Introduction 1. 1Background of the Company William Procter from England and James Gamble from Ireland had come to Cincinnati. Both gentlemen did not plan to permanently stay in England despite the busyness of the city they came to. Cincinnati was then a famous and a busy center of commerce and industry in the early nineteenth century. Despite their intentions, however, both men ended their travels when they arrived at the Queen City of the West where William took care of his ailing wife, Martha, who soon died of illness, and James sought medical attention for himself.
As for William Procter, he had become a famous candle maker and James Gamble became a soap maker. Both of this gentlemen met when the married to sisters, Olivia and Elizabeth Norris. After getting married, William Procter and James Gamble were invited by their father-in-law to become his business partners. In the year 1837, Alexander Norris, their father-in-law had suggested to open a new enterprise which was named as Procter and Gamble. On April 1837, William Procter and James Gamble start making and selling their soap and candles.
The formal partnership agreement is signed on October 31, 1837. 1. 2Nature of Business The nature of the company’s business relies mostly on healthcare products, beauty care products, toys, baby and family care products, fabric and home care and also snacks and coffee products. The business of P&G is done globally ever since the nineteenth century. Although the nature of business has some similarly by its competitors, it has a strong brand name and had created brand awareness among people around the world.
Thus, the business had sustained its competitive advantage among its competitors. Four of P&G’s latest product developments have used P’s research expertise to satisfy new consumer needs in the fabric care, cleaning, and food areas. •Dryel fabric care system allows home cleaning of dry-clean-only clothing. The Dryel system uses pre-moistened cloths with odor-removing vapors to penetrate the fabric without fading or shrinking dry-clean-only clothing. The Dryel kit includes a stain remover and absorbent cloths, pre-moistened Dryel cloths, and a reusable Dryel bag. Febreze fabric spray removes odors from lightweight and heavy fabrics and upholstery. As the formula dries into the fabric, odors are cleaned away, leaving clothing, drapes, and other fabrics smelling fresh. In summer 2000, P&G will introduce Febreze Clean Wash, a liquid laundry aid for use with regular detergent. •Swiffer cleaning cloths use an electrostatic charge to attract and trap household dirt and dust. The cloths can be used by hand as disposable dust cloths, or they can be attached to the lightweight Swiffer sweeper for use on floors and other surfaces. Fit Fruit & Vegetable Wash removes dirt, pesticides, and handling residue from produce, making it safer and healthier to eat. It is available in spray, soak, and rinse form, as well as in a heavy-duty commercial form under the name Professional Line Fit Antibacterial Produce Cleaner. 1. 3Products or Services Offered The above shown products are just a part of the products that are offered by Procter and Gamble. These products are the most sold products throughout the world. Below are the range of other products and services offered by Procter and Gamble: . 4Success Story of the Company P&G’s History of ‘Firsts’ Year Product 1948Tide: first synthetic detergent 1962Crest: first fluoride toothpaste 1972Pampers: first disposable diaper 1975Bounce: first fabric softener dryer sheet 1988 Pert Plus: first 2-in-1 shampoo and conditioner Source: “85 Years,” 1999, “Living In Future,” 1999 (Year 2001) In the year 2001, P acquires the Clairol business from Bristol-Myers Squibb Co. Clairol is a world leader in hair color and hair care products.
P and Viacom Plus announce a major multimedia marketing partnership. Crest Spin Brush is brought to market in record time following the acquisition of Dr. John’s Spin Brush toothbrushes. Crest White strips is now available for retail sale in the U. S. market. (Year 2002) In the year 2002, P&G celebrates its 165th anniversary. A. G. Lafley was elected as the Chairman of the Board. Bruce Byrnes and R. Kerry Clark are elected Vice-Chairmen of the Board. P&G has 12 billion dollar brands in its portfolio.
These brands represent more than half of the company’s sales and earnings and include Pampers, Tide, Ariel, Always, Pantene, Charmin, Bounty, Iams, Crest, Folgers, Pringles, and Downy. They also account for the majority of P’s consumer interactions; the millions of “moments of truth” we face and win every day. Almost 110,000 P&G people in over 80 countries worldwide work hard to earn that trust. (Year 2003) Approval is received by the FDA to switch Prilosec, a treatment for frequent heartburn, from a prescription to an over-the-counter (OTC) product.
