Muhammad Taha Uddin Khan Ghori
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The document provides an agenda and introduction for a strategic analysis of Procter & Gamble (P&G). It outlines P&G's history, founders, products, revenues, competitors and strategic direction including vision, mission and objectives. External and internal environmental analyses are conducted including opportunities/threats and strengths/weaknesses. Current strategic performance is evaluated through financial ratios showing improved liquidity and returns.
![We will provide branded products and services of superior quality and value
that improve the lives of the world's consumers.[customer, market and self-
concept] As a result, consumers will reward us with leadership sales, profit,
and value creation, allowing our people, our shareholders, and the
communities in which we live and work to prosper.[Concern for survival,
growth, and profitability, concern for employees and concern for public
image]
Recommendation:
We will improve our consumers’ lives a little better but in meaningful ways
each day by means of technological advances and meeting their demands
for household and personal products. [philosophy, technology and
products/services]
Evaluating mission statement](https://image.slidesharecdn.com/tahapresentation1-150425071506-conversion-gate01/85/Muhammad-Taha-Uddin-Khan-Ghori-11-320.jpg)
Muhammad Taha Uddin Khan Ghori
- 1. M. Taha Uddin Khan Ghori
- 2. AGENDA • PART A: Introduction • PART B: Strategic Direction • PART C: External Environment Analysis • PART D: Internal Environment Analysis • PART E: Current Strategic Performance • PART F: Strategic Analysis • PART G: Recommendation
- 3. INTRODUCTION
- 4. William Procter, a candle maker, and James Gamble, a soap maker, emigrated from England and Ireland respectively. Their father-in-law called a meeting and persuaded his son-in-laws to become business partners. On the 31st of October the Procter & Gamble company was created. They began by supplying the Union Army with soap and candles.
- 5. INTRODUCTION • The Proctor & Gamble company also knows as P&G is an American multinational consumer goods company headquartered in downtown Cincinnati, Ohio, USA. • P&G was founded in 1837 by William Procter and James Gamble. • First products were soaps and candles • Now P&G has two dimensions of products hygiene and health Care and home products with 23 brands. • The P&G community includes approximately 138,000 employees working in about 80 countries worldwide and provide services in 180 countries. • In fiscal year 2014, it has sales revenue of $83 billion. • P&G Ranked #41 on the list of the World’s Most Reputable Companies in Forbes. http://www.makingafortune.biz/list-of-companies-p/procter-gamble.htm
- 7. INTRODUCTION Competitors: • Unilever Co. • Johnson & Johnson Co. • Kimberly-Clark Co. • Colgate palmolive • Nestlé • Reckitt Benckiser
- 9. VISION STATEMENT: Be, and be recognized as, the best consumer products and services company in the world. MISSION STATEMENT: We will provide branded products and services of superior quality and value that improve the lives of the world’s consumers, now and for generations to come. As a result, consumers will reward us with leadership sales, profit and value creation, allowing our people, our shareholders and the communities in which we live and work to prosper Source: Annual report of P&G
- 10. Evaluating mission statement • 1. Customers • 2. Products or services • 3. Markets • 4. Technology • 5. Concern for survival, growth, and profitability • 6. Philosophy • 7. Self-concept • 8. Concern for public image • 9. Concern for employees
- 11. We will provide branded products and services of superior quality and value that improve the lives of the world's consumers.[customer, market and self- concept] As a result, consumers will reward us with leadership sales, profit, and value creation, allowing our people, our shareholders, and the communities in which we live and work to prosper.[Concern for survival, growth, and profitability, concern for employees and concern for public image] Recommendation: We will improve our consumers’ lives a little better but in meaningful ways each day by means of technological advances and meeting their demands for household and personal products. [philosophy, technology and products/services] Evaluating mission statement
- 12. Current strategies • Consumer will pay a premium for products that offer improvements over either private-label products or the brand they have bought for years. • Product innovation must be regular with visible improvements, in years constantly. • Product innovation must be designed to constantly “up-scale” consumer preferences. • This “up-scaling” of consumer tastes is not just for affluent consumers. • These strategies can be used to break into developing economies. • Using innovation to attain a growing share in the developing markets will be the key to growing companies earnings as growth rate in mature consumer markets.
