Strategic Mgmt Case Study P&G

1. Strategic Management Case Study:
Procter & Gamble 2011
PREPARED BY
Mohd Rijal Bin Jamaluddin GA01290
Muhamad Rizuwan Bin Mokhtar GA01293
Muhasibi Bin Hj Abdul Wahab GA01298
Zulhan Bin Juraimi GA01343
PREPARED FOR
Prof. Madya Dr. Zizah Che Senik

2. Content
• Introduction
• External Analysis
• Internal Analysis
• Strategy Analysis
• Strategy Implementation
• Strategy Recommendation
• Conclusion

3. A Comphrehensive Straregic Management Model

5. • Headquartered in Cincinnati, Ohio.
• The world's largest household products company.
• The firm is divided into two global units: Beauty &
Grooming and Household Care but P&G also makes
pet food and water filters.
• Many P&G's products are billion-dollar sellers,
including Febreze, Fusion, Always, Braun, Bounty,
Charmin, Crest, Downy, Gillette, Mach3, Iams, Olay,
Pampers, Pantene, Tide, Gain, and Wella, among
others. (250 brand products)
• P&G’s fiscal year ends June 30 every year
Procter & Gamble (2011)

7. • Focus on beauty and personal care
products – Sold Pringles
• P&G desires to accelerate its growth in
developing market such as Brazil & India –
”walled cities” (Emerging Market).
• Focus on “Affordability, accessibility and
brand awareness.”
• Improve existing product lines by focusing
on consumer needs.
Main Issues

8. Vision & Mission Statement
• No Vision
• Mission
“ 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 stakeholders and the
communities in which we live and work to prosper.”

9. Mission Analysis
Components P&G Mission
Customers. value that improve the lives of the world’s
consumers, now and for generations to come √
Products or services We will provide branded products and services of
superior quality √
Markets the world’s consumers, now and for generations
to come √
Technology
Concern for survival
growth and profitability.
As a result, consumers will reward us with
leadership sales, profit and value creation √
Philosophy.
Self-concept. branded products and services of superior quality
√
Concern for public
image.
As a result, consumers will reward us with
leadership sales, profit and value creation,
allowing our people, our stakeholders and the
communities in which we live and work to prosper
√
Concern for employees
√
77.78%

10. Perform External Audit
Opportunities Higher demand for higher-priced products such as prestige cosmetics and
fragrances.
Younger customers are attracted by social media advertising.
Social media advertising is more cost effective than traditional advertising.
The beauty and cosmetics industry is expected to increase globally especially in
the emerging market
There is an endless possibility to `celebrities’ endorsing fragrances, these
products are successful because many are persuaded by fame of the celebrity.
Men are increasingly concerned with their appearance, this provides a opening
to grab a new branch of consumers.
Increase in online purchasing.
Being a leader in some of the most demanding product in the market.

11. Perform External Audit
Threats Volatile foreign exchange rates.
Subject to anti-trust investigation in Europe.
Increase in competitor expansion globally from Colgate-Palmolive,
Unilever, and Clorox.
Regulations are increasing due to the voicing of different groups
about harmful chemical ingredients in cosmetic products.
The Unilever companies ranks number two in personal care and
household companies.
Considerable investment is necessary to bring new products to
the market and to maintain their high profile.

12. Competitive Profile Matrix
Critical Success
Factors
Weight P&G Estee Lauder Revlon
Rating Score Rating Score Rating Score
Advertising 0.10 4 0.40 2 0.20 1 0.10
Market Penetration 0.10 4 0.40 3 0.30 1 0.10
Current Ratio 0.05 1 0.05 4 0.20 3 0.15
Inventory Turnover 0.08 4 0.32 1 0.08 2 0.16
R&D 0.06 4 0.24 3 0.18 2 0.12
Income 0.05 4 0.20 1 0.05 3 0.15
Financial Profit 0.12 4 0.48 3 0.36 2 0.24
Customer Loyalty 0.08 4 0.32 3 0.24 2 0.16
Market Share 0.10 4 0.40 3 0.30 2 0.20
Product Quality 0.10 2 0.20 4 0.40 3 0.30
Top Mgmt 0.06 4 0.24 3 0.18 2 0.12
Price Competitiveness 0.10 4 0.40 2 0.20 3 0.30
TOTALS 1.00 3.65 2.69 2.10

13. EFE Matrix
Opportunities Weight Rating Rated
Score
1 Higher demand for higher-priced products such as prestige cosmetics and
fragrances.
0.09 3 0.27
2 Younger customers are attracted by social media advertising. 0.07 2 0.14
3 Social media advertising is more cost effective than traditional advertising. 0.07 2 0.14
4 The beauty and cosmetics industry is expected to increase globally
especially in the emerging market
0.08 3 0.24
5 There is an endless possibility to `celebrities’ endorsing fragrances, these
products are successful because many are persuaded by fame of the
celebrity.
0.06 2
0.12
6 Men are increasingly concerned with their appearance, this provides a
opening to grab a new branch of consumers.
0.08 3 0.24
7 Increase in online purchasing. 0.08 3 0.24
8 Being a leader in some of the most demanding product in the market. 0.09 3 0.27

14. EFE Matrix
Threats Weight Rating Rated
Score
1 Volatile foreign exchange rates. 0.04 4 0.16
2 Subject to anti-trust investigation in Europe. 0.04 3 0.12
3 Increase in competitor expansion globally from Colgate-Palmolive,
Unilever, and Clorox.
0.09 4 0.36
4 Regulations are increasing due to the voicing of different groups about
harmful chemical ingredients in cosmetic products.
0.07 3 0.21
5 The Unilever companies ranks number two in personal care and household
companies.
0.09 3 0.27
6 Considerable investment is necessary to bring new products to the market
and to maintain their high profile
0.05 4 0.20
TOTAL 1.00 2.98

15. Perform Internal Audit
Strengths Proposed sale of Pringles line of snacks in 2011 for $1.5 billion.
P&G is focused solely on the beauty and personal-care products business.
In 2011, Fortune ranked P&G the number one soap and cosmetic in the world.
New CEO, Mr. McDonald focuses on lower end products aimed at price sensitive customers.
P&G operates under a SBU structure.
23 P&G brands routinely earn over $1 billion in revenue per year.
Braun, bounty, Charmin, Crest, Downy, Gillette, Pampers are all top brands owned by P&G.
Invested over $2 billion in R&D in 2010.
Market share grew in 14 of top 17 countries in 2010.
EPS is 3.94.

