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M. Taha Uddin Khan Ghori
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
INTRODUCTION
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.
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
EVOLUTION OF LOGO
INTRODUCTION
Competitors:
• Unilever Co.
• Johnson & Johnson Co.
• Kimberly-Clark Co.
• Colgate palmolive
• Nestlé
• Reckitt Benckiser
STRATEGIC DIRECTION
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
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
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
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.
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
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 scarcityhttp://www.theguardian.com/sustainable-business/procter-gamble-sustainability-vision
EXTERNAL ENVIRONMENT ANALYSIS
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
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
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
EFE MATRIXOPPORTUNITIES 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
EFE MATRIX
Threats Weight Rating Weighted score
3. Cheaper consumer brand competitorsin the market
0.08 3 0.24
4. New and competitive consumer productsare 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/
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.
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
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.
INTERNAL ENVIRONMENT ANALYSIS
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
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.
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 internetWeakness
• Lack of new media marketing challenge
• Lack of direct marketing
IFE MATRIXKey internal factors Weight Rating Weighted
score
Strength
1. Strong reputable brandname
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 productlines
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
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
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.
CURRENT STRATEGIC PERFORMANCE
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 2013because of the significant increase in short-term investment, cash and miscellaneouscurrent assets. The quick ration of the company has increased by 24.39% in 2014that is 0.51 and in 2013 it was 0.41. So, overall liquidity position of the company hasimproved.
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.
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.