INTRODUCTION The key challenge facing Procter & Gamble (P&G) is the inability to serve all the needs

of a very diverse consumer population. In addition, the ability to do so quickly cost effectively. P&G's challenge is further complicated by a product scope that stretches across a whole range of everyday items from paper towels to laundry detergents, personal cleansing products, dentrifice, antiperspirants, hair-care products, a wide range of beauty-care products, fragrances, personal over-the-counter health-care products, and a pharmaceutical business. This company needs to meet consumer needs globally while focusing on being responsive on a local basis. P&G markets its products to more than five billion consumers in 130 countries. The company has on-theground operations in over 70 countries around the world. PROCTER & GAMBLE Procter and Gamble is a worldwide producer of consumer, household and pharmaceutical goods. It also manufactures chemicals as input for its own products as well as for the chemical processing industry. Part of its elaborate marketing strategy involves the production of soap operas in order to attract and maintain female customers into using their brands of products. P&G is Americas biggest producer of household products with at least 250 brands in six main categories which include paper goods (toilet paper), laundry and cleaning (detergents), beauty care (cosmetics and shampoos), feminine care (sanitary towels), health care (toothpaste, medicine) and food and beverages (coffee, snacks). In addition, P&G makes pet food and PUR water filters. The firms leadership and management are based on values such as trust, integrity, ownership leadership and passion for winning by collaborating as a team internally to win externally. P&G is dedicated to the development of leadership by creating early meaningful responsibilities for every employee. They provide on-the-job experience and provide a wealth of technical, functional and leadership skills training. Procter and Gambles mission statement is; it aims at providing branded products and services of superior quality and value that improve the lives of the worlds consumers. As a result, it

anticipates that customers will reward them with leadership sales, profit and value-creation, allowing their people, their stakeholders and communities in which they live and work to prosper. The companys mission statement specifies the businesses in which the firm intends to compete and the customers it intends to serve. The mission establishes the firms individuality and is inspiring and relevant to its stakeholders. P&Gs integrates its values in showing respect for all individuals as it believes that all individuals can and want to contribute to their fullest potential. They believe that doing right for the business with integrity will lead to mutual success for both the company and the individual. The vision is to be, and be recognized as the best consumer products
and services company in the world.

EXTERNAL ENVIRONMENTAL ANALYSIS The external environment can be categorised into three: general, industry and competitor environments. GENERAL ENVIRONMENT It is the broader society dimensions that influence an industry and the firms within it. This environment can be analyzed as follows for Procter & Gamble; Economic Environment P & G was affected by the recession and therefore had to make a few adjustments in meeting consumer needs. As a result, its earnings projections reduced and shed off 15% of poorly performing product management staff. It focused its limited resources to the best selling brands. Economic changes in the environment may result in inflation, deflation or reduced demand for the companys products. Success of the company therefore depends on its ability to manage the economic uncertainty in significant geographic markets. Socio-Cultural Environment Consumer demands keep on changing depending on age, lifestyles and beliefs. Procter & Gamble needs to keep up with diverse consumer trends in order to retain consumers with different cultures. Demographic Environment Most of the companys products are used by everyone. The consumers range between middle to upper levels due to higher price of brand name products. It is difficult to ascertain the market of
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P&G than that of the worldwide. Its several product lines targets different age structures and genders. The products range from beauty to households which include pet, care and snacks as well as small appliances. Global Environment P & G is a multinational company and it operates in more than seventy countries. Terrorist activity and wars may result in business interruption. The company needs to manage the global uncertainty which can be a great threat to the company. Legal/Political Environment P & G must meet laws and regulations in the many different countries in which they operate. Any change in law, regulations and related interpretations and enforcement actions may alter the companys external environment. These changes include changes in environmental, competitive and product related laws, changes in accounting standards, taxation requirements and enforcement penalties. Technological Environment P&G was one of the first companies to form fully pledged product and market research frame. As of 2001 under the CEO, P&G established a 360 degree innovation strategy which emphasized commercial and technical groups working closely to understand the needs of consumers. The company also adopted an open innovation strategy which focussed on embracing collaboration, partnership and improving external relationships. Currently the strategy is still in effect which involves scientists and engineers as well as all employees of the company. P&G innovates new products after identifying gaps of consumer needs in individual markets and takes an international perspective in innovation. This enables P&G tap into new consumer markets and satisfy its clients. As a result it utilises the opportunities in the market. INDUSTRY AND COMPETITOR ENVIRONMENTS

Industry environment is a set of factors directly influencing a firms competitive actions or

responses. It relates to the Porters five forces and involves competitor analysis.

