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Gillette: SWOT analysis Essay

Gillette: SWOT analysis

The Gillette Company SWOT Analysis

            The Gillette Company started in 1901 when King C. Gillette opened “one of the first great multinational organizations” (Hartline, 2007, p.444) that led the safety razor manufacturing industry for about 50 years.  As it provided shaving care products in Boston, it was able to open up a branch in London only four years after its founding (Hartline, 2007, p.444).  By the 1920s, the company’s products reached other more secluded areas from Norway to the Sahara Desert.  This was according to the words of King C. Gillette himself, who has set his company’s goal into “offer[ing] consumers high-quality shaving products that would satisfy basic grooming needs at a fair price” (Hartline, 2007, p.445).  By 1950s, it went through a successful investment during its first and second acquisitions of the Toni Company and the Paper Mate Company consecutively.

However, the environment became tougher when the 1960s came, and the Wilkinson Sword-Schick Company introduced the same shaving products, as the environment became more global and innovative.  Since then, business for Gillette became something that has to be wrestled and battled.

            This paper presents a SWOT analysis of Gillette Company over the past few decades.  We shall analyze its strengths, weaknesses, opportunities, and threats, and then see what exactly are the problems of the company.  Lastly, the writer shall present alternatives for the said case, and then recommend the best solution given the problems that the manager of the company is more likely to face.

Main Body

SWOT Matrix

Below is a SWOT Matrix of Gillette Company:

SUBJECT OF SWOT ANALYSIS:

The product innovation strategy of Gillette Company, which has been a subsidiary of Procter & Gamble since June 2004

STRENGTHS:

ü  Resource and technology advantage

ü  Creativity and strong R&D investments

ü  Strong brand equity and market leadership

ü  More aggressive expansion, product launches and innovation since 2003

ü  Strong marketing and advertising

WEAKNESSES:

ü  Made reckless acquisitions

ü  Highly dependent on core business

ü  Inability to transform strengths to powerful opportunities

ü  Market share lower by as much as 63% in 2003

OPPORTUNITIES:

ü  Product diversion and new product launch

ü  Strong, extensive, and promising customer environment

ü  Socio-cultural trends in hair removal

ü  Price increase in premium shaving systems

THREATS:

ü  Strong competition and razor product imitations

ü  Heavy critics and negative reviews

ü  Cultural and religious factors that prevent people from shaving

ü  Heavy legal and political issues

Strengths

ü  Resource and technology advantage

A strong and extensive resource and technology made way for new products since the ‘80s like the Atra-Plus, the Trac II, and the Sensor and Sensor for Women.  As Michael Hartline (2007) stated, “The Gillette laboratories helped boost sales in the razor and blades, personal care, and writing instruments segments” (p.446).  The steady sales of its products did a lot in maintaining superb company performance.

ü  Creativity and strong R&D investments

Since the ‘80s, Gillette Company has been known for creative and innovative extended products in other personal care and writing instruments industries.  There are the Aapri facial products, the Dry Idea deodorant, Bare Elegance lotion, the Mink Difference hair spray, and the White Rain hair care products.  There is also the Silkience shampoo and moisturizer, Eraser Mate erasable pens, the Paper Mate pens, and the Liquid Paper correction fluids.  This led to a well-diversified portfolio.

ü  Strong brand equity and market leadership

The company’s brand equity can be allocated to the success of its established brands like the Gillette and Braun, the Oral-B, and the Duracell.  Because of this, the company was able to charge higher prices and higher margins, with the advantage of having a better brand image.  As stated by Datamonitor USA (2005),

The Gillette blade and razor portfolio achieved a record 72.5% share of the global market in 2003.  The Venus female shaving franchise has delivered more than $1 billion in retail sales in just three years and has a 32% share of the worldwide female shaving market.  (pp.5-6)

ü  More aggressive expansion, product launches and innovation since 2003

Because of increased competition, the company expands to other hard-to-reach countries like Romania, Yugoslavia, Czech Republic, and the Soviet Union.  New product launches were made on what they called the Sensor, the Sensor Excell, and the Mach3 shaving products.  The unique five-blade design of the Fusion was introduced in 2005.

ü  Strong marketing and advertising

Advertising and marketing activities are significant factors for Gillette Company.  Usually, promotions are focused on sports and newsprints.  These include, first, the New England Revolution of soccer, the FIFA Women’s World Cup, the NCAA Men’s Lacrosse Championship this come 2008, and other events on football, soccer, lacrosse, and car racing (Hartline, 2007, p.452).  Second, the company also extended some marketing activities on newsprints and communication, such as Gay Times and websites.

Weaknesses

ü  Made reckless acquisitions

The company has a tendency to make reckless acquisitions, especially in the ‘60s during the time of CEO Vincent Ziegler, who was too aggressive and ambitious, as he believed that diversification was the answer to bigger prices and values.  Thus, four of the seven acquisitions that were made ended up to be unprofitable on the side of Gillette.  Acquisition was better in the ‘80s and ‘90s.

