groupassignment for strategic management strategic management on pg case

P&G Vietnam was one of the first American firms to invest in Vietnam following the restoration of diplomatic relations between the two countries in 1995 and has seen double-digit growth

Banking Academy of Vietnam International School of Business

GROUP ASSIGNMENT FOR STRATEGIC MANAGEMENT STRATEGIC MANAGEMENT ON P&G CASE

LECTURER: Dr Van Canh Ta

STUDENT NAME:

Phạm Hồng Phúc ( CA7 – 075)

Hoàng Thu Hà (CA7 – 029)

Lê Hồng Đức (CA7 – 027)

Bùi Quốc Trung (CA7 – 105)

Trần Thị Huyền My (CA7 – 065)

CLASS: City U 7A

STUDENT’S TASK SPECIFICATION

No Members Tasks

Procter & Gamble (P&G) – 2022

A Case Abstract

Procter & Gamble is a consumer goods company that has a subsidiary in Vietnam P&G is an American global business with one of the strongest portfolios of trusted, quality, leading brands P&G Vietnam was one of the first American firms to invest in Vietnam following the restoration

of diplomatic relations between the two countries in 1995 and has seen double-digit growth for many years, becoming 12 times larger in the previous ten years

For the past 25 years, P&G Vietnam has served Vietnamese consumers through a portfolio of leading brands across a wide range of consumer product categories, including Baby Care, Hair Care, Fabric & Home Care, Grooming, Skin & Personal Care, Feminine Care, and Oral Care, with the goal of "Touching and improving more Vietnamese consumers' lives." In addition to the main headquarters in HCMC, the corporation has two large-scale production plants in Binh Duong province

In recent years, P&G Vietnam has been one of the company's fastest-growing operations internationally P&G has been a leader in socially sustainable development

by providing affordable housing, education, gender equality, improved health and hygiene facilities, and clean water to those in need

B Vision Statement.

Proctor and Gamble’s vision statement is “Be, and be recognized as, the best consumer products and services company in the world.”

The organization's vision statement states that it aspires to be a worldwide leader and to preserve that position This declaration focuses on the organization's leadership role and explains how P&G works hard to stay ahead of the competition

The following features of the organization are stated in the vision statement:

1: Everyone recognizes us as the leading provider of consumer goods and services

2: To achieve the status of global leader and to inspire others

3: To make touch with people all around the world and effectively handle market activity The organization's capabilities are highlighted in the vision statement The statement expresses the organization's ability to have a positive impact and expresses how committed the

organization is to upholding its high standards The phrase exemplifies the company's global expansion strategy and also the actions that the company takes to become a well-known brand

C Mission Statement.

Proctor and Gamble’s mission statement is “We will provide branded products and services (2)

of superior quality and value (7) that improve the lives (6) of the world’s consumers (1,3), now and for generations to come As a result, consumers will reward us with leadership sales, profit, and value creation (5), allowing our people (9), our shareholders, and the communities in which

we live and work to prosper.(8)”

The improved one: “We will provide branded products and services (2) of superior quality and value (7) by using state-of-the-art technology (4) that improve the lives (6) of the world’s consumers (1,3), now and for generations to come As a result, consumers will reward us with leadership sales, profit, and value creation (5), allowing our people (9), our shareholders, and the communities in which we live and work to prosper.(8)” Nine Mission statements:

1) Customers - Who are the firm’s customers? - YES, the mission statement state that the world’s consumers, so P&G intended to serve people around the world

2) Products or services - What are the firm’s major products or services? YES, it is said that P&G will provide superior quality products and services to customers

3) Markets - Geographically, where does the firm compete? - YES because they serve customers from around the world, so their markets are global

4) Technology - Is the firm technologically current? NO

5) Concern for Survival, Growth, and Profitability - Is the firm committed to growth and financial soundness? YES, so after serving customers with the best quality products, the company will be rewarded with great sales, profits

6) Philosophy - What are the basic beliefs, values, aspirations, and ethical priorities of the firm? - YES, through the superior quality products, they believe that the life of customers will be improved

7) Self-Concept - What is the firm’s distinctive competence or major competitive advantage? - YES, the firm competitive advantage is the best quality of products and services

8) Concern for Public Image - Is the firm responsive to social, community, and environmental concerns? - YES, they believe that with what they provide to the people, the communities will grow and prosper

9) Concern for Employees - Are employees a valuable asset of the firm? - YES, the employees are also benefited from leadership sales, profit

To conclude, the mission of P&G is a very good one It is short and provides enough information

to demonstrate the reason why the company exists

D External Audit.

