Questions On The Procter And Gamble Company

1260 WordsSep 8, 20146 Pages
CHAPTER FOUR 4.0 Problem and Opportunity Quantification This chapter presents an investigation into the problems that the Procter and Gamble Company (P&G) is faced with; this will include an analysis of the company’s bloated cost structure that was followed by the crisis in 2009 that affected their financial performance and productivity in terms of pricing, sales growth, market share and revenue. This analysis will give a clear understanding of the problems that need to be resolved and opportunities that need to be maximised. 4.1 The 2009 crisis The inflated cost structure that was created by P&G, started as an attempt to increase its competitive advantage and win market share but this took a different turn. In 2009 P&G encountered crisis due to the economic condition that was present. This economic recession was as a result of the drop in economic growth internationally especially in the United States and other developed countries where the prices of housing and equity markets fell (Procter and Gamble, 2009). According to P&G’s annual report of 2009, the Gross Domestic Product (GDP) declined from +4% to -6% in 2008 (which is a 10 point difference) in developed markets and declined from +6% to -1% in that same year (which is a difference of 7 points) and this had an effect on consumer spending which affected the company’s productivity. Due to this economic situation, almost 30 million people were left jobless which changed the behaviour of consumers; they were forced to

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