1. Organization and product/service analysis
a. Description of the organization
Procter and Gamble Company also known as P&G popularly is an American multinational company which provides various kinds of goods. The main or the head office for its consumer goods corporation is located in downtown Cincinnati in Ohio. The company was founded in the year 1837 by British American individuals named William Procter and Irish American James Gamble (Jermy, 2006).
The company focuses on providing a wide range of the various personal health, personal care, hygiene products and consumer health items. Apart from these main items, the company also offers grooming, beauty, baby care, food, fabric and home care items. Some of the popular products which the company offers are Ariel, Always Dawn, Charmin, Bounty paper towels, crest toothpaste, Downy, Clancy`s, Fairy, Gain, Gillette, Olay, Oral-B, Head and Shoulders, Pentene, SK II, Tide, Pampers and Vicks and a few others. Procter and Gamble caters the everyday life needs of the general public in terms of products which are important for people from all ages and genders. Therefore, it is one of the companies which have launched several brands over the years and have managed to generate reasonable success in all of them globally which is a huge achievement (Jermy, 2006).
b. Product or services “needs assessment” of the chosen overseas market/country
The products which need assessment for the chosen overseas market which is located in the country of Brazil are only a few. The company needs to change its approach in the marketing department to be successful in Brazil. This is so as the company needs to take care of the cultural aspects in their marketing strategies as Brazilian culture is not similar to that of the home country of the company.
The products of the company which need assessment are the products related to the beauty line as they focus on getting fairer skin like the Olay skincare. The products need to be reassessed as they might not do as well in Brazil as they do in other parts of the globe as the people there generally are not looking for fairness creams or products (THOMPSON, 2017). However, items targeted at maintaining good hygiene are highly needed by the people of Brazil because the utilization of the hygiene items in Brazil has elevated to 56 percent in Brazil in the past 5 years. Individual hygiene and cleaning items make 8.2 percent of overall utilization (Garcia, 2015). The people of Brazil purchase cleaning items and select huge packages that are effective for a relatively long period of time.
c. Description of the company’s products or services to meet the need
For Procter and Gamble to be successful in Brazil they have to cut the cost by hiring the local employees. The company needs to look into the social, cultural and economic structures of Brazil to make sure that their needs are met. By focusing on all these aspects the company will be able to penetrate in the market (Paddison, 2014). As it has been observed that Brazil has faced a steady growth in the recent years it can be said that the economy of the country is budding. The services like the financial and insurance services should be looked into. The company can also find quite affordable skilled and semi-skilled labor. This will aid the company to meet the market demands of the Brazilian people and at the same time not increase the cost of production of the products. This can be a major advantage for Proctor and Gamble. The products related to the hygiene such as the soaps and sanitary napkins and washing detergents like Ariel can successfully meet the needs of the Brazilian market (Paddison, 2014).
2. Global strategy formulation
a. Conduct a business risk analysis (associated with the chosen country)
The business risk analysis of Brazil for Procter and Gamble are as follows:
i. Political
The political conditions of Brazil are quite stable however, there are some political conflicts which are taking place between the general public and the current government. But these conflicts don’t seem to impact the businesses as such, hence there are no major political risks presently which need to be dealt with in Brazil for Procter and Gamble. However, there is a possibility a political instability can be created in the country based on the current corruption allegations on the ruling party, but there are lesser chances that instability will affect the foreign companies which have already invested in the country (Paddison, 2014).
ii. Competitive
Currently Brazil does not have a very competitive market, therefore, it will be quite easy for Procter and Gamble to make a mark for itself there. However, as it is predicted in the coming five to ten years, the market of Brazil can turn into a very competitive one. This is due to the fact that the investors and brands from all over the world are aiming to invest in the country because of its increasing economy growth and recently achieved political stability. If Procter and Gamble makes a mark for itself now in the Brazilian market and becomes able to have loyal customers, there is a great chance that the company will be able to make a lot of profits and stay high up even if the market becomes very competitive (Chandra, 2007).