P&G acquires a controlling interest in Wella AG, a leading hair care company, giving P&G a major presence in the fast growing professional hair care segment. (Year 2004) Reflect. com, our initial Internet brand, is launched publicly. It is the first to offer truly customized beauty care products online. The U. S. FDA (Food and Drug Administration) approves Actonel (risedronate sodium tablets) for the treatment and prevention of postmenopausal osteoporosis (PMO) and gluco corticoid-induced osteoporosis (GIO). Marketing capacity was increased by partnering with Aventis. Organization 2005
Six years ago, in 1999, Procter & Gamble stated a lofty goal of doubling its $35 billion to $70 billion within in a decade (“The Procter & Gamble Company,” 2000). In order to achieve this sales goal, the company must realize consistent annual growth rates of roughly 7 percent. “We know the key is faster, bigger innovation in every part of our business,” said Jager (Tomkins, 1998). His strategy: a massive reorganization of P&G’s operations called Organization 2005, hitting everything from restructuring for increased globalization to changing the corporate culture of the old economy company.
Until the beginning of the restructuring program, P divided its operations into four geographical regions: North America; Europe, Middle East, and Africa, Asia and Latin America. Under Organization 2005, the company has re-divided its business to shift responsibility for making profits to brands, rather than geographic regions. A focus of the restructuring program is to design new product introductions for global reach, rather than simply sticking to one region. The program consists of five major transitions: Global Business Units (GBU): seven business units based on product lines (Baby Care, Beauty Care, Fabric & Home Care, Feminine Protection, Food & Beverage, Health Care & Corporate, Tissues & Towel) •Market Development Organizations (MDO): eight organizations to develop tailored programs and strategies for P’s global business (North America, Central & Eastern Europe, Middle East/Africa/General Export, Western Europe, ASEAN/India/Australasia, Japan/Korea, Greater China, Latin America) •Global Business Services (GBS): provide business services including accounting, human resources systems, order management, and information technology to the Global Business Units •Corporate Functions: P&G corporate staff moved to business units, some remain to focus on knowledge and corporate functions •Culture: bolder environment with “more stretching goals and plans, bigger innovations, and greater speed” to market (“Organization 2005,” 1999) Financial Information (Stability and increase in revenue 1999 – 2004) P&G 1999 Sales By Category CATEGORY1999 SALES (in millions)MAJOR BRANDS Laundry & Cleaning$11,517Tide, Mr. Clean, Dawn Paper$11,451Puffs, Bounty, Charmin Beauty Care$7,115Cover Girl, Noxema Food & Beverage$4,381Pringles, Folgers, Crisco Health Care$2,836Nyquil, Vicks, Metamucil TOTAL *$38,125*(w/adjustments) Source: The Procter & Gamble Company, Hoover’s Company Profile, 2000 Business Strategy Diversity Position Strategy
P consumers, customers and suppliers become more and more diverse every day, so the company’s success depends on their ability to understand diverse consumers’ needs and to work effectively with customers and suppliers around the world. Diversity is the uniqueness that everyone, from suppliers to employees to corporate officers that brings to fulfill P&G’s Purpose, Values and Principles. P touches lives and improves life all around the world. In order to live up to these goals and be “in touch” with the global markets, customers and business partners, the company require a diverse work force. That’s why the company is proud of their long tradition of valuing, trusting and respecting diversity.
The company recognizes the direct link between engaging the unique talents of their employees and the company’s success, both in the short and long term. Diversity, therefore, is a fundamental component of our “How to Win” business strategy for success. Procter & Gamble’s Tremor Targets Young Girls and Minors for Viral Marketing Procter & Gamble’s in-house “Tremor” program has identified a quarter of a million “influential” teens, the ones who are likely to be perceived as trendsetters, and gives them free samples, CDs and movie passes. Tremor asks for feedback, but more important to them is the cool factor their products gain thanks to the “influential” teens. Similarly, Girl’s Intelligence Agency is a marketing and research firm specializing in selling to girls and women ages 8-29.
Laura Groppe, in an interview said, “In today’s market where teens and tweens are using so many medium, it’s really hard to get through the clutter. We understand how these kids communicate with each other, what messaging turns them off, and we make recommendations to our client about the best way to position products so you get strong word of mouth,” Values of P&G Core Values In order to achieve its purpose and mission, P&G has affirmed a set of core values: integrity, leadership, innovation, passion for winning, ownership, customer focus, respect for people and trust. INTEGRITY P&G demand the highest ethical standards, and their products and processes will be of the highest quality. INNOVATION Innovation is the key to improving health and sustaining P&G’s growth and profitability.