ü  Highly dependent on core business

As stated by Datamonitor USA (2005), “Gillette’s profitability is highly reliant on the performance of its razors and blades business” (p.7).  This is because, based on its 2003 projection, approximately 68% of its profits came from this sector, while in the total sales, it covered about 42% of the total sales (Datamonitor USA, 2005, p.7).  This makes the company very vulnerable to any projection in the area of its razor blade business.

ü  Inability to transform strengths to powerful opportunities

The company has been scrutinized as “a stagnant, lazy, sleeping giant, with potential far above current realizations” (Hartline, 2007, pp.446-447).  Despite the fact that it holds about 72.5% of the global market in the blade and razor industry in 2003 sales (Datamonitor USA, 2005, p.5), it had difficulty turning its core strengths into powerful opportunities.  As of now, there are about 68 million men and women who shave using a razor blade.  This is in U.S.A. alone.  There is much opportunity given this core strength that the company has.

ü  Market share lower by as much as 63% in 2003

When its strong competitor, Schick, introduced the Quattro—the world’s first four-bladed razor—Gillette’s market share of the razor and blade industry weakened by as much as 63%; Schick’s market share, on the other hand, increased by 17% (Hartline, 2007, p.448).  The 21st century is marked by significantly increased competition worldwide.

Opportunities

ü  Product diversion and new product launch

The environment presented alternatives for product diversion and new product launches, especially in the ‘80s and ‘90s, when the company acquired other firms in other industries, such as the Waterman Pen Company in 1987; the Parker Pen Holdings in 1993, the Duracell International in 1996, and the Newell Rubbermaid in 2000 (Hartline, 2007, p.447).  By 2005, Gillette introduced the Fusion razor blade, which is a five-blade razor product and an effect of its highly innovative strategy.  P&G made a remark that this Fusion product is about to reach $1 billion worth of sales by next year (Hartline, 2007, pp.448).

ü  Strong, extensive, and promising customer environment

According to Hartline (2007), “Approximately 1.3 billion men worldwide shave with a razor blade” (Hartline, 2007, p.449).  In the United States of America alone, this constitutes about 94 million men ages 15 and up, and about 100 million women ages 13 and up (Hartline, 2007, p.449).  The Western societies, such as Canada, UK, and other European countries, also practice good grooming by shaving.  Still, there are other countries in other continents like South America, East Asia, the Middle East, and Australia, which have embraced the practice of shaving body hairs.  The customer environment is so extensive, yet it continues to increase and develop in other countries worldwide.

ü  Socio-cultural trends in hair removal

The present trend insists that more and more people around the globe are starting to adopt the good grooming practices of the West.  When it comes to current people in the Western countries, however, the socio-cultural trends are bending toward the shaving of hair even in other parts of the body that were not shaved before (e.g., chest, back).  Others even prefer a full-body hair removal, and this appears to be highlighting to companies like Gillette.

ü  Price increase in premium shaving systems

There were considerable price increases in the shaving systems of razor products in 2004 (Datamonitor USA, 2005, p.8).  In February of that same year, North America had price increases averaging to about 2.8%, after the new launching of the M3Power, the Venus Divine, and the Sensor3 (Datamonitor USA, 2005, p.8).  This highlighted dramatically in the annual revenues starting that year, and over the last ten years, has been increasing over the last ten years at a rate of about 4% per year (Datamonitor USA, 2005, p.8).

Threats

ü  Strong competition and razor product imitations

Strong competition in the razor shave industry basically started since 1962, when the Wilkinson Sword Company introduced a new shave made of stainless steel (Hartline, 2007, p.445).  However, the real tremendous impact of strong competition was only felt about 30 years after when, sometime in 1990, Schick introduced the Quattro, which is “the world’s first four-bladed razor” (Hartline, 2007, p.448).  Somehow, it appeared that Gillette was threatened, since it filed lawsuits against the said company for using some ‘progressive geometry’ as the Mach3.  Schick, on the other hand, argued that Gillette disposed ‘misleading claims’, such as that the Mach3 was ‘the world’s best shave’.  Product imitations were more prevalent in the 21st century.

ü  Heavy critics and negative reviews

Aside from the critics in the ‘80s that Gillette was “a stagnant, lazy, sleeping giant” (Hartline, 2007, p.446), there was also skepticism on the high price of Mach3, as well as those who post the question on why there is a need for a five-blade razor when, in fact, the company has stated in the ‘90s that its Mach3 three-blade razor is ‘the best a man can get’.  Lastly, it was criticized that razor manufacturers, such as Gillette Company, usually excel because of their profits in the refill industry (i.e., cartridge).

ü  Cultural and religious factors that prevent people from shaving

Culture and religion continues to be a threat for razor manufacturers, especially to those countries that do not have the tendency to adopt Western practices, such as those in the Middle East, in Africa, or the developing countries in Southeast Asia.  Aside from culture and religion, economic stability and trend are also factors that prevent people from shaving.

ü  Heavy legal and political issues

There were legal and political issues in the 21st century when Energizer Holdings filed some lawsuits for the mass mailing in Germany that reached 100,000 samples (Hartline, 2007, p.450).  There were also lawsuits filed in 2004, when the same Energizer pointed out that Gillette’s advertisement of doing ‘closer shave’ is too minimal to support its claim of ‘superior shaving’.  The Consumers Against Supermarket Privacy Invasion and Numbering (CASPIAN), on the other hand, objected that Gillette uses radio-frequency identification (RFID), which are claimed to be ‘spy chips’ by critics.

