Global Operations of P&G

Company Overview

Procter and Gamble is a leading American multinational consumer product corporation with its headquarters situated in Cincinnati, Ohio, the U.S. They operate their business worldwide expect in North Korea and Cuba (us.pg.com, 2018). The products provided by them are cleaning agents, personal care and beauty products along with personal healthcare products. They also provide diagnostic product for pregnancy test with the help of joint venture with Swiss Precision Diagnostics (SPD) (www.pg.co.uk, 2018). The key competitor of Procter and Gamble (P&G) is Unilever Limited. However, based in the segment of product they deliver the competitors vary such its key competitor in the personal and beauty care product is Avon apart from Unilever Limited (www.forbes.com, 2016).

Mission and Vision

The mission statement of the Procter and Gamble is to provide branded services and products of best quality and to value the aspects which help to improve the daily lives of consumers now and for future generation. This is because it is going to help them in making consumers reward them with leadership sales, profit as well as value creation that allows the employees, shareholders and communities in which P&G live to work and effectively prosper (www.pg.com, 2018). The vision statement of Procter and Gamble is to become the best consumer service and product company in the global market and be recognised as the best company in the international market operation (www.pg.com, 2018). The Procter and Gamble is in the consumer goods industry and their key stakeholders are mainly the middle-class consumers.

General Overview of the Company

The Procter and Gamble (P&G) is seen to have many global brands through which they operate their business. In 2017, they collected a total of US$65.06 billion from the market as total revenue. The operating income for the company in 2017 was US$13.96 billion and net income was US$15.32 billion. The sales for the financial year 2016-17 grew by 3% than the previous years. The profit after tax for 2017 was US$6.2 billion (www.pginvestor.com, 2017). This means that the company earned an effective amount of profit as well as could execute higher sales mentioning that they performed well than the previous years. As mentioned by Waddell (2017), core competence refers to the combination of the multiple skills and resources that are used by a firm to operate successfully in the marketplace. The core competency of P&G is effective consumer understanding, brand building efficiency, innovation, productivity assurance and increased scale of product delivery along with go-to-market capabilities (us.pg.com, 2018).

Market of P&G

The Procter and Gamble has mainly five business segments on which they operate that includes Fabric and Home care; Baby, Feminine and family care; beauty, grooming and healthcare. Each of the segments has different global business units. The grooming segment provides fourth-largest revenue and profit to P&G. The major brands under which P&G operate in this segment are Fusion, Gillette, Mach3 and others (marketrealist.com, 2015).

The P&G’s Fabric and Home care products are priced on an average of $0.19 per load. However, the average price of the product segment of the P&G’s competitors is $0.13 per load (marketrealist.com, 2015). This means that the prices of the products by P&G are more than their competitors which may act as a disadvantage for them because the middle-class customer segment prefers effective quality products at economic prices.

Geographic and Internationalisation

The Procter and Gamble (P&G) has marketing operation in more than 80 countries and is a well-known and trusted brand among more than 180 countries. (Refer to Appendix 1)

Key Performance Indicators of P&G

The Key Performance Indicator (KPI) is referred as the measurable value which demonstrates the extent of effective a company is to achieve their key business objectives. The KPIs are used by organisation for evaluating their extent of success to reach determined targets (Parmenter, 2015). The KPIs of Procter and gamble (P&G):

The P&G cut their shelf-level out of stocks from 10% to 5% (us.pg.com, 2018). This means that the consumers have to wait for less time to get access to P&G’s products once their stocks uploaded ends. Thus, it is going to lower disappointment of the consumers as they can get their products in less time once they are finished (Rosato, 2016). The total supply chain response time refers to the time from which the cash is registered for sale of a product to the next purchase of resources in making the product replacement (Yang et al. 2015). P&G is trying to minimise the total supply chain response time to 50 days from their 100 days (us.pg.com, 2018). This is an effective step as it is going to help P&G to deliver goods more quickly as per demand in the market minimising the issue of out of stock of products for the retailers. (Refer to Appendix 2)

Business strategy

The business strategy of P&G is to offer quality products to the consumers by changing any and everything that is required to serve the purpose and core value of the company to serve customers and create value for their shareholders. The P&G informs that the consumers come for them first and later profit (www.pginvestor.com, 2018).

