:

Factors which refer to the economic state of the country or continent, the economic stability of the region that may affect the business of the company come under this analysis. Colgate being FMCG, its sales largely depend on the demand for products.

This all depends on whether the current market is a monopoly, duopoly or perfect competition. The rate of GDP growth will impact the growth of Colgate. The rate of currency exchange will also impact the profitability of the company since it doesn’t manufacture in each country in which it operates. If the country has higher unemployment, it would have workers available lower wages, which would reduce cost, however, the demand for products may also decrease because of lower money with the people.

Social Factors:

Following are the social factors impacting Colgate PESTLE Analysis:

Social factors that have an impact on Colgate's operations are the direct reflection of the society on which Colgate operates. The cultural beliefs, values, attitudes of the majority of the population will determine the business market for Colgate. Thoroughly understand the market, with its age, gender, cultural preferences, product preferences, would help Colgate get better space in the market. For example, a society shifts towards ayurvedic products due to social change brought about, Colgate has to diversify to remain as the main product supplier. The lifestyle of the locals also affects and hence Colgate has to consider what kind of health standards, what type of product is preferred largely and have to adjust its product line accordingly.

Technological Factors:

The technological factors in the PESTLE Analysis of Colgate are mentioned below:

Technological changes can rapidly dismantle the current product range, price structure, competitors’ landscape, in a very short amount of time. Colgate being a market leader, it has to constantly keep updating itself in terms of the quality of product offered by constant innovation. Colgate has to constantly remain updated with the technological changes in the industry and need to analyze how will it affect the market.

It has to know how quickly will the new technology be adopted by the other competitors and also know-how will it affect the cost structure of the competitor's product.

Following are the legal factors in the Colgate PESTLE Analysis:

Colgate being a Multinational company, it has its own sets of policies of operations, however, when it operated in various countries, it has to take into consideration the legal framework of that country. Intellectual property laws, the data protection laws, which are implemented by the government to protect ideas and new innovations of the company would largely impact the competitive edge the company would have over its competitors. Colgate has to keep a tap on such laws. Other certain laws such as health and safety laws for the protection of the health of its citizens must be given due importance since it can adversely affect the company's sale if some misalignment is there in the standards. Food safety board also expects a certain level of quality standards to be maintained to keep the customers safe, and this has to be properly followed by Colgate according to the region it operates.

Environmental Factors:

In the Colgate PESTLE Analysis, the environmental elements affecting its business are as below:

Each company has to deal with different environmental laws and regulations depending in the type of product that it manufactures and the location of its operations.

Colgate must keep into consideration at least those environmental regulations which would not lead to its boycott of products or pressure from the social groups. Also, the environmental condition of a particular region may affect the availability of the product. The manufacturing method, type of climate changes which may occur due to the products and the use of renewable energy in its ecosystem, employment of sustainable methods all along the product chain are some of the environmental factors that Colgate has to consider.

To conclude, the above Colgate PESTLE Analysis highlights the various elements which impact its business performance. This understanding helps to evaluate the criticality of external business factors for any brand.

This article has been researched & authored by the Content & Research Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

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