Competitor environment, in the other hand gives details about the firms direct and indirect
competitors and the competitive dynamics expected to impact a firms efforts to generate above average returns. The main competitors of P&G are Unilever, Kimberly Clark and Johnson & Johnson.
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P&G operates in an industry of consumer good as the main industry. It requires innovation and differentiation from other brands and competitors. Many of the product segments are differentiated by price. P&G competes in premium, mid- tier value and low-tier economy and is well positioned in the industry segment and markets in which it operates. Porters Five Forces The threat of new entrants is medium. A new firm can easily enter the market but find it hard to be successful at least on large scale. It may also be difficult to obtain shelf space in stores. The bargaining power of buyers on the other hand is high and increasing due to large retailers. For example Wal-Mart could account for up to one third of global sales. The bargaining power of suppliers and the threat of substitute products are low while the intensity of rivalry is high due to many powerful competitors. Swot Analysis Threats to P&G include competitors, economic slowdown in US and Euro zone, increase in price of raw materials and new regulations. The opportunities available to P&G include improved technology, innovation, developing markets and the new products. INTERNAL ENVIRONMENT ANALYSIS RESOURCES A resource is any physical or virtual entity of limited availability that needs to be consumed to obtain competitive advantage from it. There are two types of resources; tangible and Intangible. For P&G Corporate, the following relates to resources that it uses to gain competitive advantage; a) Tangible Resources: These are assets that can be seen, touched and quantified and they include; Organizational Structure P&G has an organizational structure that offers global scale benefits of an international company and the local focus to be relevant for consumers in roughly 180 countries where their brands are sold. The corporate structure provides the framework that allows it to tap the benefits of a global organization with speed and efficiency. In addition, its global operations keep the in touch with the local communities. It combines the global scale benefits of a $79 billion global company with a local focus to win with consumers and retail customers in each country where P&G products
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are sold. Some of the P&Gs structure attributes that serve as a strength in serving various customer needs include;
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Global Business Units (GBUs) focus solely on consumers, brands and competitors around the world. They are responsible for the innovation pipeline, profitability and shareholder returns from their businesses.

Market Development Organizations (MDOs) are charged with knowing consumers and retailers in each market where P&G competes and integrating the innovations flowing from the GBUs into business plans that work in each country.

Global Business Services (GBS) utilizes P&G talent and expert partners to provide bestin-class business support services at the lowest possible costs to leverage P&Gs scale for a winning advantage.

