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Procter & Gamble (P&G) is a Fortune 500 Americanmultinational corporation headquartered in downtownCincinnati, Ohio and manufactures a wide range ofconsumer goods. Founded 1837 Headquarters Cincinnati, Ohio, U.S. Area served Worldwide Key people Bob McDonald (Chairman, President and CEO) Revenue US$ 82.56 billion (FY 2011) Operating income US$ 15.818 billion (FY 2011) Net income US$ 11.797 billion (FY 2011) Employees 127,000 (2010)
William Procter, a candlemaker, and James Gamble, a soapmaker, immigrated from England and Ireland respectively. Sold in 160 countries Manufacturing in 130 conutries About 300 products spends nearly $2 billion annually on R&D In January 2005 P&G announced an acquisition of Gillette, forming the largest consumer goods company and placing Unilever into second place. Competitors : JNJ, KMB, ITC, HUL Global Business Units › Beauty segment › Grooming segment › Health Care segment › Snacks & Pet Care segment › Fabric Care & Home Care segment › Baby Care & Family Home Care segment
Value Chain Analysis is a process that starts from the acquisition of raw materials to actual physical products sold by the company Increase Competitive Advantage Determines strategic benefits
Inbound Logistics / SCM › Moments of truth 1. consumer comes to buy 2. satisfaction after consuming Operations › MDO – Market Dev Org & GBS – Global Bus Serv Outbound Logistics / Distribution Cross decking, efficient planning Marketing & Sales › 23 brands more than $ 1 billion › Signals and Responses Service › More than $100 million in ADs › 5000 key retailers & 30000 key suppliers
Firm Infrastructure › R&D › 25000 patents, more 7500 Ph.Ds in 71 countries › Approx 4% of sales Human Resource Management › I.D.Systems - Vehicle Mgmt Systems Technology Procurement
Life Cycle Assessment (LCA) is a tool used to evaluate the potential environmental impact of a product, process or activity throughout its entire life cycle by quantifying the use of resources ("inputs" such as energy, raw materials, water) and environmental emissions ("outputs" to air, water and soil) associated with the system that is being evaluated. Two types of systems of particular interest to P&G are › the life cycle of a product (such as a detergent) or › an activity (such as washing clothes).
Procter & Gamble complies with ISO 14040 Procter & Gamble has used Life Cycle Assessment to guide decision making since the late 1980s. In the last decade, Procter & Gamble has adopted ISO 14040 standards for LCA. Managers at P&G routinely use LCA approaches to: › Analyse products from a system-wide, functional unit point of view in a consistent, transparent and reproducible manner in order to: guide choices of raw materials, guide product innovation and design packaging with lower impact, › Analyse the energy and resource use in the detergent system, › Analyse various emissions, wastes, and resources using environmental themes, › Identify what parameters are most likely to be significant to monitor and control, › Identify opportunities for improving overall system performance, and › Benchmark the product over time and report progress.
Low because of: Enormous amount of product (14 Categories) Extensive Distribution Channel Huge capital Investment Economies of Scale Brand Power Low switching costNote: Niche marketing firm can be a threat.
Moderate because of: High brand value Less threat of backward integration Less threat of forward integration Less switching cost
Limited because of: Codependent relationship P & G as a Key customer Market share & growth rate ( more than 20 % overall growth for 2010)
High because: Low involvement products Competitor’s offerings with almost same price & quality Low switching cost Eg. – Surf Excel & Ariel
High because: Presence of strong competitors like HUL, ITC & Colgate – Palmolive, J & J in different markets Low switching cost
SWOT Analysis Strength Threats» Market share » Price competition in family care and» Brand image coffee categories» Diversified products » Rising commodity prices, media» Unique organizational chart fragmentation» Global business Services » Global economic» Market Development » Political disruptionorganization » Government regulation» Product availability » Strong Competitors» Unique and Innovative » New Entrantproducts » Cultural Norms & Values» Brand conscious» High quality products Weaknesses Opportunities» Merger » Expand market to other countries» High prices » Reconsider target market» Massy infrastructure » Buy shares to increase assets» Decreasing sales » Launch competitive products» Less advertisement » Use latest technology» No Campaign for introducing » Develop distribution center in others the products countries
Strengths Weakness 1. Market share 1. No Campaign for 2. Market Development introducing the organization products 3. Brand image 2. High prices 4. Unique and Innovative 3. Decreasing sales products Opportunities 1. To enhance the 1. Enhance campaign1. Use latest technology products through technologies2. Expand market to other 2. Expanding into new 2. Seek more business by countries market as being the lower prizes3. Develop distribution market development 3. By increasing center in others organization distribution centre they countries 3. Stepping into market can increase there sells development by using brand name as a tool Threats 1. Using brand name to 1. Lower prices to1. Price competition in overcome pricing overcome political family care and coffee competition instability categories 2. Use uniqueness as a2. Global economic tool to protect the3. Political disruption economic environment
Key External Factors Weight Rating Weighted ScoresOpportunities • Expand market to other countries 0.06 4 0.24 • Reconsider target market 0.07 3 0.21 • Buy shares of others shareholders from all over the world for gaining more market share 0.05 4 0.2 • Launch competitive products 0.08 4 0.32 • Use latest technology 0.05 3 0.15 • Develop distribution center in others countries 0.04 2 0.08Threats • Price competition in family care and coffee categories 0.07 4 0.28 • Rising commodity prices, media fragmentation 0.08 4 0.32 • Global economic 0.08 3 0.24 • Political disruption 0.09 4 0.36 • Government regulation 0.08 3 0.24 • Strong Competitors 0.09 4 0.36 • New Entrant 0.08 3 0.24 • Cultural Norms & Values 0.08 4 0.32 Total 1 3.56
Positions an organization’s various divisions in a nine-cell display. Similar to BCG Matrix except the IE Matrix: › Requires more information about the divisions › Strategic implications of each matrix are different Based on two key dimensions › The IFE total weighted scores on the x-axis › The EFE total weighted scores on the y-axis Divided into three major regions › Grow and build – Cells I, II, or IV › Hold and maintain – Cells III, V, or VII › Harvest or divest – Cells VI, VIII, or IX
EFE : 3.56IFE : 3.31Therefore it will come under GROW AND BUILD cell.