Porters Five Forces

1139 Words5 Pages
In which industry does P&G compete? Apply Porter’s Five Forces Model to the industry. Is this an attractive industry?
P&G is one of the leading companies that are operating in the household consumer product industry. P&G’s threat of substitution is extremely high as there are many companies producing household consumer products, both national and international such as Clorox, Kimberly-Clark and Colgate-Palmolive CL. Also, P&G is also competing with retailers private label brands such as Walmart’s Great Value. Because the consumer’s switching costs between products are low, the quality, price, brand loyalty and differentiation of a product is very important in influencing consumer’s purchasing decision.
The barrier to
…show more content…
This does help us explain how the company emerged successful as compared to its other competitors. The innovative products and services have helped the consumers to reduce their costs on heath care products.
The company also enhanced its distribution network through vertical integration. P&G were able to form alliances and partnerships with their suppliers which resulted beneficial for the company’s success.

What are your concerns about P&Gs strategic position in 2005?
After Lafley’s innovation strategy, P&G regained its market shares and enjoyed a fast sales growth. However, some concerns still existed for its strategic position in 2005. From the case, we know that the cuts in capital and R&D spending led to some increases in profit. But this kind of increase cannot be long lasting because the certain amount of investment in R&D is required to implement the innovation strategy.
To keep its market share and sales growth rate, P&G should have more innovative actions to respond any attack. However, just as case presented, since Lafley was focusing more on upgrading the existing brands rather than introducing new brands, they might have risk of losing emerging markets and was unable to meet the changing demands of customers. If P&G couldn’t provide the relevant products, the only way to compete with other firms might be decreasing prices. The profit margins of incremental innovation

More about Porters Five Forces

Get Access