16. Perform Internal Audit
Weaknesses No published vision statement.
$57 billion in goodwill on balance sheet.
Profits declined 5% in 2011 yet revenues increased 2.9%.
Weak profitability ratios.
Not operating as efficiently as Johnson & Johnson.
Spent $772 million in advertising to Johnson & Johnson’s
$366 million.
Consumers may not associate all of our brands with P&G
rather view them as their own distinct companies

17. IFE Matrix
Strengths Weight Rating Rated
Score
1 Sold Pringles line of snacks in 2011 for $1.5 billion. 0.12 4 0.48
2 P&G is focused solely on the beauty and personal-care products
business.
0.08 4 0.32
3 In 2011, Fortune ranked P&G the number one soap and cosmetic
in the world.
0.06 4 0.24
4 New CEO, Mr. McDonald focuses on lower end products aimed at
price sensitive customers.
0.07 4 0.28
5 P&G operates under a SBU structure. 0.05 4 0.20
6 23 P&G brands routinely earn over $1 billion in revenue per year. 0.10 4 0.40
7 Braun, bounty, Charmin, Crest, Downy, Gillette, Pampers are all
top brands owned by P&G.
0.10 4 0.40
8 Invested over $2 billion in R&D in 2010. 0.05 4 0.20
9 Market share grew in 14 of top 17 countries in 2010 0.07 4 0.28

18. IFE Matrix
Weaknesses Weight Rating Rated
Score
1 No published vision statement. 0.02 1 0.02
2 $57 billion in goodwill on balance sheet. 0.04 1 0.04
3 Profits declined 5% in 2011 yet revenues increased 2.9%. 0.04 2 0.08
4 Weak profitability ratios. 0.04 2 0.08
5 Not operating as efficiently as Johnson & Johnson. 0.05 1 0.05
6 Spent $772 million in advertising to Johnson & Johnson’s $366
million.
0.07 1 0.07
7 Consumers may not associate all of our brands with P&G rather
view them as their own distinct companies
0.04 1 0.04
TOTAL 1.00 3.18

19. SO Strategies
• Spend $400 million in R&D to produce 3
new lines of higher end fragrances (S7,
S8, S9, O1).
• Allocate $100 million for advertising and
promoting male skin care products
using celebrities as spokesmen (S6, O5,
O6).
WO Strategies
• Increase social medial advertising
targeting teenagers by $100M (W3, O2).
ST Strategies
• Continue to market low end cosmetics
and fragrances (S4, T5).
WT Strategies
• Reduced advertising by $300M on well
established products letting their brand
name sell for itself (W5, W6, T7).
SWOT

20. BCG Matrix
Division
Sales
/Revenue ($
millions)
%
Profit
($ millions)
% RMSP
Net sales
growth %
1
Beauty
19,491 24 2,712 23 0.60 3
2
Grooming
7,631 10 1,477 13 0.20 3
3
Health Care
11,493 14 1,860 16 0.30 2
4
Snacks and
Pet Care 3,135 4 326 3 0.10 1
5
Fabric Care/
Home Care 23,805 30 3,339 28 0.80 3
6
Baby Care/
Family Care 14,736 18 2,049 17 0.40 4
Total
80,291 100 11,763 100

21. BCG Matrix
23%
1.0 0.7 0.6 0.5 0.4 0.3 0.2 0.1 0.00.9 0.8
+5
+10
+15
-5
-15
-10
-20
0
+20
0
2
3 1
5
6
28%
23% 17%
16%
13%
3%
Relative Market Share Position (RMSP)
IndustrySalesGrowthRate
Star Question Marks
DogsCash Cow
III
III IV

22. 3% 3%
2%
1%
3%
4%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
0.000.100.200.300.400.500.600.700.800.901.00
IndustrySalesGrowthRate
Relative Market Share Position (RMSP)
P&G BCG Matrix
Stars
Dogs
Question
Marks
Cash Cow
III
III IV

23. SPACE Matrix
X-axis 3.6
Y-axis 2.4
•Market Penetration
•Market Development
•Product Development

24. SPACE Matrix

25. Grand Strategy Matrix

26. The Internal-External (IE) Matrix
Segment Revenues Profits
Beauty &
Grooming
34% 36%
Health &
Well-Being
18% 19%
Household 48% 45%
4.0 I II III
Household
High
3.0 IV V VI
The Beauty & Grooming
EFE
Total Medium
Weighted
Scores
Health & Well-Being
2.0 VII VIII IX
Low
1.0
The Total IFE Weighted Scores
Strong Average Weak
4.0 to 3.0 2.99 to 2.0 1.99 to 1.0

27. QSPM

28. QSPM

29. Recommendation
• Spend $400 million in R&D to produce 3
new lines of higher end fragrances and
lower end products.
• Allocate $100 million for advertising and
promoting male skin care products using
celebrities as spokesmen.
• Increase social medial advertising
targeting teenagers by $100M.