2014

Strategic Management
Mission Statement (Actual)
“We will provide branded products and services of superior quality and value that
improve the lives of the world’s consumers, now and for generations to come. As a
result, consumers will reward us with leadership sales, profit and value creation, allowing
out people, our shareholders, and the communities in which we live and work to
prosper.”

Mission Statement (Proposed)

“We will provide branded products and services of superior quality and value that
improve the lives of our consumers around the world and the environment we live in,
now and for generations to come. By giving best opportunities to our employees and
providing them best resources, we will go for innovations. As a result, consumers will
reward us with leadership sales, profit and value creation, allowing out people, our
shareholders, and the communities in which we live and work to prosper.”
 o EXTERNAL FACTOR EVALUATION
An external factor evaluation (efe) is the strategic tool used to evaluate firm existing
strategies, efe matrix can be defined as the strategic tool to evaluate external environment
or macro environment of the firm include economic, social, technological, government,
political, legal and competitive information. Matrix includes both opportunities and
threats. Following are the opportunities and threats of p&g.

OPPORTUNITIES:
 Growth of global market.
 Customers in developing markets are increasingly willing and able to purchase
expensive items.
 Growth in the use of advertising
 Population growth
 Increased demand of beauty and health products for customers.
 Supplier diversity in the market
 Increased amount of customers (male)
 Increased effectiveness in social media and internet marketing

THREATS:
 Local consumer goods producers.
 Cheaper brands in market Increase in global industry regulations
 Rising costs of raw material & labor
 Customer unwillingness to try new products
 New and competitive consumer products are constantly being introduced.

Rating:
1. Poor.
2. Average.
3. Above average.
4. Superior.
 o INPUT STAGE:
o EFE MATRIX

Weight Rating Weighted

OPPORTUNITIES
score
1. Growth of global market. 0.1 4 .4
2. Customers in developing markets are
increasingly willing and able to purchase 0.1 3 0.3
pricey items

3. Growth in the use of advertising 0.05 3 0.15

4. Population growth 0.05 1 0.05
5. Increased demand of beauty and health
products for customers. .1 4 .4

6. Supplier diversity in the market 0.05 3 .15

7. Increased amount of customers (male) 0.08 1 .08
8. Increased effectiveness in social media
and internet marketing 0.05 3 .15

THREATS
1. Local consumer goods producers. 0.08 2 0.16
2. Cheaper brands in market 0.08 3 0.24
3. Increase in global industry regulations 0.04 2 .08
4. Rising costs of raw material & labor 0.08 2 0.16
5. Customer unwillingness to try new
products. 0.06 1 0.06

6. New and competitive consumer products

0.08 2 .16
are constantly being introduced.
TOTAL 1 2.54

INTERPRETATION:
Company’s total score is 2.54; it’s very near to average. It does not shows very good
performance of company but still it is able to avail opportunities and avoid threats.
 o INTERNAL FACTOR EVALUATION
The internal factor evaluation matrix is a popular strategic management tool for auditing
or evaluating major internal strengths and internal weaknesses in functional areas of an
organization or a business..

Listed below are the strength and weaknesses of P&G.

STRENGTHS:
 High market share
 Strong reputable brand name
 Customer brand awareness
 High quality products
 Strong research and development.
 Worldwide distribution of products
 Profitable acquisition of competitor brand companies
 Diversification of product line

WEAKNESSES:
 P&G’s weak balance sheet, highly leverage 73.3% and low liquidity ratio.
 Lack of product variety of green products that are environmental friendly.
 Business ethics lack of women leadership in the executive board.

WEIGHT ASSIGN:
4. Major strength.

