Proctor and Gamble - Strategic Management - Essay Example

The company operates in six product segments: grooming, beauty, Health care, Home care, Family and Baby care, and Pet care (P&G, 2012a). Beauty and personal care arena are contained within P&G’s grooming, beauty and health business segments and include skin care, oral care, cosmetics, fragrances, hair care, baby care, depilatories and men’s grooming products (Euromonitor, 2010:4). Some of the fundamental brands in beauty and personal care arena include pampers, Olay, Head& Shoulders, Panteen, Mach3, Oral B, Puma, Fusion, Gillete, safeguard, ivory among others (P&G, 2012b).

The company’s global Beauty and Personal care market share is 11.7% with the volume growth in net sales in this segment being an average of 4% in 2011 where the beauty segment growth was 3%, the grooming segment at 4% and the Health segment at 5% (P &G Annual Report, 2011: 41-42; Euromonitor, 2010: 4-5). The market share growth for the Beauty and personal care products experienced single digit growth at the rate of 2.8% with the market share growth for the Beauty and Personal Care share for the company based on the main categories of skin care, hair care, men’s grooming, fragrances, and oral care being as shown below in figure 1.

Figure1: Value Market Share Source: Euromonitor, 2011 Similar with its peers in the industry, P&G was negatively impacted with the global economic crisis with its key brands being grossly affected and net sales within the industry having fallen during the 2008 – 2009 period. However, with the company’s strategy response in focusing on core businesses and brands, and divesting in its less critical segments, the company has been able to record growth within its various product segments, with the beauty and personal care products taking the lead in growth.

In addition, the company has over the past three years focused in building a strong market position in emerging countries such as China, India, Russia, and Brazil (Raval, 2012: 1; Prior, 2011:201; Reingold, 2011:60). Financial Assessment: The company has bounced back from the 2009 decline in net sales through its post recession strategy of focusing on its core businesses and brands, and its continued investments in the emerging markets. The most impactful strategy though that has increased net sales is the company’s decision to cut down prices.

These strategies have proved successful with the company increasing its net sales over the 2010 and 2011 period. Net sales rose by 4.6% in 2011 from 2010 net sales. This strategy though effective in the short term, it may be detrimental to brand equity in the long term. This is clearly noted with the downward trend of the net earnings value since 2009 at the rate of 1% (P &G Annual Report, 2011: 1-2). The revenue versus profit growth trends over the past five year period is as shown in figure 2.

The beauty and personal care segments as noted above though have been growing in sales volume especially in the emerging countries (P&G Annual Report, 2011:52; P&G, 2010:5). In fact the company has moved its personal care hub from Ohio to Singapore, in order to strategically place itself in that market (Raval, 2012). Figure2: Net sales and Net Profit growth trend SWOT Analysis: A SWOT analysis of the company’s beauty and personal care segment reveals a stronger and powerful portfolio of products as a key strength.

This provides a strong