Abstract
Businesses are increasingly operating in a dynamic environment. That owes to globalization that subject their operations to various forces. In that respect, businesses apply strategies and structures that enhance success in the face of various challenging issues resulting from external and internal factors. In that view, the analysis sought to analyze an organization operating in the global market for its structure, strategies and market environment and provide suitable recommendations. The company analyzed is the Procter and Gamble that has been identified as a leading brand in the consumer goods market. It operates in over 180 countries and serves five segments.
The business’ performance has been impressive compared to competitors while the market highly values its stock resulting to its continued price increase. Further, the business has been found to be subject to various management and marketing issues that require it to apply suitable strategies. The issues include increasing competition, regulatory pressures, and economic fluctuations as well as changing consumer behaviors. Thus, it has been recommended that a business should apply strategies that maximize on its numerous opportunities and averting market threats by utilizing its strengths and managing weaknesses.
Introduction
The current business world has dynamic forces that influence business operations. Those forces include increased globalization, competition, technological advance, economic fluctuations as well as social, legal and environmental factors. In that respect, businesses face changing environment and apply innovation as well as suitable strategies to enhance their sustainability in the global market. Thus, performance is dependent on effective management of issues arising from the corporate strategy and the factors’ influences. In that view, this analysis seeks to demonstrate how global businesses operate, the structure, performance and market as well as internal forces that influence their operations. To achieve the objective, the analysis uses the case of Proctor and Gamble and provides an overview of the company and its operations, market performance, competitors and current issues. In addition, it provides a summary for the company strengths, weaknesses as well as opportunities and threats. Finally, recommendations are made in view of the business positioning and the market environment.
Analysis
- Company background
Together with its subsidiaries, the company produces and sells packaged and branded consumer goods through five segments. The segments include; grooming, beauty, healthcare, Fabric & Homecare as well as Feminine, baby and family care products. It markets its products through merchandisers, membership clubs, grocery stores, departmental stores, high-frequency stores, drug stores and e-commerce. (Yahoo Finance, 2014a)
In addition, its corporate structure provides a framework that helps it tap the benefits of the global business with efficiency and speed. The global operations keep the business in touch with local communities while its governance practices ensure consistency in integrity and high standards. (Proctor & Gamble, 2014)
Historical stock price
The price is shown on the following chart
Source: (Yahoo Finance, 2014)
In view of the stock’s historical rice, P&G has been growing in market value since the year 2008 as marked by a continuous rise in price from $51.21 in 2012 to $79.85 in 2013.
- Competitors
The industry within which the company operates has few large firms that control significant market share. In that respect, competition is stiff among few large firms that have a global reach. The company’s competitors include Unilever, Kimberly-Clark Corporation and Johnson & Johnsons. The table below presents the company’s comparison with the three major and direct competitors in terms of size and performance. (P&G, 2013)
In view of the figures, Johnson & Johnson is the largest business in the industry by market capitalization and number of employees. However, P&G has higher revenues that all the three competitors hence an indication of its competence and competitiveness in utilizing its resources to deliver revenues. In addition, although JNJ has higher earnings per share, P&G is already highly valued by the markets. That is given its higher P/E ratio which shows that investors are willing to pay more for a dollar of its earnings. That is an indication of high level of market confidence for the company. The market competition also comprises of other business models such as label brands and retailers. Finally, industry’s competition is focused on price differentiation with some brands being sold at premium price. (P&G, 2014e)
- International operations: Human resource
The organization has a large number of employees in international operations. The operations HRM focuses on diversity management for its global operations in a bid to make its workforce bigger and diverse to serve more consumers in the world’s market. The organization’s global enrollment by gender over time is shown in the following table.
(P&G, 2014g)
The global employees’ enrollment shows a trend of inclusion and diversity consideration. That is shown by the rising proportion of management and all other employees that are female and those with disabilities. It shows the organization’s commitment to its global service to customers through a representative workforce.