Financial P&G corporate has a wide capital base amounting to$61,439 Million as at the year ended 2010. Its total assets amounted to $128,172 Million for the same period. The company generated an above average return of $12,736 Million. These financial resources will enable the company innovate new products to meet customers needs. Technology P&G has up-to-date technology which can be utilized in the manufacturing of innovative products that meet various customer needs. An improved Science-based Approach can also be used to evaluate the Safety of its products. This is motivated by the fact that the reputation of every P&G product depends upon the trust of consumers that they are safe. Therefore, only products that are well within safe levels make it through the evaluation process. Technology should be is incorporated in the products life cycle from pre-assessments up-to its sale. b) Intangible Resources: These refer to assets which cannot be seen or touched but are rooted deeply in the firms history as they are accumulated over time. P&G Corporate has several intangible resources which include; Purpose-Driven Innovation P&G fulfills its Purpose by launching innovative products that improve peoples lives in small but meaningful ways.
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Human Resources P&G people are the Companys most important asset and source of competitive advantage that can help in meeting the diverse needs of consumers. P&Gs has a talented pipeline which is built from within and managed with a disciplined process led by the CEO and the senior leadership team. Product leaders can be developed around the world in every business, in every region and at every level. This is strength for the company if exploited as is the basis ideas. In addition, It is at the core of being in touch so that P&G create brands and products to improve the lives of the worlds consumers now, and for generations to come. CAPABILITIES AND CORE COMPETENCIES Capability is the ability to perform actions so as to gain competitive advantage. Capabilities are purposely integrated to achieve a specific task or set of tasks in an organization. Core competencies are capabilities that serve as a source of Competitive advantage for a firm over its rivals and help distinguish a company from its competitors. P&G has the following core competencies that are strengths that if exploited can be used to devise ways of serving the diverse consumer needs; Consumer Understanding No company in the world has invested more in market research than P&G. It interacts with more than five million consumers each year in nearly 100 countries. P&G conducts over 20,000 research studies every year, and invests more than $400 million annually in consumer understanding. The insights gained can help identify opportunities for innovation and better serve and communicate with consumers. Innovation P&G is the industrys innovation leader. Nearly all organic sales growth over the past nine years has come from new brands or improved products. P&G continually strengthens its capabilities and pipeline by investing twice as much, on average, as its major competitors. The company also leverages a global network of research partners. As a result of innovation, in 2009 P&G launched 5 of the top 10 most successful non-food products as judged by Symphony IRI: Tide Total Care, Gillette Venus Embrace, Bounty Extra Soft, Always Infinity and Secret Flawless. Brand Buiding
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P&G is the brand-building leader in the industry. P&G has built the strongest portfolio of brands in the industry with 50 leadership brands that are among some of the worlds best-known household names which together make up 90% of P&Gs sales and more than 90% of profits. Twenty-three of these brands each generate more than $1 billion dollars in annual sales. Therefore P&G has the capability to build strong brands to meet consumer needs.

STRATEGIC OPTIONS In order to solve the problem of inability to meet the diverse needs of all its clients, P&G has the following strategic options available to it; 1. Forming strategic alliances 2. Business level differentiation 3. International strategy Forming strategic alliances: This is where Procter & Gamble can buy a controlling or 100% interest in another firm with the intent of making the acquired firm its subsidiary business within its portfolio. P&G can use horizontal acquisitions to meet more consumer needs. This worked in 2005 when Procter & Gamble (P&G) acquired Gillette. Both companies had products that complemented each other. In fact, the merged company after the acquisition produced 21 billiondollar brands that met various customer needs. This is however expensive and requires proper due diligence. Business Level Differentiation: Procter & Gamble should compete through differentiation. Differentiation is a strategy where Value is provided to customers through unique features and characteristics of an organization's products rather than by the lowest price. This is can be done through high quality, features, high customer service, rapid product innovation, advanced technological features, image management, etc. P&G should spend on research and development to create products that are differentiated from that of competitors and spend on advertising to signal the value of the companys brands. Due to their relationship with many retailers and investment in learning about consumer behavior, P&G will have a good sense of what consumers want in a product, and can effectively focus research and development to create new products, and improve existing products to better meet consumer needs.
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International strategy: This option can allow Procter & Gamble sell its goods and services outside the domestic market. This will enable the company tap into new opportunities and markets. Multi-domestic strategy and other motives such as pressure for global integration, borderless demand for globally branded products. P&G should aim at improving the lives of the worlds consumers every day. The company should meet the diverse needs of consumers by touching and improving more consumers lives in more parts of the world. P&G brands should strive to serve the needs of the 6.5 billion people on the planet today. From the above analysis, the best strategic option would be business level differentiation. These can be supported from the perspective of Porters Five forces of porter; 1. Buyer Bargaining power A high absolute value of research and development spending will allow the development of products that add value over the products of rivals, and high spending on advertising thus facilitating the signaling of this value. Some examples include: Detergent optimized for cold water washing (saves energy costs) Detergent optimized for single rinse (where clothes are washed by hand) Compact detergents to reduce packaging waste P&Gs three tiered product line will help with pricing power, as the lowest tier acts as a price benchmark for customers deciding whether the higher tiers are appropriately priced. There is some retailer concentration, with Wal-Mart accounting almost 20% of sales. But Wal-Mart needs P&G about as much as P&G needs Wal-Mart, so their bargaining power is not enough to hurt P&Gs profitability. If the companys on-line sales channel grows sufficiently then this will give P&G additional bargaining power with retailers. 2. Supplier Bargaining Power Raw materials are primarily commodities, and are readily available from multiple sources. Labor is not organized, and is productive, with earnings per employee of close to $100,000.Therefore, suppliers power is not very material for P&Gs business.This means that P&G can meet the needs of consumers without increasing supplier costs. 3. Threat of New Entrants Economies of scale allow P&G to spend much more than rivals on R&D and advertising. There are many opportunities to leverage proprietary technology among multiple categories. P&Gs
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research and development is enhanced by a global relationship with nearly two million researchers in technology areas connected with P&G businesses. P&Gs new products can be quickly brought to market using P&Gs existing brands and distribution system.

