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P&G focus on providing consumer packaged goodsFounded in 1837 by William Procter and James Gamble.Operates in over 180 countries today primarily through massmerchandisers, grocery stores, membership club stores, drug stores andhigh-frequency stores.P&G is organized 3 Global Business Units:1) Beauty and Grooming,2) Health and Well-Being and3) Household Care
“We will provide branded products and services of superior quality and value that improve the lives of the world’s consumers, now and for generations to come. As a result, consumers will reward us with leadership sales, profit and value creation, allowing our people, our people, our shareholders, and the communities in which we live and work to prosper.”
STRENGHTS1.Diverse range of business segments2.Large amount of customer based.3.Most products are not highly seasonal WEAKNESSES1.Price paid for commodities for the products subject to fluctuation2.Previous CEO has focused the strategy on innovation withoutconcern the customer demands
OPPORTUNITIES1.Research and development efforts to develop technology2.Capturing market share from competitors through advertising3.Accelerate its growth in developing markets such as Brazil and India THREATS1.A material change in consumer demand or products could have asignificant impact on business2.Business is subject to legislation, regulation as well as enforcement in theU.S and abroad
BACKGROUND OF COMPANY• SO Customer in developing market Brazil and India have the chance to use P&G products (S2, O3)• WO • P&G products can get into Brazil and India markets as there are customer demand.(W2, O3)• ST • Increase the number of products that can meet the consumer demands (S3, T1)• WT • Reduce the number of products that cannot give profit in order to cut the cost (W1, T2)
FINANCIAL POSITION STABILITY POSITION (FP) (SP) COMPETITIVE INDUSTRY POSITION POSITION (IP) (CP)
BACKGROUND OF COMPANY BACKGROUND OF COMPANY P&G is located in competitive strategies. The strategies used by P&G: 1- Market penetration - P&G will able to increase market share through advertising. - P&G spend a lot on advertising compared to the others 2- Product development - Can enhanced market share and sales of the company. - P&G can improvised their current products or develop new products to retain old customers and obtain new customers.
Sales Profit Net sales Division /Revenue ($ % % RMSP ($ millions) growth % millions) Beauty1 19,491 24 2,712 23 0.60 3 Grooming2 7,631 10 1,477 13 0.20 3 Health Care3 11,493 14 1,860 16 0.30 2 Snacks and4 Pet Care 3,135 4 326 3 0.10 1 Fabric Care/5 Home Care 23,805 30 3,339 28 0.80 3 Baby Care/6 Family Care 14,736 18 2,049 17 0.40 4 Total 80,291 100 11,763 100 3
The division beauty and fabric care/home care is located in Quadrant II which is “Stars”. Quadrant II – the organization’s best long-run opportunities for growth and profitability. Divisions with a high relative market share and a high industry growth rate should receive substantial investment to maintain or strengthen their dominant positions. Other 4 divisions located in Quadrant I which is “Question Marks”. Quadrant I represents the divisions that have low relative market share position, yet they compete in a high-growth industry.
Internal Factor Evaluation (IFE)Strength Weight Rate ScoreDiverse range of business segments 0.3 4 0.12Large amount of customer based 0.4 2 0.8Most products are not highly seasonal 0.2 3 0.6
Weaknesses Weight Rate ScorePrice paid for commodities for the 0.2 1products subject to fluctuation 0.2Previous CEO has focused the strategy 0.3 2 0.6on innovation without concern thecustomer demands Total Score IFE= 2.32
External Factor Evaluation (EFE) Opportunities Weight Rate Score 0.3 2 0.6 Research and development efforts to develop technology Capturing market share from 0.2 2 0.4 competitors through advertising Accelerate its growth in developing 0.5 2 1.0 markets such as Brazil and India
Threats Weight Rate ScoreA material change in consumer 0.3 1 0.3demand or products could have asignificant impact on businessBusiness is subject to legislation, 0.15 3 0.45regulation as well as enforcement inthe U.S and abroad Total Score EFE = 2.75
RAPID MARKET GROWTH Quadrant II Quadrant I 1. Market development 1. Market development 2. Market penetration 2. Market penetration 3. Product development 3. Product development 4. Horizontal integration 4. Forward integration 5. Divestiture 5. Backward integration WEAK 6. Liquidation 6. Horizontal integration STRONGCOMPETITIVE 7. Related diversification COMPETITIVE POSITION POSITION Quadrant III Quadrant IV 1. Retrenchment 1. Related diversification 2. Related diversification 2. Unrelated diversification 3. Unrelated diversification 3. Joint ventures 4. Divestiture 5. Liquidation SLOW MARKET GROWTH
Procter & Gamble could be considered in quadrant IV, between slow market growth but have strong competitive position. This firm has characteristically high cash flow levels and limited growth needs and often pursue related diversification successfully. The reason is, in July 2010, P&G had changed their CEO from Mr. Lafley, who focused on innovation to Mr. McDonald who focuses on lower-end products aimed at consumers looking for discounts. Even P&G’s revenue increased to $78.9 billion compared than previous year, their profits declined $12.7 billion compared than previous year.