PROCTER & GAMBLE Presented byAkshay Gupta Anchita Bhatia Kakili Chishi Palak Dhawan Rohan Gupta Sanchit Govila
What we will cover today • • • • • •
Company Overview Brief History List of company’s products and brands About the case SWOT Analysis PESTEL Analysis
COMPANY OVERVIEW • The Procter & Gamble Company is an American multinational consumer goods company headquartered in downtown CINCINNATI, OHIO, USA. It was founded in the year 1837. • Its products include foods, beverage, cleaning agents and personal care products. • In 2011, P&G recorded $82.6 billion dollars in sales. • Fortune magazine ranked P&G at 5th place of the “World’s Most ired Companies” list, which was up from 6th place in 2010.
• P&G currently has about 300 brands. • It has an employee strength of about 1,27,000 employees. • The current CEO of P&G is Robert A.McDonald. • It has 28 global technical centers. • P&G touches and improves the lives of more than 4.4 billion people around the world with its potfolio of trusted, quality brands.
BRIEF HISTORY William Procter (candlemaker)
PROCTER
James Gamble (soapmaker)
&
GAMBLE
BRIEF HISTORY • 1858-1859: AMERICAN CIVIL WAR Procter&Gamble supplied the Union Army with soap and candles. • 1880: IVORY An inexpensive soap that floates in water. • 1911: Began to build factories in other locations in the US. • 1915: Opened a plant in Canada to produce ivory soap & Crisco.
• 1920: The company sponsored a number of radio programs. As a result, these shows often became commonly known as ”soap operas”. • 1930: The company moved into other countries, both in of product sales and manufacturing. This was in Britain.
THE VISION “Be, and be recognized as, the best consumer product and services company in the world”
THE MISSION “We will provide branded products and services of superior quality and value that improves the lives of the world’s customers, now and generations to come”
List of company’s products and brands
ABOUT OUR CASE • The pace of international expansion quickened in the 1950s and 1960s as P&G expanded rapidly in Western Europe and then again in the 1970s when P&G entered Japan and other Asian nations. • P&G sometimes used to enter a nation by acquiring an established competitor and its brands but more typically the company set up operations from the ground floor. • Late 1970: this strategy of P&G was well established. The company developed new products in Cincinnati and then relied on semiautonomous foreign subsidiaries to manufacture, market and distribute those products in different nations.
• For years this strategy delivered a steady stream of new products and reliable growth in sales and profits. By the 1990s, however, profit growth at P&G was slowing.
• The reason for this was; P&G’s costs were too high because of extensive duplication of manufacturing, marketing and istrative facilities in different national subsidiaries when national markets were segmented from each other by barriers to cross-trade. • 1980: Barriers to cross-border trade fell of rapidly worldwide leading to global markets. Also, the retailers of P&G were growing globally, such as WALL-MART, TESCO from the UK and CARREFOUR from , demanded price discounts from P&G.
• 1993: P&G did a major reorganization to control its cost structure. P&G shut down 30 factories around the globe, fired 13,000 employees, concentrated production in fewer and the best of their plants. This lead to $600 million a year out of P&G’s cost structure but still profit growth remained sluggish. • 1998: P&G did its 2nd reorganization named “ORGANIZATION 2005”, the goal was to transform P&G into a truly global company.P&G tore off its old organization which was based on countires and regions, and replaced it with 1based on 7 selfcontained global business units. Each business unit was given complete responsibilities to run their functionings.
• Each business unit was told to rationalize production, concentrating it in fewer larger facilities; to build global brands, eliminating market differences and to launch new products. • 1999: P&G announced that as a result of this initiative it would close another 10 factories and fire 15000 employees mostly in Europe. The annual cost savings were $800 million. P&G planned to increase market spending in order to gain market share and further lower prices. • 2003-04: P&G reported strong growth both in sales and profit by revenue surged to 28%. While profits increased by impressive 46%.While P&G’s global competitors such as Unilever, Kimberely-Clark, and Colgate-Palmolive were struggling in 2003 and 2003.
SWOT ANALYSIS OF P&G
STRENGTH: 1. P&G has over 300 brands globally which are available in over 180 countries 2. Over 125,000 people are employed in P&G globally 3. It has around 24 brands which have annual sales over a billion dollars. 4. Its brand have a high recall, high visibility due to excellent marketing and adveritisng 5, P&G has operations in over 80 countries 6. P&G brand has also contributed as sponsors in major sporting and entertainment events
WEAKNESS: 1. Fake products sold under the name of their brands. 2. Its products have stiff competition from big domestic players and international brands.
OPPORTUNITIES: 1. Tap rural markets and increase penetration in urban areas. 2.Mergers and acquisitions to strengthen the brand. 3.Increasing purchasing power of people thereby increasing demand.
