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PROCTER AND GAMBLE 9

Week 8 Assignment 3

Felicia Griffin

BUS499 Business Administration Capstone

Professor Joseph Keller August 30, 2020

Week 8 Assignment 3

Introduction

Procter and Gamble is a multinational organization responsible for the creation of consumer goods. Its main objective is to create products that improve consumers' lives in a meaningful way each day (Procter and Gamble,7). P&G’s profit proposition states that "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" (Procter and Gamble,7). P&G produces revenue from five business segments: the beauty, hair, and personal care segment involved with cosmetics, deodorants, and skincare products. The other segment is the grooming segment, where P&G is a leading producer of blades, razors, and other electronic hair removal products. P&G also produces health care products, fabric care, and home care, and baby, feminine and family care products like pampers diapers.

Business-Level Strategy

A business-level strategy gives out the outline in which the company incorporates its policies, goals, and actions with the main aim of delivering valued goods to the customers at the same time maintaining competitive advantage(Pytlik,8). Proctor and Gamble goods are always competitive on a global scale as they are the most consumed goods. "Globalization provides both opportunities to access larger potential markets and a broad base of production factors such as raw materials, labor, skilled managers, and technical professionals" (Dess, Lumpkin, Eisner, & McNamara, 2). Differentiation is the main focus of the P&G industry, and it is the primary business strategy. P&G focuses on being the best in branding, innovation, and the same time in scale, which sets them apart from their competitors. P&G has always maintained to be the leading producers of laundry, baby care, hair, and feminine products, and it has formulated its business-level strategies to pursue its business level.

Product differentiation in P&G has been the core business-level strategy due to its innovation culture, and I believe that this is the right choice. In P&G, it is not only the invention of new products that happen in product differentiation but the ability to systematically convert ideas into new goods that alter the context of the business (Lafley & Charan,5). The product differentiation strategy has made it possible for P&G to charge a premium price for its products and create a good market share for its competitors with their high product demand. P&G's CEO explained this strategy in his book "The Game Changer," where he talked about the game-changing innovation drive that will make a business grow on a consistent well-placed basis and have a high focus on the customer needs.

P&G's differentiation encompasses areas like value creation while operating the total shareholder return, more innovation, productivity improvement, and the portfolio transition to be the most focused company and the leading producer of their goods. Proctor and Gamble use differentiation as the industries where there is the differentiation of products; the company has the advantage of brand recognition and its consumers' loyalty. With many competitors in the field of production including the Clorox, Avon, Bic, Unilever and their main competitor which is the Colgate-Palmolive, Procter and Gamble maintain its competitive advantage over the competitors by being more innovative and by this they can create new products and at the same time alter the existing ideas into new goods, and this changes the main context of the business making them get an eye from the consumers. Based on the consumers' needs, P&G makes sure that they collaborate with external sources to connect and develop new products.

Corporate-level Strategy

A corporate-level strategy is a plan made by a company to see which organizations they should interact with over a given time. It is instrumental in outlining the company's goals for the following year and breaks down the steps for the employees that they are needed to take(indeed,3). Due to the CEO of P&G company's exchange of power for the last three years, the new CEO Taylor has decided to turn the company's strategy to focus on the lifeline of the organization, and this is through innovation and science. The corporate-level strategy is vital to the company because of the managerial issues and the lack of strategic focus that has been in the organization for the past years. I believe this is a good choice for the company as it will help regain its stance in the marketplace and make them go back to their level.

P&G hopes to go back to its position by being leaner and, unfortunately, cutting jobs of other employees. The CEO is unremorseful about that and ends up indicating that he only had two options, and they were very apart and that in 2000, the company was to grow. It was extended and expanded when returning; he finds the business so different from the overextended and over the expanded business he left (Reingold,9). The commitment of the past, future, and present of P&G is to improve their consumers' lives meaningfully. P&G intends to do this by focusing on six strengths; consumer understanding, the company's innovation, the branding of its products, the scale, the go-to-market capabilities, and the quality of the goods produced by the company. P&G hopes to accomplish these goals, making them have a competitive advantage over their rivals and increasing the revenue and market share.

P&G gives a direction to the corporate values, corporate culture, corporate goals, and the corporate mission to accomplish those goals. Under the major corporate-level strategy, there are also some functional and business unit strategies that P&G focuses on. In the functional strategy, the company works to meet the overall corporate strategies, and hence to some extent, the strategies are derived from the main corporate strategy. For this to happen, the strategic business unit should be responsible for the budgeting, making new products, decisions on hiring, and the setting of prices of goods from the company. Additionally, a compensation package has been offered to consider the organization's performance, and each line of the company offers innovation.

The innovation strategy being the man corporate level strategy of the P&G company works on diminishing the emphasis of products that are overextending in the market and, at the same time adding new products in the market. Some of the new products added in the P&G market include the Bluetooth toothbrush, which has captured the consumer market by recording the places in the mouth that have been missed during brushing, which is a great innovation in the company. Another great innovation in the company is the mixing of its commercial offerings and the enhancement of its products to increase the number of goods sold at the same time lower the cost of the goods, which will, in turn, increase the consumer level.

