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How did Procter & Gamble Globalize - Essay Example

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How did Procter & Gamble Globalize

In the early 1990s the company changed its marketing strategy, by introducing products worldwide early in their product development. Today P&G manages a world roll-out within 18 months (Ball et al, 2005, p. 479).
Since 1980 P&G has increased four times the number of consumers the company serves to five million people around the world. P&G today has operations in more than 80 countries employing 110,000 people; its products are sold in over 140 countries, transforming P&G into one of the biggest consumer goods companies (Ball et al, 2005, p. 9).
With global headquarters in Cincinnati, Ohio, USA, P&G has manufacturing facilities in 114 plants in 42 countries worldwide (Graph 1) (Sustainability Report 2004). It manufactures and markets nearly 300 products and is one of the world's most successful brand creation companies (Graph 5). P&G has one of the strongest portfolios of quality brands, including Pampers, Tide, Ariel, Always, Whisper and many others (Datamonitor, 2004).
Most of the company's products are produced and assembled by P&G-owned facilities; approximately 10 percent of products are outsourced to third parties (Graph 2). P&G purchase annually more than $25 billion materials and services to manufacture and market their products. In company-owned plants P&G purchases the majority of raw materials within the regions where products are manufactured (P&G Sustainability Report, 2004).
P&G's globalization strategy is straightforward. The company is focused on its core businesses and leading brands, countries and customers. The global company structure has established regional organizations for seven world regions - North America; Latin America; Western Europe; China; ASEAN, Australasia and India; North Asia; and Central and Eastern Europe, Middle East and Africa (Graph 3) (P&G Sustainability Report, 2004). The company's majority of sales come from the mature markets of USA and Western Europe (Graph 4, 6). A balanced future growth has drawn investment in developing countries and low-income markets that represent majority of world population (P&G Annual Report 2005). As a result, sales in those segments are growing, and China has become P&G's sixth largest market (Ball et al, 2005, p. 479).

2. "Why"
Market access
Procter & Gamble's globalization strategy is focused on customer similarities worldwide. In this aspect market access has been the major driver for P&G's global expansion, whereby relatively standardized products have been produced in similar manufacturing facilities around the world and then sold under the same brand names globally (Ball et al, 2005, p. 9). This "brand internationalization" (Enke et al, n.d.) has increased P&G's competitiveness.
Sustained further market expansion requires P&G to look to other consumer segments. P&G's sales have been focused on premium-priced branded products in relatively affluent Western consumers. Still, according to P&G CEO A G Lafley the company has "a tremendous opportunity to serve lower income and value-conscious consumers around the world" (cited by Mitchell, 2005). The rationale behind this strategy is simple. Mature markets, where P&G is present face intense competition and slow growth in demand. This impedes organic growth and forces P&G to look for alternative markets, like the developing countr ...Show more

Summary

Procter & Gamble have been able to achieve sustainable international growth over the last decade by leveraging company capabilities in branding, innovation, and superior organization (P&G Annual Report 2005).
Established in 1837 in USA, the company first initiated international manufacturing in 1915 in Canada (P&G History)…
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How did Procter & Gamble Globalize essay example
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