iii. Cultural
The cultural environment of Brazil is such that it has a major population of Christians. According to this, it is compulsory for Procter and Gamble to make sure that none of their products or marketing strategies go against the Christian values and traditions. Moreover, the culture of Brazil is quite different from that of the US and Europe, which means that the company needs to study the culture of the country before hand to be successful there. The marketing department of Procter and Gamble has to work hard in studying the local cultures and coming up with appropriate strategies to attract the targeted local market (Paddison, 2014).
iv. Economic
As the economy of Brazil is rising up in the recent years. The ranking of it in the world from the business perspective is number 43 out of 82 which proves to be average. It means that opening up a business in Brazil or catering the Brazilian population under its current economic conditions has risks but can prove to be a profitable venture. As the country has improved its economic conditions immensely in the last decade, it has one of the most exciting economies and business markets in the world today. Therefore, Procter and Gamble can grab a lot of success and profits in the country by making sure that it prices its products which are within the affordability range of the general population and at the same time, trying to hire man power form the country itself as it will help the company save a lot of money. Currently, Brazil is an attractive place for various foreign companies. It has improved it economy and seems to be on the roads of further improvements (Paddison, 2014).
v. Legal
In Brazil, the foreign companies are treated in the same way as the local companies when it comes to the legal matters such as the taxes imposed by the government. The industrialized product tax (PI) ranges between 10 to 20 percent in the country on most of the products except for the alcoholic beverages (Paddison, 2014). The service circulation tax is around 18 percent. The imports through and to the free zone are exempt of all kinds of taxes and duty charges. The taxes which are applied by the government of the country are somewhat high but can still enable the company to make decent profits. The taxes in Brazil are slightly higher than that in all the BRIC countries. Therefore, the legal aspects of opening or extending a business like that of Procter and Gamble to Brazil will not be facing any major risks in terms of the legal aspect (Paddison, 2014). However, the company will have to pay slightly higher amounts in taxes as compared to other countries. It can be concluded that from the legal perspective, it is not very difficult to start a business or take a business to Brazil under the current political conditions of the country. The current government claims that it does not follow the corruption patterns unlike the previous governments. It means that there will be lesser money taken by the officials from the foreign companies which enforces the companies make more profits (Paddison, 2014).
vi. Technological
The technological fields is not as advanced in Brazil as it is in the United States. This means that the company will need to conduct some of its technological processes in the home country or pay slightly higher to get the things done in Brazil (Wade, N.D.).
vii. Demographical
The demography of Brazil is very diverse. This is so as there are people belonging to several ethnic groups and races living there. Basically, there are people belonging to five major ethnic groups which are the Africans, Amerindians, Europeans, East Asian and Levantines. It means that the company must cater all these major ethnic groups to be successful in Brazil (Wade, N.D.).
The major aspects which need to be looked into by the company are language, demographics, religion, beliefs, traditions, values and norms to run successful business operations in Brazil. The official language of Brazil is Portuguese, however, other languages such as German, Italian and Argentine. Procter and Gamble needs to advertise its products in the local languages to reach out to the maximum of the 207.7 million population of Brazil (Chandra, 2007).
Apart from this, the official religions of the country are Christianity and Roman Catholicism which make up the 65% of the population. To operate successfully in Brazil, the company needs to fortify that none of their products, services or advertisement contradicts with the practices of Christianity. The overall culture of the country is such that the people are quite friendly and open in their conversations. Therefore, the employees and representatives of Procter and Gamble must deal in a friendly and open manner with the locals of the country to increase their sales and make the consumers to be their loyal and regular customers (THOMPSON, 2017).
b. Compare and contrast the advantages/disadvantages of various modes of entry into the global markets
The advantages and the disadvantages of various modes of entry into the global market are joint ventures, franchising, licensing and exporting. The advantages of exporting are that if the products are entered through the free zones, it becomes cheaper and quite profitable as the taxes are not imposed. however, if the exports are done through the main land, heavy taxes can be imposed. Joint ventures involve having partners from the locals of the country. the advantage of this mode is that the locals can help in marketing in accordance to the target market more efficiently. Because they are already familiar with the culture and the demands of the locals. The disadvantage of this mode is that it can become expensive as a share of the profit needs to be handed over to the partners as well. The entry mode based on franchising and licensing has more benefits as compared to the other modes as there are fewer regular investments. Also, the franchise needs to be bought once. Similarly, the license is brought once and people just need to renew the franchise and license payment after a specific interval of time (Wade, N.D.).
c. SWOT analysis
Strength:
The strength of the Brazilian market is that it has an emerging economy, a high population, skilled and semi-skilled labor available for hiring, and the high demand of new kinds of products. If all these strengths are properly used by the Procter and Gamble, the company can be quite successful. The taxes are less in Brazil as compared to that in other countries like the U.S. and the UK. Apart from this, the company can save a lot by handing over work to the local labors (Wade, N.D.).
