P;G Case Study SM Essay
Question 1 : What are firm’s most important external opportunities and threats? External opportunities and threats are events and trends that are beyond the control of the organization. It can be divided into five broad categories which are economic forces; social, cultural, demographic, and natural environment forces; political, governmental, and legal forces; technological forces; as well as competitive forces. From this article, there are some external opportunities that can be pointed. One of the opportunities is P&G desires to accelerate its growth in developing markets, such as Brazil and India.
This activity will create job opportunities and at the same time, it also helps to reduce unemployment rate at the countries involved. Every percentage point less in unemployment makes good economic sense by not only reducing the budget deficit, but also reducing the human deficit that we see in the economic insecurity, growing poverty, hunger, homelessness and many more. Other than that, made Asia as a primary target for growth. Asia consists of Japan, China, and ASEAN/ Australia/ India/ Korea (AAIK). Asia is a good for choice because over three billion consumers populate Asia, representing more than half of the world’s population.
It will contribute more benefits and opportunities for the growth, profitability and productivity of the P&G Company and at the same time, it helps in changing the fundamental structure of the economy of that country. However, there are also some threats that might affect the company. When entering the new market, a company needs to be aware that the gains may not be seen in the short term. It may be many years before they start reaping the rewards of their efforts. Besides, they have to hire additional staff to help launch their company in the new markets they expand into.
Apart from that, company need to know the regulations and tax laws in foreign countries, which takes time and money, and they may need to hire professionals in those countries to help with legal and financial issues. Also, a company usually has to modify their products and packaging to suit the local culture, preferences and language of the new market. Question 2 : What are the organization’s major strengths and weaknesses? The organization’s strengths and weaknesses are under control of the organization that could be practiced well or poorly.
In case of P&G Company, there is a main strength of having three different sectors which could increase the company’s market share by reducing the risk of default. Besides, the other strength of the company is being in the market of approximately 180 different countries around the globe. That could lead revenue to increase better in the countries which are having large size of population. Furthermore, ranking as number one in the Soaps and Cosmetics industry, being number one company in the top ten advertisers during the first quarter of 2010 and holding a slight market share advantage also could be considered as strengths of the company.
On the other hand, being in the market of three different sectors could be a weakness of the company as it is not really possible to focus on only one of them and improve it better. For instance, Apple Company focuses on only one sector and it is the number one within its competitors. The other weakness of the company is shutting down the industry which most probably causes P&G Company to lose a lot of money in terms of liquidation charges. Question 4 : What are the firm’s existing strategies and objectives?
Objectives I. To diversify in terms of products and markets. II. To increase sales 1 percent to 2 percent faster than market growth in all categories and geographies. III. To deliver earnings per share (EPS) growth of high single digits to low double digits. IV. To generate free cash flow productivity of at least 90 percent. V. To attaining more consumers to diverse products range. VI. To broaden the geographic domain of the products distributed. VII. To be the main supplier majority of the needs of consumers, as to more completely. Strategies . Operates in three strategic business units (SBUs) In their terms, the SBUs are called as Global Business Units (GBUs). Those three are Beauty and Grooming, Health and Well-Being and Household Care. The products will be manage systematically accordance to their categories. It will also attain optimum management as to the relevance of such products can be experimented with the same par to every products in the same category. 2. Sell products through all medium Strategically, P&G used various medium to distribute their products.
This includes thousands of retail operations, mass merchandisers, grocery stores, membership club stores, drug stores, department stores, salons and high-frequency stores. 3. Ends food business section Having much branches of products, one of them had to be cut off to enhance the other categories. Food business section has been let go in order to focus more on the beauty and personal-care products. Statistics shown that P&G involvement in beauty and personal-care gave a higher returns hence the releasing of food business section is wise. 4. Acquired many smaller business
P&G takeover business such as the pet-food company Nature Pet Products, Inc and Sara Lee Corporation’s Ambi Pur air refresher. The strategy support the need for the company to have diverse industry products. Not to mention the products had been develop in niche surrounding, making the cost to train such expertise lesser than to develop their own product. Adding to that, the company will attain loyal customers along with the developed brand. 5. Reduced its fabric-care business from 60 lines to about 40 products. With lower amount of products, the company can fix their focus products that generates more benefits.
They can also build up strategies that fits the potential products rather than handling a lot of products at one time. 6. Reducing packaging cost. Packaging cost was decreased by using 1,500 plastic colours from 4,000 and from 10,000 to 200 print-ink colours. This saves approximately $60 million. Other than that, this promotes the environmental-friendly lines of products which save much more on the overhead cost. 7. To enter new market, the Brazil and India while continuing the supply of slightly over the average priced item to developing countries.
