Answer Correctly One Question at the bottom after reading the case given. (300 - 400 words only)

BRUSHING UP AT COLGATE

Ever since Procter & Gamble merged with Gillette, your phone has been ringing off the hook from investment bankers wanting your company, Colgate, to make a deal with Alberto-Culver, S.C. Johnson, Reckitt Benckiser, or Clorox, and today is no exception. Your management team has assembled to listen to yet another set of bankers outline some grandiose proposal. Youve got another plan for Colgate, however, and it doesnt involve a big acquisition. Quite the opposite, in fact. Colgate-Palmolive Company (NYSE:CL) reported worldwide net sales of $3,845 million in second quarter 2016, a decrease of 5.5 percent versus second quarter 2015, and you are planning to cut 4,400 jobs, restructure the company, and save $300 million in the process.

Colgates problems are no secret. In a decades-long tug-of-war, P&G has regained the edge thanks to its innovation machine. In the past five years, P&G has aggressively expanded in the oral care markets where it competes most heavily with Colgate. New flavours of Crest whitening toothpastes, Crest Whitestrips, SpinBrush, and a licensing arrangement with W.L. Gore for Glide floss have all helped Crest re-emerge as the leader in the markets it serves. Colgates most recent innovationsColgate Total, Motion, and Actibrush electric toothbrushes and Simply White tooth whitenerare now either fading memories or also-rans. And even though Colgate has a strong reputation as a reliable brand, it has been slow to develop new products for developing and existing markets. Perhaps its just gun-shy. The companys most aggressive innovation was the tooth-whitening system Simply White. Regardless of the products quality, the bottle and applicator looked like correction fluid and proved no match for P&Gs Crest Whitestrips. After that near debacle, Colgate managers apparently decided that going for big hits wasnt a workable strategy. The company now seems to be playing catch-up to P&G and GlaxoSmithKline, a new competitor in the oral care market. In fact, in a recent year, P&G spent $229 million on its toothpaste and tooth-whitening products; Colgate spent only $80 million.

Innovation isnt the only area where Colgate has failed to invest. The companys annual ad budget of $1 billion pales in comparison with the $5 billion P&G spends each year to promote its consumer products. Heavy spending has helped P&G capture 51 percent of unit sales and 70 percent of dollar sales in the tooth-whitening segment. Colgate weighs in with 21 percent and 10 percent, respectively. P&Gs innovative approach to advertising has helped catapult its products to the forefront of consumers minds. For example, advertising and sales for Whitestrips began on the web, where the demand was overwhelming. Once the product was rolled out on the market, the day after Colgates Simply White, P&G had a blockbuster. Simply White hit the shelves and stayed there.

After hanging up from yet another conference call with investment bankers urging your management team to consider a merger, you lean back in your chair and look around the table. I think we all know what were not going to do, you begin cautiously. The real question is what we are going to do. Now that we have announced measures to conserve resources, we need to decide how to invest what we save.

Question

Q - Do you use the $300 million saved from operational cuts to fund innovation, or do you use the money to better market current products?

Word limit 300-400 words