Opportunities

1 90% of U.S consumers are concerned about having bugs in their homes

2 Vietnamese consumers are willing to pay more for high-end products with unique functions

3 Due to Covid-19, people spend more on categories that offered personal and family hygiene to remain clean and kill germs

4 Support from the government for increased energy efficiency

5 Preference for high-quality consumer items is growing

6 Growing online market

7 The growing demand for environmentally friendly products, such as the ‘organic’ ones

8 Recycling resources are becoming more readily available

9 Product safety requirements are becoming more stringent

10 The growing market for personal care products in Asia

According to the P&G annual report, 90% of U.S consumers are concerned about having bugs in their home, almost as many have concerns about traditional insecticide spray products

So the company developed Zevo with a powerful blend of active essential oils inspired by plants’ natural defenses against bugs, for an effective way to control insects in the home using ingredients consumers know Initially direct-to-consumer, Zevo has quickly expanded to several major U.S retailers, helping the company enter a new consumer segment — and generated organic sales growth of over 50% in fiscal 2021 The annual report for the Vietnam market found that Vietnamese consumers are willing to pay more for high-end products with unique functions such as relief for acute pain, whitening and gum health Whitening and sensitive tooth products were among the newly added value trends in oral care This is a very good opportunity for P&G

to enter the market since they possess the best quality product in the segment of teeth whitening

As countries develop, consumers are increasing their preference for high-quality products from firms like Procter & Gamble This social external factor creates an opportunity for business growth in the remote or macro-environment of the consumer goods industry For example, P&G can expect a potential revenue increase by enhancing the quality of its products (Andrew Thompson, 2017) The company also sees opportunities from government support

Governmental support for increased energy efficiency is constant By gaining access to such help

in the distant or macro-environment, Procter & Gamble may reduce its environmental imprint For example, the corporation can take advantage of government initiatives that provide businesses with cost-effective energy solutions In the world of technology, it would be backward

if companies do not make use of e-commerce P&G has done well in developing online sales to increase its revenues, based on a growing global online market Besides, the company also introduces environmentally friendly products, by reducing plastic bags,…to satisfy their customer They improve their environmental footprint by using available recyclable materials Including this effort can improve brand image and consumer perception and loyalty Such effort can also encourage a general improvement of corporate responsibility in the remote or macro-environment of the consumer goods industry (Bhasin, 2019) The last thing that can be seen from

the P&G annual report is that they take great concern for expanding their business in Asia countries As of the year 2017, the share of Asia in the Company’s revenues is expected to increase from 17% (as it is now) to 25%

Threats

1 P&G is concentrated in the wrong markets causing the company to have weak profits 2.P&G’s manufacturing operations and products are subject to strict regulations and laws

3 Facing great risks from the third party

4 The risk of counterfeit products is high for P&G

5 Changes in consumer buying behavior in the digital era may reduce the company’s revenue

6 Trade barriers limit P&G’s global growth

7 Rising pay level and costs of raw material affect P&G’s revenues and net earnings

8 Increased local and unbranded competition being supported by governments

9 L’Oréal was awarded as the world’s most ethical company regarding cosmetic fields

10 Big retailers own brands affect the company’s market shares

Firstly, P&G gets almost 45% of its revenue from North America and nearly 23% from Europe which are developed markets ("Has Procter & Gamble Made Some Bad Bets? -Knowledge@Wharton", 2022) Nonetheless, their main products are mostly from high-end segment which are being hurt by these slow-growth markets Their rival Unilever, in contrast, is focusing more on the emerging markets and making a big profit with their business.Secondly, Higher level of legal regulations is causing higher cost pressures for FMCG brands like P&G The laws vary from one country to another globally and require serious compliance P&G is put under a lot of pressure by multiple laws and regulations regarding environment, safety and health, food and drug use internationally ("Procter & Gamble faces mounting criticism over its 'Our Home' climate initiative", 2022).Thirdly, With operations over 180 countries, the company has to rely on third parties such as suppliers, contractors and business partners to run its business The company is required to maintain agreements and relationships with their third-party to avoid legal, financial and reputational risks Next to the risk of counterfeit products is high for P&G In

2020 Jordan Denton, Senior Manager of P&G stated that with multiple product lines and worldwide operations, P&G’s products can be easily counterfeited, resulting in loss of revenues

and customer’s trust in the brand Subsequently, According to ("Online Upstarts Pose a Threat to Procter & Gamble (Published 2016)", 2022), in the era of online purchasing, new technologies developed by other competitors or market disruptor may hurt P&G’s existing physical infrastructure driven supply chain model The company may be facing an intense threat of substitution from other competitors with more advanced digital tools Following trade barriers limit P&G global grow, In some countries with protectionist trade policies that restrict imports or have questionable policies on the operations of foreign firms, trade barriers are a significant threat since P&G operates worldwide Next, The costs of raw material and labour have kept rising, adding to the operational costs of most consumer good companies including P&G and leading to serious pressure on profitability ("Higher prices ahead for Tide detergent and other Procter & Gamble products as costs climb higher", 2022) We continued with Local brands getting a lot of favour from the governments along with foreign countries supporting their own infrastructure and manufacturing can cause P&G to lose their market shares as they are an international business (“COVID-19: Government support for individuals and businesses”, 2022) Next but not least, According to “L’Oréal recognized as a world environmental leader with triple

