Swot Analysis, Current Issues and Challenges of Procter and Gamble - Essay Example

Procter and Gamble Swot Analysis of Procter and Gamble Procter and Gamble, a global manufacturer and marketer, is the leading company in the United States consumer products market (Datamonitor, 2007: 16). The SWOT analysis, which is a powerful technique for assessing critical issues in relation to the strengths, weaknesses, opportunities and threats impacting a business, is used for Procter and Gamble as follows: Strengths: 1. Understanding the consumer, walking in the consumers’ shoes (Newman, 2007: 48). 2. Good human resources at all levels, employees’ loyalty and cooperation. 3. The company consistently strives to uphold its principles and values. 4. High level of corporate leadership and community service (Proofs, 2008: 12). Procter and Gamble’s strengths are extensive and contribute directly to its position as the global leader in consumer goods. Leading change, innovation, strategy, utilization of the power of knowledge and learning, discipline and thoroughness are part of Procter and Gamble’s ideals of best practice.By implementing profit sharing, the company reinforces loyalty for the company, mutual respect and trust between management and workers. Among the principles and values are a deep commitment towards customers’ best interests, social service, employees’ welfare and business operations that are simple, direct and transparent. (Dyer et al, 2004: ix, 46, 305). Weaknesses: 1. The company’s competition. 2. Dependence on the nation’s economy. 3. Animal testing. 4. Downsizing due to use of advanced technology and loss of traditional jobs. Increasing intense competition from Unilever, Johnson and Johnson, Kimberly-Clark, L’Oreal and other companies is weakening the company’s position in the share market. Further, demand for consumer goods is impacted by the soundness of the United States economy and particularly by corporate profits. Also, investigators have uncovered the fact that animal testing is being done by the company in harsh conditions for its cosmetic and drug manufacturing units (Swasy, 1994: 196). Since consumers are aware of the ethics behind production and the need for corporate social responsibility, this may affect the marketability of its products. Opportunities: 1. Acquisitions and mergers. 2. Leadership position in countries of the former Soviet block and other international opportunities created by liberalisation. 3. Technological advances. 4. Change in population age structure. Acquisitions such as the recent one of Gillette prove to be mutually beneficial (Hannon, 2008: 46). Further, developing the different markets which are opening up opportunities for P & G to establish itself has to be done with priority product categories, and the organization to be developed to carry out the strategies have to be planned (Conklin, 2006: 189). Technological advances have made it possible to increase the rate of production several times, thus reducing overhead costs (Swasy, 1994: 97). With the aging population all over the world increasing in proportion, as compared to a decade earlier, the growing need for skin care and pharmaceutical products along with research development has opened up new opportunities in these spheres. Threats: 1. Increasing intense competition from major rivals, causing slow growth of profit margins. 2. Changes in government regulations, high tariffs and tax increases. 3. Fears of a recession. Since early 2008, Procter and Gamble shares have declined about 6 %. 4. Changing customer tastes. Competitors have been devoting more research funds to cosmetics than to detergents or other products, with higher profit margins (Swasy, 1994: 271). Procter and Gamble believe that liberal trade policies would encourage necessary competition and promote regional development and integration. Due to changing customer tastes, diversification into different product categories has become a necessity; along with the need to market competing brands which share shelf space in stores. Further, recent developments in the area of share values have created the fear of an impending recession (Ellen, 2008: B5). Procter and Gamble’s Current Issues and Challenges For progress and intensive global operations, Procter and Gamble has taken steps to develop organizations such as the Market Development Organization (MDO) and the Global Business Services (GBS). The company’s MDO includes dedicated teams for retail customer and trade channel, and a country-specific team, all of which are organized along seven geographic regions: “North America, Western Europe, Northeast Asia, Central & Eastern Europe/ Middle East/ Africa, Latin America, ASEAN/ Australia/ India and Greater China” (Datamonitor, 2007: 17). Technology, processes and standard data tools are provided by the GBS organization to enable the business units and the MDO to better understand the business and the customers. The company’s traditional philosophy of being the leader in the domain, backed by strong research, development, high level human resources, and total dedication enables it to be ahead of its competitors. However, increasing competition is constricting the company’s profit margins, for which Procter and Gamble is adopting the latest insights about science and business. Springer (2008: 9) believes that concurrent transformations in science and business impact people’s daily life today, and when they are integrated will have the potential to change the basic way in which the world operates. With the development of global markets, speed has become very important. Speed challenges conventional dependence on expertise and trial and error methods. Hence advanced methods developed by new technology have become crucial. Product and process errors and advantages have to be identified at great speed. The consequent returns on investment will include faster development of new products and product innovations, more compelling claims justification and the identification of false claims, higly defensive internet protocol creation, product performance and quality that is improved, higher efficiency in the manufacturing process, shorter time to market, and strengthened market penetration strategy. Thus the relationship between science and business “affects both top and bottom lines: higher sales and lower costs”, and ensures sustained success of the company (Springer, 2008: 11-12). These concerns form significant challenges to P & G’s operations. The values and standards expressed in Procter and Gamble’s statement of purpose, values, and principles: the PVP, enable managers in different global locations to respond quickly and effectively to business opportunities or crises. The parameters on how the company chooses to compete prioritize the best interests of the customer in all business activities (Kanter, 2008: 45). Only those companies which are oriented towards customer satisfaction, practice business ethics and have social responsibility can survive and grow in contemporary times. ---------------------------- References Conklin, D.W. 2006. Cases in the environment of business: international perspectives. California: Sage Publications. Datamonitor. 2007. Personal products in the United States: Industry Profile. December, 2007. New York: Datamonitor U.S.A. Dyer, D., Dalzell, F. & Olegario, R. 2004. Rising tide: lessons from 165 years of brand building building at Proctor and Gamble. The United Statesof America: Harvard Business School Press. Ellen, B. 2008. P & G opts for a Folgers spinoff instead of sale. Wall Street Journal – Eastern Edition, 251 (14): B5. Hannon, D. 2008. Blueprint for a merger. Purchasing: 46-49. Available at: www.purchasingdata.com Kanter, R.M. 2008. Transforming giants. Harvard Business Review. January, 2008: 43-53. Newman, K.A. 2007. Parry and advance. Global Cosmetic Industry Magazine. December 2007. Available at: http://www.gcimagazine.com/articles/12307321.html Proofs. 2008. Industry News. Proofs Magazine. January, 2008. Available at: www.rdhmag.com Springer, S. 2008. Connecting business needs with basic science. Research-Technology Management. January-February 2008: 9-15. Swasy, A. 1994. Soap opera: the inside story of Procter and Gamble. New York: Touchstone Publishers. Read More