Analysis of Procter & Gamble - Research Paper Example

Analysis of Procter & Gamble Competitive strategy-William Procter, a candle maker, and James Gamble, a soap maker, founded this giant and Fortune 500 Corporation in 1837 (corporate profile, web). Procter and Gamble (P&G) is based in Cincinnati, Ohio. The Corporation manufactures a wide variety of consumer goods, including household, beauty, wellness and health products. According to the reports of CNNMoney.com, in the early parts of year 2007, P&G was the 18th largest by profit, 25th largest by revenue company based in the United States of America and 10th in Fortune’s Most Admired Companies list. Additionally, its strategy has been very effective worldwide that is exemplified by its 138,000 employees globally. And, at the same time, due to the worldwide demand for P&G’s services and products, its management is forced to devise such competitive strategy that ensures its sound global marketing strategy with innovation. However, it almost lost its market supremacy to competition in the mid 1980’s had it not been its unsound and aggressive play-to-win strategy (Davila, Epstein, & Shelton, 2006, p.73). After that period, the management of the company realized this fact and changed their competitive strategy. Rivals- stronger financial position both in the foreign and domestic market have left many of its rivals behind. As mentioned earlier, the company was declared as the 25th largest by revenue clearly provided its position in the U.S. market in comparison with its competitors such as Johnson & Johnson, Kimberly Clark, and Unilever. They are not only identified its main competitor in the U.S. market but also in the global market as well. However, the company has been successful in maintaining comparatively better financial position in the industry due to the fact that it has capability and ability to use the latest innovation in its products. And, besides, the P&G has very effective and efficient manufacturing processes that enable her to remain competitive in comparison with its rivals. New entrants- P&G operates in a diverse industry- ranging from consumer products to households. In the local as well as in the global market, the company uses innovation in its products in a way to ensure their consumers demands. As a result, the new entrants in the industry would face very tough time to stay competitive as the company has very strong and stable market brand image and perception. Buyers-the company sells a diverse range of buyers. They range from home products such as Ariel, Pantene, Head & Shoulders, laundry and cleaning products (detergents), beauty care (shampoos, cosmetics), paper goods (toilet papers), famine care (sanitary towels) food and beverages (snacks and coffee) and health care (medicine and toothpaste) (corporatewatch.org, web). The company products clearly highlight the diverse range of buyers that are being served globally by the company. Suppliers- P&G greatly values its suppliers and relationships with the suppliers. Recently, in that direction, the company has put into practice Combine Net’s approach to developing and building sourcing networks, called as expressive competition (Hughes, Jacobs, Begg, 2006). In this process, the P&G’s suppliers are greatly benefiting by this approach; expressive competition match demand to the efficient means of production and at the same time removes exposure risks in making offers. Aggregately, this is another evidence of the company in introducing innovative means to interact with its suppliers. Threat of substitutes- P&G has been famous for its high quality products which are pretty difficult to match or beat (Masahudu Gunu, 2010). Consumers want high quality goods at affordable and reasonable prices. It is this thought that has been the motto of P&G in its product development and innovation, making its products recognized worldwide. It would not easy for any new entrants to come up with new products, putting a tough time to P&G products. Additionally, the brand image of P&G is considerably stable globally. Research & Development- some authors contend that innovations can have both negative and positive implications. However, P&G has been able to manage the both angles of this aspect in an appropriate manner. By comprehending the strategic significance of innovation to remain competitive, P&G, in July of 2001, acquired the second installment of AskMe Enterprise from AskMe Corporation. AskMe Enterprise is one of the most significant and largest innovation systems currently operational in P&G. Qu (2001) argues that AskMe Enterprise touches 18,000 key knowledge workers, working in departments of P&G such as R&D, Purchasing, Knowledge sharing, Consumer and Market Knowledge and Engineering. Organizational culture- P&G faces multicultural issues while managing diversity within the organization. Dooley and O’Sulllivan (2001) argues that poor alignment between actions and goals, poor participation in generating ideas and problem solving, poor control of action implementation with poor planning pose more challenging time to the leadership (p.179). The multiculturalism and diversity of P&G requires transformational leadership that will work in a way to promote organizational goals regards of any other objectives. Customer relationship/reputation- previously, P&G was less attracted to the concept of customer relationship management and its significance for overall business. However, with the passage of time, the company has changed its approach towards customers by ensuring customer relationship via introducing different customer participation programs managed by AskMe. Incumbent advantages- the company enjoys a number of incumbent resources and advantages. First, the company has a very strong skilled employee base. In this base, P&G has around 9,000 R&D associates including 1,100 PhDs; this was held by P&G’s Corporate Director of Innovation Capability (Masahudu Gunu, 2010). Second, the company has huge investment in innovation of current and new products, which gives her an edge to compete with the rivals beyond its traditional geographic boundaries. Conclusion- P&G possesses a huge internal strengths with rich human capabilities. Its strong dedication towards R&D, strong customer relationship/reputation brings those factors that have ensured its unique global position in the industry. However, it has some challenges at the organizational-cum cultural level; undoubtedly, these challenges require the strong organizational leadership; the leadership who must be equipped enough to understand the significance of organizational diversity; and must lead all employees in a way to ensure the attainment of organizational goal and objectives. Works cited page Corporatewatch.org, ‘Overview of Procter & Gamble’ available at: http://www.corporatewatch.org/?lid=247 [accessed on: 22nd July, 2011]. CNNMoney.com (2007).  America’s most admired companies 2007 http://money.cnn.com/magazines/fortune/mostadmired/2007/top20/index.html Corporate profile, Procter & Gamble, available at : http://www.pg.com/en_US/index.shtml [accessed on 22nd July, 2011] Dooley, Lawrence, O’Sullivan, D. Structuring innovation: A conceptual model and   implementation methodology: Enterprise and innovation management studies, 2(3),2001. p.177-194 Davila, T., Epstein, M.J., & Shelton, R. Making innovation work. Upper Saddle River, NJ, (2006). Wharton School Publishing Hughes, Rick. Jacobs, Jim. & Begg, Dennis. “Changing the Game in Strategic Sourcing at Proctor & Gamble: Expressive Competition Enabled by Optimization,” Interfaces, Jan-Feb, 2006, pp.55-68 Masahudu Gunu, Osman. How Procter and Gamble Survived Through Innovation – A Case Study:Innovation at Procter and Gamble – A Case Study [Internet]. Version 4. Knol. 2010 Jan 17. Available from: http://knol.google.com/k/osman-masahudu-gunu/how-procter-and-gamble-survived-through/1kietb77pgwru/8. Qu, L. Procter and gamble enhances innovation by purchasing another Installment of askme enterprise. (2001).  Retrieved April 10, 2008 from www.askme.com Read More