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P & G Case Analysis

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P&G competes in five major industries: fabric and home care, beauty care, baby and family care, health care, and snacks and beverages.

The five forces are the bargaining power of suppliers, the bargaining power of customers, threat of new entrants, threat of substitute products and competitive rivalry within an industry. The various care products are not made with anything rare so the suppliers do not have significant power in this case. So the threat here is low. However, there are many variations of these products so the threats from substitute products, competitive rivalry and new entrants are high. For the same reason, since the customer has a lot of options with regards to these products, loyalty is not guaranteed. So the threat there is very high. Overall, four of the five forces are serious threats so these industries are not attractive.

Since there are many competitors, P&G must find ways to distinguish themselves from their rivals. The factors that determine these are marketing, technological innovation and accurate consumer feedback. In terms of marketing, the public must be aware of the product, what it is used for and what makes it better than other alternatives. In terms of technological innovation, the product should have some advantage over the competitors’ product such as low cost or high performance. In terms of consumer feedback, data should be gathered on what the customer liked about the product, what they did not. This will allow the product to continue to evolve into what the customer wants.

The tangible resources, in the case of P&G, are a relatively large research department, marketing division and budget. P&G always has enforced research since 1890 and marketing since 1931. Its long history of financial...

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...was too high, thus Jager’s strategy to achieve sales growth and develop new products quickly did the opposite for the company as sales growth continued to decline.

The current competitive situation for P&G is that it is one of the largest and most successful consumer products companies. This is evident in the high volume of sales and profits experienced by the company. Also, the company has updated all of its brands and created new product categories through innovation of the products, thus P&G is considered a leader in the consumer market. On the other hand, the company made cuts in its capital and research and development spending (which was in line with that of its rivals) in order to increase profits, which may serve to hinder the growth of the company. Therefore, competitively P&G may face difficulty in the growth of its earnings as oppose to its competitors.
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