PG Strategic Management


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The ppt describes various strategies incorporated by P&G and also talks about P&G's innovation process

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  • Net sales decreased 3% in 2009 to $79.0 billion behind a 3% decline in unit volume. Unfavorable foreign exchange reduced net sales by 4% as many foreign currencies weakened versus the U.S. dollar. Price increases, taken across all segments, primarily to offset higher commodity costs and foreign exchange impacts, added 5% to net sales. 
  • P&G deployed CPFR to enable creation and integration of consumer demand data
  • celebrating America's moms who encourage their children to prevail through the thrill of victory and the agony of defeat.Prepared for the Winter Olympics in Sochi, the 2-minute "Pick Them Back Up" video is the latest installment in the "Thank You Mom" campaign that won international acclaim for the Cincinnati-based company at the Summer Olympics in London in 2012.
  • Optional Features Pricing- Gillette, ArielProductline- ArielCompetitive Pricing- P&G’s Pantene and Unilever’s Tressame, Dove and VO5Cost Plus-Tide
  • PG Strategic Management

    1. 1. Touching Lives, Improving Life
    2. 2. INTRODUCTION • Founded in 1837 by William Procter and James Gamble • Is an American multinational consumer goods company • Has a revenue of US$ 84.17 billion and net income of US$ 11.31 billion • Total number of brands – 300 • Operating in 180 countries • Headquartered in Downtown, Cincinnati, Ohio, United States
    3. 3. HISTORY • Procter’s candle making company merged with Gamble’s soap making business in 1837 • First company in US to offer a profit sharing program for its employees • First to create a Market Research department • The invention of electric bulbs, ceased the production of candles • P&G started supplying soaps to the soldiers in mass quantities • Gave an opportunity to return to the market again
    4. 4. VISION & MISSION “Be, and be recognised as, the best consumer products and services company in the world.” “ We will provide branded products and services of superior quality and value that improve the lives of the world’s customers, now and generation to come.”
    5. 5. Company Product Portfolio • Products sold in > 180 Countries • On the ground operations in 80 countries • Organized into 2 Global Business Units (GBU’s) Health Care Grooming Beauty Beauty & Grooming Fabric and Home Care Baby and Family Care Snacks and Pet Care Household Care&
    6. 6. SWOT ANALYSIS Strengths • Powerful collection of well-known brands • Massive world-wide distribution network • Impressive and historically successful R&D efforts Weaknesses • Focus on high-end of the market • Growth hard to achieve for such a large and diversified portfolio, particularly in mature product categories
    7. 7. Opportunities • Growth of the middle class in developing markets Threats • Fierce competitive landscape, with well-heeled participants like DABUR and HUL • Often unstable economies and political structures in emerging markets • Consumer price sensitivity, particularly in emerging markets. • Raw material cost increases
    9. 9. Intensity of Rivals • The intensity of rivalry is very high in this industry. • P&G has several strong competitors like Amway corporation, Colgate- Palmolive, Unilever, Kimberly-Clark, Johnson & Johnson
    10. 10. Threat of new entrants • The enormous amount of products that are distributed under Procter & Gamble’s name creates a challenge for new entrants. • Since the P&G possess a significant amount of market shares around the world, a potential competitor that lacks large sums of capital for heavy marketing, R&D, would hardly be able to effectively compete
    11. 11. Bargaining Power of Buyers • P&G is heavily dependent on Wal-Mart and its affiliates for generating a major part of its revenue. • Sales to Wal-Mart and its affiliates have represented approximately 15% of its total revenue since 2006 thus creating the “ Wal-Mart Effect”. • High dependence upon Wal-Mart reduces the bargaining power of P&G. Wal-Mart could use its bargaining power to impose unfavorable terms of the company
    12. 12. Bargaining Power of Suppliers • P&G has a codependent relationship with most of its suppliers. Suppliers of materials also need key customers like P&G for profitable revenue generation and will vary likely have little bargaining power because of its small size • P&G can use its tremendous size and large amounts of available cash to its advantage during this current credit crisis
    13. 13. Threat of Substitutes • This is substantial number of substitutes for all of P&G’s product offerings, creating an intense competitive environment • In order to differentiate itself, the P&G must continue to provide new, cutting-edge and innovative products and branding to the customer
    14. 14. CORPORATE STRATEGY • Strengthening Core Business – Top 20 in Household Care and 20 in beauty & grooming • Improving Productivity and Creating cost-Saving Culture – Reduction of 5700 non-manufacturing overhead positions in 2013 • Strengthening Innovation Program – Dedicating R&D resources and funding to develop new innovations
