The document provides an analysis of the institutional and industrial cleaning industry, focusing on two major companies: Ecolab and JohnsonDiversey. It discusses the history and operations of both companies, compares their financial performance in 2008, and analyzes their competitive environment using Porter's Five Forces model. The document concludes by recommending various strategic options for each company, including potential mergers or partnerships.

1. Strategy Analysis Christopher Mowbray Jessica Soares Eddie Basiliere Mike Silva

2. Industry Industry: I nstitutional and Industrial Cleaning and Sanitizing Main Categories: Janitorial and housekeeping, food processing and industrial, foodservice, and laundry $18 Billion Market

3. History / Industry Public Company – Ticker: ECL 1923: Founded by Merritt J. Osborn “ Economics Laboratory” 1986: Ecolab 1960-2004: 15 Acquisitions Detergent Manufacturers Pest Elimination Business Vehicle-care Products 2004: Douglas Baker, CEO Market: Foodservices Global Market Consumers: Lodging Establishments Hospitals Schools Full-service & fast food restaurants & more. . Location: More than 160 Countries Employ: 26,000 associates Johnson Diversey Private Company – Family owned 2002 : Johnson Holdings acquired Diversey Lever Johnson Diversey S. Curtis Johnson III., CEO Market: Floor Care Global Market Consumers: Coca-Cola McDonald’s Wal-Mart Hilton Hotels 2006: Scrubber-Drier - floor cleaning Productivity 30% Water & Electrical energy reduced by 50% Location: More than 50 Countries Employ: 11,000

4. Johnson Diversey Ecolab Web Site Comparison = Location of H1N1 information

5. Porter’s Five Forces Threat of New Competitors Low barriers to entry leads to many small suppliers competing for business. New entrants are very much attracted to this industry: Limited Scale Economies Moderate Product Differentiation Low Capital Requirements Minimal Switching Costs EcoLab has made many attempts to create a larger barrier of entry into their industry. Acquisitions

6. Porter’s Five Forces Threat of Substitute Products New products can take companies in this industry out of business. New product innovation is key within this industry for both EcoLab and JohnsonDiversey. Environmental Innovation JohnsonDiversey has been at the top of Environmental Innovation. Many new competitive innovations are consistently being released.

7. Porter’s Five Forces Intensity of Competitive Rivalry JohnsonDiversey and EcoLab setting themselves apart from the rest of the industry. JohnsonDiversey is able to use the big names of their partners to penetrate new global markets. SC Johnson Sizing of Divisions JohnsonDiversey has only a fraction of the sales and service force that EcoLab has. R&D EcoLab bases acquisitions on their ability to reduce competitive threats.

8. Porter’s Five Forces Bargaining Power of Suppliers Suppliers make up a very large part of the business process within this industry. The timing of shipments and services that EcoLab and JohnsonDiversey provide need to be precise. Debt in 2007 JohnsonDiversey totals $1.1 billion in debt. EcoLab totals $750 million in debt.

9. Porter’s Five Forces Bargaining Power of Buyers Multinational businesses make up a large part of the buyers within this industry. McDonalds Chain Hilton Hotel Chain Industry is turning to global markets as a main source of business. 80% of distribution to buyers is dependant on the distributors and contractors. High level of quality assurance is needed for distributing products to customers.

10. (Year End 2008) JohnsonDiversey Ecolab Net Income (59,521) 448,100 Total Sales 3,280,857 6,137,500 Total Asset 3,215,172 4,756,900 Total Stockholder's Equity (96,245) 1,571,600 COGS 1,990,082 3,141,600 Total Debt 2,854,542 1,138,200 Long Term Debt 1,956,652 799,300 Current Assets 1,150,292 1,691,100 Current Liabilities 897,890 1,441,900 Inventory 255,330 467,200

11. JohnsonDiversey Ecolab Return on Sales Ratio (0.02) 0.07 Return on Assets Ratio (0.02) 0.09 Gross Profit Margin Ratio 0.39 0.49 Debt Ratio 0.89 0.24 Asset Turn Over Ratio 1.02 1.29 Current Ratio 1.28 1.17 Quick Ratio 1.00 0.85

12. JohnsonDiversy Financials

13. JohnsonDiversy Debt

14. Ecolab Income Statement

15. Recommendation Ecolab Option A: Create Customer Support Groups/Sponsors/Memberships Cleaning and Sanitizing operations were flat H1N1, other reocurring viruses, Flu shot clinic Helps show care to the communities Gains awareness of who Ecolab actually is to customers Membership with “Climate Group” ( Help gain better image) Work on giving more back to the community Option B: Stick to what they are doing Stick to food safety (Strong growth, double digit gains) Have globally growing customers Great internal Factors (Strong, energetic, motivated) Imbed sales force into their own culture

16. Recommendation Ecolab Option C: Look into Merger with Unilever Unilever Global market leader in all food categories that they operate in Global market leader in skin and deodorants Strong position in other home and personal care categories Very Sustainable company 2/3 raw materials from agriculture Reduce greenhouse emissions Will Ultimately Minimized resources used Great support financially and strategically Consequences Great support financially and strategically Might not be free to do whatever you want Part ownership

17. Recommendation JohnsonDiversey Option A: Keep doing what your doing Very attractive in community Moral is high, “going green” creates strong beliefs and happy workplace Goals/Targets They are the sustainable leader Option B: Venture into personal care/cleaning market Merge with Proctor and Gamble Create heavy competition Help recover debt Gain market share R & D costs will be taken care of easier

18. Recommendation JohnsonDiversey Option C: GO PUBLIC IPO (initial public offering) Allow investors to buy common stock Large influx of cash Board of directors help guide the company More opportunity in new markets Consequences: Have to answer to stock holders Could lose their ultimate vision Heavier Competition

19. What’s going on now? October ’09: Relationship with Tennant Company to launch Scrub-N-Go ™ 2009: Received the 2009 Tekne Green Award from the Minnesota High Tech Association The award honors businesses that practice environmental awareness and responsibility October 7 th : Unilever announced that it is going to reduce its equity interest in Johnson Diversey from 33% to 4 % Dubillier & Rice, Inc are going to take 46% equity interest as part of a broader recapitalization transaction November ‘09: Committed to triple their absolute reduction in greenhouse gas emissions under WWF’s Climate Savers Program by 2013