Discuss about the Knowledge Based and High-Tech Industrial Markets.
The report helps in analysis of the Procter and gamble toiletries company wherein the different strategic issues is required to be identified. Furthermore, the different objectives along with the ownership structure will be discussed along with analysis of the external and internal governance of the company in an effective manner. The identification of the sources of cost and the differentiation advantage in the industry will be explained along with analysis of the major competitors in the entire competitive market will be discussed. The value chain and VRIO analysis of the sources of the competitive advantage will be determined as this will help in analysing the sources of competitive advantage.
Procter and gamble toiletries are the American multi-national consumer goods corporation which is headquartered in downtown Cincinnati (“Home”, 2018). The company was founded in the year 1837 which belongs to the consumer goods industry and the founders of the company are William Procter and James Gamble. The different products which are sold by the company includes cleaning agents, personal care products along with personal healthcare products as well. The number of employees who are working in the respective organization Procter and gamble toiletries are around 96000 till the year 2016 and the revenue which has been generated by the company in the year 2017 is US$65.06 billion.
The ownership structure which is followed by Procter and gamble toiletries is the Institutional Ownership structure in which it is seen that the entire ownership stake in the company is held by the different large financial institutions. It is traded as the public company under the industry of the consumer goods. The areas served by the company is the entire world except Cuba and North Korea (Di Benedetto & Lindgreen, 2018).
The external analysis of Procter and gamble toiletries are imposed on the organization by the different external stakeholders in form of the regulatory guidelines. In this scenario, it has been noticed that the companies report the status of the company in an effective manner (Foxall, 2014). The external governance mechanism of Procter and gamble toiletries can be analyzed with the help of Porter’s Five Forces Model Analysis that includes the following:
Intensity of the different competitors is high in Procter and gamble toiletries which is highly competitive in nature as there are different regional, global and local kind of competitors. Procter and gamble toiletries helps in selling products in many markets and the different industry segments. Procter and gamble toiletries tries to compete against the other brands and branded products along with the private label brand of the retailers as well (Kotler, 2015).
Threats of the new entrants is low and moderate in nature for Procter and gamble toiletries as there is high range of products and this is hard for the other organization which will easily come in the line. The huge capital of the Procter and gamble toiletries are impressive in nature and there is very less kind of probability for the new entrants in the market to keep a pace with the respective organization in an effective manner (Kotler, 2015).
Threats from the substitutes is low and moderate in nature as most of the products of Procter and gamble toiletries are being used in the daily life. The strength of the company is based on offering market all over the world in different P&G products. The respective organization has tried to adopt different kinds of strategies with the different clients as to properly develop understanding of the demands of the customers and respond to them effectively as well (Fulker et al., 2016).
Bargaining Power of the Suppliers is low in nature as the Procter and gamble toiletries have no such reliance on the different specific suppliers in the entire market. The entire bargaining power of the different suppliers is being coped with the mutually kind of dependent relationship of the organization with the different suppliers. The reputation which is maintained by Procter and gamble toiletries helps in offering advantage to the entire organization and this helps in improving the relationship between them (Kleinaltenkamp, Plinke & Geiger, 2016).
Bargaining power of the buyers is moderate in nature as more than 20% of the sales of Procter and gamble toiletries are provided to the Wal-Mart which is a very demanding kind of buyer. The entire economic kind of downturn will not have any kind of significant impact on P&G as due to the diversity proof status of the entire organization (Chernev, 2018). The different products which are sold by Procter and gamble toiletries helps in offering goods and services which has the entire ability to sustain in any kind of economic downturn.
From the Porter’s Five Forces Model analysis, this can be analysed that there are different threats from the buyers and other competitors in the entire market. Furthermore, it has been seen and analysed that there are different kinds of threats which are required to be analysed and this will help in minimizing the risks in an appropriate manner (Aivazidou et al., 2017).
On the other hand, there are different internal governance mechanism includes the board structure variables that includes duality and proportion of non-directors and the different shareholdings. There are different policies relating to the employees and employer of the organization (Villeneuve & Pasquier, 2017). Furthermore, there are different CSR policies which are required to be adopted by the organization is analysed in an effective manner which will help in managing the differences appropriately. There are different kinds of CSR activities performed by Procter and gamble toiletries wherein the activities are taken by them with genuine kind of intention and this helps in giving back to the society as well (Weinstein & Pohlman, 2015).