Competitive Environment

Consumer goods are the goods directly sold to consumers and can be used for personal, recreational, and corporate use. All of the products produced by P&G are consumer goods, and the consumer goods market is very competitive. To have a competitive advantage over your rivals, a company must be innovative and diverse, with its lines of products and brand names and a good market strategy. P&G is known as one of the leading consumer goods companies globally with its production of a wide range of consumer products. However, P&G is not the only company in this field, as some more companies are trying to race to the top of the consumer goods industry. The company owns so many brands, including Gillette, Pampers, crest, and tide, which are known and used worldwide.

The Major competitors of P&G are the Colgate-Palmolive, church, Unilever, and Dwight companies. P&G has six major segments. In the fabric and home care business segment, their major competitors are the Ajax, Palmolive, surf Fleecy from Colgate-Palmolive, and Persil form Unilever; however, they are still the leading producers. In the beauty industry, P&G's major competitors are Avon, who is known worldwide for its great direct selling beauty, household, and personal care companies. The company is an excellent threat to P&G as it uses salespersons, often known as the Avon ladies who use brochures and mailouts for advertising their products. Though not a significant risk, other competitors in the beauty industry are; Colgate-Palmolive, Estee Lauder, Unilever, and Revlon(Investopedia,4).

P&G's forces in a competitive environment include the horizontal forces, the competitive intensity among the rivals, the new entrants of products in the company, and the ease of product submission. On the other hand, the vertical forces include customer bargaining power and supplier bargaining power. P&G offers a wide range of products in the market, so it becomes hard for a new company to compete with them, making them better than their rivals. However, the Peers Unilever and Estee Lauder invest large amounts of capital in comprehensive research for their beauty brands, making them have a complete marketing strategy and giving them some advantage over the P&G company. Another competitive advantage of P&G is that they focus more on innovation and the quality of their products. Many brands, both local and international, offer substitutes for their products. By adopting the innovative strategy known as connecting and developing, P&G understood the consumer demands and the responses consumers give about their products through connecting and partnering with universities, sole inventors, their competitors, and other multinational corporations (Morgan,6). The relationship between P&G and their third parties, who are the suppliers and the business partners, has also led to a massive P&G business scope.

Market Cycles

The market cycles include slow market cycles and fast market cycles. In slow cycle markets, the firm's competitive advantage is shielded from imitation for commonly long periods and costly. In a slow cycle market, P&G attained its competitive advantage by innovating new products that were difficult for its competitors to understand. By achieving the proprietary advantage, competitive behavior is now maintained and protected by the company. Fast-cycle markets are markets in which the firm's capabilities that contribute to their competitive advantage are not shielded from imitation. P&G learned to attain a new competitive advantage over its competitors by replacing innovation in the Fast cycle market.

P&G avoided the loyalty of some of their products and this was done by the cannibalizing their current products to bring out some new ones before their competitors learned to do such a thing and this was helpful as it shielded them from competitors learning how to so successful imitation (Douglas,1). Moving through on to another temporary competitive advantage before competitors respond to the new one also made them be above their rivals. The competitive advantage of Procter and Gamble will differ in the slow and fast market cycles by using more funds in the advertisement of their products as well as have good strategies both business and the corporate level strategies which will always make the company have a competitive advantage over its many rivals making them always to be a developmental cycle behind P&G.

References

1. Douglas, A. (2017). Chapter 6: Competitive Rivalry and Competitive Dynamics - Free Download PDF. Retrieved from https://silo.tips/download/chapter-6-competitive-rivalry-and-competitive-dynamics#

2. Dess, G., Lumpkin, G., Eisner, A., & McNamara, G. (2012). "Analyzing the External Environment of the Firm," pages 3–37, from Strategic Management: Creating Competitive Advantages. New York, NY: McGraw-Hill Custom.

3. Indeed. (2020). What Is a Corporate-Level Strategy? | Indeed.com. Retrieved from https://www.indeed.com/career-advice/career-development/corporate-level-strategy

4. Investopedia. (2020). Who Are Procter & Gamble's Main Competitors? Retrieved from https://www.investopedia.com/ask/answers/120114/who-are-proctor-gambles-pg-main-competitors

5. Lafley, A. G., & Charan, R. (2008). The game-changer: How you can drive revenue and profit growth with innovation. Crown Pub.

6. Morgan, P. (2015). Porter's Five Forces: Procter & Gamble's Competitive Position. Retrieved from https://marketrealist.com/2015/07/porters-five-forces-procter-gambles-competitive-position/

7. Procter and Gamble. (2016). Taken together, our Purpose, Values and Principles are the foundation for P&G’s unique culture. Retrieved from: http://us.pg.com/who-we-are/our-approach/purpose-values-principles

8. Pytlik, J. (2019). What is Business Level Strategy? [+ 5 Examples] TrackTime24. Retrieved from https://tracktime24.com/Blog/business-level-strategy

9. Reingold, J. (2016). Can Procter & Gamble Find Its Aim Again?. Fortune. Retrieved, from http://fortune.com/procter-and-gamble-david-taylor-fortune-500/