‘A’ CDP rating”, 2022, since L’Oréal is a big rival of P&G, the environmental benefits they pose through eco-friendly products have been favoured by the public and act as an advantage over P&G in numerous mutual products segments Lastly, Allingham (2021) indicated that big supermarkets chains such as Walmart, Tesco, etc have been succeeded in founding their own consumer packaged goods brands for multiple segments of skincare, personal care, body care that directly affect the marketing share of P&G

EFE Metrix

EFE Matrix of P&G Company

1 90% of U.S consumers are concerned about

2 Vietnamese consumers are willing to pay more

for high-end products with unique functions 0.04 2 0.08

3 Due to Covid-19, people spend more on

categories that offered personal and family

hygiene to remain clean and kill germs 0.06 4 0.24

4 Support from the government for increased

5 Preference for high-quality consumer items is

7 The growing demand for environmentally

friendly products, such as the ‘organic’ ones 0.03 2 0.06

8 Recycling resources are becoming more readily

9 Product safety requirements are becoming more

10 The growing market for personal care products

Threats

11 Rising pay level and costs of raw material

affect P&G’s revenues and net earnings 0.07 3 0.21

12 P&G’s manufacturing operations and products

are subject to strict regulations and laws 0.05 2 0.1

13 Facing great risks from the third party 0.03 2 0.06

14 The risk of counterfeit products is high for

15 Changes in consumer buying behavior in the

digital era may reduce the company’s revenue 0.05 1 0.18

16 Trade barriers limit P&G’s global growth 0.05 2 0.1

17 P&G is concentrated in the wrong markets

causing the company to have weak profits 0.04 2 0.08

18 Increased local and unbranded competition

19 L’Oréal was awarded as the world’s most

ethical company regarding cosmetic fields 0.02 2 0.04

20 Big retailers own brands affect the company’s

By adding the weighted score of various opportunities and threats of P&G Company, we get the total weighted score of 2.76 the total weighted score is above average, which means that the Company’s strategies are effective and the company is taking advantage of existing opportunities along with minimizing the potential adverse effects of external threats

The Competitive Profile Matrix (CPM)

The Competitive Profile Matrix (CPM) is a tool that can be utilized in order to assess and evaluate how P&G performs as compared to its direct competitors in the industry The critical success factors are used as a measurement basis by which a general weight is provided in order

to compute the weighted scores of the companies The analysis also reveals the company’s relative strengths and weaknesses against its competitors, so the company would know which areas it should improve and which areas to protect

WEIGHT ASSIGN:

4 = Major strength

3 = Minor strength

2 = Minor weakness

1 = Major weakness

Competitive Profile Matrix

Critical Success Factor

Weight Rating Score Rating Score Rating Score Advertising 0.20 4 0.80 3 0.60 2 0.40 Product quality 0.10 4 0.40 3 0.30 3 0.30 Price Competitiveness

0.10

3 0.30 1 0.10 2 0.20 Management 0.10 4 0.40 3 0.30 2 0.20 Financial position 0.15 3 0.45 4 0.60 2 0.30 Customer loyalty 0.10 3 0.30 3 0.30 4 0.40 Global expansion 0.15 4 0.60 2 0.30 3 0.45 Market Share 0.10 4 0.40 2 0.20 2 0.20

Totals 1.00 3.65 2.7 2.45

The CPM illustrated above how P&G compares with its competitors, J&J and Unilever As we can see P&G garnered the highest weighted score with 3.65 while J&J and Unilever’s total scores are approx The factor having hthe ighest is advertising for which Unilever is rated only 1,

while for some other factors having lower weights Unilever is rated highest such as customer loyalty This may be the reason for Unilever’s lowest score

P&G is having the highest score among its competitors, however, J&J has the better financial position and Unilever is having better customer loyalty than both P&G is rated 4 for most of the factors comparatively of higher weight and the factors for which it is rated less than 4 are weighted 0.1 only This is the reason P&G has got the highest rating

This weighted score serves as an indicator of how their critical success factors work for the company With this, it can be said that P&G can afford to improve their public concern, product value, and price competitors in order to increase their performance in the market

E Internal Audit

Ten internal strengths of P&G

1 Strong consumer goods brands

2 The sales revenue increase among pandemic

3 Efficient product distribution network

4 Excellent R&D

5 Multinational and Multi-product line presence

6 The value of shares of P&G has increased steadily over the years

7 Fantastic distribution channel

8 Sales increased strongly in 2 main market

9 Market Leader in FMCG Market

10 P&G e-commerce sales increase significantly

Strong consumer goods brands - Strong consumer goods brands ensure Procter & Gamble’s competitive advantage For example, Tide and Pampers are household names that contribute to consumer loyalty and P&G’s stable market share (Andrew, 2017)

The sales revenue increase among pandemic (2021) – According to the annual report of P&G (2021) organic sales increased by more than 6% in the fiscal year, core earnings per share increased by 11%, currency-neutral core earnings per share increased by 11%, and adjusted free cash flow productivity increased by 107 percent These are excellent achievements under difficult conditions, on top of equally excellent performances prior to the pandemic

Efficient product distribution network - In relation, Procter & Gamble maintains a high-efficiency global product distribution network This network involves company-owned facilities

as well as third-party service providers (Andrew, 2017)