Disclaimer: This is an example of a student written essay.
Click here for sample essays written by our professional writers.

Any opinions, findings, conclusions or recommendations expressed in this material are those of the authors and do not necessarily reflect the views of UKEssays.com.

Procter & Gamble: Organisation And Development

Paper Type: Free Essay Subject: Marketing
Wordcount: 3517 words Published: 8th May 2017

Reference this


Procter & Gamble was created in 1837 by William Procter who was a candle maker and James Gamble who was a soap maker. Since then the company was growing bigger and bigger as years past by. Nowadays, Procter & Gamble is a multinational organization operating in more than 180 countries and producing over 300 products. Firstly, at this report, the strategic development of P&G will be clearly evaluated and it will be followed by the evaluation of its resources and competences. Then, the evaluation of the company’s external environment will be analyzed through the use of swot analysis, pest analysis and 5 forces analysis. Subsequently, a strategic group analysis of the industry that P&G is engaged to will be carried out to illustrate their differentiate characteristics from other companies. Finally, the longer – term strategy of P&G will be clearly demonstrated with some future recommendations that could be supportive.

Pattern of strategic development

Since 1837 when Procter & Gamble was founded, the company continued to grow and following the changes at the external environment, the corporate strategy of P&G was changing as well. From 1945 to 2020, P&G has three stages of corporate strategy, which are: Product diversification strategy (1945-1980), Globalization strategy (1980-2003), and Sustainable Development Strategy (2003-2020).

Product diversification strategy (1945-1980)

In 1946, P&G introduced Tide washing powder. Tide’s performance was better than the similar products in the market and so it soon got as a big success. Subsequently, P&G launched a lot of new products. The first fluoride toothpaste Crest Obtained certification by American Association of Dental Prevention, then it became the leading toothpaste brand quickly. In 1961, P&G introduced Pampers which is disposable baby diapers, it is still one of the top product that P&G sells (Ifeng Finance, 2010 ).

Get Help With Your Essay

If you need assistance with writing your essay, our professional essay writing service is here to help!

Essay Writing Service

The disadvantage of this strategy is that it is too difficult for the company to control and manage so many products and the company may over pursuit the market share and might not pay attention to develop the star products which have core competitiveness. As a result, the original core competitiveness is weakening and the company does not have its own characteristics, the concept of the company’s image and product become blurred.

Globalization strategy (1980-2003)

Through the acquisition of Norwich Eaton pharmaceutical company ¼ˆ1982¼‰ and Rechardson-Vicks company¼ˆ1985¼‰¼ŒP&G is active in personal care products industry. In the late 80s, early 90s, through the acquisition of Noxell¼ŒMax Factor¼Œand Ellen Betrix, P&G plays an important role in cosmetics and fragrances industry (Ifeng Finance, 2010 ). These acquisition activities have accelerated the process of P&G globalization.

Moreover, Pampers, Whisper, Pantene, Tide, Ariel, Crest, and Olay and other brands has become a world-renowned brands. However, the biggest problem when a company involved into other countries, is the cultural differences which will lead to different reactions on product on the consumers, thus the marketing strategies need to be changed accordingly. Also, the different national legal systems and the differentiation in consumers budgets is also greatly affecting the conduct of globalization strategy.

Sustainable Development Strategy (2003-2020)

At the current stage, the tenet of P&G’s organization strategy is sustainability which means improving people’s life quality. In order to achieve this strategy, P&G to start work from the following aspects:


P&G developed and sold “sustainable innovation products” which can significantly reduce environmental pollution. In 2007, P&G replaced the packaging of detergent as half of the original’s, and adjusted the solution to double concentrated formula. The method saved the use of packaging materials and reduced wastes. P&G’s purpose is to make the environment a better place (Adweek, 2007).


