p&g analysis_.pdf
- 1. OVERVIEW Procter & Gamble Co., also known as P&G, is an American multinational consumer goods company headquartered in downtown Cincinnati, Ohio, United States, founded by William Procter and James Gamble, both from the United Kingdom. Its products include pet foods, cleaning agents,and personal care products. Fortune magazine awarded P&G atop spot on its listof "Global Top Companies for Leaders", and ranked the company at fifteenth place of the "World's Most Admired Companies" list. P&G is credited with many business innovations including brand management and "Connect & Develop" innovation. P&G’S VISION AND MISSION STATEMENT VISION: “We will provide branded products and services of superior quality and value that improves the lives of the world’s customers, now and for generations to come.” MISSION: “Be and be recognized as the best customer products and services company in the word.” EXTERNAL ENVIRONMENT ANALYSIS PESTLE ANALYSIS 1. POLITICAL P&G helps shape public policy and legislation that helps the company to reach out to more lives in the entire world in much better way. They are committed to being transparent about their political motives. P&G is politically involved with the help of the three tools: a. P&G political action committee b. P&G’s global government relations c. P&G good government fund
- 2. 2. ECONOMICAL The current economic trends look positive, particularly the economies of India and USA. The growing infrastructure of the countries (mainly the developing countries) also supports the industry which is beneficial for P&G. P&G has the following factors in its kitty which will help it invest more in R&D as well as emerging economies so that it can sustain itself in the cut- throat sector of FMCG.: a. Free cash flow productivity greater than 90% b. EPS now in double digits :22.19% 3. SOCIAL a. Pampers working with UNICEF for healthy babies b. P&G is a part of Shiksha Abhiyaan run by Indian Government c. Enabling children to live, learn and thrive across the globe d. Diverse work force (biggest diverse workforce in the world) e. Major beauty and health care products cater to women 4. TECHNOLOGICAL P&G heavily invests in R&D activity with increase in the amount of investment every year. The huge R&D budget helps them in a. Continuous innovation, for example, Gillette Mach 3 Turbo razors b. Latest technology development to better interact with customers, for example, online product catalogs to engage customers 5. LEGAL Operating in the global market has its own challenge for P&G where each country has its own sets of laws and regulations. It needs certain permits to operate in any new geographical location and has to abide by these laws and rules in order to sustain in all the countries where it has its presence: a. Health and safety standards b. Environment requirements worldwide c. Consumer laws, employment and antitrust laws P&G is subjected to:
- 3. a. Lawsuit and claims b. Consumer courts c. Compliance and non compliance issues 6. ECOLOGICAL/ENVIRONMENTAL P&G has pioneered in becoming environment friendly in midst of the talks of climate change, global warming and environmental damage via: a. Focus on reducing green house gas emissions by 20% b. Reducing energy consumption by almost 50% c. Proper waste disposal from P&G facilities PORTER’S 5 FORCES ANALYSIS 1. Threat from new entrants: P&G have low threat from entrants. As it requires huge capital investment to enter into the market. P&G is already a well established brand so it becomes difficult for new companies to compete with them. They already have established relationship with retailers which give them advantage to acquire most eye catching shelf space. 2. Threat from Substitute: P&G have high threat from substitutes. We see products at retailer outlet which are cheaper than P&G product but offer same quality. Also Consumer is moving towards natural products. So they prefer products like herbal shampoos, detergents and cosmetics. 3. Threat from Buyers: Large share of P&G sales depends upon retailers like Wal-Mart, BigBazar, and D-Mart. Because of large contracts these retailer wants high profit margin, hence they have more power. Also power lies in hand of end customers as they have choice between different substitutes. 4. Threat from Suppliers: There is no or very low threat from suppliers. P&G being a brand name become a key customer for suppliers. Also, P&G partners with Supplier which further reduces threat from suppliers
- 4. 5. Threat from Competitors: P&G deals in highly competitive market. There are many branded and local products present in market which gives competition to P&G products. Major competitors which are threat for P&G are HUL, Revlon, L’Oreal, Colgate-Palmolive etc. INTERNAL ENVIRONMENT ANALYSIS VRIO ANALYSIS Resource Valuable? Rare? Costly to imitate? Exploited by the organization? Competitive implication Sales Yes No Yes Yes Unexploited competitive advantage Credit Facilities Yes No Yes Yes Unexploited competitive advantage Brand names Yes Yes Yes Yes Sustained competitive advantage Product Innovation Yes No Yes Yes Unexploited competitive advantage R&D Yes No Yes Yes Unexploited competitive advantage Global Operations Yes No Yes Yes Unexploited competitive advantage Employee Diversity Yes No No Yes Temporary competitive advantage
- 5. Sales: The current sales ofP&G is 2,333.79 Crores Inr which is at the 6th position in the industry. HUL is leading with asales of30,805.62 followed by Dabur India, Godrej consumer, Marico & Colgate. With the current sales figure the net profit comes out to be Credit Facilities: Procter and Gamble maintains four bank credit facilities to support their ongoing ‘commercial paper program’. In 2014, Procter & Gamble repurchased $10 billion in shares. The company expects to repurchase up to $24-$30 billion of company shares in the future. As of June 30, 2014, there were approximately 2,231,000 common stock shareholders. Brand names: Procter & Gamble has one of the largest and strongest portfolios of trusted brands. Procter and Gamble is the producer of products in nearly 50 categories. Because of this, they have been able to bond technologies within the categories in various astonishing ways. Procter & Gamble operates in more than 80 countries worldwide, which makes for one of the largest global companies around. Product Innovation: Procter & Gamble’s strategy is mostly focused on innovation. P&G is also strongly committed to the concept of sustainable development, and continues to lead its industry in that regard. The company views sustainability as an opportunity to innovate products that improve the lives of the world’s consumers. Procter and Gamble’s Innovation strategy is called Connect + Develop. This strategy is seeking to build a global innovation network. Through Connect + Develop relationships, the company continually searches for products, packaging, technologies and commercial opportunities that can be reapplied to brands and rapidly introduced to better meet consumers’ diverse needs. This strategy seeks to leverage the ideas, talents and innovation assets of individuals, institutes and companies around the world. R&D: Over the years, Procter & Gamble’s Research and Development team has revolutionized home care. Many breakthroughs originate in the Procter & Gamble’s laboratories. It has spent a sum of Rs 200Cr in R&D for the year 2014. Global Operations: Procter & Gamble operates in more than 80 countries worldwide, which makes for one of the largest global companies around. Procter & Gamble manufacturers their own products, and they do so in different places all throughout the world. These places include the US, Canada, Latin America, China, Asia and Africa. Employee Diversity: Procter & Gamble has been recognized by Black Enterprise magazine as one of the top 40 Best Companies for Diversity. Procter and Gamble has demonstrated a significant representation of African Americans and other ethnic minorities in four key areas: corporate procurement, corporate board participation, senior management representation and their total workforce.
- 6. Procter and Gamble’ employees are not only diverse among race, but also sex, age, cultural heritage, personal background, and sexual orientation. SWOT ANALYSIS WITH IMPLICATIONS
- 7. IMPLICATIONS: 1. Due to easy imitation of P&G products, brand image of the company is getting diluted. This impacts the business as the people wont trust in the brands that the company has to offer. It also affects the vision of the company to provide quality and value products to consumers. 2. P&G has a very high investment in R&D of around 2 billion USD in the past FY. It is constantly increasing its R&D budget to develop new and future friendly products. This has given P&G a competitive advantage and serves the vision to not only improve life of the current generation but also the lives of the future generations to come.