Procter & Gamble
Saturday, 17 July 2010
Presentation by
Michael Rajendra Sai Tunde Yinka
Saturday, 17 July 2010
Aim of Presenta.on
• To cri.cally analyse P&G from the strategic management perspec,ve using various models .
Saturday, 17 July 2010
Purpose of P&G
• To provide large variety of consumer products at an affordable price without compromising quality.
•To con.nually an.cipate consumer needs and develops a product to meet their needs.
Saturday, 17 July 2010
Profile
• LAUNCHED in 1837.
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Environment: Green house effect environmental sustainability. product recycling. Legal/Regulatory: Food and Drug Administration/EU regulations. Mergers and acquisition policies
Saturday, 17 July 2010
FIVE FORCES ANALYSIS
THREAT
OF NEW ENTRANTS Economies of Scale Experience and market leaders Patent on some products Highly capital intensive Distribu.on Channels Requirement High industry growth rate Bargaining power of Buyers Sensi.ve to price Low switching cost Brand is extremely important. Informa.on in Purchasing decisions Ver.cal Integra.on of products Subs.tutes are readily available
Saturday, 17 July 2010
FIVE FORCES ANALYSIS
(Cont’d)
BARGAINING POWER OF SUPPLIERS(LOW) Few large manufacturing supplier Medium bargaining strength Quality of inputs is critical to the finished products Alternatives available Forward integration difficult Switching costs are high. THREATS OF SUBSTITUTES(HIGH) Substitutes are readily available Substitutes perform well also Switching costs is low RIVALRY AMONG EXITING COMPETITORS(LOW)
1) What significant changes have occurred in the Canadian mouthwash market in the past three years?
Suppliers generally have a moderate to high bargaining power within the industry due to the limited number of suppliers which forces aviation companies to choose from the number available and accordingly to accept their prices. In fact, fuel is the second highest cost for aviation companies. There are highly depended on supplier’s prices and the availability which indicates on a relatively high bargaining power of suppliers. In addition, there are high switching costs which are strongly in favor of the suppliers and means that the company experiences an increase in operating costs when switching to another supplier as flying another type of aircraft leads to additional costs (maintenance, training etc.).Aircrafts are vulnerable to delays due to the location of gate locations which leads to a decrease in utilization and therefore to an increase in costs.
Procter and Gamble Co. also know as P&G, is an American multinational consumer goods company, founded by William Procter and James Gamble. Its products include cleaning agents and personal care products. It has in its kitty global brands such as Ariel and Tide in the Fabric care segments and Head & Shoulder, Pantene and Rejoice is the Hair care segment. For this case study selects P&G Company as it has an important role in the consumer segment products. As P&G was a popular company, the financials statement shows better performance in the previous year.
The Bargaining Power of Suppliers (Moderate): Most of the industry’s products are sourced and manufactured by a network of third parties. The supplier group is diluted compared to the industry; KMD alone has over 45 suppliers. There is credible threat of suppliers adopting forward integration resulting in loss of major suppliers and emergence of new competitors for the industry. Highly effective and specialised products will pose high supplier switching costs for industry firms.
These suppliers have slightly more bargaining power because of the differentiation between their work. However the need for these suppliers can be eliminated if furniture manufacturers produce every piece of their products themselves. A furniture manufacturer will only outsource production of parts if it proves to be cost effective for their company. Since the price of materials is consistent market and the outsourcing of production is unnecessary, suppliers have low bargaining power in the furniture manufacturing industry.
Bargaining Power of Suppliers: The bargaining power of suppliers in the industry is low. There are numerous suppliers in this industry, and the large department stores have the ability to negotiate for the lowest prices. In addition, the switching costs are low, as the products are not highly differentiated. There are a large volume of purchases in the industry, allowing the department stores to exert even more power over the suppliers.
Bargaining power of buyers is medium-high because of the low switching costs and wider spectrum of similar products selling at competitive prices due to the influence of developing countries
Bargaining power of supplier: High levels of competition among suppliers act to reduce prices to producers. This is a positive for Ford Motor Company. Standardization of parts allowed Ford to reduce dependency on fixed supplier/vendor which goes into producer’s favor.
There are many network equipment suppliers, which are suffered from the down telecom market. Having mature technologies also commoditize the products. As such, the bargaining power of suppliers has been weak.
Since its humble beginning as a small drugstore, Merck has placed a large amount of importance on improving the health and well-being of its customers. As drug patents expire and genetic forms of their top products become available, Merck’s strategy is to do the unexpected; instead of raising the price of their older products in favor of patent protected new drugs, Merck focuses on reducing their cost in order to better compete with their generic counterparts. Additionally, Merck’s plan for growth now encompasses a much more aggressive pursuit of new drugs in their pipeline through extensive research. Merck became the second largest health care company in the world after the merger with Schering-Plough in 2009 and has
The bargaining power of supplier is how easier it is for suppliers to drive up prices. As the company acquired the company of previous supplier, Importadores Neptuno, who manufactured several critical subcomponents for the Adventure Works Cycles product line, the bargaining power of supplier is low the company as the company can acquire supplies at low cost. The ownership of the company also means that the company can demand the required
Supplier Power: This highlights that it is easy for suppliers to rise up their prices. This is determined by the number of suppliers, the uniqueness of their product, their control over the buyer, and the cost of changing from one buyer to another. The scarcer the supplier choices you might have, and the more you need the help and that
The bargaining power of buyers stands in a direct relationship with the bargaining power of suppliers. If the bargaining power of buyers is substantial it increases the opportunity cost of suppliers. The greater the buyers concentration the greater their bargaining power. This bargaining power is also increased in markets where the suppliers’ concentration is high. The bargaining power is also increased when the cost of switching from one supplier to another is low. In instances where backward vertical integration is possible i.e. buyers setting up their own chains of suppliers the bargaining power of the buyer increases in that their prices may become more competitive. In a market where the buyers are more concerned over quality than price their bargaining power decreases as they are less inclined to shop
Bargaining power of suppliers is low due to large number of suppliers of raw materials, low switching cost and availability of attractive substitutes. (Jim Wilkinson, 2013) Therefore, we could control the price of raw materials because we can easily switch to different suppliers with lower price and higher quality, increasing our profit consequently.
- Suppliers’ bargaining power: The company does bargains with the suppliers, suppliers are first carefully selected by carrying out bidding then a fixed price is set by multi consent then material is provided by the supplier.