P&G established the “sustainable development team” in the offices. Through “green recycling box”, the company recycled more than 4800 kilograms of waste paper, and in exchanged for 69,000 new pieces of paper, moreover, the company’s power consumption dropped by 10%, saving 17 million kWh which is equivalent to 560 families a month’s electricity consumption. In addition, in some factories and distribution centers, P&G also installed solar power and rainwater collection and processing device, to further reduce energy consumption. (21ST CENTURY BUSINESS HERALD, 2009)

Social Responsibility:

In 2009, P&G signed ‘United Nations Framework Convention on Climate Change’ and developed a global reduction in carbon footprint by 2012, and that will be published the results of carbon reduction stage. (21ST CENTURY BUSINESS HERALD, 2009)

So far, all of the efforts which P&G has done are win-win situation of business and environment. When the company set up the environmental value chain, it will get financial gains from using energy efficiency and reducing wastes.

Resources and Competences

P&G as we know it, is one of the world’s largest consumer products company but what does makes P&G so successful while it competes in the huge consumer products industry? This part of the report is mainly focuses on the P&G’s resources and competences and how the resources and competences works together creating a competitive advantages for the firm.


Tangible resource

The tangible resource is easy to be identified by looking at the financial report. Their net sale was $ 78. 9 billion in 2010, which is markedly stable by compared with the last two years net sales ($ 76.7million in 2009 and $79.3 in2008 respectively). The net earnings were $ 12. 7 billion and net operating income was $16 billion in 2010. This illustrates that P&G has enjoyed a stable and healthy profits.

Intangible resources

The intangible resources are the brand equity, corporate culture and human resources. P&G is the 6th Most Admired Company in Fortune’s 2010 list; it was also one of the most valuable brands in the world. The corporate culture is unique, “tough lives and improve life every day” is P&G’s philosophy which encourages the P&Gners engaging to improve consumer’s life.

P&G is also very good at research & develop. P&G has invested $2 billion in consumer research over the last decade in order to understand consumers’ needs and to improve customers satisfaction. Additionally, at the same time R&D increases the product innovation.


Marketing strategy

Product differentiation: each product has different brands, for example shampoo has “Rejoice”, “Pantene”, and “Head & Shoulders”. Only one product has more than three brands and detergent has as many as more than nine brands. Product differentiation can lower risk in case if one brand goes wrong.

Various functions: one product has different functions and different packaging, for example, some of detergents have fragrance and others with the function of strong cleaning. This strategy will increase the market share for P&G, such as in china along, the market share increased from 30% to 40% in 2010.

Advertising: P&G tends to use celebrities to advertise its products in order to attract young customers. Localization is another strategy that P&G has adopted, for example in china, the company sells shampoo by suing Chinese girl who has black long hear, because this can represent the Chinese culture.

Consumer understanding

P&G is a company that did most investigations in consumers and market research. More than 15,000 researches has been conducted each year. P&G invested $350 million a year in consumer understanding in order to improve the customer needs. P&G is the first company to focus on customer feedback.


P&G is the Innovation leader in the consumer products industry. Over the past 15 years, 125 P&G innovations have earned a spot on the top 25 Pacesetters list – more than six largest competitors combined.

Innovation program: connect & develop (C+D): P&G is always seeking the opportunity to collaborate with people or company who has innovative ideas.

The VRIO framework evaluates the competitive advantage from four aspects: valuable, rare, inimitable, and organized. From the evidence above the corporate culture was the Competitive parity. Because each organization has its unique cultures, it is inimitable. Human resources are the short term competitive advantage of the company. People are not fixed assets of one company, they can go to other company as well if they wish to. P&G’s competitive advantages are its brand equity, R&D, marketing strategy, consumer understanding and innovation.

External business environment

At this part of the report, the evaluation of P&G’s external environment will take place. This evaluation will be contacted through the SWOT analysis, PEST analysis and Porters Five forces analysis.

SWOT Analysis (Opportunities and Threats)

SWOT analysis is a way to analyse an organisation and its environment. SWOT stands for Strengths, Weaknesses, Opportunities and Threats. Strengths and Weaknesses are the internal factors, Opportunities and Threats are the external factors. At this report we are only consider about the external factors.