- International markets
The organization’s structure combines local and intentional operations with a focus on growth in individual and retail customers across the globe. Further, in line with an international approach, the company has even changed its go-to-market name from the Market development organizations and adapted the Selling and Market Operations (SMOs). That was a clarification of the need to achieve effectively, superior selling, shelving, distribution, merchandising and execution every day. In that respect SMOs are the business representatives focusing on channels, consumers, customers and markets including the following various regions. The regions of operations are Asia, Latin America and Europe. The others are India, Middle East and Africa (IMEA) as well as North America. In addition, the business has Company’s Global Business Services (GBS) that utilize experts and talents to deliver best in class support services to the international operations. That seeks to achieve low-cost operations while ensuring lean corporate functions that enhance capability improvement and functional innovation. (P&G, 2014f)
- International and segments’ revenues
The business operations cover various segments and regions. In that respect, revenues are earned through various product lines and markets that have been classified into regions. A close look at the regional and segment revenue proportions shown on the following tables can identify the best performing markets and product lines. (P&G, 2014e)
Source: (P&G, 2014e)
The table shows that the business largest revenue proportion was earned in North America, which contributed 39% of the total population. That can be associated with the brand’s western culture hence they are well positioned for the US market. In addition, the region has a large economy that relatively better performing compared to the other regions hence the high demand. In addition, the business is well established in that region with a wide distribution network and a significant markets share. Europe followed the region, then Asia and Latin America with IMEA being the least contributor in the company’s revenues with 7% of the total revenue. IMEA’s share of revenues can be associated with the region’s relative low economic growth and development as well as adoption of the western cultures and products. In addition, the business does not have a well-established production and distribution network in the region compared to the others. However, the region has a number of emerging economies that presents opportunities for venture. (Keller, 2012)
Source: (P&G, 2014e)
In view of revenues by segment, the Fabric and home care products line had the greatest contribution to the company’s revenues. Baby followed it, feminine and family care products then beauty, grooming and finally healthcare products. The leadership by fabric and home care products is because they are the flagship brands for the company hence has a well established production and distribution network.
- Marketing and management issues
Business operations are subject to various forces that determine the issues relevant to management and marketing. In that respect, the following is a summary of the current marketing and management issues facing Procter and Gamble Company.
Marketing
Marketing issues affects the organizations ability to attract and retain customers. They include the increasing concerns over the health effects of products, changing consumer behavior as well as increasing competition. The changing customer preferences are experienced with increased substitute products in the markets and change of lifestyles. In that respect, the organization’s marketing has to position it increasingly products for value delivery to the changing needs. (P&G, 2013) The other issue sis Health concerns as consumers are increasingly becoming more aware of products effects on their health as well as products safety. In that respect, the business marketing has increasingly to address customer worries and concerns arising about the artificial ingredients effects on consumers. (P&G, 2014e)
Competition is also a key marketing issue as the business faces increasing competition with increased market liberalization. That is because more foreign firms can now easily venture into various markets with little restrictions. In addition, technological advance has significantly lowered costs for businesses hence the ease of new entrants venture to the company’s markets. (P&G, 2013)
Management
Various issues concern the organizations’ management ranging from diversity, globalization, environment and related laws. Diversity is increasing for both consumers and the workforce. Thus, there is increasing pressure on management to devise strategies that addresses different customer needs and offering equal opportunity to people with differences. (P&G, 2014d) The other involve environment regulations that are increasing with more concerns over the effects that business operations have on the environment has led to increased pressure to adapt more environment friendly operations. In that respect, the management needs to establish ways to reduce adverse effects on population and sustain sustainable operations. (Keller, 2012)
Expenditures for Environmental Compliance are also a management issue as the company faces issues relating to environment regulations. That is related to the need to embrace more environment friendly sourcing of raw materials, products as well as adapting production methods that are less polluting. In that respect, there is the cost related to the initiatives that affect business performance. In addition, the business has to embrace in socially responsible production and operations. That is as a means of enhancing brand image and customer loyalty in a market that is increasingly adapting use of the social index by investors and even consumers. (P&G, 2013)
Global economic risks are also a key management issue with the business operations being subject to risks that face global markets. They include unfavorable economic conditions that negatively affect operations as well as market demand in various markets and segments. In that respect, the slow recovery from the global recession is a key management and marketing issue as it requires suitable strategies to attract and retain a substantial customer base. (P&G, 2013)
- SWOT analysis
Business operations are usually subject to internal and external forces. The internal forces are those that are within the business control and which are related to its systems, structures and resources. The forces determine an organizations strengths and weaknesses while external forces are those that are outside the business control and which determines its market opportunities and threats. (Sengupta, 2005) In that respect, the following is a summary of Procter and Gamble’s SWOT analysis explaining the organization’s strengths, weaknesses, opportunities and threats.