RESPECT It is recognized that people are the cornerstone of P&G’s success. P&G’s diversity is viewed as a sources of strength, and as they are famous in the history of treating people with respect and dignity. CUSTOMER P&G is deeply committed to meeting the needs of customer. FOCUS P&G constantly focus on customer satisfaction. OWNERSHIP P&G knows that to be a successful company, everyone must work together, frequently transcending organizational and geographical boundaries to meet the changing needs of their customer. LEADERSHIP P&G believe that leaders empower those around them by sharing knowledge and rewarding outstanding individual effort.
Leaders are those who step forward to achieve difficult goals, envisioning what needs to happen and motivating others. The name itself proves that both Procter and Gamble had indeed leaded their company well internationally. PASSION FOR WINNING P&G strive for continuous improvement in our performance, measuring result carefully, and ensuring that integrity and respect for people are never compromised. TRUST P&G plays an active role in making every country and community in which they operate in has better place to live and work, knowing that the ongoing vitality of their host nations and local communities has a direct impact on the long-term health of their business. Research & Development
Chances are that a Procter & Gamble (P&G) product will cross the path of a consumer in the United States or any of 140 countries worldwide at least once throughout the course of an average day. The Cincinnati, Ohio-based consumer and household products giant manufactures 300 brands, including Tide detergent, Crest toothpaste, Pampers diapers, Cover Girl cosmetics, and Pringles potato chips. In a strategic sense, innovation comes from a company’s dedication to research and development of new products and “pioneers,” or products and businesses that represent new growth and value potential for the company’s portfolio. Procter & Gamble is a leader in R&D investments, with $1. billion spent only in the year 1998. The company, which holds nearly 25,000 patents and adds to that total each year, announced that it is prepared to give away or license any of its 25,000 patents, including those used in established brands. (“Business: Jager’s Gamble,” 1999). Recently, P&G donated 100 patents to Western Michigan University’s Paper Technology Foundation, Inc. , citing that the company has more innovative technologies than it can develop” (“P&G Donates Rights,” 2000). P’s capacity for research and development is impressive: 7,500 scientists, including1,250 Ph. D. s, working in 22 world-class research facilities across the globe (“Product Innovation,” 1999).
The company prides itself on its ability to apply knowledge about consumers and technologies across product categories. For example, the merging of P&G knowledge from various product areas was evident in a recent market test of Olay Daily Facials, the new facial cleansing and moisturizing cloth from the Oil of Olay brand. Daily Facials brought research from paper, laundry, beauty care, and even the food division of P&G, using information from the development of the Olestra fat substitute for the cloth’s moisturizer (Nelson, 2000). Industry analysts and executives within P cite moving beyond incremental improvements to existing brands and developing truly innovative new brands as one of the issues the company must address in the future.
This may serve as a problem for P’s top managers, who “are trained to squeeze the last drop of sales out of existing products, not back risky new ones” (“Business: Jager’s Gamble,” 1999). CEO Durk Jager has his work cut out for him in changing the conservative P&G culture to allow for out-of-the-box (or in this case, brand) thinking. Jager conceded that the company’s last major category invention happened in the 1980’s, and that since then, true innovation came second to taking core brands into global markets (Edgecliffe-Johnson, 1999). Conclusion From my point of view, Procter and Gamble had successfully created brand awareness among its customers.
The brand name itself is so well-known globally. The product offering from this company had been marketed worldwide and it has been in the market for over a hundred years. From a small enterprise, the company had grown larger and larger until it ventured internationally. I strongly agree that P&G Company had set their name in the international market and it is one of the most successful companies in the world. Its consecutive success of the in the market proves that the company is well-known and well-trusted by their consumers. The financial information provided illustrates the success of the company too since there is an increase in sales every year without fail.
Both William and James had started their company in a small scale by producing soap and candles and today, their company is operating worldwide. Today, the company produces from baby products until household products, snack and a lot of other varieties of products for consumers. Although the company faces stiff competition in the international market, the ongoing business strategies and the brand awareness strategies of the company will continue to boost the company’s sales and services. References 1. International Marketing 11th Edition, Philip R. Cateora, John L. Graham 2. Marketing Management 11th Edition, Philip Kotler, Prentice Hall 3. Financial Analysis of P&G from www. yahoo. com (see below) 4. Organization 2005 program overview. 1999, June 9).
