COUNTRY RESEARCH PROJECT - Procter & Gamble in Malaysia

1. GROUP 11:NGUYEN THI VUI
NGUYEN NHAT LINH
PHAM THI HANG
LE HOANG PHUONG LINH

2. OUTLINE
Part I. Introduction
Histoty & demographic of business
Part II.
2.1. Assessing & Analyzing markets
2.2. Entry mode
2.3. International strategy
2.4. P&G global form: Hybrid Organization
2.5. Human resources policy & management
2.6. Financial management
Part III. Advice summary for businessmen

3. 1. Introduction
o The Procter & Gamble Company, also known as P&G, is an
American multinational consumer goods company headquatered
in downtown Cincinnati, Ohio, USA.
o Founded in 1837 by William Procter and James Gamble
o It primarily specializes in cleaning agents and personal care and
hygienics products

4. 1. Introduction
o P&G touches and improves the
lives of about 4.4 billion people
around the world with its
portfolio of trusted, quality
brands.
o P&G target family-oriented
consumers with traditional
values
o Part of P&G’s target market is
middle to upper class
consumers who desire quality
product
o P&G brands are available in
more than 180 countries
worldwide

5. 1. Introduction
P&G focuses on five core strengths required to win in the
consumer products industry. We are designed to lead in
each of these areas.

6. 1. Introduction

7. 2. Histoty & demographic of business

8. 2. Histoty & demographic of business
2017 NET SALES
BY MARKET MATURITY

9. 2.1. Six steps of market screening
2.1.1 First step: Initial screening
=> Still have need for consumer products

10. 2.1. Six steps of market screening
2.1.2 Second screening: Financial and economic
*Source: Globaledge.com
o Malaysia is an upper-middle income nation
o Malaysia’s average income is US$9546 (world ranking 66/189 economies) and
o PPP was US$27,234,080 (world ranking 48). Its purchasing power per capita is
among the 3rd highest in ASEAN, after Singapore and Brunei
o Snapshot

11. 2.1.2 Second screening: Financial and economic
2.1. Six steps of market screening
*Source: Globaledge.com
Exchange rate:
Malaysia’s currency, the Ringgit has experienced downward pressure over the
past few years.
o In 2013, the average exchange rate for the Malaysian Ringgit against the
US Dollar was US$1=RM3.12.
o In 2014, US$1=RM3.30.
o In 2015, it was US$1=RM3.90.
o For 2016, it averaged around RM4.12.
o The exchange rate for the month of May 2017 hovered
around RM4.30 to US$1.
A good opportunity for investment.
o Inflation

12. 2.1. Six steps of market screening
2.1.3 Third screening: Political and Legal Force
*Source: Globaledge.com
Trade barriers
o Arms and explosives;
o Motor vehicles;
o Heavy construction equipment;
o Certain drugs and chemicals;
o Various essential foodstuffs.
o Slag or concentrates
The Government of Malaysia (GOM) operates a system of import licensing for
a number of items, including:
o Malaysia also has an export licensing system, along with export duties in
some instances, for specific commodity exports such as: textiles, rubber,
timber, and palm oil.
o Imports of meat and poultry are regulated through licensing and sanitary
controls.
o Foreign companies do not have the same opportunity as some local

13. 2.1. Six steps of market screening
2.1.4 Fourth screening: Sociocultural Force
• A multicultural population
consisted of Malays, Chinese,
Indians, and indigenous
peoples.
• A diversity of religions. The
official one is Islam, but it’s
common to see temples,
mosques, and churches within
the same area.
• Business customs in
Malaysia do not differ from
those of the U.S.
• Compared to some other
Asian countries, the traits
of frankness, openness,
and punctuality are valued
relatively more in business
negotiations and dealings.

14. 2.1. Six steps of market screening
The biggest competitor of P&G is Unilever. P&G should consider
very carefully:
o Number, size, finalcial strenth
o Market share
o Marketing strategies
o Quality level of product lines
o Pricing policy

15. 2.1. Six steps of market screening
o Making a personal visit to Malaysia
market
o Hiring local research groups from
Malaysia, Singapore or Brunei
o Appointing an experienced project
manager: one who has lived in
Malaysia or Singapore/Brunei

16. 2.2. Entry mode
Wholly owned subsidiary
o As a multidomestic company, the entry modes of P&G are
wholly owned subsidiary of merger and acquisition.
o In Malaysia, their entry mode is wholly owed subsidiary.

17. 2.3. International strategy
Multidomestic strategy
o To deliver local agility, P&G’s global operations are divided
into five regions.
o Malaysia belongs to ASIA region in general and in Singapore
- Malaysia - Brunei region in particular.
o P&G gathers those 3 nations as a group because of
similarity in culture, economic status, etc.
The advantage
o They can delivers the benefits
of scale while leveraging local
focus, letting the company
respond faster to local
consumer needs and dynamic
market demands
The disadvantage
o Cost and complexity of
coordiantion

18. 2.3. International strategy
However, P&G has
o A very strong human resource
o Productivity is a core strength for P&G, which
creates flexibility to fund our growth efforts, offset
cost challenges and/or improve operating margins

19. 2.4 P&G global form: Hybrid Organization
P&G organizational structure is comprised of Global Business Units,
Selling and Market Operations, Global Business Services and
Corporate Functions.
Global Business Units (GBUs)
combines global scale benefits with a local focus on consumers and retail
customers.
Our portfolio is organized around 10 category-based Global Business Units
(GBUs):
o Where P&G has leading market positions and where product
technologies deliver performance differences that matter to consumers.
o GBUs: developing overall brand strategy, new product upgrades and
innovations, and marketing plans.