Strengths
One of the business strength is its scale of operations. The business has scale advantage across its operations, products, businesses and brands which allow them to transfer and share knowledge, as well as optimize on its resources. Innovation is also a strength as the business has established dedicated facilities for innovation across five continents including Switzerland, England, Brussels as well as Singapore and Beijing. (P&G, 2014a) Further, the business has the strength in its ability to translate consumers’ desires to products that are specifically tailored to their preferences and market conditions. (P&G, 2014b) Other strengths include diversity with the company embracing diversity in terms of workforce and product lines. In that respect, it can appeal to different segments, regions and accommodate people with various needs in its model.
Being a well-known brand is also a strength for P&G as it has well known home brands that are used the world over. In addition, it has a strong finance base with its suitable profitability that provides a suitable financial base for its investments in developing new products. The company also has a strong customer base as it enjoys a significant customer base with customer loyalty that makes its operations sustainable. Finally, P&G is a market leader in the development of suitable products and brands that resonate with customer needs.
Weaknesses
Too much specialization in consumer goods that lose the opportunity to utilize market knowledge and experience on other business lines.
Opportunities
The business opportunities include emerging markets that can be ventured to for growth of market share. It also includes technology advance presents more efficient production means that can be applied to enhance competitiveness. Further, technology advance can also be applied easily to reach consumers who are increasingly becoming technologically savvy. The changing customer needs also presents opportunities to develop products that meet the emerging needs. In addition, the improving economic conditions with economies recovering from the recession provide demand that can be tapped by businesses in the global markets. Finally, the increasing free trade and market liberalization presents an opportunity to venture to more foreign markets. (Porter, 1980)
Threats
The business threats include the increasing competition in the markets hence the risk of losing market share. It also includes environment regulations that could limit production operations. Finally, the health concerns over products effects and safety could result to reduced demand hence adversely affecting business performance hence being a threat. (P&G, 2013)
- Jobs opportunities for international operations and suitability
The business provides opportunities for potential employees across its operation regions including California. In addition, it is an excellent employer and embraces diversity in its employment. That has been recognized through various favorable ranking by Diversity Inc. It was ranked position seven among 50 top companies in diversity as well as position eight among the leading ten companies in global diversity. Further, it was ranked position five among the top 10 organizations in recruitment and retention as well as position two among the ten leading companies for people with disabilities. (P&G, 2014c)
Thus, the organization has a strategy that seeks to improve its employees’ lives and strives for recognition as a global leader in inclusion and diversity. The company applies diversity as a competitive strategy hence providing opportunities for qualified candidates from diverse backgrounds. In addition, the company leverages on employees full potential while managing employees’ weaknesses and utilizing their strengths hence providing better opportunities for career growth. Thus, the organization provides an environment within which employees feels appreciated and valued hence can perform at their peak every day. (Sengupta, 2005)
- Recommendations
In view of the company’s position in the market and its strengths as well as weaknesses, the following recommendations are made. They are a means of utilizing the strength and managing weaknesses to optimize on opportunities and avert possible threats. It should enhance the online presence through application of internet and social media marketing. That would easily reach the growing youthful generation that mainly use the internet, and that is forms a significant share of the business target market. Further, it should differentiate products as a means of addressing the increasing competition problem. It would also e crucial in addressing the changing consumer needs and preferences with products tailored to their needs. In addition, the company should tailor products to market needs given the diverse markets that the brand serves. S (Porter, 1980) P&G should venture to emerging markets as a way of enhancing market share growth. Finally, it should divest in declining markets as a way of easing resources for application in more promising areas and segments. (Keller, 2012)
Conclusion
The analysis has shown that P&G ids global leading company of packaged and branded consumer goods selling its products in over 189 countries and across five segments. The organization’s global operations are organized through a structure that enhances speedy and efficient utilization of resources and competence to deliver superior quality and value to customers. The business faces stiff competition from close competitors such as Johnson & Johnson, Unilever and Kimberly-Clark Corporation. In addition, the business faces competition from other business models including retail stores, club stores among others. The company’s stock has been gaining in value since the year 2008 showing growing market confidence in the stock. Currently, the business has been found to be facing a number of issues on management and marketing including competition, regulations, economic fluctuations, social concerns and change in consumer behavior. The company has been identified to have much strength and few weaknesses, as well as numerous opportunities and few threats. In that respect, it has been recommended that the business adapts strategies that seek to utilize its strengths while managing weaknesses to maximize on available opportunities and avert possible threats.
References
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