Strategic Management - Using Your Strength to Overcome Weaknesses and to Overcome Threats - Case Study Example

? Strategic Management Table of Contents TASK I 3 Procter and Gamble 3 Objectives and Mission 3 Social Responsibilities of the Company 4 Relation between Missions and Objectives 6 TASK II 6 External Factors Affecting Business 6 PEST Analyses 7 SWOT Analyses 8 Porters Five Forces Analyses for P&G 9 Resource Based View 10 Key Issues 11 TASK III 11 Recommendations 11 12 12 Reference List 13 TASK I Procter and Gamble This essay will focus on the business strategies of Procter and Gamble which is also known as P&G. P&G is a consumer goods organization based in America. The company's headquarter is in Cincinnati, Ohio, United States. P&G is a reputed multinational company manufacturing variety of products. The major classification of the commodities produced by P&G is divided into three categories; individual care products, pet foods and cleanup agents. The organization has gained a successful name for its leadership in the management process. Right from its inception the company has shown accelerating growth over the years. William Procter and James Gamble; one being candle maker and the other being a soap producer started a partnership business long back in 1837 in Cincinnati named P&G. The company won a very fruitful contract during the American civil war. The organization was supposed to supply candle and soaps to the Union army during the civil war as per the contract. Gradually working systematically over time the company has gained its giant social appearance. It now engages in the production of beauty, grooming, food and drink and pet care, cloth and habitat care, baby and family unit care segments, health care. As estimated in 2012 the companies operating income is about $13.29 billion (P&G, 2012). It provides large employment opportunities in the economy. Objectives and Mission The company’s mission is to provide good quality products to the people and improve the quality of their life. This is because by doing so they can achieve leadership sales, value and goodwill in the market. The mission of the company would help its employees and shareholders to prosper in their activities. The company attempts to provide good quality products to the consumers all over the world and help to improve their quality of lifestyle. They trust the fact that their profit, value and fame in the market can be automatically generated, if the consumers have faith in the quality of their manufactured goods (Mullerat, 2011). The company claims to recruit the best employees in the Globe. The employees are rewarded or promoted in the company only on the basis of their performance. This is the sole reason for which all the workers give their 100% to make the company work better over time. Thus one of the most important assets of the values of the company is to think their employees as their assets. The company has keen leadership and ownership qualities. It realizes every step of its business in a strategic pattern. The workers take the assets of the company as their own wealth. The company gives values to perform tasks with integrity and trust. The company works completely with empirical observations and intellectually advocates all its proposals and risks. The company always gives importance to the interests of all the individuals. At the same time the organization separates the interests of the individuals and the company. The company has always claimed to focus on its operations. P&G always gives maximum importance to innovations. The company is always focused externally; it constantly tries to build good customer relations and fine corporate populace. The company follows a motto of ‘be best the best’. They believe that communal interdependence is the best way of existence. The company wants to enhance their core business and make it a global leader. It wants to innovate new brands. It wants to accelerate its growth all over the world, mainly in the western part of the globe. The organization desires to drive growth in the developing economies. Social Responsibilities of the Company P&G has continually enhanced the quality of life for all its consumers for over 170 years. The extreme importance that the organization gives to the motto of social responsibility is evident from the investments they make for social causes. The social responsibilities of the company help to achieve the United Nations Millennium Goals. P&G’s social goals attempts at improving the housing and sanitation facilities for people. It also concentrates on improving child and maternal health status in the world. P&G has built various long term relationships with several other NGO’s like Red Cross and Habitat. P&G nonprofit wise has established a Children Safe Drinking Program (CSDW). In most of the developing countries poor people lack access to safe drinking water; as a result more than billion people die due to diarrhea (Elearn, 2013). P&G has introduced P&G packets that convert about 10 liters of dirty water into clean drinkable water. These packets manufactured by the company are used in every part of the world, even in the disaster prone areas (Hawkins, 2006). It is accounted that more than 50000 babies in the world die along with their mothers due to maternal and neonatal causes in the first year of their birth. P&G has joined with UNICEF to give vaccinations to the poor mother and children of the poor nations who are need of preventive care (Vezzoli and Manzini, 2008). P&G has partnered with United Way to introduce a program named ‘Born Learning’ that aims at the development of children less than 6 years of old (Rogers, 2001). The program provides jobs for mothers of these children and thus helps them to get their ends meet. The company participates in several disaster relief programs. The organization donates a lot of money to various NGO’S and IGO’s. CSR Value Model Causes for society/ Responsibilities Desire Expectation Requirement Requirement Philanthropic P&G is helping to develop women and child health in their charitable programs (Smith, 2010). Ethical The company is providing good quality consumer goods products at reasonable prices that