and Gamble and LG Electronics
and Gamble and LG Electronics
In the scope of this paper the analysis of the strategies, used by the Procter and Gamble and LG Electronics would be conducted while referring to both strong and weak points, which are inherent to each particular strategy; contributing factors of the strategic development and the outcomes which have been reached by both enterprises.
PROCTER AND GAMBLE
First of all it is essential to refer to the fact that the Procter and Gamble (P&G) is the global leader in the area of consumer goods; this business entity operates in more than 180 countries – it is both producer and marketer of the branded products. It is estimated that this company serves more than 4.8 billion of the clients. The head office of Procter and Gamble is located in Cincinnati, Ohio. This company employs more than 126,000 people (PGSA, 2013).
There are five segments, where the company has reported the high rate of competition, experienced by it: health care, beauty, grooming, family and baby care, home and fabric care. There are more than 300 brands, offered by this business entity, among the most famous, it is possible to outline the following: Pantene, Gillette, Tide, Charmin etc. There is a set of the product lines, offered by P&G; for instance, skin crèmes, cleaning products, toothpaste, products for shaving etc (P&G, 2015).
Strengths and weaknesses of P&G
While referring to the business and marketing strategy of P&G as it is initially represented on its official web site, it is essential to outline the following information. The business activity of this company is mainly focused on the set of the strategies, which is referred by its top management as the most suitable for the long-term profitability and sustainable development of the Company, while the major objective is set on the delivering total return to shareholder.
Additional emphasis should be put on the fact that throughout the history of this company innovation has always been a lifeblood of P&G. more than that the fact of consistency in terms of winning the target audience is directly interrelated with the preferences and the price tiers, innovative approach towards the portfolio, product improvements, integration of the various commercial programs and game changing innovations.
Finally, one of the major focuses of the top management of P&G is put on the operating discipline improvement at all the stages of the manufacturing and operational processes. It is claimed within the strategy of the company that winning the clients is possible only in the case of netter executing in comparison to the competitors.
While referring to the current growth rates in the market, it is expected by the leaders of this company that in the case if the set of the annual financial targets (listed below) is consistently delivered, it is possible to expect significant shareholder returns and being in the top three of the peer group of competitors.
Annual financial targets for P&G:
Delivering the high single digits’ Core EPS growth
Generation of the free cash flow productivity at the rate of minimum 90% or even more;
Increasing the organic sales in a modest manner above the rates of the market growth in the set of the geographies and categories, where the P&G competes (P&G, 2015);
The major weakness of this company it is possible to refer to the rapid change of eth clients’ preferences, which leads to the need of inventing the new products as well as their further promotion and popularization.
Influencing factors for each stage of P&G strategic development
Embryonic and Growth
In the scope of strategic development of P&G it is essential to refer to the major changes, which have occurred in the leadership and culture of this organization. P&G- as the conglomerate, which has been existent for many decades, has faced with the need of issuing the set of changes into its culture in order to get adapted to the new times. For instance, the plan ‘Organization 2005’ has been implemented into the practice by this company in late 1990s; the major purpose of such strategic approach implied the change in structure and culture of the company. The major reason for such trend was the fact that it was referred by the experts as the slow moving and conservative business entity with the bureaucratic culture, it meant that the allocation of power was mainly concentrated on the top executive body; thus, the lion share of strategic decisions was made by these managers – it meant that the corporate decisions were made in a slow manner and it has led to the profit losses (Avila, 2013).
Shakeout and mature
Currently, P&G is fast-moving and modern business entity, which operates with the wide set of the technological advancements. Such innovative approach provides the employees of this company with an option of better and more prompt decision making; access to the available resources and minimization of the overall quantity of the ‘red tape’.
Additional emphasis should be put on the fact that the major part of the culture changes comes from the new focus of the top management of P&G , which is put on the active launching of the innovative informational technologies.
The factors, which have affected the strategy of P&G
The resources of this company are mainly allocated for the leading as well as the most promising strategic directions. In accordance with the strategic planning of the P&G, the major areas for strategic expansion and development, involve the following:
Focusing on the core current markets (such as US)- for further development of this segment of business;
Focusing on the market investments’ development on the countries as well as specific categories, which represent the highest probability of winning as well as the largest revenues;
Focusing on the portfolio, while allocating the available resources to those business segments, where there is an option of the disproportionate value creation.