The increasing demand for the section of male health and beauty goods is one of the biggest opportunities of P&G and with the acquirement of Gillette, P&G is growing rapidly at this particular market. Moreover, P&G has a huge opportunity with its reaction to the enormous technological growth of the internet by utilizing different marketing techniques and online social networks. What is more, taking into consideration their long-term aims, they have been disconnected from some products such as the oral-care toothpaste of Gillette, Zest brand have been acquired by Brynwood Partners, etc. so P&G will pay their full attention at brands of their interest. P&G is persistently growing into more and more countries so at the moment operates in 80 countries and now due to the recession it is easier to acquire any smaller firms because of their financial problems (Canadian Business 2011, Worldlingo 2011).


P&G as a global giant company have a lot of competitors like Kimberly Clark, Unilever, Johnsons & Johnsons, etc. who in various countries causes large threat at the market share. Moreover, the competitors of P&G are increasing their goods range through getting hold of other smaller firms. As a result of the recession, the consumers budget has been decrease and therefore their spending power is limited as well. Also, raw materials prices are rising thus the production cost is rising and the different currency rate place a huge threat on P&G.

PEST Analysis

PEST analysis stands for Political, Economical, Social and Technological factors and it is used by the analysers to identify the external factors that may affect the organisation in an opportunity or as a threat.

Political Factors

Procter&Gamble have created the P&G Political Action Committee (P&G PAC), which is a scheme that it was created to give the opportunity to the employees of P&G to support candidates at the federal, state and local level who contribute to the quality of life at the communities. Moreover, P&G by offering economic support contributes in the political process (Procter & Gamble 2011).

Economical Factors

P&G is designed to go through any type of economy as they are very capable and they have a commitment to the consumers. Subsequently, even at the time of the recession P&G had margins to reduce costs and offer products to consumers ( Business Week 2011).

Social Factors

With the creation of Live – Learn and Thrive Program, P&G helps children in need to drink clean water so it helps them to have a healthy beginning in life. Moreover, it is making places, tools and programs available to them for better learning (Procter & Gamble 2011).

Technological Factors

P&G as a big organisation and as it is specified in a lot of different markets, they are focusing on more sophisticate technology and they have managed to reduce any unwanted errors. P&G have managed to create new products and further improve their existing products (Procter & Gamble 2011).

Porter’s Five Forces Model

(SlideShare INC. 2011)

Porter’s five forces model is a framework that was created by Michael E. Porter in 1979 and it is consider with the buyers power, supplier power, the treat of new entrants, the treat of substitute and the rivalry of a firm.

Buyer Power

Consumers are well informed for all different brands of a specific product that are available mostly through advertising. Brand name is very important but consumers are very perceptive with price level as well. Thus, buyers power is high so P&G organisation must remain competitive to keep being successful.

Supplier Power

The power of the suppliers to P&G organisation can be low because the raw materials are easy to be find from different suppliers and what is more, such big firms have the opportunity to produce their own raw materials.

Threat of New Entrants

The threat of new entrants is very low since P&G and their well known competitors are already huge global firms with very famous brand names and consumers will not just change their brand goods as easily. Moreover, setting up this kind of firm will cost millions.

Threat of Substitutes

The threat of substitutes that P&G have to face is high. That can be seen from the retailers shops and sometimes the substitutes have cheaper prices and same performance.

Degree of Rivalry

The variety of the goods between different companies started to be similar to each other so the firms must begin a differentiation with offers, vouchers or even better/cooler advertises.

Strategic group analysis

P&G is one of biggest multiple customer goods company in the world. Thus each product could have its own competitors. However, the main competitors of P&G are Kimberly-Clark Co, Johnson & Johnson and Unilever.

Net sale of P&G and Unilever

The chart above illustrates the net sale of P&G and Unilever in the last six years. As it can be seen, Unilever has about 10 billion more sales than P&G in 2005. Interestingly, as it can be seen from 2006 to 2010, the net sale of P&G is considerably more than Unilever. Furthermore, in 2008, P&G reaches the peak showing 20 billion Net Sales more than Unilever¼ˆP&G official website 2010, Unilever official website 2009¼‰

Find Out How UKEssays.com Can Help You!

Our academic experts are ready and waiting to assist with any writing project you may have. From simple essay plans, through to full dissertations, you can guarantee we have a service perfectly matched to your needs.