The different projects which has been undertaken by Procter and gamble toiletries are as follows:
Furthermore, it has been seen and analyzed that the CSR activities has been taken by Procter and gamble toiletries is such that they have worked with UNICEF which helped them in combat micronutrient malnutrition (Armstrong et al., 2015). Procter and gamble toiletries tried to include the different kinds of sustainability measures which has helped the company in managing the different issues and addressing them in effective manner. Additionally, it has been noticed that there are different partnerships made by P&G with different NGOs for delivering the water purification kind of product. The partnerships made by P&G with the different non-profit companies is the proof that the local markets can or they will be able to win over the new products in the entire market effectively (Charter, 2017). Lastly, the employees’ welfare policies are taken into consideration wherein this has been seen and analyzed that the respective company is largely contributed towards the entire success by following the corporate strategies and the management decisions.
P&G uses the generic strategy as to achieve the competitive advantage in the industry of the consumer goods. The Michael Porter’s Generic Strategies mainly focuses on the different approaches of the business which will lead to competitiveness of the entire organization along with resilience amid the competition (Chambers & Humble, 2017). In the case of P&G, the main focus in on the quality and value of the product. These are the different factors which are significant in nature as this helps in maintaining a leadership position in the entire industry of the consumer goods.
Additionally, it has been seen and analyzed that P&G follows the generic strategy along with intensive growth strategies which is helpful in managing the market performance. It has been seen and analyzed that due to the tough kind of competition in the competitive market, this has been seen that the intensive growth strategies are essential and relevant to the conditions of the current market and this affects the P&G success factor in an inappropriate manner (Berbegal-Mirabent, Gil-Doménech & Alegre, 2016). The intensive growth strategies of P&G help in depicting the strategic approach which helps in addressing the consumer goods market. On the other hand, it has been analyzed that the generic strategies help in achieving the entire competitiveness and this helps in influencing the managerial decisions.
The P&G uses the differentiation strategy for gaining more competitive advantage in the entire market. Furthermore, differentiation includes the developing of the uniqueness of business and products which helps in attracting the different customers. P&G tries to highlight the quality along with value in the consumer goods sold by them. For instance- P&G tries to highlight that they try to offer high quality cleaning agents at affordable prices to the different customers in the entire market (Litman, 2018).
The other advantage that is gained from the P&G Company is that the differentiation will help in maintaining effective marketing strategies which mainly emphasizes on the uniqueness of the products and services in an effective manner. On the other hand, the cost leadership generic strategy is applied on P&G which mainly focuses on the cost or the pricing as to achieve the competitive advantage (Chernev, 2018).
Market Penetration- It is the primary intensive strategy of P&G which aims in increasing the market share of the company in an effective manner. P&G tries to conduct different marketing campaigns as to increase the awareness among the different customers in the market (Wagner & Eggert, 2016). This strategy is applicable for the different low-performing products in the market and this will be beneficial through beneficial agreements with the different retailers. With the help of the aggressive marketing, the market share of P&G will be increased to a great extent.
Product Development- It is the other secondary intensive strategy which is used in P&G business. This helps in attracting the different customers in the market and this is used for supporting the continuous growth. P&G tries to develop new products in the company as this helps in increasing the market share of the company in an effective manner as well (Bresler & Lubbe, 2014).
Diversification- This is the other strategy adopted by P&G which helps in involving establishment of the business operations that are new in nature. It has been seen that the considerable growth in the business of P&G has helped them in becoming successful. The intensive growth strategy is difficult in nature to implement as the large-scale efforts of P&G has helped them in building competitive environment. The entire differentiation strategy adopted by P&G has helped them in using the aggressive approach to acquire the different firms to grow their business in an appropriate manner (Baker, 2016).
Market Development- This is the last strategy used by P&G which helps in contributing towards the growth of the company by entering into different segments or new markets. P&G can expect a new system of revenue and this will help P&G in entering into different new markets in an effective manner. The main strategic objective of the differentiation helps in making it easier for P&G to enter the different markets in an appropriate manner (Huang et al., 2015).
P&G has tried to position themselves with the help of the different radio channels and television advertisements. There are different products of P&G which has been positioned in an effective manner which has helped the P&G company in managing their sales along with the profitability as well (Martín-de Castro, 2015).
For instance- Heads & Shoulders has tried to position themselves in an effective manner which is positioned in the market as anti-dandruff shampoo which will attract the ones who are suffering from such issues. Gillete has tried to position themselves primarily the men or the different age group boys from 18 years (Miquel-Romero et al., 2014). P&G products or the different brands under the P&G has been able to improve their marketing strategy in an effective manner which has helped them effectively and solved the issues faced by the different individuals in an appropriate manner (Sheth & Sisodia, 2015).