The major purpose for creating the flexibility implies funding of the growth efforts and further delivering of the financial commitments. For this purpose, the top management of the P&G is elaborating the strategic options for making the productivity a major strong point of the P&G. Significant steps have been already undertaken by this business entity for cost savings’ acceleration. As an evident example, it is possible to refer to the fact of announcing the five year cost saving initiative in 2012. The entire set of the cost elements has been covered by the cost savings program. For instance, the expenses for marketing campaigns, cost of goods sold, non-manufacturing overhead etc.
LG ELECTRONICS
The second company to be assessed in this paper is LG electronics. It is the enterprise, operating in the area of the consumer electronics. The head office is located in Korea, but this brand is already recognized all over the world. More than 84 thousand people are employed by this company. LG electronics has got 81 subsidiaries around the globe. Currently, this company is tending to occupy the leadership positions in the IT Industry. As for now, the leaders in the area of IT technologies are Samsung and Nokia, and the third leadership position is occupied by LG.
Strengths and weaknesses of LG Electronics
The core means, which are used by LG electronics, are the cutting-edge designs, innovative technologies and unique product lines.
The current vision of this company is becoming a global leader in the area of digital technologies. In order to understand the major success factors in terms of its strategic management as well as compare them with the further strategic options, both mid-term and long-term visionary planning strategies should be assessed (Hill and Jones, 2013).
For producing the products, while applying the innovative technological achievements into the practice, and at the same time, offering the client with the stylish solutions, LG electronics has made significant investments into the areas of research and development. For this purpose, the top management of this enterprise has followed the Total Quality Management (TQM) approach in the entire set of the organizational areas- such as inspection, production, assurance of the quality and design etc.
Among the major weak points of LG, it is possible to refer to the fact that it is the export-oriented company and that is why there are the cases when its lacks the awareness in terms of cultural disparities.
Influencing factors for each stage of LG Electronics strategic development
Embryonic and Growth
While taking into account the fact that LG has brought the creativity and innovation into the entire set of the business processes – such as branding, manufacturing, marketing advertising, sales, as well as the set of the strategic options, related to the brand, the major postulates of the digital world have been transformed by the LG into the added value of the client’s everyday lives.
Shakeout and mature
At this stage of the strategic development, the involvement of the designers into the process of decision making has taken its place. In such manner, they have been empowered for launching their invocative ideas into the practice through the best designer’s efforts. In addition, the designers of this business entity are encouraged for their input into the company’s image development – by the award “Super Designer”. In such manner, the top management of LG Electronics promotes the activity of innovation and designing. It is possible to make a statement that the contributions and efforts in the area of design have put the LG Electronics into the rate of being appreciated as the business entity with the world renowned design (Sadler, 2003).
Currently, LG holds the set of the following awards in the area of design - Korea Good Design Awards, Design Award, reddot Design Award, Good Design Award Japan etc. Both creative approach and innovative solutions, reached in the set of the 38 research labs all over the world, have empowered the LG with the through smart technology. In such manner, the products, offered by this company, have become more user-friendly and intuitive. In other words, they match the current trends in terms of the customization and ease of use, while being fulfilled with the maximal quantity of the options (Snoj, 2004).
The factors, which have affected the strategy of LG Electronics
In accordance with the corporate philosophy of this business entity, the major directions for further development are mainly determined by the dreams, needs and desires of its clients. It is claimed by the top management of LG that research and development as well as the designing is related with the feelings, emotions and expectations of the clients and thus they should be reflected within the appearance of the new products.
How do they differ from each other
After conducting analysis of P&G and LG Electronics business strategies, if is essential to refer to the fact that these two business entities have both common and differentiated features inters of their strategic development. The common feature is customization of the products- matching the current need of the market by both business entities. Such strategic approach has enabled both companies, analyzed in the scope of this report, with the possibility of being involved into top positions within their corresponding industries and markets.