Analysis:

The extensive support from the government for international companies acts as a positive factor Procter and Gamble (P&G) because it is going to offer them the opportunity to make greater penetration in the market to increase their sales effectively. The rising support for e-commerce industry could pose hindrance for P&G as they have limited online stores thus creating increased rivalry as well as competition for them. As mentioned by Brandt and Thun (2016), reduced growth rate in the industry means that the annualised growth rate of the companies is falling. This is because the companies present in the market are unable to offer effective quality product as demanded by the consumers. It is opportunity of P&G to attract more consumers towards them by creating innovation and changes in the products which is one of their core valued to offer satisfaction as demanded by the consumers. The increasing growth rate of the population means increased demand for consumer goods as they require for leading their daily lives (www.ons.gov.uk, 2017). Thus, P&G has a positive opportunity in the UK and US market as greater numbers of consumers are available for them to purchase their products. Since P&G already delivers high-quality and healthy consumers goods thus the increased regarding them in the market acts as positive factor them. This is because more consumers would be oriented to avail their products due to the fulfilment of their basic demand for quality and healthy aspects of consumer goods they buy. P&G already uses effective technology to create innovation in their products as well as in making distribution which is effective for them to deliver quality goods within less time to consumers reducing their waiting time. Thus, consumers face less hindrance in buying their products which leads to them to feel satisfaction and value. In all the countries it is seen that people are more oriented to buy from organisation who have taken up the initiative to reduce pollution in the environment. P&G is seen to be involved in taking green initiative and promote recycling of products which is a positive step for them as they are improving the environment in turn being preferred by the consumers (www.pg.co.uk, 2018). The P&G is seen to follow the different product safety standards and others legislation of countries of their operation accordingly. Therefore, they have the opportunity in this respect to avoid any form of legal complication in business in any countries ensuring their smooth market operation.

Porter’s Five Forces Model

Threat of New entry: The threat of new entry is moderate to low for P&G. This is because the entry into the new market requires increased amount of money to become an established companies with leading image requires wide amount of time. Since, P&G has been operating in the industry for the past 180 years and has made a leading position in the market thus it is unable for new entry to pose a threat for them (us.pg.com, 2018).

Bargaining power of Supplier: The bargaining power of supplier is low for P&G. This is because wide number of distributors and suppliers of consumer goods are present in the industry.

Bargaining Power of consumers: The bargaining power of the consumers of P&G is low. This is because even though switching cost is low yet there is high demand in the market for the natural and high-quality products of P&G in the market and lower substitutes are found (www.pg.co.uk, 2018). Thus, consumers cannot bargain as they have limited options of substitutes to avail and they cannot get the high-quality of consumer goods provided by P&G by switching brands.

Threat of Substitutes: The threat of substitutes for P&G is low. This is because they deliver wide numbers of consumer goods of each type under different brands and thus there is less opportunity to create other varieties or substitutes of the products.

Competitive Rivalry: The competitive rivalry for P&G is high and it is a negative aspect for them as there are increased number of organisations in the consumer goods industry where they operates and the switching is also low. The switching cost is the cost which is to be incurred by the consumers as a result of changing brands or products (Ho, 2015). Since no such change in the prices is made while changing from one brand to another thus consumers remain polygamous in this industry and this act as a negative aspect for P&G. This is because they can lose their loyal consumers to competitors.

SWOT Analysis

Analysis:

The P&G has a strong market hold for wider amount of time and has become a household name in many countries. Thus, the consumers buy from them with assurance that they are investing their money in a good way which is positive aspect for the company as they are attracting more loyal customers towards them. As mentioned by Chung et al. (2015), CSR provides companies to have benefit of showing positive brand reputation. This results in drawing increased sales and improved customer loyalty as consumers feel satisfied for spending their money in supporting social causes in the society. Thus, the good CSR is an effective strength for P&G to attract effective amount of customers towards them. As argued by Wilder et al. (2014), lack of experienced employees hinders productivity as ideas required for developing quality products in an effective is unavailable. Thus, lack of experienced employees is a key weakness for P&G as they cannot deliver improved quality products which are going to affect their sales. The reduction in workforce is going to lead P&G to face issues with delivering goods as per demand in the market as adequate staffs are not available to produce the demanded supply. Thus, consumers have to wait long for availing the products they wish which are going to make them switch to other companies for availing their desired consumer products more quickly. The operation in the international market and extensive focus on different market segment acts as an opportunity for P&G as they can attract increased number of consumers. Moreover, operating in international market leads to increased earning in foreign currency (www.pg.com, 2018). Therefore, the financial earnings of the company can be improved. As criticised by Flammer (2015), increased competition in market leads the company to face hardship in sales. This is because each of the competitors wishes to provide improved quality products at same prices to the consumers like the parent company. Thus, P&G have to make extensive investment in making their products best and innovative which may not be possible all the time which may lead to their financial loss. Further, trade barriers for P&G are threat as they cannot expand their market to wider dimension to increase their sales and market exposure.