There are different competitors of P&G brand that includes Avon, Elizabeth Arden and Unilever as well. The largest international business of Unilever is the one which is the major competitor of P&G and the brand faces major competition from the different them which is required to be analyzed by P&G as to adopt different strategies which will help them in being the top most priority of the different customers in the entire market.
The value chain analysis helps in describing the different activities which take place in the business and this helps them in relating the same in analysing the competitive strength of the business of P&G as well. The primary activities of P&G are the ones which are directly concerned with creating and delivering the product.
Sourcing and Procurement is the first component in which it has been seen that the different products of P&G are sourced from the entire world which is cost effective in nature. Furthermore, there are number of years it has been seen that the company or the brand has tried to mainly focus on the improvement of the supply chain costs and efficiency. P&G has powerful network of the industrials which is major for the suppliers and customers in the market (Sheth & Sisodia, 2015).
Operations and Outbound Logistics is the other component in which P&G has more than four operations such as health, snacks, beverages and babies. It has more than 300 products inclusive of the major brands such as Tide. The organization uses the MatrixOne software for automating the knowledge components in an appropriate manner. The operations of the P&G are helpful in managing the different kinds of issues which will help in managing their position in the market and this will affect the position in a positive manner with not much of difficulties faced by the brand in the entire market.
On the other hand, the largest customer of P&G was Wal-Mart which had a reputation of successful kind of reputation in coordinating with the different suppliers in the market. Sales and Customer Service is the other component in which it has been seen that more than 20% of the sales of Wal-Mart has helped them in capitalizing their position in the market (Sheth & Sisodia, 2015).
Support Activities are the ones which are not directly related to the production and this will increase the overall effectiveness. Financial Management is the first activity in which transportation costs along with different other costs are included. Research and Development is the third element in which P&G has been considered to be unimaginative and the brand has started introducing different innovative procedures which has helped them in managing the activities in an effective manner.
|
Resources |
Valuable or not |
Rare |
Imitate or Costly |
Exploited by the organization |
Competitive Implication |
|
Sales of the company |
Yes |
No |
Yes |
Yes |
Unexploited kind of competitive advantage |
|
Facilities relating to credit |
Yes |
Yes |
Yes |
Yes |
Exploited kind of competitive advantage |
|
Innovation of the product |
Yes |
Yes |
Yes |
Yes |
Unexploited kind of competitive advantage |
|
R&D |
Yes |
No |
No |
Yes |
Exploited kind of competitive advantage |
|
Global Kind of Operations |
Yes |
Yes |
No |
Yes |
Unexploited kind of competitive advantage |
|
Diversity among the different employees |
Yes |
Yes |
Yes |
No |
Unexploited kind of competitive advantage |
The development of the different resources with the corporate governance mechanisms is such that the CSR activities are being handled and introduced by the P&G brand is such that this has helped them in innovating the different technologies and this will improve the entire status of the company effectively as well. P&G tries to maintain different strategies that has helped in becoming more sustainable in nature and this has helped the company or the organization in including the diversity problems effectively. The P&G has been recognized by the Black Enterprise magazine and the diversity issues has been solved with the implementation of the different strategies that has assisted the brand in becoming more popular in comparison to the other competitors in the market (Sheth & Sisodia, 2015). The current sales of the respective brand are 2333.79 crores and they are being ranked in the sixth position in the market which is helped them in managing their position in the market.
Therefore, it can be recommended that the strategic management of P&G is required to be analyzed in an effective manner which will help the company in improving the different strategies effectively. The different recommendations which are required and analyzed by P&G are as follows:
Conclusion
Therefore, it can be concluded that strategic management is essential in nature which is required to be adopted by the P&G brand as this will help them in managing their position and retaining the customers in the entire market. Furthermore, the VRIO and Value Chain analysis has been performed which has helped the company in managing the different kinds of issues and this has helped them in retaining their position in an effective manner. Lastly, the external and internal governance mechanism is required to be adopted in order to maintain their position in the market in an effective manner.
References
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Berbegal-Mirabent, J., Gil-Doménech, D., & Alegre, I. (2016). IMPROVING BUSINESS PLAN DEVELOPMENT AND ENTREPRENEURIAL SKILLS THROUGH A PROJECT-BASED ACTIVITY. Journal of Entrepreneurship Education, 19(2), 89.
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