Still, there is a set of differentiating features within the strategic preaches, used by LG and P&G. These differences have the set of underlying issues- such as completely different industries, they operate in, managerial style of the leaders and the structure of the enterprises.
LG Electronics has effectively adopted the set of the policies, which have furthermore contributed the process of transformation of the LG Corporation into the Leading Brand in terms of the quality. These strategic policies have been launched in the following areas of the company’s activity: Human resource, branding, advertising, manufacturing, corporate social responsibility etc. in other words, the approach, used by the strategic managers of LG was rather complex and integrated one. The set of the efforts, mentioned above has contributed establishment of the strong brand image of LG (Hussain et al, 2013).
While referring to the P&G business strategy, it is essential top pay additional attention to the fact that embracement of the P&G public knowledge is mainly caused by the newfound passion of its top management on the potential options, implied by the active use of the technological advancements and the internet in terms of the marketing, logistics etc. In such manner, both shareholders and clients are provided with an easy and prompt access to the urgent information, which is allocated on the official web site of this company (Freeman, 2010).
The innovative changes, which have been launched by P&G have assisted this company in terms of the better representation of their values of leadership, honesty, strive for leadership in the market, ownership, and trust. In addition, the belief of the top management into the fact that the major success factor of the business of the 21st century is innovation, has motivated it for reinventing their business strategy for further matching the needs of the consumer (Doyle, 2001). It is possible to make a statement that such approach has supported the new cultural change of P&G.
Finally, P&G has demonstrated the high rate of the social responsibility through the set of the programs - such as Disaster Relief at P&G; these programs are mainly oriented on the assisting people in the areas of disaster recovery with the necessary remedies, provision and financial support.
Thus, it is possible to make a statement that both companies have relied to the customer’s needs maximization of the CSR, innovation and creativity in design and characteristics of the products, the means, used by the companies, were totally different, but the outcomes have the set of the similarities – being recognized brands, which are referred as innovative and promising.
References
Avila, Jim.(2013) FDA Regulation of Cosmetics Nears Despite Industry Objections." ABC News in PGSA (2013) A Strategic Analysis of the Procter & Gamble Company. Retrieved from: http://angthonytung.com/pdfs/PGSA.pdf
Doyle, Peter(2001), “Building value-based branding strategies”, Journal of Strategic Marketing, Vol 9 No. 4, pp. 255-268 in Hussain, S.F., Nazir, T. and Zaman, K. (2013) Brand analysis of LG electronics: a case study. Retrieved from: https://www.academia.edu/3206810/BRAND_ANALYSIS_OF_LG_ELECTRONICS_A_CASE_STUDY
Freeman, R. E. (2010) Strategic Management: A Stakeholder Approach. Cambridge University Press
Hill, Ch., Jones, G. (2012) Strategic Management: An Integrated Approach. Cengage Learning
Hussain, S.F., Nazir, T. and Zaman, K. (2013) Brand analysis of LG electronics: a case study. Retrieved from: https://www.academia.edu/3206810/BRAND_ANALYSIS_OF_LG_ELECTRONICS_A_CASE_STUDY
P&G official web site (2013) A Company History in PGSA (2013) A Strategic Analysis of the Procter & Gamble Company. Retrieved from: http://angthonytung.com/pdfs/PGSA.pd
P&G official web site (2015) Company Strategy. Retrieved from: http://www.pginvestor.com/GenPage.aspx?IID=4004124&GKP=208821
PGSA (2013) A Strategic Analysis of the Procter & Gamble Company. Retrieved from: http://angthonytung.com/pdfs/PGSA.pdf
Sadler, P. (2003) Strategic Management. Kogan Page Publishers
Snoj, B. (2004) The relationships among perceived quality, risk and product value‟, Journal of Product & Brand Management,Volume 13 Number 3, pp 156-16 in Hussain, S.F., Nazir, T. and Zaman, K. (2013) Brand analysis of LG electronics: a case study. Retrieved from: https://www.academia.edu/3206810/BRAND_ANALYSIS_OF_LG_ELECTRONICS_A_CASE_STUDY