are most suitable for common customers to afford. Legal The organization treats the interests of itself and individual separate. Economic The company has many operating branches across different nations and thus provides good employment opportunities to a large section of people. (Source: Author’s Creation) Relation between Missions and Objectives The company aims at improving the living standard of people and remains successful in doing so by actively participating in sustainable social programs as explained above in the previous context. The organization claims at giving good quality products and indeed the commodities produced by the company are safe, hygienic and can never adversely affect the health conditions of the users. P&G has claimed to maintain good ecological balance and pertaining to this they have undertaken several environment friendly measures like using renewable energy and recycled materials. Thus it is evident that the companies mission and objectives are mitigated in its activities. TASK II External Factors Affecting Business The activities of a business organization are largely influenced by external factors of the economy. Thus when a business firm carries its operations it must take into account the political, social, cultural and economical aspects of the rest of the society. There are various models and analysis tools that help to judge the effect of external factors in the working of a business firm. This essay will mainly focus on PEST, SWOT and Porter’s 5 forces analysis of P&G. PEST Analyses PEST analysis is one of the efficient tools that help to strategically study the impact of political, economical, social and technological factors in the working of a business organization. The essay will now explain the PEST factors affecting the operations of P&G. Political P&G is a company of U.S. and the government of U.S. follows strong democratic tradition for its governance. This has helped the company to expand and flourish in business according to its own set goals. The government has interfered least in the matters of the organization. On account of this reason the government’s tax rates set by the government for corporate companies is also high. Economical P&G is mainly based in the U.S., the nation that is considered to be the most economically developed countries in the world. The GDP of the country was $15.94 trillion estimated in 2012. The nation’s per capita income is about $50,700 (CIA, 2013). This shows that the people in the country are economically healthy. The products newly launched by the company have always gained great importance among the rich, literate and health conscious people in the country. Social The consumers of the products of Procter and Gamble in U.S. are mainly rich and literate people. They have always shown interest in enhancing their quality of life. The products of P&G are mainly commodities relating to health and hygiene. Thus the consumers have always demanded these commodities for their day to day use. The products produced by P&G are mainly consumed by people living in the urban regions. The rate of urbanization in U.S. is 82%, thus it can always be said that products of P&G have good market within the borders of the U.S (CIA, 2013). Technological The level of urbanization in the U.S. is extremely high. The nation is highly developed in terms of technology and infrastructure (Porter, 2008). Good infrastructure of U.S. helps the companies like P&G to accurately distribute their goods and services across different retailers in the market. Since the generation of energy in the country is very high the state often subsidizes certain resources required by the corporate companies for their production purposes. SWOT Analyses SWOT analyses will enumerate the company’s strength and weaknesses along with the opportunities and threats faced from external affairs (Bohm, 2009). Strengths The company is a global leader in manufacturing a wide variety of products; from beauty care to detergents and diapers to food. The company has a good knowledge in industry manufacturing for over 170 years (Yuece, 2012). The new acquisitions of the company are market leaders in Europe. The firm has an effective system for brand management. Weaknesses The cost of production of the goods in the company is very high. It has to face variable cultural needs of the customers. The organization is facing difficulty in protecting the imitation of its newly launched products and strategies in competition. Opportunities The company is now enjoying the fruits of the growing market for shampoos and conditioners. The market for conditioners in Europe is less developed thus P&G conditioners enjoy good international demand (Fine, 2009). The managers of the company are efficient and posses good technical know-how. Threats The market for the products produced by P&G is extremely powerful in terms of competition. There are potential rival firms in the company who produce and sell the same quality products at lower prices. The company has less number of suppliers of raw materials and goods in the market. Porters Five Forces Analyses for P&G Porter’s 5 forces of Analysis try to take an account of the five basic threats that can obstruct the growth of the business of an organization. This context of the essay will consider the case of five opposing forces in the economy that affects the business of P&G. Threat of a New Entrant The overall threat of new entrants in the industry is moderate but still often varies according to the segment of the product concerned. New entrants in the market cannot turn big and well capitalized like P&G at the initial stages. Rather the company invests large sums of money in research and development that is not possible cannot be invested by other new entrants in the market. Threat of Substitutes The threat of substitutes faced by the company is moderate as most of the products produced by P&G are necessities like laundry detergents. However some segment products like soaps and snacks have substitutes in the market. Power of Suppliers The company is a giant in the market and does not depend on any specific suppliers. P&G gets into partnerships and joint ventures for