- 13. Short-term objectives • Build existing core businesses into stronger global leaders. • Grow leading brands, big countries, winning customers. • Develop faster-growing, higher margin with global leadership potential. • Regain growth momentum and leadership across Europe and other parts of the world. • Drive growth in key developing markets. http://www.slideshare.net/surehmani1/presentation-pg
- 14. Long-term Objectives • In fact, the company has an acknowledged aim of reaching an additional 1 billion consumers in the next five years, taking its total to 5.2 billion, well over half the global population. • P&G acknowledges it will take decades to make the vision a reality and to ensure it has teeth, has set 10 year targets for each of the five long-term commitments, which are: 1.Powering its plants with 100% renewable energy 2.Using 100% renewable or recycled materials for all products and packaging 3.Having zero consumer and manufacturing waste go to landfills 4.Designing products that delight consumers while maximizing the conservation of resources 5.Delivering effluent water quality that is as good as or better then influent water quality with no contribution to water scarcity http://www.theguardian.com/sustainable-business/procter-gamble-sustainability-vision
- 16. EXTERNAL FACTORS OPPORTUNITIES: • Decrease in inflation rate in Pakistan from 7.2% in 2014 to 2.49% in 2015 • Customers in Pakistan are increasingly willing and able to purchase pricey items. • Increase in population growth in Pakistan • Increased demand of beauty and health products for customer • Increased amount of men who are wanting health and beauty products • Growth in Pakistan’s economy. • Political condition in Pakistan 2015 is stable as compare to 2014
- 17. EXTERNAL FACTORS THREATS: • New and competitive consumer products are constantly being introduced. • Cheaper consumer brand competitors in the market • Rising cost of raw materials • Substitute products
- 18. EFE MATRIX OPPORTUNITIES Weight Rating Weighted score 1. Customers in Pakistan are increasingly willing and able to purchase pricey items. 0.1 3 0.3 2. Decrease in inflation rate in Pakistan 0.09 3 0.27 3. Increase in population growth 0.1 3 0.3 4. Increased demand of beauty and health products for customer 0.1 4 0.4 5. Increased amount of men who are wanting health and beauty products 0.1 4 0.4
- 19. EFE MATRIX OPPORTUNITIES Weight Rating Weighted score 6. Increased effectiveness in social media and internet marketing 0.05 2 0.1 7. Political condition in Pakistan 2015 is stable as compare to 2014 0.08 3 0.24 Threats Weight Rating Weighted score 1. Terrorist activities 0.1 1 0.1 2. Increase in prices of raw material 0.1 2 0.2
- 20. EFE MATRIX Threats Weight Rating Weighted score 3. Cheaper consumer brand competitors in the market 0.08 3 0.24 4. New and competitive consumer products are constantly being introduced. 0.03 2 0.06 5. Price competition 0.07 2 0.14 Total 1 2.75 http://www.thefridaytimes.com/tft/political-forecast-2015/
- 21. EFE MATRIX • The average weighted score of EFE matrix is 2.5 and the total weighted score here is 2.75 which means the company is managing external environment factors above average but not excellently.
- 22. COMPETITIVE PROFILE MATRIX CRITICAL SUCCESS FACTORS WEIGHT P&G UNILEVER JOHNSON & JOHNSON Rating Score Rating Score Rating Score Advertising 0.1 3 0.3 4 0.4 2 0.2 Product quality 0.13 3 0.39 3 0.39 3 0.39 Price competitiveness 0.12 3 0.36 2 0.24 2 0.24 Market share 0.14 3 0.42 4 0.56 2 0.28 Global expansion 0.15 2 0.3 4 0.6 3 0.45 Consumer loyalty 0.12 3 0.36 3 0.36 3 0.36 Cost 0.13 3 0.39 3 0.39 4 0.52 Financial position 0.11 3 0.33 4 0.44 3 0.33 Total 1 2.85 3.38 2.77
- 23. COMPETITIVE PROFILE MATRIX • The total average score of CPM matrix is 2.5 and the total score of P&G is 2.85. The total score of Unilever is 3.38 and Johnson & Johnson is 2.77. So P&G is managing both internal and external factors less efficiently than the Unilever but more efficiently than Johnson & Johnson.
