The Procter & Gamble Company is one of the world’s leading manufacturers/retailers of the ‘fast-moving consumer goods’ FMCG, which primarily specializes in personal and household care. As of 2014, the number of the Company’s manufacturing facilities in the U.S. accounted for thirty-three, with the number of such facilities in other countries has been estimated to amount to forty-one. The Company currently employs 126.000 individuals worldwide. In the same year, P&G reported revenue of $83.7000. The Company’s headquarters are located in Cincinnati, USA.
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The Company’s internal environment is characterized by the following key features:
- The emphasis is placed on customer understanding. P&G is reported to invest $400-$450 million on an annual basis in researching the dynamics in the global FMCG market, as the part of striving to increase the overall rate of consumers’ satisfaction with the Company’s products.
- P&G is committed to implementing the newest technologies within the operational cycle of its manufacturing facilities. In its turn, this explains why the Company’s products have the reputation of being technologically advanced to a high degree. The same explains why P&G was able to receive twenty-two ‘Product of the Year’ awards (Lafley and Martin 5).
- The Company’s approach to dealing with the competitive challenges is concerned with the continual expansion of its brand portfolio. As of today, P&G owns fifty different world-famous brand names, such as Tide, Ariel, Mr. Proper, Camay, etc., while planning to acquire the ownership of even more FMCG brand names in the future.
The main qualitative aspects of the Company’s customer environment have to do with the fact that:
- P&S invests rather heavily in the diversification of just about every line of its products: “Comprehensive product portfolio helps the company (P&G) to serve diverse customer needs and preferences and increase its overall sales… Diverse product portfolio coupled with well-known brands helps to achieve a balanced revenue platform” (“Procter & Gamble” 8.2.1). In its turn, this points out to the fact that, while trying to ensure its competitiveness, P&G relies on the so-called ‘scale approach’ to addressing the competitive challenges. The fact that this is indeed the case can be illustrated, in regards to the Company’s practice of targeting both: the price-sensitive and not-so-sensitive consumers.
- The Company does function in close conjunction with the provisions of CSR (Corporate Social Responsibility), the main of which has to do with the assumption is that by choosing in favor of conducting their operations in the socially responsible (ethical/environmentally friendly) way, companies are able to contribute towards increasing the rate of these operations’ long-term commercial sustainability (Leavy 10). The Company’s range of CSR-activities is indeed rather extensive. It is understood, of course, that the Company acts in the socially responsible manner for the purpose of strengthening its reputation as the ‘ethically sound’ commercial enterprise, which in turn should prove helpful within the context of P&G trying to achieve high sales
Among the main competitors of P&G in the global market of FMCG are:
Avon Products, Inc., Colgate-Palmolive Company, CCA Industries, Inc., Johnson & Johnson, Mattel, Inc., and Clorox Company. Nevertheless, even though the mentioned companies do pose a certain competitive threat to P&G, it is far from being considered particularly acute. The reason for this is that the Company’s presence in just about every segment of the FMCG market is rather substantial. For example, P&G’s share of the world’s razor-market alone accounts for 70%.
The company’s shares in other FMCG-markets are not quite as impressive, but still considerable: “It (P&G) is the global market leader in the feminine health care category with over 30.00% of the global market share. In the fabric care segment, P&G holds either number one or number two position in the market” (“Procter & Gamble” 8.2.1). This, of course, presupposes that P&G is the company with high bargaining power and, consequently, which serves as yet another indication that it is indeed strongly competitive.
Probably the most notable aspect of the external environment, in regards to P&G, is that the Company is now required to take into consideration the challenges of having to ensure the commercial appeal of its products in the ‘post-industrial’ market of FMCG, the dynamics of which are largely defined by the consumers’ willingness to pay a particular attention to what accounts for the ‘perceived’ value of every individual product. In its turn, this naturally presupposes that the Company’s willingness to invest more than its competitors do into development/research is thoroughly justified.
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The Company’s strengths account for:
- Diversified product portfolio. Because, as was mentioned earlier, there is a great variety to the lines of the Company’s products, this will result in helping P&G to achieve a new level of functional integrity, in the sense of being able to react promptly to the demands of the market.
- Strong foothold in the global market of FMCG. As of today, the Company’s products are sold in more than a hundred-eighty countries in the world, which makes P&G a truly transnational corporation (Morgan par. 1).
- Commitment to innovation. P&G invests rather heavily in research and development: “In FY2012, FY2011 and FY2010, the company (P&G) incurred US$2,029 million, US$1,982.00 million and US$1,931.00 million, respectively for R&D activities” (Procter & Gamble 8.2.3).
The counterbalancing weaknesses are:
- The limited base of customers. As of 2014, 30% of the Company’s total revenues came about because of P&G’s cooperation with only a few, particularly large retailers, such as Wal-Mart. This has a negative effect on the extent of P&G’s operational resilience.
- The high rate of product recalls. As of the same year, the overall rate of product recalls was determined to account for 7% – by the standards of the FMCG-industry, it is rather high.
The main opportunities are:
- The growing market for personal care products in Asia. As of the year 2017, the share of Asia in the Company’s revenues is expected to increase from 17% (as it is now) to 25%.
- The growing demand for the particularly user-friendly FMCGs, such as the ‘organic’ ones.
The foremost threats faced by the company are:
- The continually increased labor-costs in the U.S.
- The fact that, as time goes on, the functioning of the cosmetic/personal-care industry in the world becomes the subject of ever more rules and regulations.
Based upon what has been said earlier about the specifics of P&G’s market positioning, the main strategic recommendations to the Company are:
- P&G should proceed to expand its already extensive brand-portfolio as the mean of increasing the measure of the Company’s bargaining power.
- P&G should strive to increase its market share in Asia, as the world region where the market of FMCG has been experiencing rather rapid growth for some years.
Lafley, Arnold, and Roger Martin. “Instituting a Company-Wide Strategic Conversation at Procter & Gamble.”Strategy & Leadership 41.4 (2013): 4-9. Print.
Leavy, Brian. “Where To Play And How To Win – Strategy Fundamentals The Procter & Gamble Way.” Strategy & Leadership 41.5 (2013): 7-16. Print.
Morgan, Penny 2015, Procter & Gamble: Global Giant in Household, Personal Products. Web.
The Procter & Gamble Company: Consumer Packaged Goods – Company Profile, SWOT & Financial Report. Basingstoke: Progressive Digital Media, 2014. ProQuest. Web.