Procter and Gamble strategic appraisal

Résumé du document

Procter and gamble is an American multinational consumer goods company. Founded in Cincinnati Ohio in 1837 by William proctor and James Gamble, the company is today one of the leading companies in its sector of activity. P&G is the world's largest and most profitable consumer products company, with nearly $84 billion in sales and more than $10 billion in net earnings. The company has 25 billion- dollar brands, each of which generate from $1 billion to more than $10 billion of sale per year. They span a broad range of products categories including household care, beauty, grooming and personal health care. The company include brands such as Pampers, Gillette, Tide, Ariel, and more. To deliver growth amongst the best in its industry, they're strengthening their core business, renewing their focus on discontinuous innovation, and implementing a $10 billion productivity program. (Procter and gamble 2013)

The macro economic crisis resulted in various changes in the consumer good industry. Due to the economic crisis and the various austerity programs set up by various governments especially in Europe (BBC 2012). Customers have limited available income; as a result their buying behavior dramatically changes.

Meanwhile the distributors have developed new marketing techniques in order to attract and win the loyalty of customers. According to Abi Lawrence : Successful brands and retailers will help shoppers to maintain their lifestyle on tighter budgets – they will strive to be seen as a money-saving ally.Companies will have to review their strategic positions if they want to be able to compete in this new business environment. Also the companies will have to make good use of the new tools provided by Internet such as the social networks. This in order to increase and improve its communication with its customers.

Extraits

[...] Procter and gamble's strategy is also based on numerous acquisitions and this throughout the years. In 1930 P&G acquires the English company Thomas and Hedley, and establishes the first overseas subsidiary product the Fairy soap. In 1985 P&G acquires Richardson-Vicks, maker of personal healthcare products .In 1991 P&G acquires Max Factor and in 2005 P&G acquires Gillette. In 1948 the company establishes an oversees division in order to manage the growing international business, and in 1988 the company start to manufacture products in china.Today Procter and Gamble is established in 180 countries all over the world and employs over 126000 people (Procter an Gamble annual report 2012) The combination of acquisitions and globalization led the company to its success. [...]

[...] Innovation is a dear aspect of P&G's strategy. The P&G Business Model : ( Procter and Gamble annual report 2012) Porter's five forces As said previously the consumer good industry is very dense. Understanding the competitive environment in essential in order to gain advantage over competitors. The five forces framework helps identify the sources of competition in an industry or sector (Johnson and Scholes 2005). Porter's 5 forces is an analytical tool that can be used in business analysis and business strategy development. [...]

[...] Available: http://www.bcg.com/about_bcg/history/history_1968.aspx. Last accessed 30-04- 2013. Yahoo. (2013). industry personnal products . Available: http://finance.yahoo.com/q/in?s=PG. Last accessed 29-04-2012. "2012 Earnings Report, The Procter & Gamble Company". The Procter & Gamble Company. Retrieved May 2012. [...]

[...] The objective is to reduce cost by optimizing the stages of production and increasing production volumes. Differentiation strategy: The differentiation strategy is based on the production of a product or service that is recognised by the industry as being unique thus permitting the firm to charge higher prices. (Dess & Davis, 1984). Procter and Gamble has invested a lot in research and development and offer high quality products. They have chosen to provide higher quality products, at a higher price. Focus strategy: The strategy focuses on a particular segment of the industry. [...]

[...] p8. Bruce Henderson (1970). The Product Portfolio . Boston : The boston consulting group . europa team . (2008). the SWOT analysis . Available: http://ec.europa.eu/europeaid/evaluation/methodology/examples/too_swo_res_fr .pdf. Last accessed 9-5-2013. Gregory Dess, Peter Davis. (1984). Porter's (1980) generic strategies as determinants as strategic grop membership and organisational preformance . The academy of management journal 4-5. [...]