- 25. STRENGTHS AND WEAKNESSES R & D DEPARTMENT: Strength • Continuously creating new products and new designs. • Heavy investment in research and development • Continuous innovation, translating consumer desires into new products • Conduct thousands of research studies annually, and invest hundreds of millions annually in consumer understanding HR DEPARTMENT: Strength • Professional management • Good reputation and image • Loyal employees • Strong management team
- 26. STRENGTHS AND WEAKNESSES OPERATION DEPARTMENT: Strength • Timely expansion of hub plant for the reduction in production cost • Continuously advancing their technologies FINANCE DEPARTMENT: Strength • Effectively meeting the capital requirement for all expenditures ORGANIZATION AND MANAGEMENT: Strength: • P&G is strongly committed to a brand management approach.
- 27. STRENGTHS AND WEAKNESSES MARKETING DEPARTMENT: Strength • Innovative marketing programs • Well established and renowned distributors • Continuously promoting their products • Diversity in distribution, does business in 180 countries • Leading manufacturer and marketer of consumer products • Customer brand loyalty • Multiple suppliers of raw material s in the market • Selling through internet Weakness • Lack of new media marketing challenge • Lack of direct marketing
- 28. IFE MATRIX Key internal factors Weight Rating Weighted score Strength 1. Strong reputable brand name 0.11 4 0.44 2. Customer brand awareness 0.13 3 0.39 3. High quality products 0.07 3 0.21 4. World-wide distribution of products 0.06 4 0.24 5. Diversification of product lines 0.185 3 0.555 6. Profitable acquisitions of competitors brand companies 0.06 3 0.18 7. Multiple suppliers of raw materials 0.125 3 0.375
- 29. IFE MATRIX Key internal factors Weight Rating Weighted score Weakness 1. Losing market share in the half of its global brands 0.06 2 0.12 2. Substitutable products 0.1 1 0.1 3. Lack of women leadership in executive board 0.1 2 0.2 Total 1 2.81
- 30. IFE MATRIX • The average weighted score of IFE matrix is 2.5 and P&G score is 2.81 which means that the company’s internal performance is above average but less than excellent.
- 32. Liquidity Ratios: Ratios: Formula 2014 2013 Increase/ (decrease) from last year Current ratio Current assets/ current liability 0.94 0.80 17.5% Quick ratio (Current assets- inventories)/ current liability 0.51 0.41 24.39% http://financials.morningstar.com/ratios/r.html?t=PG Interpretation: The current ratio has increase by 17.5% from the last year which was 0.8 in 2013 because of the significant increase in short-term investment, cash and miscellaneous current assets. The quick ration of the company has increased by 24.39% in 2014 that is 0.51 and in 2013 it was 0.41. So, overall liquidity position of the company has improved.
- 33. Rate Of Return: Ratios: Formula 2014 2013 Increase/ (decrease) from last year Return on assets Net income/ total assets 8.03% 8.15 % (1.47) % Return on Equity Net income/ total shareholder equity 17.14% 16.87% 1.6% http://financials.morningstar.com/ratios/r.html?t=PG Interpretation: In 2014 the return on assets has decreased by 1.47% that is 8.03% and in 2013 it was 8.15% it was because of the significant increase in the total assets that is around 5 billion in 2014. The return on equity has increased by 1.6% from 2013 which was 16.87% is because of the increase the net income which is 11.57 billion in 2014.
- 34. Ratios: Formula 2014 2013 Increase/ (decrease) from last year EPS net income / average outstanding common shares 4.01 3.86 3.88% Net income growth - 11.57 Billion 11.21 Billion 3.2% Interest cover EBIT/ Interest expense 21.99 (Times) 23.25 (Times) (5.4%) http://www.marketwatch.com/investing/stock/pg/financials/balance-sheet Interpretation: EPS of P&G has increased from 3.86 to 4.01 which means it has increased by 3.88% in 2014. The net income has grown by 3.2% in 2014 that is 11.57 billion and in 2013 it was 11.21 billion. The interest coverage ratio has decreased by 5.4% in 2014 because of the increase in the interest expense.