20. 2.4 P&G global form: Hybrid Organization
Global Business Services (GBS) :
o Provides technology, processes and standard data tools to understanding of
the business to serve consumers and customers.
o Supports P&G business units and employees in areas : accounting, financial
reporting, information technology, purchases, etc.

21. 2.4 P&G global form: Hybrid Organization
Corporate Functions:
Provide company-level strategy and portfolio analysis, corporate
accounting, treasury, tax, governance, human resources and legal.

22. 2.4 P&G global form: Hybrid Organization
Our Selling and Market Operations (SMOs):
To deliver local agility and focus on efficient selling, distribution,
pricing execution and merchandising in 6 regions.
ASIA
P&G Asia includes: China, Japan,
Korea, Hong Kong, India, Australia,
New Zealand, Indonesia,
Philippines, Singapore, Taiwan,
Vietnam, Thailand, Sri Lanka,
Malaysia, Bangladesh.
Asia Regional Headquarters
Singapore

23. 2.4 P&G global form: Hybrid Organization
CENTRAL & EASTERN EUROPE, MIDDLE EAST AND
AFRICA (CEEMEA)
P&G CEEMEA includes: The Balkans, Central Europe North, Central
Europe South, Eastern Europe, Middle East, Sub Sahara, Turkey/
Caucasia & the Central Asian Republics.
CEEMEA Regional Headquarters Geneva, Switzerland.

24. 2.4 P&G global form: Hybrid Organization
LATIN AMERICA
Employ people across 14
countries, including 19
manufacturing sites, 12 distribution
centers and a service center.
Latin America Regional
Headquarters Panama City

25. 2.4 P&G global form: Hybrid Organization
NORTH AMERICA
North America region operates in
Canada, Puerto Rico and the United
States.
The America where sales make up more
than 40% of the company’s total, every
family in the U.S. has at least one P&G
product in home.
North America Regional Headquarters
Cincinnati, Ohio

26. 2.4 P&G global form: Hybrid Organization
WESTERN EUROPE
European business dates back to 1930 when we opened a subsidiary in the
UK.
Today, P&G has a presence in every country in Western Europe; the region
represents about 20% of P&G’s total business.
Western Europe Regional Headquarters Geneva, Switzerland

27. 2.4 P&G global form: Hybrid Organization
GREATER CHINA
Malaysia belongs to ASIA region in general and in Singapore, Malaysia and
Brunei region in particular because of similarity in culture, economic
status, etc.

28. 2.5. Human resources policy &
management
HRM approach P&G choose:
Regioncentric- an international
recruitment method where in the
managers are selected from different
countries lying within the geographic
region of business.
To recruit and promote new
employees, P&G:
o Engagement with top universities
in Asia: screen and hire talent
directly into their own business
units and product divisions+
marketing.
o Post online recruitment: social
media…

29. 2.5. Human resources policy &
management
Jayson- HR manager breaks down the rigorous selection into
three phases:
o A series of well-qualified quantitative tests
o A behavioural-based and situational interview
o A series of much more intense and comprehensive interviews
The company identifies these future leaders based on
performance and results, and how well employees transfer their
results from one assignment and business unit to another.

30. 2.5. Human resources policy &
management
Advantages of Regiocentric
Approach
o Culture fit
o Less cost.
o The managers work well in all
the neighboring countries
within the geographic region
of the business.
o The nationals of host
country can better influence
the decision of managers at
headquarters with respect to
the entire region.
Disadvantages of Regiocentric
Approach
o The managers in different
regions may not understand the
viewpoint of the managers
employed at the headquarters.
o There could be a communication
barrier because of different
languages.
o The manager selected from a
particular region may lack the
international experience.
o It may lead to the confusion
between the regional objectives
and the global objectives.

31. 2.6. Financial management
Balance sheet (100 000MYR)
Year June 30,
2017
June 30,
2016
June 30,
2015
ASSETS 116 012 216 641 194 843
Non-current assets 55 699 53 453 59 213
Current assets 60 313 163 188 135 630
EQUITY& LIABILITIES 116 012 2 16 641 194 843
Equity 52 612 165 178 134 572
Non- current Liabilities 417 357 333
Current Liabilities 62 983 51 106 59 938
(source: www.pg.com)

32. 2.6. Financial management
Current ratio = Current assets/ Current Liabilities
= 60 313/ 62 983
= 0.958
⟶Company hasn’t have ability to pay short-term and long-term
obligations.
⟶This ratio from 2 to 3 is good, company should increase Current
Assets or decrease Current Liabilities.
Debt/ Equity = 63 400/ 52 612 = 120%
⟶A high D/E ratio generally means that a company has been
aggressive in financing its growth with debt
⟶Pay more interest expense
⟶High levels of risk
⟶Company should add Equity by some ways such as: reducing the
dividend, increasing capital from shareholders…

33. Part III Advice summary for businessmen
o Offer both local and international dealings structure and
entities set up to to meet investment objectives in Malaysia.
o The best entity for foreigners is to own 100% equity, a perfect
match for cross border business transactions with a low taxes
 Give you a peace mind when your business grow rapidly with
big transactions
o Recommend the right trade licences needed for intended
business
o Update government’s policy of trading, taxes
o Take more care for community

34. Reference
1. https://globaledge.msu.edu/
2. https://us.pg.com/
3. https://my.wobb.co/users/companies/procter-
gamble-malaysia
4. http://malaysiabizadvisory.com/

35. THE END.