Company Analysis of Procter & Gamble
P&G is a company that provides branded packaged goods to its consumers. Their goal is to provide good quality products that help improve their customers’ lives. They have been very successful in achieving this and the outcome is that their products are market leaders, earnings and value creations are also on the high. P&G conducts business in more than 180 countries. P&G, in 1924, was the first company to have done a consumer market research. This helped in greater understanding of their customers and anticipating their needs and wants.
A Consumer Relations department came into being in 1941 to further improve relations with the customers. Also toll free phone numbers in 1973 and e-mail addresses in the 1980s helped this cause. A breakthrough product was developed in the form of Crest tooth paste to help prevent tooth decay by using fluoride. This was accomplished in 1955 at the time tooth decay was the second most prevalent disease. Another product Naturella was developed in 2002 to meet the needs of Latin women in America with lower incomes. Structure
P&G has a very unique organizational structure that helps the company extract benefits at the global level. In the 180 countries P&G is present it aims to focus locally on the consumers. Their global structure helps them be efficient, speedy and in closer contact with the local people. The operations in all countries are carried out at high standards. P&G’s structure is designed to incorporate their world wide continuous growth. P&G’s innovative structure is free from most of the conventional inefficiencies that hinder many big companies.
Global Business Units (GBUs) are mostly responsible for the worldwide consumers, brands and competitors. They focus on product innovation, profits and returns of the shareholders. Market Development Organizations (MDOs) are responsible for retailers and consumers of the particular market and also for incorporating the innovations of GBUs into the plans. Global Business Services (GBS) gives P&G a competitive advantage by providing business support services at lowest costs possible. Lean Corporate Functions integrates innovations in the functions and improves the capabilities.
This structure has been used by P&G for a decade now and they still reap its benefits. It helps them save a lot of money, provides innovations, better execution of plans and growth (Procter & Gamble,2010). Strategy P&G’s strategies are long term and aim in improving the position of the company and returns of the shareholders. The long term financial goals of P&G include increase in organic sales of 4 to 6 percent, increase in operating margin of 50 to 75 points, limiting capital spending at 4 percent, 10 percent growth of earning per share, increase in the productivity of cash flow of 90 percent.
If P&G wants to achieve these goals then it has to take the following actions. Firstly, it needs to keep growing its leading brands and core categories. Their portfolio comprises of 43 brands that make up 85 percent of their sales. P&G should focus on these brands by bringing more innovations and expand these categories. Secondly, P&G needs to build businesses by identifying gaps in the market. They need to serve markets that are not being served. They should expand the distribution system and the geographical reach and emphasize on affordability, accessibility and awareness of the products.
Lastly, P&G needs to build fast growing businesses that have what it takes to become market leaders (Procter & Gamble,2010). Product Development The three Global Business Units are Beauty, Health and Well- Being and Household Care. The chief goal of the GBUs is to make a brand strategy. Consumer needs are identified, new products with innovations are developed and brands are built by effective promotions. These three GBUs can be further divided into 6 segments: Beauty, Grooming, Health Care, Snacks and Pet Care, Fabric Care and Home Care, and Baby Care and Family Care. Beauty:
Procter and Gamble is the global market leader when it comes to the Beauty segment. In hair care, they have 20 percent of the market. In skin care their brand Olay leads the global market. In prestige fragrances they stand second only to the likes of Gucci, Hugo Boss and Dolce & Gabbana. Grooming: In this segment which consists of razor, blades, shaving products, hair removal devices and house hold appliances, Procter and Gamble leads the manual razor and blades market, globally. In the other products like Braun in home appliances and others in the electric hair removal devices are also fairly successful (Procter & Gamble,2010).
Health and Well-Being: This includes in oral care, feminine care, pharmaceuticals and personal health. They are second in they global oral care market. They are the market leaders in the feminine care, globally. In the personal care segment, they are also the market leaders for nonprescription heartburn medications and in respiratory treatments. Snacks and Pet Care: In the snacks global market of potato chips, they are second to Pringles with a 10 percent share. Their Lams and Eukanuba brands compete in the pet care market.
Their chief market is the United States where they have a 10 percent market share. Household Care: This segment includes laundry products, fabric care, fabric conditioners, home care products, detergents, air fresheners and batteries. P&G is mostly one of the two top market share holders in the fabric care. They have 15 percent global market share in home care. Their product in the battery segment is just behind Duracell with 25 percent share. Baby Care and Family Care: This segment of baby care comprises of diapers, training pants and baby wipes.
P&G has 35 percent market share globally and is in most markets either number one or two. The family care is mostly restricted to United States with products like Bounty paper towel and Charmin toilet tissue brands Quality Management The emphasis of P&G is on its five core strengths which give them that bit of something extra to beat their completion and be on top. These five strengths are: Consumer Understanding, Innovation, Brand-Building, Go-to-Market Capabilities and Scale. P&G conducts almost 15000 researches annually to get a grasp of consumer understanding.
That is how important P&G rates it. No company invests more than P&G as far as consumer understanding is concerned. And this helps P&G come up with such good products. They know what people want to improve their lives. P&G is the innovation leader in most industries. P&G continually seeks to improve its products and has many times come up with breakthrough improvements. P&G invests twice as much as its competitors when innovations are concerned. P&G is the best when it comes to build a brand. They have the strongest brand portfolio to show for that.
Most of their brands are market leaders or runners up. P&G’s go to market capabilities also make them what they are today. Retailers rate them as perfect suppliers. P&G also has prominent scale advantages as company and as individual categories. This is achieved through knowledge sharing, best practices, large size and scope (Procter & Gamble,2010). Conclusion P&G also has excellent CSR programs. Through its P&G’s Live, Learn and Thrive program, Children’s Safe Drinking Water, P&G Hope Schools, Shiksha program and Feeding America program, P&G is doing a great service to the humanity.
It has invested a lot in CSR and has given a lot to society. The financial condition of P&G is very healthy. It is able to generate a lot of cash through its operations. Also its accesses capital markets at low rate to generate any finance when need be. Financial needs and capital expenditures are mostly met by the cash from operations. The excess first goes to the shareholders as dividends. Then if need be, shares are repurchased or acquisitions are made. The overall position of cash in the year 2009 portrays the strength of the company. References
Procter & Gamble, (2010), Global Structure & Operations, Retrieved May 21, 2010, from http://www. pg. com/en_US/company/global_structure_operations/index. shtml Procter & Gamble, (2010), Strategy, Goals and Progress, Retrieved May 21, 2010, from http://www. pg. com/en_US/sustainability/strategy_goals_progress. shtml Procter & Gamble, (2009), Annual Report 2009, Retrieved May 21, 2010, from http://www. annualreport. pg. com/ Procter & Gamble, (2010), Operations & Suppliers.
Retrieved May 21, 2010, from http://www. pg. com/en_US/sustainability/operations_suppliers/index. shtml Procter & Gamble, (2010), Heritage, Retrieved May 21, 2010, from http://www. pg. com/en_US/company/heritage. shtml Procter & Gamble, (2010), Core Strengths, Retrieved May 21, 2010, from http://www. pg. com/en_US/company/core_strengths. shtml Procter & Gamble, (2010), Corporate Structure, Retrieved May 21, 2010, from http://www. pg. com/en_US/company/global_structure_operations/corporate_structure. shtml Procter & Gamble, (2010), Social Responsibility, Retrieved May 21, 2010, from http://www. pg. com/en_US/sustainability/social_responsibility/index. shtml