3. Minor strength.

2. Minor weakness

1. Major weakness.
 o IFE MATRIX
Weight Rating Weighted
STRENGTHS
score
1. High market share 0.08 4 .32
2. Strong reputable brand name 0.1 4 0.4
3. Customer brand awareness 0.07 3 0.21
4. High quality products 0.08 3 0.24
5. Strong research and development. 0.13 4 0.52
6. Worldwide distribution of products 0.1 4 0.4
7. Profitable acquisition of competitor brand
0.08 3 .24
companies
8. Diversification of product line 0.1 3 .3
WEAKNESSES
1. P&G’s weak balance sheet, highly leverage
0.1 4 .4
73.3% and low liquidity ratio.
2. Lack of product variety of green products that
0.08 3 0.24
are environmental friendly.
3. Business ethics lack of women leadership in the
0.08 2 0.16
executive board.
TOTAL 1 3.43

INTERPRETATION:
Company’s total score is 3.43, it shows that it is trying to retain its strengths and
overcome its weaknesses.
 o COMPETITIVE PROFILE MATRIX (CPM):
“The Competitive Profile Matrix (CPM) is a tool that compares the firm and its rivals
and reveals their relative strengths and weaknesses.”

In order to better understand the external environment and the competition in a

particular industry, firms often use CPM. The matrix identifies the firm’s key
competitors and compares them using industry’s critical success factors. The analysis
also reveals company’s relative strengths and weaknesses against its competitors, so the
company would know which areas it should improve and which areas to protect.
WEIGHT ASSIGN:

4 = Major strength.

3 = Minor strength.

2 = Minor weakness.

1 = Major weakness.
 o CPM MATRIX
Johnson & Procter & Unilever
Johnson Gamble

Critical Success Weighted Weighted Weighted

Weights Rates Rates Rates
Factors score score score

Advertising .2 2 .4 4 .8 1 .2

Product quality .1 2 .2 4 .4 3 .3

Price 0.1 1 0.1 3 0.3 2 0.2

competitiveness

Management 0.1 3 0.3 4 0.4 2 0.2

Financial position 0.15 4 0.6 3 0.45 2 0.3

Customer loyalty 0.1 3 0.3 3 0.3 4 0.4

Global expansion 0.15 2 0.3 4 0.6 3 0.45

Market share 0.1 3 0.3 4 0.4 2 0.2

Total 1 19 2.5 29 3.65 18 2.25

INTERPRETATION:

Unilever and Johnson & Johnson’s total scores are approx equal while score of p&g is
significantly higher than both. The factor having highest weight is advertisement for
which unilever is rated only 1,while for some other factors having lowers weights
unilever is rated highest such as; customer loyalty. This may be the reason of unilever’s
lowest score.

P&G is having highest score among its competitors, however, Johnson &Johnson has
better financial position and unilever is having better customer loyalty than both. P&G is
rated 4 for most of the factors comparatively of higher weight and the factors for which it
is rated less than 4 are weighted 0.1 only. This is the reason P&G has got the highest
rating.
 o MATCHING STAGE:
o SWOT MATRIX
STRENGTHS WEAKNESSES
1. High market share. 1. P&G’s weak balance sheet,
SWOT 2. Strong reputable brand
name.
highly leverage 73.3% and
low liquidity ratio.
ANALYSIS 3. Customer brand awareness
4. High quality products.
2. Lack of product variety of
green products that are
5. Strong research and environmental friendly.
development. 3. Business ethics lack of
6. Worldwide distribution of women leadership in the
products. executive board.
7. Profitable acquisition of
competitor brand
companies.
8. Diversification of product
line.

OPPORTUNITIES SO Strategies WO Strategies

1. Growth of global market.
2. Customers in developing markets
are increasingly willing and able to
purchase expensive items.
3. Growth in the use of advertisement.
4. Population growth.
5. Increased demand of beauty and 3. Introduce new beauty and
health products for customers.
6. Supplier diversity in the market.
7. Increased amount of customers
(male).
8. Increased effectiveness in social
media and internet marketing.
1. Go for market development.
(S5,O2,O5,)
2. Introduce new products for
men. (S2, S5, S6, O7).
health products. (S2, S4, S5,
O5, )
1. Develop new herbal
products and create a new
product line of green
products. (W2, O2, O5).
2. Consider recruitment of
women to be an equal
opportunity provider.
(W3, O1).