Weaknesses
The weaknesses of the market in Brazil are that the language barrier and the culture differences are there. Besides, there is a high level of poverty in the country. If these things are dealt with appropriately by Procter and Gamble there is a great chance that the company can make a lot of profit (Sottovia, 2018).
Opportunities
The opportunities of the Brazilian market are that direct foreign investments are welcomed, the economy is growing further which invites investors from different countries. In addition, the rules and laws imposed by the government are not very strict which give an advantage to the foreign companies to invest there and make profits (Sottovia, 2018).
Threats
The threats which lie in the Brazilian market are that the value of the local currency is not very high which can make the profits lesser when converted back into the US dollar. Also, the interest rates are quite higher in Brazil which means that taking loans from the local bodies can result into higher pay back amounts (Sottovia, 2018).
d. Country selection
The country of selection is Brazil.
i. Market size and growth
The size of the Brazilian market is not as big as it is of the United States or Europe. However, the market size is growing with the rise in the national economic and political conditions of the country. As Brazil is gaining stability in its political and economic conditions, the size is growing immensely. However, it is still the second largest economy located in the Western hemisphere after the United States of America. It is also the largest country in South of America which means that the market has a great potential. Also, the GDP value of Brazil is going up as of the year 2017 the GDP ranking was number 8 out of 192 (Brazil GDP, 2018).
iii. Barriers to entry
The barriers to entry in the Brazilian market are the culture and language. Apart from these two, there are no specific barriers which can restrict or hinder the entry of Procter and Gamble in the country. This is so as the gaining of the business and operating license or investing in a franchise is not a big barrier in the country. Because the laws support and promote new businesses coming to their land (ECONOMYWATCH, 2010).
iii. Previous experience in countries and timing
The previous experience in countries and the timing of Procter and Gamble has overall been satisfactory. The company has been able to generate a decent market demand for itself in different developed as well and developing countries globally. This means that Procter and Gamble has an appealing aspect to itself which attracts customers worldwide. The main reason behind the success of Protector and Gamble in various countries is that its products are quite affordable and of good quality (ECONOMYWATCH, 2010).
3. Trump`s polices` impact on Procter and Gamble in Brazil
As the United States of America has entered a new era regarding how to survive, compete and blossom under the administration of president Trump, several things have changed. Trump`s administration has developed and formulated some new policies which tend to effect the businesses and companies directly and indirectly (Monk, 2018).
One of the policies implemented by Trump which has affected Procter and Gamble is the one in which Trump has imposed additional taxes on the export and import of various goods. As a result of the policies of the current administration of Washington, an additional 10 percent tariff will be imposed on all the products like the bounty paper towels, cascade detergents, body wash just to name a few in Canada. This is said to be one of the biggest impacts on Procter and Gamble in the history. This has happened as a result of Trump imposing taxes on most of the foreign imports in January 2018. Consequently, all the trading partners of the United States have responded in a similar fashion (Monk, 2018).
Various countries have imposed an additional tax the products coming in from United States. This tax is known as retaliatory tariff. It is predicted that if things continue this way, the U.S. products can be sold at a higher price in the foreign markets including Brazil. Due to these increased prices, there is a great chance that the people of these countries will avoid buying the products being made by the US companies. Because it will cost them more that the local or other foreign competitor products. It can be stated that this specific policy coming from the Trump administration can prove to damage the business of Procter and Gamble in Brazil along with several other countries as it will hinder their profits (Monk, 2018).