P&G News Releases. [Online]. Available: http://www. pg. com/about/news/news. shtml [2000, April 6]. 5. Product innovation at P&G. (1999, June 9). P&G News Releases. [Online]. Available: http://www. pg. com/about/news/news. shtml [2000, May 23]. 6. P&G donates rights to more than 100 pending patents for commercial development. (2000, March 30). PR Newswire – Lexis Nexis. [Online: 1174 words]. Available: http://web. lexis-nexis. com [2000, May 23]. 7. P&G pursues greatest growth ever. (1998, September 9). PR Newswire – Lexis Nexis. [Online: 2150 words]. Available: http://web. lexis-nexis. com [2000, May 23]. 8. The Procter & Gamble Company. (2000).
Hoover’s Company Profile – Lexis Nexis. [Online: 1811 words]. Available: http://web. lexis-nexis. com [2000, May 23]. 9. Tomkins, R. (1998, September 3). The what, not the where, to drive P&G. Financial Times (London), p. 34. 10. Nelson, E. (2000, May 16). Procter & Gamble tries to hide wrinkles in aging beauty fluid. The Wall Street Journal Interactive Edition. THREE YEAR FINANCIAL SUMMARY 2003 USD in thousands 2004 USD in thousands 2005 USD in thousands Net Sales 43,377,000 51,407,000 56,741,000 EBITDA 9,556,000 11,712,000 13,157,000 EBIT 7,853,000 9,979,000 11,273,000 Net Profit 4,948,000 6,481,000 7,121,000 Ordinary Dividend -2,121,000 -2,408,000 -2,595,000 Intangibles 3,507,000 23,900,000 24,163,000 Fixed Assets 13,104,000 14,108,000 14,332,000 Current Liabilities 12,358,000 22,147,000 25,039,000 Long Term Debt 11,475,000 12,302,000 12,614,000 Provisions 1,482,000 1,940,000 2,245,000 Total Shareholder Eq 16,186,000 17,278,000 17,477,000 Stocks/Inv. 3,640,000 4,400,000 5,006,000 Cash 5,912,000 5,469,000 6,389,000 KEY RATIOS 2003 2004 2005 Net Profit Margin 11. 41 % 12. 61 % 12. 55 % Cur. Ratio 1. 2300 0. 7700 0. 8100 Debt/Capital 0. 3100 0. 3700 0. 4000 Procter & Gamble CEO Sees More Growth Tuesday October 11, 2005 9:03pm CINCINNATI (AP) – Procter & Gamble Co. , fresh off its $57 billion acquisition of Gillette Co. can keep growing, its chief executive said Tuesday at the annual shareholders meeting of the consumer products company. ” There’s plenty of room to keep growing in every strategic focus area, and with Gillette, the opportunities for growth are even greater,” A. G. Lafley, chairman, president and CEO said. P, maker of Tide detergent, Pampers disposable diapers, and Crest toothpaste, among other consumer products, closed its $57 billion acquisition of Gillette, maker of razors, Braun electric shavers, Duracell batteries and other products, less than two weeks ago. Lafley said Gillette adds to the company’s core strengths such as branding and scale and to its market leadership positions.
The combined companies have 22 brands with at least $1 billion each in annual sales, and he said P&G’s growing strength in China and other developing markets will be complemented by Gillette in places such as Brazil and India. Gillette also adds businesses to what Lafley called the fast-growing, high-margin areas of personal care, beauty and health care. The combined company totals some $70 billion in annual sales and a market capitalization of some $200 billion, he said. Many shareholders who came to the meeting at the Aronoff Center for the Arts in downtown Cincinnati were pleased by the merger. Arlene Sansone, a retired P employee of 35 years, noted that Gillette’s product line appeals to more men than most of P&G’s. “We have had a lot of female products; why shouldn’t they do more with men? ” she said. I think it’s a good fit. I think it’s a solid company. ” Shareholders approved annual election of members of the board of directors, starting with next year’s meeting. The board has been elected to three-year terms on a staggered basis; current terms will be completed, meaning that by the 2008 meeting, all directors will be elected annually. Shareholder activists have pressed for annual corporate board elections, saying they increase accountability. P&G stock closed at $56. 01, up 17 cents a share, Tuesday on the New York Stock Exchange. The stock hit a 52-week high of $59. 56 right after the Gillette merger closed; it’s traded as low as $50. 53 in the past year.