THREATS ST Strategies WT Strategies

1. Local consumer goods producers. 1. Reduce ineffective and 1. Undergo a cost effective
2. Cheaper brands in market Increase
in global industry regulations. inefficient workforce to control system to increase
3. Rising costs of raw material & labor. minimize cost. (S2, T2) profit and to generate more
4. Customer unwillingness to try new cash inflows.(W1,T2,T3).
products.
5. New and competitive consumer
products are constantly being
introduced.
 o SPACE MATRIX
Factors of SPACE Matrix :
o Competitive Position
FACTORS Rating -6=Low ; 0=High

Market share -4

Product quality -1

Customer loyalty -3

Control over distributors and suppliers -2

Promotional activities -1

Product price -3

TECHNICAL KNOW-HOW -1

TOTAL -15

Average -2.14=-2

o Industry Position
FACTORS Rating 0=Low ;+6=High

Growth potential 5

Profit potential 3.5

Financial stability 4

Technological know how 5

Resources utilization 2.5

EASE OF ENTRY INTO MARKET 4

TOTAL 24

Average 4
o Environmental Position
FACTORS Rating -6=Low ; 0=High

Technological changes -3

Rate of inflation -2

Barriers to entry into market -3

Competitive pressure -1

Demand variability -5

Price elasticity of demand -3

Total -17

Average -2.83=-3

o Financial Position
FACTORS Rating 0=Low ;+6=High

ROI 5

Financial and Operating leverage 2.5

Inventory turnover 4

Cash flow 5

Working capital 5

Liquidity ratios 2.5

TOTAL 24

Average 4
 o Score on X axis
Competitive Position = -2
Industrial Position = +4
Total Score on x-axis = -2 + (+4) =+2

o Score on Y axis
Financial Position = +5
Environmental Position = -3
Total Score on y-axis = -3 + (+5) = +2

Coordinates (+2;+2)

INTERPRETATION:
Financial position of company seems to be good but not so strong, competitive position
is however very strong. Company has acquired many of its competitor’s successfully and
is able to maintain its position. Company is operating in stable market and industrial
position is also good. Here company should focus on integration, intensive and
diversification strategies.
 o GSM Matrix

o INTERPRETATION:

As industry has rapid growth and company has strong competitive position so
here it should first focus on intensive strategies then should go for integration and
then for related diversification strategies.

Rapid Market Growth

Procter & Gamble

Weak Competitive Position Strong Competitive Positive

Slow Market Growth

 o IE Matrix

Sales /Revenue Profit

Division % % IFE EFE
($ millions) ($ millions)
Beauty
1 19,491 24 2,712 23 3.4 3
Grooming
2 7,631 10 1,477 13 1.2 2.8
Health Care
3 11,493 14 1,860 16 1.6 2
Snacks and
4 Pet Care 3,135 4 326 3 2.9 1.6

Fabric Care/
5 Home Care 23,805 30 3,339 28 3.5 3

Baby Care/
6 Family Care 14,736 18 2,049 17 3.8 4

Total
80,291 100 11,763 100

3 2 1
4

1
 o INTERPRETATION

 Division I
This division has highest sales among all; its IF and EF both are strong so company
needs to hold and maintain this division. Most effective strategies for here would be
integration and intensive strategies.
 Division II
IF of this division are weak, while, its EF are medium, company should by
retrenchment reduce cost or should divest this division.
 Division III
This division is also in 6th cell, so, here also company should either go for retrenchment
or for divestiture.
 Division IV
IF of this division are average, while, its EF are low, here also company should either
go for retrenchment or for divestiture.
 Division V
IF of this division are strong and its EF are also high, it show s company is performing
well in this division, so for its growth company should focus on integration and
intensive strategies.
 Division VI
According to IFE and EFE this is company’s strongest division, here also integration
and intensive strategies would grow and build this division.
 o BCG Matrix

Sales Market
Profit Industry
Division /Revenue ($ % % share
($ millions) Growth
millions) %
Beauty
1 19,491 24 2,712 23 60 14