VIRO Framework

The VIRO Framework is used to identify the value, imitate, rarity and exploitation ability of the organisation to identify their potential to compete (Aghazadeh, 2015).

TOWS Matrix of P&G

Major challenge

One of the major challenges being faced by Procter and Gamble (P&G) is increased competition in the consumer goods industry which has led them to face slow growth of market share in the global market.

Solution for the challenge:

P&G require executing effective market research to identify in which aspects they are lagging behind than their competitors in the market which is lowering their competitive advantage. The aspects are to be implemented in their products and require identifying what is the present preference of the consumers to be included in the products to make it attractive to the customers. This is because fulfilling of the consumer needs results in satisfaction which makes increase sales result the company to have improved growth, in turn, accessing better competitive advantage. In order to resolve this challenge, P&G is recommended to use innovation capabilities to create high quality and innovative consumer products that are different and better than the competitors. This is because it is going to make the products of P&G to be delivered to the consumers as unique one which cannot be replaced by the competitors. P&G is recommended to improve their online exposure in the e-commerce field through effective content marketing and SEO services. This is going to help them promote their brand more effectively attracting more customers resulting to increase sales making the company have better competitive advantage than its competitors.

Best solution

The innovation in consumer products being presented by P&G to make them unique in the industry is the best solution for helping the organisation to have better competitive advantage.

Implementation plan:

In order to develop a unique product to attain improved competitive advantage, P&G require at first to identify cheap ways of creating innovation in the existing products so that the price of the products does not increase. Later, the present ingredients used in the products are to be enhanced and new raw materials are to be added to make the product unique and best in the market than the existing ones of the competitors. P&G requires going out of existing pattern that is used in the industry. For example, they require making beauty products than enhances the texture of the skin of black female and male rather than focusing on brightening their body complexion. This way P&G can avoid being on the same pattern to focus only on skin colour and focus more on actual beauty.

Conclusion

The above discussion shows that Procter and Gamble are in an effective position in the market where they are experiencing increased sales and profit. However, they are facing competition in the market at a higher level as there are increased numbers of organisations who are offering similar products at same quality and price range for the consumers. In order to resolve it, they are recommended to use innovation and create unique product by going out of pattern that is followed usually by the industry.

References

Aghazadeh, H., 2015. Strategic marketing management: Achieving superior business performance through intelligent marketing strategy. Procedia-Social and Behavioral Sciences, 207, pp.125-134.

Chung, K.H., Yu, J.E., Choi, M.G. and Shin, J.I., 2015. The effects of CSR on customer satisfaction and loyalty in China: the moderating role of corporate image. Journal of Economics, Business and Management, 3(5), pp.542-547.

Ho, C.Y., 2015. Switching cost and deposit demand in China. International Economic Review, 56(3), pp.723-749.

Kanagal, N.B., 2015. Innovation and product innovation in marketing strategy. Journal of Management and marketing research, 18, pp.1-25.’

Rosato, A., 2016. Selling substitute goods to loss‐averse consumers: limited availability, bargains, and rip‐offs. The RAND Journal of Economics, 47(3), pp.709-733.

Waddell, S., 2017. Core Competencies: A Key Force in Business–Government–Civil Society Collaborations 1. In Globalization and Corporate Citizenship: The Alternative Gaze(pp. 16-30). Routledge.

Wilder, K.M., Collier, J.E. and Barnes, D.C., 2014. Tailoring to customers’ needs: Understanding how to promote an adaptive service experience with frontline employees. Journal of Service Research, 17(4), pp.446-459.

Yang, D., Qi, E. and Li, Y., 2015. Quick response and supply chain structure with strategic consumers. Omega, 52, pp.1-14.