Major Problem

            From the SWOT analysis conducted in the recent pages, it is obvious that Gillette Company’s basic problems usually revolve around the following: first is weak marketing foresight; second is weak management and control; third is vulnerability of core products and industry; fourth and final are the environmental and cultural hazards.  Given these things, it is clear that what the decision manager faces is an industry that strikes at both the company’s internal and external environments.  They can start by improving important management strategies, such as those that pertain to stronger forecasts and tougher system control.  Being surrounded by a largely threatening environment that is almost inflexible, what they can do is to center their alternatives on the internal environment of the company.

Alternative Solutions

            Before creating some alternative solutions for Gillette Company, it is important to note, however, that its situation reflects the strengths and opportunities that are the following: first is a strong use of skills and knowledge, especially in the R&D; second is brand equity and market leadership; third is strong market penetration; fourth is an extensive customer availability and reliance; fifth are economic opportunities like price increases.

There are three specific alternatives that Gillette Company can choose from given its state in the manufacturing industry, and these are the following:

1.    Improve weak marketing foresight by improving leadership and control.

Usually, when a company gets entangled because of wrong decisions, values, and strategies, the wrong turns can be allotted to the upper management team.  It appears the company is too contented for all the strengths and opportunities it is high time they revitalize a strong and brave character that takes pride in whatever accomplishments and opportunities they may have.  However, the most probable disadvantage is that, by improving upper leadership and control, the execution of leadership would only reside in the upper levels instead of all levels.  The lower staffs may find it hard to learn the execution of leadership.

2.    Improve weak management structure and control by outlining a systematic, more secure and up-to-the minute company strategy.

Weak management structure and control cannot stay in a company too long.  It appears that Gillette is a bit far behind the other companies that already execute—not just leadership of the higher staffs—but also leadership in the lower staffs.  With Gillette, however, even the higher staffs have not yet embraced the proper method of leading and managing the company.  Therefore, creating a systematic and up-to-the-minute company strategy from the higher-level staffs would be very helpful in improving a more secure management structure for the company.  The only disadvantage, however, is that the company has been proven of not being able to execute remarkable actions from the higher staffs.  This means that, if the company strategy would have to rely on these same higher staffs, then the company may be in a worse situation years from now.

3.    Improve vulnerability of core products by improving its basic products.

The vulnerability of core products and industry is normal in the razor blade shaving industry.  To prove these environmental hazards, therefore, it is advisable that the company should focus more on improving its basic products (i.e., razor shave) and resources (e.g., skills, knowledge, R&D).  This act would strengthen the products and the company by reinforcing a tougher, sounder underground barrier.  However, Gillette should fine other means of developing its basic products, aside from additional number of blades that are in their manufacturing products.  There are other ways to improve the products, aside from the number of blades… and the answer would have to rely on R&D.

Recommendation and Conclusion

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            Going over the company’s state wherein its basic problems revolve around weak marketing foresight, weak management and control, as well as the vulnerability of core products and industry, the most viable, far-reaching recommendation that the company can implement is to improve weak management structure and control by outlining a systematic, more secure and up-to-the-minute company strategy, which is the second alternative strategy.  Especially that the only threats that were available these current years have something to do with the heavy legal and political issues, Gillette has all the opportunities that are mostly required for companies to largely excel in the 21st century industries.  The company has learned, so far, on becoming more aggressive and insistent in handling the marketing industry, which means that alternative no.1, which is to improve weak marketing foresight by improving leadership and control, is not really that significant these days.

Alternative no.3, however, which is to improve vulnerability of core products by improving its basic products, can also be under the second alternative.  As for the second alternative—which is to improve weak management structure and control by outlining a systematic, more secure and up-to-the-minute company strategy—its higher staffs have recently been able to execute wise and even aggressive shifts and turns.  It is obvious, then, that nowadays, there is no disadvantage with executing alternative no.2, because the higher staffs have been showing signs of sensibility and great perception.  Therefore, the internal and external environments of Gillette Company reflects that it should focus itself on improving and reinforcing its company structure (i.e., division and allotment of power) as well as strengthen its utilization of control (i.e., leadership, transparency, foresight).

            With Procter & Gamble’s overall mission of “provid[ing] branded products and services of superior quality and value that improve the lives of the world’s consumers” (Procter & Gamble, 2007), Gillette should do something significant that would provide branded products and meaningful services by focusing on strategy, structure, and control.

References

Datamonitor USA.  (2005, December).  Global Gillette: company profile.  New York, NY: Datamonitor USA Publishing.

Hartline, M.D.  (2007).  Case 7: Gillette: the razor wars continue.  In Marketing Strategy (4th edition, pp.444-454).  Belmong, CA: Thompson-Southwestern Publishing.

Procter & Gamble.  (2007).  Company: who we are.  Retrieved July 31, 2007, from its official database: http://www.pg.com/company/who_we_are/ppv.jhtml.

 

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