THREATS: 1. Intense and increasing competition amongst other FMCG companies. 2.FDI in retail thereby allowing international brands. 3. Competition from unbranded and local products.
PESTEL ANALYSIS OF P&G • PEST Analysis is a simple, useful and widely-used tool that helps company understand the "big picture" of your Political, Economic, SocioCultural and Technological environment. As such, it is used by business leaders worldwide to build their vision of the future. PESTEL analysis is a standard way of environmental scanning. Successful managers need an all-round view of their environment for decision-making. PG company uses PESTEL analysis to draw attention to each of the key external environmental factors.
Political analysis: • The P&G Political Action Committee (P&G PAC) is a voluntary, nonpartisan political action committee. ed with the U.S. Federal Election Commission (FEC) and appropriate state offices, the PAC allows P&G employees to pool personal, voluntary financial contributions to candidates at the federal, state and local level, who issues important to the business and the quality of life in the communities in which they live and work. • P&G PAC operations are transparent and compliant with all applicable laws. The PAC is governed by a set of by laws and supervised by a diverse board of Company senior managers, U.S. Government Relations personnel, and Legal counsel. • of candidates is based on their of P&G issues and sustained constituent relationships. The PAC generally does not contribute to Presidential candidates; industry, association or leadership PACs; or multiple candidates running in the same race.
ECONOMIC ANALYSIS: • Business Cycle Stage • Consumers’ Disposable Income • Economic Growth • Exchange Rates • GDP Growth • Globalisation • GNP Growth • Interest Rates • Inflation Rate (cost of capital) • Labour Costs • Labor Supply • Likely Economic Change • Unemployment Rate
SOCIAL ANALYSIS: P&G leaders are expected to build an inclusive work environment that welcomes and embraces diversity – an environment where people feel comfortable being who they are, regardless of their individual differences, talents or personal characteristics. This is an environment that provides everyone equal access to information, opportunities and involvement so each person learns, grows, excels and maximizes his or her personal contribution. Training, policy and sensing systems are utilized to reinforce development of an inclusive culture. Focused diversity training/learning processes are utilized to equip leaders to value and nurture differences in experiences, styles of leadership and problem-solving/decision-making approaches. All employees have access to ive and enabling policies and practices in the areas of flexible work arrangements.
TECHNOLOGICAL ANALYSIS: P&G’s Global Medical organization advises and assists management and employees to assure a safe, healthy work environment. Global medical delivers preventive health services to all employees, at all sites. It manages health issues that may affect employees, technologies and brands. As P&G is a principles-driven company, all medical system work follows this order of priority: 1. Save a Life (Protect P&G People) 2. Obey the Law (Protect P&G’s Reputation) 3. Protect Key Technologies (Protect Brand Integrity) 4. Enhance Speed to Market (Protect Emerging Technologies) 5. Optimize Employee Productivity
Environment Analysis: P&G s the goals of Climate R.E.S.O.L.V.E. (Responsible Environmental Steps, Opportunities to Lead by Voluntary Efforts). Even with the slight increase in emissions, they have met the 2012 goal, but this will not stop their solve to continue reducing greenhouse gas emissions. Procter & Gamble believes that there is growing scientific evidence linking greenhouse gas (GHG) emissions and global climate change. As a global citizen, P&G is concerned about the potentially negative consequences of climate change and believes prudent and cost-effective action by governments, industry and citizens to reduce emissions to the atmosphere are justified. They will focus their efforts in two main areas: • Reduce the intensity of greenhouse gas emissions from their own operations through – continued energy efficiency measures throughout our facilities. – continuing to transition fuels sources toward cleaner alternatives. – setting goals to drive continued improvement in their GHG emissions. • Help consumers to reduce their own GHG emissions through the use of our products via – product and packaging innovations that enable more efficient consumer product use and energy consumption. – consumer education.
LEGAL ANALYSIS:
There are numerous health, safety and environmental requirements worldwide. Plants are subject to emission limits and operating requirements embodied in these statutes, regulations, laws and permits. It is P&G’s intent to comply with both the letter and the spirit of statutes, regulations, laws and permit requirements. Identified compliance issues are treated seriously, and all noncompliance matters are resolved as soon as possible. P&G is subject to various lawsuits and claims with respect to matters such as governmental regulations, income taxes and other actions arising out of the normal course of business. They are also subject to contingencies pursuant to environmental laws and regulations that in the future may require them to take action to correct the effects on the environment of prior manufacturing and waste disposal practices. Accrued environmental liabilities were not material. While considerable uncertainty exists, in the opinion of management and their counsel, the ultimate resolution of the various lawsuits and claims will not materially affect our financial condition, cash flows or results of operations.