Procter & Gamble vs. Gillette

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Proctor & Gamble 1. What is Proctor & Gamble’s corporate strategy? Do the company’s businesses seem to be related or unrelated? Are Gillette’s businesses closely related to P&G’s businesses? How will a merger with Gillette provide a 1 + 1 = 3 effect for P&G? Proctor and Gamble recently completed large restructuring, put new management in place, and cut capital spending needs. Since then they are now focused on increasing top and bottom line results after shifting business mix toward higher margin, less capital-intensive health and beauty care sectors and also gearing towards developing markets and lower-income consumers. Most of the company’s products are closely related in the sense that they are household products such as Always,…show more content…
(figure c) Proctor & Gamble are very comparable to each other when it comes to their profit margins. P&G’s operating and net profit margins are lower than Gillette’s however they still have similar rate patterns over time. Impressively categorized as “cash cows”, P&G and Gillette have increased yearly profitability from 2000 to 2005. On the other hand, Proctor & Gambles Debt to Assets ratio s are higher when compared to Gillette’s, but has dropped steadily over the years indicating they were a financially stable company that could support its spending big spending habits. Gillette, also financially stable, had a lower Debt to Assets % in 2000 – 2001, followed by a spike in 2002 which tells us that they invested some money into expansion in order to promote growth. 2002 – 2004 Debt to Asset ratio diminishing shows Gillette recovering from the investment in 2002, so they were on the right track to recovery and growth. Overall both companies are showing very good financials and history. From the looks of it, the addition of Gillette’s business units will most defiantly boost Proctor & Gamble earnings and overall company wellbeing. Compound Annual Growth Rate 2000 – 2005 P&G Gillette Net Sales 7.3% 6.0% Operating Income 12.9% 13.0% Net Earnings 15.4% 44.1% Diluted Net Earnings Per Common Share 15.4% 46.0% Dividends per Common Share 16.7% 0.0% Proctor & Gamble 2000 2001
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