Study Guide for making report in P&G

1. M. Taha Uddin Khan Ghori

2. 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

3. INTRODUCTION

4. 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.

5. 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

6. EVOLUTION OF LOGO

7. INTRODUCTION
Competitors:
• Unilever Co.
• Johnson & Johnson Co.
• Kimberly-Clark Co.
• Colgate palmolive
• Nestlé
• Reckitt Benckiser

8. STRATEGIC DIRECTION

9. 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

10. 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

11. 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

12. 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.

13. 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

14. 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 scarcity
http://www.theguardian.com/sustainable-business/procter-gamble-sustainability-vision

15. EXTERNAL ENVIRONMENT ANALYSIS

16. 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

17. 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

18. 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

19. EFE MATRIX
OPPORTUNITIES 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

20. EFE MATRIX
Threats Weight Rating Weighted score
3. Cheaper consumer
brand competitors
in the market
0.08 3 0.24
4. New and
competitive
consumer products
are 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/

21. 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.

22. 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

23. 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.

24. INTERNAL ENVIRONMENT ANALYSIS

25. 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

26. 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.

27. 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 internet
Weakness
• Lack of new media marketing challenge
• Lack of direct marketing

28. IFE MATRIX
Key internal factors Weight Rating Weighted
score
Strength
1. Strong reputable brand
name
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 product
lines
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

29. 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

30. 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.

31. CURRENT STRATEGIC PERFORMANCE

32. 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 2013
because of the significant increase in short-term investment, cash and miscellaneous
current assets. The quick ration of the company has increased by 24.39% in 2014
that is 0.51 and in 2013 it was 0.41. So, overall liquidity position of the company has
improved.

33. 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.

34. 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.