Case Study On Proctor & Gamble Case Study

P&G’s success strategy in the market place are; Continuous focus on the company’s core business and continuous focus on the company’s leading brands, customers and countries with the aim of growing the market share in its core categories. The company has a strategy of growing leading brands and winning customers. Besides the company has a strategy to continuously develop higher-margin, faster-growing, more efficient health and beauty care business with a worldwide leadership potential. P&G has the strategy of continuously investing in lower-income clients in the developing market with the aim of increasing its market share in those markets. Lastly, the company is keen on regaining, leadership and the growth momentum in Western Europe.
P&G primarily relies on, product leadership customer value proposition. This is supported by the fact that the company has a unique balanced businesses and brands combination. About half of P&G’s sales are expected to be realized from Family, Baby and Household and another half from Health and beauty. This gives the company leadership in the brands on offer in the market. The company also has a balanced geographic presence. Approximately half of the company’s sales are from North America and the other half from the global markets. P&G also boasts of a balanced customer base. This balance in the company is crucial as it enables the company to meet its objectives even in the face of tough challenges as was in the year 2005.
Some of the business risks that P&G faces that may threaten its ability to meet the stakeholder’s expectations are;
Cost Pressures: The Company’s costs are subject to fluctuations due to changes in the cost of labor, commodity price changes, interest rates, and foreign exchange. The inflation risk affects the company’s profits unless properly managed. To manage this nature of risks, P&G employs various methods including hedging transactions, cost savings projects, use of pricing actions, and sourcing decisions. The company also has to manage currency, more so in volatile countries. The company maintains and key supply and manufacturing arrangements to manage its manufacturing and other general overheads.
Global economic risk; this is the risk that the company is exposed to due to the fact that it has a large global presence. This risk is due to global economic changes, political unrest and terrorist activity which could result in interruption of business, decreased demand for the company’s products and inflation. The company has to manage the global economic and/or economic uncertainty especially in the significant geographical markets for it to remain successful.
Regulatory environment: The Company faces the risk of laws or interpretation of the laws changing, thus altering the business environment. The laws that are likely to change and affect the business include environmental laws, product related laws and taxation requirements. Adverse changes in any of the laws affecting the business environment are likely to affect the business results.
The quarterly net sales for the Federal Department Stores’ for the year ended June 30, 2005 is $ 9,571 million (Sec.gov). From these two values, it is clear that P&G’s quarterly trend leads the Federal government store’s quarterly sales trend. The Federal Department Stores trend is likely to cause a greater cash budgeting concern, this because the quarterly sales are lower than for P&G Company. This means that the Federal government might not have enough cash to achieve its desired operational levels (Macy’s, Inc. Annual report 2011).

Scope of P&G’s business.

Physical Facilities; through their market development organization (MDO), P&G have operations in over 80 countries (Balance and Leadership 2005 Annual Report). The market development organization consists of a dedicated retail channel, regional (or country) specific teams that are dedicated to developing brands for the local market. P&G’s MDOs operate in seven geographic areas; West Europe, North America, Latin America, Northeast Asia, East Africa, ASEAN/India/Australia, and Central and Eastern Europe (Balance and Leadership 2005 Annual Report).
Products; the company has divided its products line to various global business units (GBU), which are P&G Household Care, P&G Beauty and P&G Family Health. Each of this GBU operates as autonomous business entities with each having its strategic objectives and long-term goals. The three GBUs have seen P&G gain market leadership, through diversification. Of the company’s billion-dollar brands, six belong to the P&G Family Health business unit. These are; Pampers, Bounty, Actonel, Crest, Charmin and lams. P&G Household consists of Tide, Downy, Ariel, Folgers, Pringles, and Dawn. The P&G Beauty Business unit is the most profitable business unit for the company. This GBU has consists of five of the company’s billion-dollar brands i.e. Olay, Lacoste, Hugo Boss etc. P&G have the largest variety of brands in the industry. The company has a seventeen billion-dollar brand with another thirteen brands. The total P&G branded products are over 300 in more than 160 countries.
Customers; as Company a global company P&G, boasts of a balanced mix of clientele. The customers are drawn from both the developed countries and from the emerging markets.

The five uncertainties that make it difficult for P&G to forecast the company’s sales and expenses are;

The uncertainty of lacking historical information; Most forecasts are based on past data, however in the event that the company manufactures a new product then there is a risk of not finding relevant information to be used for sales forecasting.
The uncertainty of the price; Due to inherent market conditions the prices of commodities or cost of expenses may fluctuate, determining the correct rate of adjusting such adverse economic factors in forecasting possess a problem.
Foreign exchange uncertainties; since P&G operates in a global market, foreign exchange rates are critical in the determination the various costs or sales prices for purposes of forecasting. The uncertainties in the money market rates are thus likely to affect the forecasting process.
Uncertainties in the global market; with the company being global, uncertainties such as terrorism, changes in law etc., possess a challenge in forecasting of both sales and expenditure.
Budgeting being a process it involves a number of assumptions concerning the future projected revenues and expenditure. Different companies will generally have different policies and traditions on how to forecast revenues and expected expenditure to be used for the budgeting process. Generally, different companies based on a management policy will have unique ways of gathering the necessary information, preparing the budget, receiving approval and monitoring/evaluation of the budget. As such budgeting is could be taken to be part of a company culture that could be a course for divergence in the cultural norms.

References:

Sec.gov, 'FEDERATED DEPARTMENT STORES 10-K'. N.p., 2015. Web. 16 Apr. 2015.
Balance And Leadership 2005 Annual Report. 2005. Web. 16 Apr. 2015.
MACY’S, INC. ANNUAL REPORT 2011. 2011. Print.