View our services

Product range and geographical scope

Procter & Gamble, Johnson & Johnson, Unilever and Kimberly-Clark are the major international companies that sells their products all over the world. But as regard their geographic scope we can see huge differences. P&G has been selling its products in more than 180 countries. Johnson & Johnson is almost the same as Unilever, and they are both over 170countries. However, Kimberly-Clark has been developed up to 150 different countries. The product range of P&G holds into 5 main product categories which are: Personal & Beauty, House & Home, Baby & Family, Health & Wellbeing and Pet Nutrition. Although the categories of P&G are very similar with Unilever¼Œthe food product of Unilever (Hearbrand, Lipton, sim-fast) gained an advantage over the other three companies. However, Johnson & Johnson focuses its products on paramedical such as baby care, wound care and vision. In addition, Kimberly-Clark specializes in Health care products (P&G official website 2010, Unilever official website 2009, Johnson & Johnson official website 2010, Kimberly-Clark official website 2010)

Market share of shampoo in China

With the development of shampoo market, the organization of P&G became the leader of shampoo in Chinas market. P&G basically owns five main shampoo brands which are Rejoice, Head & Shoulders, Pantene¼ŒSassoon¼Œand Clairol; With these brands P&G became the dominant position in many countries. Take china market as an example, P&G take up nearly 60% shampoo market share in 2010. However, Unilever only accounted for 23%. The domestic brand C-bon only had 6.3% until 2010 (Bai Du website 2010).

Successful factors

P&G adopts multi-brand strategy. When P&G entered the China market, it launched Rejoice, Head Shoulders, Pantene, Sassoon and Clairol successively. What is more, each of these brands has its traits; for instance, the function of Head & Shoulder should emphasis getting rid of surf and the function of rejoice is to soften the hair.

Adopting the multi-brand strategy could have two advantages; Firstly, multi brand strategy can focus on different target market. Secondly, brand management can became very independent. In addition, at the same time it can reduce the risks. Supposing that one brand of P&G frails, it will not affect the reputation of P&G too much. On the other hand Unilever adopts the Monolithic Brand Strategy which with this method can save money on many advertisement fees, it lost the market share.

P&G always build the brand image with a massive advertising campaign. It is not only in newspaper, magazines, but also on major television channels. The advertisement of P&G is very pertinence, because each of their brands are emphasizing its unique function (Bai Du website 2010).

Long – term strategy development of the organization


Bai Du website (2010¼‰Brand of shampoo strategy in China. [online] available from [20 January 2011]

Bai Du website (2010¼‰marketing analysis of P&G and Unilever [online]available from [20 January 2011]

Bai Du website (2010¼‰P&G took up more 60%market share in China. [online]available from [21 January 2011]

Business Week (2011) P&G is up [online] available from [19 December 2010]

Canadian Business (2011) Brynwood Partners [online] available from [7 January 2011]

Docstock (2010) P&G Analysis [online] available from [29 December 2010]

Ifeng Finance. (2010) Procter and Gamble Profile [Online] Available from < http://finance.ifeng.com/company/data/detail/1454.shtml> [10 January 2011]

Johnson & Johnson. (2010) official website [online]available from [16 January 2011]

Kai, H. (2009) ‘Procter & Gamble: Environmental Friendly Promoting Innovation’. Newspaper of 21st Century Business Herald, 26

Kenneth R. Andrews. (1980) The Concept of Corporate Strategy. Richard D. Irwin, Inc

Kimberly-Clark¼ˆ2010 Official website [online] available from [18 January 2011]

P&G (2010) Official Website [online] available from [5 January 2011]

SlideShare INC. (2011) Fluff Pulp Fiction [online] available from [5 January 2011]

Sustainable Packaging Coalition. (2007) P&G Canada Liquid Laundry Concentrate [Online] Available from [8 January 2010]

Unilever (2009) Official Website [online] available from [14 January 2011]

Worldlingo (2011) List of Procter & Gamble brands [online] available from [6 January 2011]


Cite This Work

To export a reference to this article please select a referencing stye below:

Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.
Reference Copied to Clipboard.

Related Services

View all

DMCA / Removal Request

If you are the original writer of this essay and no longer wish to have your work published on UKEssays.com then please: