During this case study of Procter and gamble I will be analyzing key external and internal factors that play a major role and how P&G strategize the operation of its business. P&G has been in business for over more than a century founded in 1837 in Cincinnati, Ohio by William Procter and James Gamble coming together to make and sell candles and soaps (David, 2013). This humble beginning has since transformed into a multinational manufacturing, distribution and marketing enterprise that provides 50 brands to consumers (David, 2013).
Today, Procter & Gamble is the world’s biggest consumer products company with more than 78.9 billion in sales (David, 2013). It manufactures and produces a very diverse line of products that offer superior standard of quality, practicality and value.
Procter & Gamble business functions are based on their mission to improve the lives of the world’s consumers every day, by touching lives in small but meaningful ways. Integrity, trust and respect for others are important values that drive the everyday working methods and decision-making of P&G, and are enforced by a code of ethics that guarantees a high standard of quality and morals.
P&G is taking advance of the opportunities that are being brought about by the eradication of trade barriers, enhancements and expansions in Internet and IT, as well as new, emerging and enlarging markets and types of consumers.
However, P&G has to also receive the challenges that come along with the product stagnation, unsafe product ingredients, a highly competitive market, strong buyer power and a rising cost in raw material. Regardless of the obstacles, P&G has a top market position with a diversified product portfolio and a strong brand image. Procter & Gamble has plenty of core strengths that will offset the insufficient weaknesses that the company faces. They know how to properly leverage its core strengths to create consumer understanding, brand-building, innovation, market capability and scale, which has allowed P&G the opportunity to execute growth strategies in several areas. Procter & Gamble Present Mission, Vision, Objectives, and Strategies Mission Statement
(www.pg.com/en_US/company/purpose_people)The main mission of Proctor and Gamble is to offer top quality and highly valued products and services to the customers while trying to improve consumer life. Due to their current mission statement they have won numerous consumer and loyalty to their product; which has reward them with leadership in sales, profit because they hold a larger portion of the market.
Although Procter & Gamble has many areas of focus that the company vision themselves embarking on according to the case study in the book, P&G does not have a vision statement (Davids, 2013). My suggestion for vision statement for P&G would that they formulate one that is realistic, credible, attractive, and future. The vision for P&G should be: “We at Procter & Gamble are striving to become an environmental sustainability, socially responsible and the empowering of our employees and stakeholders in order to deliver on our environmental and social programs.”
Procter & Gamble’s long term objectives and goals involve formulating a strategy that will help them to become the fastest growing, most profitable, and most admired consumer goods company in the world. The company also would like for their organization to become a company of winners. They believe by equipping all P&G employees to develop sustainability thinking and habits into their everyday work; that they will accomplish just that. P&G wants to become a company of leaders, as well as a caring organization. According to the 2011 Sustainability Overview Report, Procter and Gamble is using its Live, Learn and Thrive to focus on helping children in need around the world. The programs enable children to get off to a healthy start, receive access to education and build skills for life.
Since 2007, P&G has improved the lives of over 315 million children.(pg.com) Procter & Gamble wants to become a dynamic and innovative organization and according to Bob McDondals the Chief Operating Officer the “First and foremost, innovation is the key to improving quality of life for people in every part of the world. We face enormous challenges today – as individual companies and institutions, but also as nations, as societies, and as a planet. I believe most if not all of these challenges can be highly responsive to innovation. We’re not innovating boldly enough in as many areas I think we could and should be doing. Second, innovation is the primary driver of business, financial and economic growth. I don’t know of a company or a country that has prospered and grown over the long term that has not also been an innovation leader.
This fundamental importance of innovation creates a unique demand for leadership. We need strong innovation leaders not just in our labs or universities, but at senior levels in business, in legislative and policy roles, and in not-for-profit and non-governmental institutions.”(McDondals, 2008, p3) By P&G becoming a dynamic and innovative company they will also become a preferred business partner of customers and suppliers. Procter and Gamble financial objectives includes increasing sales by one to two percent faster than market growth in all categories and geographies; while delivering earning per share growth of high single digits to low double digits. They also would like to generate free cash flow productivity of at least 90 percent.(Davids, 2013)
P&G uses the following strategies in their firm’s operation:
1. Fast moving Customer Goods
The primary strategy use by P&G Corporation is to manufacture Fast Moving Consumer Goods. As today FMCG’s has been came extremely popular among billions of customers globally. P&G products that are FMCG would be food, beverages and household products. As they for the most part consist of products the customer would use on a daily base.
2. Better Customer Relationship
In terms of managing its products promotion P&G typically utilize an all promotional mix to distribute its products .Which are Sales promotion, public relation, personal selling etc. Above all Procter & Gamble has developed the Integrated Marketing communication (IMC) Strategies, which essentially takes into consideration factors like proposition driven, values driven etc.
3. Brand Proliferation Strategies of P&G
Procter & Gamble primarily uses this type of strategy for its hair products like Pantene , Rejoice and head and shoulders etc.; which would limited the market shares for new and old competitors. This strategy furthermore is used by P&G for other products like Ivory , Tide and Paper towels such as bounty and charming in U.S. market.
4. Market Targeting or Target Audience
In the situation of trying to the market you should be targeting or the people that you should be attracting to your product you would look for people with common characteristics and common needs and group them together. (Lindquist D. and Sirgy M., 2009) P&G many of its marketing promotion are generally intend for a specific set of audience. A Target audience can be from any age group, demographic, geographic etc. The P&G has extensive target audience .They target all type of age groups and demographic like for children they have Pampers, men they have Gillette, Mach and other products and for women they have Beauty products like Olay, pears, Camay etc.
