Strategic Fit With the Industry Environment Assessment

Threat of Competition: HIGH : P&G’s market environment is highly competitive, with global, regional, and local competitors. In many of the markets and industry segments in which P&G sells its products, P&G competes against other branded products as well as retailers’ private-label brands.  There are many different options for consumer products. Although the options are abundant, the threat is still more moderate because of the   brand equity in most products.

Threat of New Entrants: LOW-MODERATE : It is a low probability for a new entrant to become as big and as well capitalized as P&G. Due to the vast range of Procter and Gamble products, it is very hard for a new company to come and participate. No new entrant can compete with the company without heavy amount of capital and complete marketing strategy based on comprehensive research.

Threat of Substitutes: LOW-MODERATE : The threat of substitutes is moderate and not high because most of the products that P&G sells are necessities. There is no substitute for laundry detergent besides different types of laundry detergent. The only true substitute is to not wash your clothes or wash them without laundry detergent. That is why the threat of substitutes is low to moderate.

Power of Suppliers: LOW :  Procter & Gamble does not seem to have any reliance on specific suppliers and P&G forms joint ventures and partnerships for new products. The sheer size of P&G also helps it deal with suppliers in delivering the product because companies want to work with P&G.

Power of Buyers: MODERATE :  There are two tiers of buyers, the retailers and the end consumer. The retailers have more power in dealing with P&G because they have large contracts for many stores (Wal-Mart stores, Albertsons). Although they have the decision on choosing substitutes or the competition, the success of P&G’s brands and the brand loyalty they have created thus far have shown that the consumers enjoy its products.