Procter and Gamble is a multi-national corporation with global scale of P&G operations, with around 300 brands being sold to 5,000 million consumers in 140 countries generating a turnover $37 billion in 2002.

Authors Avatar

Procter and Gamble is a multi-national corporation with global scale of P&G operations, with around 300 brands being sold to 5,000 million consumers in 140 countries generating a turnover $37  billion in 2002.  There are 7 Global Business Units, responsible for overall global strategy and planning for P&G brands worldwide, and 8 Market Development Organisations, whose role is to drive sales of P&G brands in individual markets.  This re-structuring, which is part of the company well publicised Organisation 2005 programme, will ensure that P&G is well placed to address the issues facing manufacturers, retailers and wholesalers at the outset of the 21st century. P&G purchases and sells their operation products on a worldwide market. Because of the special characteristic of the product and the homogeneous of the target market, globalization is such an important part of P&G’s operations that is one of its four pillars of its corporate structure.  They have a philosophy to “think globally and act locally.”  They strive to create “strong brand equities, robust strategies and ongoing innovation in product and marketing to build major global brands.”  To do this they communicate with customers to ensure their marketing plans are locally understood and fully capitalized.  They try to meet customer needs in each country while keeping synergy across the company and ensuring the use of programs that work in their favor Industry. Procter and Gamble has remained very competitive by becoming a multi-national company with a central home base in Cincinnati, OH, decentralized production, sales, and marketing in many countries in North America, Asia, India, Australia, China, Europe, Africa, and Latin America.  Globalization creates greater uncertainty and complexity in business, but P&G has succeeded in creating communication and information processing systems to keep up with their business needs.                                                                                              According to the situation of this corporation and its globalization strategy, the researcher try to identify and evaluate P&G’s global strategy in accordance with the strength of the global drivers.

Industry

Dealing in the production, R&D, distribution of the product which is basic daily consuming by individual, a broad spectrum of products, which involve food, pharmaceuticals, beauty care, paper products, soap products and household detergent

The key features of the firm’s external environment:

PEST analysis

·Political

P&G established the joint venture in different country for production, Each country has different laws and traditions that affect accounting practices.  Some countries will not recognize profit until the project is completely finished and payment has been collected.  Other countries post profits before the project’s completion as long as they are reasonably certain that payment will be received.  These laws vary because variance in legal systems and business philosophy.

·Economic

The global economy is increasing, but dealing in different country P&G will face the currency risk, on the other hand, the pricing and sales will depend on the local per capita income for the sake of basic daily consuming products.

Join now!

·Technology

New technology in R&D and new material will determine the new product according to the customer requirements, there is no barriers on the locally implementation of the new technology.

·Social culture

Not so important in this regard,  because of the homogenous of consuming habit of the global customer.

Five forces analysis

·Threat of entry

There is a high barrier in this, because of the high entry cost on the production, advertisement and R&D, also a economics of scale, further more, the establishment of complex distribution will be costly, the retailing and wholesale exist at the same time.

...

This is a preview of the whole essay