P&G will also cut costs unrelated to differentiation hence acting as a barrier to entry. For example, continuous reformulation can provide the same product performance with different ingredients, allowing the formulation to be optimized for current commodity costs, and consequently saving on input costs. P&G also have similar developing country margins as developed country margins, so they apparently have a manufacturing system that geographically matches costs to the point of sale. P&G saves on the costs of materials by creating purchasing pools for common materials used over multiple product lines. 4. Threat of Substitutes Private label goods are a viable substitute for branded products. However, P&Gs three tier Pricing reduces this threat. If the third tier (lowest cost brand) is priced close to that of private label products and consumers prefer the third tier brand to the private label product, then retailers will need to allocate a proportionally higher amount of shelf space available for the third tier brand, at the expense of shelf space for private labels, thereby creating a barrier to entry for private label manufacturers and other potential new entrants to the industry. In their Q208 transcript, P&G mentioned that private label is not really an issue in developing world. Overall, it is not impacting P&Gs market share. A potential offset to the private label threat is the on-line sales channel, where the company prices their products closer to that of private label competitors and still maintains the same margins. Today, P&G sells diapers directly from their Pampers website, and also sells numerous products on Amazon.com. P&G sells the types of goods that are typically resistant to diminishing demand during a recession. In implementing the above strategy, the following action plan can be drawn to illustrate;

Action steps

Individual(s) Responsible

Timefra me 3 Months 1 Month

Cost (Translated to Ksh) 2 Million

Identify various customer groups and their current needs

Senior Customer Service Manager

Evaluate the market gaps that Business Analyst can be filled Identify and develop various business segments i.e Beauty, Grooming, Healthcare, Homecare, Pet Centre and Family care Develop new products in each Business business segment to meet the Development current market gaps Market and sell the products to few customers for testing purposes Evaluation of results against targets Full sale of all products to all Sales Manager customers worldwide Financial Analyst Manager Sales Manager Senior Operations Manager

500,000

2 Months

6,000,000

3 Months

6,000,000

1 Month

2,000,000

1 Month

200,000

6 Months

6,000,000

REFERENCES: R. Duane Irelend, R. E. (2009). The Management of Strategy.

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Procter and Gamble Core Strengths; accessed from http://www.pg.com/en_US/company/core_strengths.shtml on 24th February 2011 Procter and Gamble Corporate Governance; accessed from http://www.pg.com/en_US/company/global_structure_operations/governance/index.shtml on 23rd February 2011 P&Gs Board Composition accessed from http://www.pg.com/en_US/company/global_structure_operations/governance/board_compositio n.shtml on 24th February 2011 Procter and Gambles Corporate Structure accessed from http://www.pg.com/en_US/company/global_structure_operations/corporate_structure.shtml on 23rd February 2011 Procter and Gambles Mission Statement accessed from http://www.sampleshelp.org.uk/mission-statements/proctor-gamble-mission-statement.htm on 24th February 2011 P&Gs Competitors accessed from http://finance.yahoo.com/q/co?s=PG+Competitors on 23rd February 2011 P&Gs 2010 annual report analysis on http://findarticles.com/p/articles/mi_6714/is_6_53/ai_n56199782/ Speech from http://gop.science.house.gov/Media/hearings/full10/mar17/Saue

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