Brazil and India was known to be walled cities, as the competitors had placed themselves long before. Such potential market must be explored to kindle the growth of P&G as well as supporting the expansion of geographical domain of P&G products. 8. Spends high amount of money in advertising and investing more in Research and Development. Advertising is essential in relating products with consumers, thus stimulates growth. P&G spends as much as any other company will. They are the leading national advertisers during the first quarter of 2010, by $772. 6 million.
Inevitably, this leading fuel the products’ market share to higher position like 60. 2 percent of laundry detergent. Question 5: Who are the firm’s competitors, and what are their strategies? There are many competitors that produce mostly similar types of products to Procter & Gambler Company. One of them is Colgate-Palmolive company; a global manufacturer and marketer of oral care personal care, home care and pet nutrition products. For instance, familiar products that have been found in Malaysia are Pantene, Colgate, Oral B, Palmolive, Febreze and SK II.
Founded in 1806 and headquartered in New York City, the company markets in products in over 200 countries to have a and operates 280 international facilities whereby 76 owned in various countries such as Brazil, Mexico, and Australia. This indicates that P&G try to have a strong brand-building in industry over the world. P&G also build the production facilities or manufacturing around the world such as Australia, Canada, China, Poland and United State in order to save for delivery of products to the various countries.
P&G also employed employees globally so that they will overcome the culture risks in certain home country. Next competitor is Kimberly-Clark that produce mostly paper-based consumer products. It operates four business segments which are personal care, consumer tissue, K-C Professional & other and health care. Most their well-known products that are familiar in Malaysia are Kotex, Scott natural, and Huggies. Kimberly-Clark also has 27 facilities an various countries with many of facilities producing multiple production items/products (synergy) that can have sufficiency in production time and costs.
Other than that is well-known Unilever company. Unilever is a privately-held British corporation headquartered in London that successfully consumes about 400 brands such as Lipton tea, Dove, Knorr, Rexona, Sunsilk and Aviance. They are categorized into food & beverage, home and personal care division. Nowadays, its top 25 brands account for more than 70 percent of sales. Most of Unilever products witnessed strong sales and performance mostly in Asia market such as Vietnam, China, Philippines, India and Pakistan.
Their products reach shoppers through a network of customers, from multinational retailers, wholesalers and distributors to small independent shops. Furthermore, Clorox is a US-based manufacturer of various food and chemical products based in Oakland, California, which is best known for its namesake bleach and cleaning product, Clorox. It also usually produces natural home care products, personal care and home care products such as brands of Burt’s Bees, KC Masterpiece barbeque sauce and Kingsford charcoal. It focuses in four respective segments: international, cleaning, households and life style.
Clorox gain opportunities by placing the giant retailer, such as Wal-Mart as a place to put heavier emphasis on their brands. Question 6 : What objectives and strategies do you recommend for this organization? Explain your reasoning. How does what you recommend compare to what the company plans? First of all, the objectives of a company could be more effective if objectives set by using the criteria of specific, measurable, agreed, realistic and time specific. Therefore, we recommend the company to have objectives of sales growth, survival, profit maximization and profit satisfying.
Besides, benefiting mankind and improving welfare of society should be one of the objectives to make the world better place to live if the owner is not Muslim. If he is Muslim, he should set these objectives to gain Allah’s pleasure first. Moreover, to achieve those objectives we suggest P;G Company to set some strategies which are watch competitors, develop distinctive advantages, identify market niches, growth strategy, cost leadership, plan flexibly, utilize human resources, stability and seek information.
The company should be constantly alert to competitive pressures and adjust their strategy accordingly and to do this, the company should watch its competitors like Johnson ; Johnson, Clorox and, Unilever. Watching competitors cannot help the company to develop. Therefore, after watching the competitors and gathering information with the help of human resources, P;G Company should come out with unique products or services. Furthermore, it is vital to be low cost limitations with reasonable quality of goods and services. However, we believe that the company should not focus on growth only.
It is important for them to be stable; they should maintain its current level of activity. Meanwhile, the company should make strategic plans and adjust the strategies according to expected or unexpected situations. Here we will be focusing on three main aspects. Products, People and Operations. These elements covers the main aspect of a company. Such as products, we suggest that the company will expand to Asia market vigorously. We’ve targeted that the market have high potential in harvesting higher sales especially in beauty and care products.