their new products. Rather in most of the situations the suppliers show a greater interest in working with P&G. Thus the bargaining power of buyers is low in the industry for P&G products. Power of Buyers The bargaining power of consumers is moderate P&G because almost 15% of its products are demanded by Wal-Mart. The group of retailers access greater bargaining power than the general consumers. The consumers generally show less bargaining power as they enjoy the brand loyalty of the products of the company. Threat of Competition The business environment of P&G is highly competitive as a result the threat of competition is high. There are a large number of competitors for the company both in the domestic and international markets. The company has to invest large sums of money in the advertisement costs because that helps to create brand loyalty among the buyers. Resource Based View This view helps to analyze the different strategies adopted by a firm on the basis of its resources and capabilities. The table below takes three major resources and capabilities of P&G which are brand value, after sales services and research and development. On the basis of the three resources it analyzes the company’s comparative advantage in the market. Capability Valuable Rare Imitable Non-substitutable Conclusion Brand name Y Y Y N Competitive advantage R&D Y Y Y N Sustainable Competitive advantage After sales services Y N Y N No Competitive advantage. Thus it is evident from the above table that the company has a competitive advantage over its technical knowledge and bring value. Key Issues The company enjoys a good amount of consumer surplus. As the products are of good quality, there always exists a wide gap between the price consumers will to pay for P&G products and the actual price they pay for it. The utility the consumers derive from P&G products is high so the network effects of the commodities are also good. Considering the strategy canvas, there still lies a gap between the blue ocean strategies of the firm and the industries value curve. The Energy and Environmental Research Center (EERC) helps the companies to improve their environmental friendly activities. P&G has still several ways to enhance environmental sustainability in its business operation. TASK III Recommendations Although the business of P&G has been successful all over the world but the company can never cease to enhance its growth. This section of the essay will take into account of some strategic recommendations the company can adopt, that will help it improving its business in future. In doing the analysis of the major external influences it has been observed that the major threat to the company is extreme competition persisting in the market. The company is also facing a problem in reducing its cost of production on several goods (Butje, 2005). The organization can appoint skillful innovators who would help to invent modern methods of production that would reduce costs. Further the company should try to expand their market so that they can enjoy economies of scale in production (McCabe, 2009). The giant business organization of P&G has adopted several ways to maintain equity and equality among its members (Nieuwenhuizen, 2007). Although the organization have adopted several tasks to maintain environmental sustainability, it can take efforts reduce the carbon emissions from its product manufacturing factories. The company has tried to give safe drinking water access to the poor sections of the society. The company can conduct campaigns against communicable diseases like AIDS. The commoners have good trust and goodwill over the company and thus such campaigns can help to create successful AIDS awareness among the people. Not only upgrading the existing brands, the company should also introduce new varieties of products. The organization should adopt strategic methods to promote the popularity of such new inventions. This can be done by creating artificial demand in the market. The company can also offer free samples of its products in developing nations where the awareness of such habits is less in prevalence (Gaffey, 2004). The organization can initiate a greater usage of various ecological friendly tools in its operations. With the above recommendations the organization would surely progress in future. Reference List Bohm, A., 2009. The SWOT Analysis. Munich: GRIN Verlag. Butje, M., 2005. Product Marketing for Technology Companies. London: Routledge. CIA, 2013. North America: United States. [online] Available at: < https://www.cia.gov/library/publications/the-world-factbook/geos/us.html> [Accessed 08 August 2013]. Elearn, 2013. Business Environment. London: Routledge. Fine, L. G., 2009. The SWOT Analysis: Using Your Strength to Overcome Weaknesses, Using Opportunities to Overcome Threats. Seattle: CreateSpace. Gaffey, S., 2004. Signifying Place: The Semiotic Realisation of Place in Irish Product Marketing. Farnham: Ashgate Publishing, Ltd. Hawkins, D. E., 2006. Corporate Social Responsibility: Balancing Tomorrow's Sustainability and Today's Profitability. Basingstoke: Palgrave Macmillan. McCabe, S., 2009. Marketing Communications in Tourism and Hospitality: Concepts, Strategies and Cases. Amsterdam: Elsevier. Mullerat, R., 2011. Corporate Social Responsibility: The Corporate Governance of the 21st Century Ramon. Alphen aan den Rijn: Kluwer Law International. Nieuwenhuizen, C., 2007. Business Management for Entrepreneurs. Landsdown: Juta and Company Ltd. P&G, 2012. P&G helps improve homes and health for people in need around the world. [online] Available at: [Accessed 2 August 2013]. Porter, M. E., 2008. Competitive Advantage: Creating and Sustaining Superior Performance New York City: Simon and Schuster. Rogers, S. C., 2001. Marketing Strategies, Tactics, and Techniques: A Handbook for Practitioners. Connecticut: Greenwood Publishing Group. Smith, F., 2010. Environmental Sustainability: Practical Global Applications. Massachusetts: CRC Press. Vezzoli, C. and Manzini, E., 2008. Design for Environmental Sustainability. New York: Springer. Yuece, I., 2012. SWOT Analysis of McDonald’s and Derivation of Appropriate Strategies. Munich: GRIN Verlag. Read More