Grooming
2 7,631 10 1,477 13 20 13

Health Care
3 11,493 14 1,860 16 30 12

Snacks and
4 Pet Care 3,135 4 326 3 10 5

Fabric Care/
5 Home Care 23,805 30 3,339 28 80 3

Baby Care/
6 Family Care 14,736 18 2,049 17 40 10

Total
80,291 100 11,763 100
 o Interpretation
 Division I
o Stars
As this division is in star it so, most effective strategies for it would be
intensive and integration.
 Division II
o Question mark
This SBU is a question mark for company, so if company wants to
turn it as star SBU Company can go for intensive strategy to increase
its market share.
 Division III , IV & VI
o Question mark
For health care division also company should increase its market share
through intensive strategies.
 Division V
o Stars
Because of high market share companies home care SBU is its star
unit and for its maintenance company should focus on integration
strategy.
 DECISION STAGE:
o QSPM MATRIX:
INTENSIVE STRATEGIES
KEY INTERNAL FACTORS Weights MARKET MARKET PRODUCT
DEVELOPMENT PENETRATION DEVELOPMENT
STRENGTHS AS TAS AS TAS AS TAS
High market share 0.08 2 .16 3 .24 4 .32
Strong reputable brand name 0.1 4 .4 2 .2 3 .3
Customer brand awareness 0.07 - - -
High quality products 0.08 2 .16 3 .24 4 .32
Strong research and development. 0.13 2 .26 1 .13 3 .39
Worldwide distribution of products 0.1 - - -
Profitable acquisition of competitor brand -
companies 0.08 - -
Diversification of product line 0.1 4 .4 2 .2 3 .3
WEAKNESSES

P&G’s weak balance sheet, highly leverage -

73.3% and low liquidity ratio. 0.1 - -
Lack of product variety of green products
that are environmental friendly. 0.08 2 1 .08 4 .32
Business ethics lack of women leadership
0.08 - - -
in the executive board.
SUM TOTAL 1.00
OPPORTUNITIES
Growth of global market. 0.1 4 .4 3 .3 2 .2
Population growth 0.1 - - -
Customers in developing markets are
increasingly willing and able to purchase 0.05 4 .2 3 .15 2 .1
pricey items.
Growth in the use of advertising 0.05 - - -
Increased demand of beauty and health
products for customers. .1 3 .3 2 .2 4 .4
Supplier diversity in the market 0.05 - - -
Increased amount of customers (male) 0.08 2 .16 1 .08 4 .32
Increased effectiveness in social media and
internet marketing 0.05 - - -
THREATS
Local consumer goods producers. 0.08 4 .32 3 .24 2 .16
Cheaper brands in market 0.08 - - -
Increase in global industry regulations 0.04 - - -
Rising costs of raw material & labor 0.08 - - -
Customer unwillingness to try new -
products. 0.06 - -
New and competitive consumer products
are constantly being introduced. 0.08 4 .32 2 .16 3 .24
SUM TOTAL 1
TOTAL ATTRACTIVENESS SCORE 3.08 2.22 3.37
 INTEGRATION STRATEGIES
KEY INTERNAL FACTORS Weights FORWARD HORIZONTAL
INTEGRATION INTEGRATION
STRENGTHS AS TAS AS TAS
High market share 0.08 - -
Strong reputable brand name 0.1 - -
Customer brand awareness 0.07 - -
High quality products 0.08 - -
Strong research and development. 0.13 - -
Worldwide distribution of products 0.1 - -
Profitable acquisition of competitor brand
companies
0.08 1 .08 3 .24
Diversification of product line 0.1 - -
WEAKNESSES

P&G’s weak balance sheet, highly leverage

73.3% and low liquidity ratio.
0.1 3 .3 1 .1

Lack of product variety of green products that

are environmental friendly.
0.08 - -
Business ethics lack of women leadership in
the executive board.
0.08 - -
SUM TOTAL 1.00
OPPORTUNITIES
Growth of global market. 0.1 - -
Population growth. 0.1 - -
Customers in developing markets are
increasingly willing and able to purchase pricey 0.05 - -
items.
Growth in the use of advertising. 0.05 - -
Increased demand of beauty and health
products for customers. .1 3 .3 1 .1

Supplier diversity in the market. 0.05 - -

Increased amount of customers (male). 0.08 - -
Increased effectiveness in social media and
internet marketing.
0.05 - -