Evaluation of the external factors
In this next section I will discuss the industry analysis, by looking at events such as economic, social, cultural, demographic, environmental, political, governmental, Legal, technological and competitive information, which are all factors that are outside to the company’s four walls but make have a major impact the P&G corporation. These external factors typically identified in the opportunities and threat section when the company performs a SWOT analysis.
1. One of P&G opportunity is to enlarge their health and beauty products for men. They have move in the right direction of expanding the men products line with the acquisition of Gillette, which provide the company with opportunities to grow in this market segment. 2. P&G is a very profitably company and with the additional capital that it has it should take it and invested in different market segments like electronics, medicine etc to help them to diversify their business portfolio. 3. Technology present P&G with great opportunity to improve there sales with the uses of online social networks and internet marketing like advertising on Face book , My space , Yahoo etc. 4. They operate in 180 countries world wide and look for new countries to introduce there product to.(David,2013)
1. The emergence of Kimberly Clark , Unilever and other Big companies are preventing a major challenge to P&G in Fast moving Good market. 2. P&G competitors are using different type of advertising and marketing strategies, that allows them to revamp their target market on a daily bases. 3. In today’s market P&G has to be careful because there are many substitute or replacement are available at cheaper price, that can take there market shares. 4. The recent recession of the past couple of years has effected the customer’s purchasing power, which has decreased significantly in all geographic locations. While on the other hand the prices of raw material are raising because of surcharge to them for fuel prices. 5. I believe that their 95 billion of goodwill could become a serious problem for them. If they continue to over pay the fair market price for asset they could them in a situation where they need to liquidity their asset quickly to pay debts off in the value of the asset has drop even more. (David, 2013)
Evaluation of Internal Factors
The next step in this case study is to look at the internal factors the P&G has control over, which related to marketing, finance, accounting, management, management information systems, and production/operation. The internal factors are took from the strengths of weakness of the SWOT analysis that is perform by the company.
1. A key strength of P&G is their ability to operate on a grand scale. Procter & Gamble is one of the largest leaders of product differential that include home products, fabric care, baby and beauty products, health products and personal care items in most of the countries of world. 2. Another significant strength that P&G poses is famous Brand name that is associated with low pricing policy. 3. You can find P&G products almost anywhere Making their products assessable to customer of all types whether they are rich or not 4. P & G invests substantial amount of capital in their research and development. On hand they pump about$1.8 billion into improving and introducing new products in the market.(David, 2013)
1. Many of the leading brands of P & G are under going a rapid reduction in market share due to increase in competition from competitors like Unilever , Johnson and Johnson etc 2. P & G is losing out on a opportunity to widening their marker share because of their refusal to produce personal brand products for there retailers and customers. 3. The size of P&G can create a big problem for, making it difficult for them to carry on their work in appropriate manner. 4. P&G has a sluggish response to change, due to the face they’re heavy culture (meaning their more set in their ways on how this should be done sometime and not open to new ideals that could help advance the company. and P&G Views
Product Performance only.
After doing this case study I conclude that in order for Proctor & Gamble to be successful they will need to keep clearly defining their objectives and goals. They will be able to obtain these goals and objectives by making sure that they constantly revamping their mission statement and vision to make sure that they are in line with the direction they are want to go in which would fall in the implementation stage. If their mission statement is strongly correlated to the objectives and goal it will promote the development of the business model which is largely center around the company’s bottom-line successes such as achieving continuing profits, market growth in shares, defense of industry leadership positioning and employee welfare development. By examine the P&G company’s Mission Statement and their Strategic Management process I conclude that P&G is among top the of the leaders in FMCG’s industry and are able to sustain success by broaden its product worldwide.
Its Mission Statement illustrate that all the company most valuable assets are their employees , with HR department and Customers services being relative the most important because they effect the consumer. The HR department needs to be well equip to recruit people that are caring and have the company best interest at heart. When HR hires people that care about their job they will produce higher quality goods and service. On the other hand customers service directly deals with the consumer. They have to employee people they are good with problem solving and have good people skills, so during the decision making stage P&G should uses the following strategies: 1. By employing the latest technologies they can improve their products 2. By move forward into market development by utilizing brand name as a tool 3. Seek more business by lower prices
4. By increasing distribution center they can increase their sale 5. Using brand name to overcome pricing competition
6. Lower prices to overcome political instability
During the Implementation Stage P&G should do the following 1. Implementation of Advertising strategies by P&G P&G mostly promote their brand like Pantene , head & shoulder, Vicks , Camay, Hugo boss and other products principally through newspaper, TV, Radios and magazines add. It takes the help of different advertising agencies like Darcy and Saatchi and Saatchi. P&G also use other strategies to meet their goal and mission .By use of sales representatives to promote its products. Retailer also play major role in advertising P&G products in pamphlets, newspapers etc 2. Implementation stage also include following work in P&G A. Has the ability make their plans for accomplishing objectives and goals work. B. How to structure or develop an organization
C. To create a budget and listing the financial resources of company. D. To motivate and create reward structure for employees
E. Establishing and sustain first-class work environment relevant and successful.
David, Fred R. Strategic Management Concepts and Case: A Competitive Advantage approach 14th Edition. Upper Saddle River, NJ: Pearson Education, Inc., 2013. Lindquist, J.D, Sirgy, J.M. Shopper, Buyer, and Consumer Behavior: Theory, Marketing Application and Public policy Implications 4th Edition. Mason, OH: Cengage Learing, 2009. McDonalds, B. Touching Lives, Improving Life: Why Innovation Matters and How to Make it Work: retrieved September 29,2012 from. www.pg.com/en_US/…/company/…/touching__ www.pg.com/en_US/company/purpose_people . retrieved form September, 29,2012