As observed, the market in these developing countries in Asia, the consumers wouldn’t mind paying slightly higher price for P;G products. Besides that, the foreign market of Brazil and India should be pursue in stages. This can largely seen in Southeast Asia, South Korea and Japan. Having at least one large producing factory in these countries will create job opportunities for the local. Hence, the purchasing power increases. This part of the strategy suited the wall-up countries, India and Brazil. Not to mention the brand or product awareness ill be highly exposed through the locals who are employed.
As for the company, the extra gold is that this can be an act of outsourcing the hard labour as well as lower cost of training the employees. We’ve estimated that the strategies should be implemented in within 7-10years to reach it maturity of profit earning. Although, within the first 4 years after 2010, we’ve estimated a jump of $2. 5 billion dollar of revenues from these parts of the world. These leap and savings will give huge impact in the cost of producing the products as well as marketing. Automatically covers the Production part of the strategies.
Lastly, we would suggest to have Corporate Social Responsibility Projects parallel to the introduction of the new-born factories. The company should beforehand have at least 6 months of local research on the issue relating to financial as well as social. As for example the company had obliged themselves into donating to the victims of tsunami in Japan. Hence the effort shouldn’t strict to circumstances like natural disaster, rather discovering matters arised long ago. As to that, these people will view P;G as a company that they can rely on.
In the light of the company’s strategies, we’ve highlighted the issues where it will be more specific in terms of years. In addition to that, the strategies we’ve suggested are more of to a specific region rather than a general geographical domain. Furthermore, the parties involve will are wider, as we include the support of to-be-employee into making these strategies a success. We’ve also made the issues products to be produced specific. Wit accordance to the pie chart, it is clearly seen that developing such department won’t be that difficult as P; has more experience in this.
Question 7 : How could the organization best implementation what you recommend? What implementation problems do you envision? How could the firm avoid or solve those problems? Every company will face a lot of problems every time they plan to expand their business in other country. It is undeniable fact that they will first try to survive in order to not face massive failure in their beginning. Obviously, Research ; Development (R;D) about the market is essential. From the result, the company can suit the community’s preference as well as knowing period and stages needed for the implementation.
Therefore, to avoid or solve those problems, some implementation should be generated. Cultures are the learned, shared, and enduring orientation patterns in a society and it can be demonstrated through values, ideas, attitudes, behaviors, and symbols. It have difference mind-sets, becoming competitive, means knowing the market and the customer’s desire, the company’s ability to reach out and become part of the community are advantages. Do the research to locate the customer, define the product that attracts the global marketing interest without making major alterations to the brand or quality.
Be ready to deliver the product, know the transportation modes available to the individual regions and always follow up with after the sale. Other than that, focus and concentration on languages, developing company competitiveness skills, establishing regional relationships, planning storefronts, researching factory locations to support product development and market growth, staffing, training and retraining are necessities. This is because, entering a new market dealing with unfamiliar customers, global customs and regional traditions.
Management approaches need to overcome all differences implementing a matched line of interactions between regional markets and corporate headquarters. Last but not least, knowing the cost of product ingredients, materials, delivery methods, tariffs, product development, marketing and packaging is utmost important. This is because, costs are critical and profits are a must. When considering pricing, be aware of the additional global costs that are required to do business in the regions. Be ready to negotiate in the global market and keep in mind that good service builds reputation and trust, which builds repeat customers and profit.
Question 8: Provide an Islamic evaluation on the overall learning outcome Based on the Procter ; Gamble superior quality products, the company is striving to produce products that are needed and usually used in consumer’s life. This indicates that P;G is fulfilling the maqasid of shariah, or the goals and objectives of Islamic laws. Generally the Shari`ah is predicated on the benefits of the individual and that of the community, and its laws are designed so as to protect these benefits and facilitate improvement and perfection of the conditions of human life on earth.
In this article, P;G fulfill the benefits of individuals as long with community as whole in term of human’s life and wealth. As are stated, P;G focuses on three segments which are beauty and grooming, health and well-being and also household care. Those products are focusing on cleaning products for individuals and community as whole that enable consumers to have a healthy and cleanliness life style that will protect them from any bacteria that can lead them to diseases. Moreover, employment creates job for humans that enable them to find money to sustain their life.
Thus, they are able to find source of money to feed and supply basic necessities for themselves such as home, food, clothes and many more. This indicates that job creation fulfill the wealth needs of individuals. All these products is categorized under the embellishment or known as tahsiniyyat whereby it helps to attain refinement and perfection in the customs and conduct of people at all levels of achievement. In simply word, The Shari’ah thus encourages cleanliness of body and attire for purposes of prayer and recommends. .