However, another policy has also been developed and implemented by the Trump administration in which they have announced the withdrawal of the United States of American from the trans pacific partnerships. This policy goes in favor of Brazil. The withdrawal will allow Brazil to keep its shares in the market many countries including the U.S. However, this policy will not help the Procter and Gamble to gain more profits in Brazil as Brazil might also impose some taxes on the imports coming in from the United States. Although the tax being imposed can be lesser than the one being imposed by the Canadian government, it will still impact the overall profits being made by Procter and Gamble in Brazil (Wilson, 2017).
It can be stated that the protectionism hurts Brazil and at the same time, benefits it in a few ways. The policy of imposing additional taxes on the goods coming in to the United States does not seem to be going the way Trump would like it to go. This is so as the promised results cannot be delivered that easily because the trade partner countries have already started reacting in an opposing manner by introducing their own tariffs which can make it difficult for the American companies to make a lot of profit overseas. This will definitely not help in the further strengthening of the American economy, in fact it can led to a negative effect on the national economy. It can be concluded that this policy introduced by Trump is not a good one and should not be continued (Monk, 2018).
4. Overall evaluation of the strategies and the recommendations
My evaluation of the strategies of Procter and Gamble in Brazil is that they are quite well developed and thought off. The company has always aimed to target a wider audience as it has opened up brands related to various necessities of life which cannot get out of fashion. their demand is there in almost all the countries around the world and the products cater the needs of the people belonging to all the social classes present in a society (Terlep, 2018).
The suggestion which I would make to improve the company`s global expansion with the new products or services is that it should come up with some new products which are only designed to cater the needs of the majority of the public in Brazil.
There are no specific strategies of Procter and Gamble which I disagree with. However, I believe that it should incorporate more of the local traditions and customs in their marketing strategies as this will help them to reach out to more people and generate more profits. I believe it is one of the most important things to make sure that the target market is involved and feels catered. If the products are not advertised with respect to the common beliefs and traditions of the local people, there is a great chance that the company will not be able to last there for a long time and all the investments can go in vein (Terlep, 2018).
References
Brazil GDP - Gross Domestic Product 2017. (2018). Retrieved from https://countryeconomy.com/gdp/brazil?year=2017
Chandra, A. (2007). Business Incubation in Brazil: Creating an Environment for Entrepreneurship. SSRN Electronic Journal. doi:10.2139/ssrn.1058901
ECONOMYWATCH. (2010). Brazil Market | Economy Watch. Retrieved from http://www.economywatch.com/market/world-markets/brazil-market.html
Garcia, R. (2015). Cleaning product market in Brazil. Retrieved from http://thebrazilbusiness.com/article/cleaning-product-market-in-brazil
Jermy, B. (2006). Procter and Gamble: Inspiring Success. Pharma Deals Review, 2006(69). doi:10.3833/pdr.v2006i69.544
Monk, D. (2018). Trump trade policy is newest headwind for Procter & Gamble Co. (PG). Retrieved from https://www.wcpo.com/money/local-business-news/trump-trade-policy-is-newest-headwind-for-procter-gamble-co
Paddison, L. (2014). Seven ways sustainable businesses can break into Brazil. Retrieved from https://www.theguardian.com/sustainable-business/brazil-smes-sustainable-opportunities
Sottovia, M. (2018). Top challenges of doing business in Brazil. Retrieved from https://www.tmf-group.com/en/news-insights/articles/top-challenges/doing-business-in-brazil/
THOMPSON, A. (2017). Procter & Gamble's Marketing Mix (4Ps) Analysis. Retrieved from http://panmore.com/procter-gamble-marketing-mix-4ps-analysis
Terlep, S. (2018). Procter & Gamble, in a Strategy Shift, Moves to Raise Prices. Retrieved from https://www.wsj.com/articles/procter-gamble-reports-slightly-higher-sales-drop-in-prices-1533040191
Wilson. (2017). Can brazil benefit from president trump's trade policy? Retrieved from https://www.wilsoncenter.org/event/can-brazil-benefit-president-trumps-trade-policy
Wade, J. (n.d.). The Risks and Opportunities of Doing Business in Brazil | Risk Management Monitor. Retrieved from https://www.riskmanagementmonitor.com/the-risks-and-opportunities-of-doing-business-in-brazil/
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