Situation Analysis and Recommendation Conducted for P&G
P&G is one of the best known and biggest consumer goods companies in
the world. It owned several well-known brands that were sold in over
140 countries to nearly 5 billion consumers. For example, Tide,
Pantene and Pampers.
P&G was founded by William Procter and James Gamble as a partnership
in Cincinnati, Ohio, merging Procter¡¯s candle-making company with
gamble¡¯s soap business in 1837. In the early 1860s P&G¡¯s initial
foray into branding was the Moon and Stars. After 50 years
development, P&G became one of the first companies in the US to offer
a profit-sharing program for its employees. And in 1924, P&G was one
of the first companies to create a market research department to study
consumer preferences and behavior. After world war ¢ò, P&G began its
international expansion. In 1948 it established an overseas division
while setting up its first Latin American subsidiary in Mexico.
Subsequently, P&G entered into the market of Japan, Europe and Saudi
Arabia in succession. By the mid of 1990s, over half of the company¡¯s
sales came from outside the US.
As its global expansion progressed, P&G continued to modify its
structure and internal processes to maximize global leverage. A
restructure program was implemented in the P&G which involved
comprehensive changes in organization structure, work processes, and
culture. This program aims to make employees stretch themselves and
speed up innovation. But this restructure program would not achieve
their initial expectation. Due to the maturity of the company¡¯s
established brands, Revenue growth was slowing down and they were not
achieve their target of 7 percent of revenue growth but declined.
The vision of P&G is that to be, as recognized, the best consumer
products and services company in the world.
The mission of P&G is to increase its after-tax profits by
approximately $900millinon by fiscal 2004.
1.4 Current strategies
1.4.1 Product diversification
One of the strategies for their product is diversifying. P&G had five
business segments which are Fabric and Home Care, Baby, Feminine, and
Family Care, Beauty Care, Health Care and Food and Beverage. Each of
the segments include different kinds of products which from toothpaste
to medicine and nearly cover everything we use in life. P&G as
diversity is a fundamental business strategy because their customers
and suppliers become more and more diversified every day. So P&G¡¯s
success depends on their ability to understand diverse consumers¡¯
1.4.2 Cost cutting
As an expansion and acceleration of Organization 2005, P&G improve the