THREATS
Local consumer goods producers. 0.08 - -
Cheaper brands in market. 0.08 3 .24 4 .32
Increase in global industry regulations. 0.04 - -
Rising costs of raw material & labor. 0.08 4 .32 2 .16
Customer unwillingness to try new products. 0.06 - -
New and competitive consumer products are
constantly being introduced.
0.08 3 .24 4 .32
SUM TOTAL 1
TOTAL ATTRACTIVENESS SCORE 1.48 1.24
 DIVERSIFICATION STRATEGIES
KEY INTERNAL FACTORS Weights RELATED UN-RELATED
DIVERSIFICATION DIVERSIFICATION
STRENGTHS AS TAS AS TAS
High market share. 0.08 4 .32 2 .16
Strong reputable brand name. 0.1 2 .2 3 .3
Customer brand awareness. 0.07 3 .21 2 .14
High quality products. 0.08 3 .24 4 .32
Strong research and development. 0.13 3 .39 2 .26
Worldwide distribution of products. 0.1 - -
Profitable acquisition of competitor brand
companies.
0.08 - -
Diversification of product line. 0.1 3 .3 4 .4
WEAKNESSES

P&G’s weak balance sheet, highly leverage 73.3%

and low liquidity ratio.
0.1 - -

Lack of product variety of green products that

are environmental friendly.
0.08 1 .08 4 .32
Business ethics lack of women leadership in the
executive board.
0.08 - -
SUM TOTAL 1.00
OPPORTUNITIES
Growth of global market. 0.1 - -
Population growth. 0.1 - -
Customers in developing markets are
increasingly willing and able to purchase pricey 0.05 2 .1 3 .15
items.
Growth in the use of advertising. 0.05 - -
Increased demand of beauty and health products
for customers. .1 4 .4 2 .2

Supplier diversity in the market. 0.05 - -

Increased amount of customers (male). 0.08 2 .16 3 .24
Increased effectiveness in social media and
internet marketing.
0.05 - -

THREATS
Local consumer goods producers. 0.08 - -
Cheaper brands in market. 0.08 3 .24 2 .16
Increase in global industry regulations. 0.04 - -
Rising costs of raw material & labor. 0.08 - -
Customer unwillingness to try new products. 0.06 - -
New and competitive consumer products are
constantly being introduced.
0.08 3 .24 4 .32
SUM TOTAL 1
TOTAL ATTRACTIVENESS SCORE 2.88 2.97
 o Interpretation:
 Intensive strategies
From the intensive strategy the product development have high score that is 3.37.

 Integration strategies
From the integration strategy the forward integration have high score that is 2.97.

 Diversification strategies
From the diversification strategy the unrelated diversification have high score that is 2.97.

o IMPLEMENTATION:
From the result of QSPM, it is concluded that P&G should prefer product development as it
have the highest score of 3.37 among all strategies.

 RECOMMENDATION:
Procter & Gamble (P&G): a widely revered innovation star that invests US$2 billion in R&D
annually, 50 percent more than its largest peer. It spends another $400 million each year on
what it calls “foundational consumer research” to uncover opportunities for innovation across
nearly 100 countries.

PRODUCT DEVELOPMENT STRATEGY:

It describes to develop new products or modify the existing products with respect to size, color,
packaging, etc. Safeguard is a well-perceived product among the customers, and at this moment,
it is available in two sizes; 75gm and 125gm, which cannot satisfy the demand of every segment.
While the products of the competitors are available in multiple sizes which provide abundant
choices for purchases to customers for example Lifebuoy Gold has 140gm and95gm and
Medicare has 80gm soap available in the market. This provides an opportunity to the customer
to have multiple choices. It can be a threat for the market share of safeguard. On the other
hand, in case of safeguard the choice to customer is very limited. This is what they have
analyzed through market survey. Therefore, it is necessary that safeguard should be available in
maximum possible sizes to meet the selection criteria of the customer. As far as launching of
new product is concerned, it is not necessary for P&G at this moment, but in future, they will
require taking this step as well because they have some other soap like ivory, and zest which are
very famous in international market.

Each company did—and still does—produce plenty of product and service innovation. But these
companies didn’t invent the automobile, steel, airlines, carbonated beverages, movie rental
services, and online search. What made these companies great—and what will keep them great
in the future—is innovation of the way raw inputs become products and services that customers
value.