    15. 15. STRATEGIC FOCUS • Focus on company’s core markets such as the US, to strengthen and grow these businesses • Focus on company’s developing market investments on the categories and countries with the largest size of price and highest likelihood of winning • Focus on portfolio, allocating resources to businesses where company can create disproportionate value
    16. 16. INITIAL STRATEGIES BY P&G • 1998,P&G faced losses and EPS fell below 14% to 15 % • Revenue growth rate which varied from 1.4% to 5% during 1995 to 1999,was also below P&G’s internal target of 7%. • To deal with this situation DURK JAGER was appointed as CEO.
    17. 17. Durk Jager introduced the foll. Strategies- • Corporate restructuring program – –Global Business Units:- • Earlier there was 4 business units based on geographical regions to seven GBUs based on global product line
    18. 18. • Market Development Organisations:- – P&G established eight MDOs • Global Business Services:- – overhead functions such as HR, Operations, etc. were centralised • Corporate Functions:- – most of the corporate function were transferred to one of the new business units. • Company culture:- – P&G redesigned reward systems and training programs to improve result orientation among employees.
    19. 19. • Secondly, focus was on cost reduction – P&G reduced the work force approx 10000 by 2004 • Thirdly, for employee retainment – P&G adopted strategies like pension policy, career development programs etc. • Fourthly, P&G focused taking new initiatives in underdeveloped markets.
    20. 20. • In 2000 ,Alan George Lafley became the CEO. • Under Lafley, strategies were changed according to upcoming competitive environment. • During 2000-2005, company strategies changed from taking initiatives in underdeveloped market to focusing on big countries and big products. • Priority was given to best selling brands
    21. 21. • More cost reduction was done around 9600 workforce was reduced • Company focused on acquisitions to have big brands under P&G umbrella
    22. 22. CURRENT STRATEGIES • Expanding by Acquisition • Heavy ads- Marketing Strategy • Supply Chain Strategy • Heavy R&D and Innovation Strategy
    23. 23. SUPPLY CHAIN STRATEGY • The major supply chain initiatives were: – Collaborative Planning Forecasting and Replenishment (CPFR) – Consumer Driven Supply Network
    24. 24. CSDN • P&G decided to have a connection between actual sales and supply chain process • Paradigm shift in viewing supply chain management from forecast driven to actual demand driven • Supply Network instead of supply chain because of information flow in all directions • This operating strategy is called as Consumer Driven Supply Network • P&G used CSDN to create a responsive supply chain that would produce and supply products as per demand at the customer level
    25. 25. EXPANDING BY ACQUISITION • Between 1905-2010, P&G invested in 34 acquisitions • In 2005, P&G acquired Gillette, making it the biggest acquisition in company history • This enabled P&G to go from having 16 to 21 “superbrands” • Acquired Natura and Nioxin, which were leaders in pet products and hair care • Some of the biggest acquisitions are • Charmin, Clorox, Crush, Revlon, and Gillette
    26. 26. MARKETING STRATEGY • P&G spends 15% of their sales on advertising beating all of their competitors • P&G was named “2008 Advertiser of the Year” by Cannes International Advertising Festival • In 2014, P&G has decided to invest almost one-third of its media spending in Digital, Social and Mobile platforms • Focus is to improve marketing efficiency through clearer messages and better targeting
    27. 27. Distribution Strategy • Intensive Distribution strategy • Introduced “Project Golden Eye” – Reducing the number of distributors – Providing better ROI to the distributors – Better Infrastructure – Cost Saving – Large Investment in Advertising Customers Retailers/Wholesalers/Distributors Marketing Agents – State wise Manufacturers (P&G India)
    28. 28. Promotion Strategy • P&G insists on Pull Strategy • Heavy advertising and media pioneer • Advertising Creativity • P&G-A click mortar company • Coupons
    29. 29. Pricing Strategy • P&G adjusts their pricing according to different types of customers and situations • P&G adopted different pricing strategies like: – Optional Features strategy – Product-line pricing – Cost-plus pricing – Competitive pricing – Distribution pricing
    30. 30. INNOVATION STRATEGY • P&G spends about US$ 2 billion a year in R&D with 8000 employees in 26 labs around the world • P&G conducts most of its new product development in R&D labs
    31. 31. Connect & Develop • P&G’s version of Open Innovation • P&G’s internal global team is dedicated to empower the concept of C+D • Connects innovators with the P&G’s needs, allowing anyone to submit their ideas to the company
    32. 32. Growth Factory • The problem of Growth- – Only 15% of innovation projects were meeting the success targets • Innovation Assembly Lines- – Sustaining Innovation – Disruptive Innovation – Transformative Innovation – Commercial Innovation • Small Bets Labs- – tapping into university research for potentially transformative innovation. Eg-Tide Dry Cleaners • Innovation Transformation – This resulted in 15% to 50% improvement in its innovation success rate
    33. 33. Presented By: Arkaprava Sadhu K Gaurav Kushagra Shukla Prateek Bhargava Prateek Sorte Sourabh Verdia Vibhor Shukla