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Proctor & Gamble took time in deciding where to locate both their regional headquarters and the perfume plant in Singapore. P&G decided to place the perfume plant along the coastal part of the country in Tuas, Singapore (Moneycontrol.com, 2008). The plant operates on a just in time process. The plant receives raw materials only as they need it and send out supplies to the main manufacturing plants to be used in the products only as they need it. By being along the coast it is easy to have the ships and trucks pick up and deliver the products in as short of time as possible.
The regional headquarters is located in the large business area of downtown. This is a good location because it locates them around local government and other businesses that may make rules and policies that could affect P&G. It also allows them to have the most resources and contacts from the local economy to use in the region.
Entry Modes into P&G Singapore
Relationships have been in place with two main groups in Singapore long before Proctor and Gamble ever decided to build a plant. The Economic Development Board and A*Star’s Institute for Materials Research and Engineering are the two main groups they have been involved with. Since Proctor and Gamble built these relationships before building a plant in Singapore they have thus established a strategic alliance with Singapore. The Economic Development Board and A*Star’s Institute for Materials Research and Engineering have come together with Proctor and Gamble to share resources and complete a project. Proctor and Gamble benefit from setting up a strategic alliance with A*Star by getting the privilege of looking at IMRE’s innovative research (Moneycontrol.com, 2008). In return for this preferential treatment, P&G shares its new innovations with A*Star’s IMRE (Moneycontrol.com, 2008).
P&G also entered into the Singapore manufacturing industry through a Greenfield venture. The 6,500-sq.-meter-fragrance manufacturing plant was built within a seven month period and it was a multi-million dollar project for P&G (Moneycontrol.com, 2008). This wholly owned subsidiary allows the company to have control over their intellectual property concerning how to manufacture perfumes for their cleaning products and bathing products. According to Proctor and Gamble’s Group President of Asia, Deb Henretta, Singapore was a natural choice to build a perfume plant, since the country focuses on creating an innovative business-friendly environment that is supported with a strong infrastructure (Economic Development Board, 2008).
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Procter & Gamble Singapore has become the third largest competitor in household care in Singapore through acquiring four main Singapore laundry brands from the Colgate-Palmolive Eastern Pte. Ltd (Euromonitor International, 2008). This acquisition deal has benefited Procter & Gamble Singapore in terms of higher profits and increased their market share in the household care Singapore market. By acquiring these four key laundry brands the P&G Singapore is able to enter into the Singapore laundry market with ease and it provides the company with brand loyal customers. This acquisition saves the company money and time in areas of marketing research, marketing campaigns, and acquiring the needed distribution and store outlets for new products.
Proctor and Gamble’s Winning Strategy
P & G practices a transnational strategy, which is a combination of a multi-domestic strategy and a global strategy. Evidence of this strategy can be buttressed by its approach to business, “Think globally and act locally” (“Corporate Info.,” 2008).
In respect to the global strategy, P&G sees the entire world as its market, but tries as much as possible to locate operations in areas where costs can be minimized, and where they can be very efficient in whatever contributions the unit makes to the organization as a whole. It has about 125 manufacturing plants, spread all over the world. The recent addition was a perfume plant in Tuas, Singapore, which produces fragrance/perfume for leading brands such as Pantene, Head and Shoulders shampoo, Olay Skin moisturizers and Downy fabric softeners (Min, 2002).
Hyderabad manufacturing plant in India is another classic example of a strategic location. P&G takes advantage of India being the world’s largest manufacturer and exporter of Menthol. The acquisition of Richardson Hindustan Limited (RHL) in 1985 led to the opening of the plant which is responsible for the Vicks range of products (“P&G History,” 2008).
In reference to its “Organizational 2005 program,” business services such as information technology, finance and accounting are streamlined and standardized, whilst it customizes marketing, R&D and products. Human resource can be said to be both customized and standardized. For example, though each region/area has autonomy in recruitment it still uses P&G’s own version of the Graduate School Admission Test known as the M test. Communication flow is both from the top-down and bottom-up (Icfaian School of Management, 2001).
P&G’s Superior Organizational Structure
The structure Proctor & Gamble uses is the Global Matrix, which is a combination of worldwide area and worldwide product divisions. There are also remnants of a worldwide function system in place.
It has four (4) major regional divisions with sub divisions under each area. These are:
Europe (Western Europe and Central Europe, Middle East/Africa)
North America (Canada and United states/Puerto Rico)
Asia/Australia (AAI)-(Greater China, Northeast Asia, Australia and ASEAN/India) with Singapore the headquarters.
Its product divisions which it refers to as Global Business Units (GBU’s) are baby care/family care, healthcare, snacks and beverage, beauty care /feminine care and lastly fabric/homecare.
Functionally this is done under the areas of customer business developments, finance and accounting, human resources, legal, R&D, external relations, marketing, consumer & market knowledge, information technology and product supply.(“Corporate Info.,” 2008). Under this matrix system, each manager of a unit has two responsibilities. One responsibility is for the product and the other for the region (Harris, 2006, p. 120).
Top management uses tight central administrative systems and tracks performance against budgets. Thus control can be said to be bureaucratic, output and cultural, since there is evidence of a high shared values system between managers and employees. For instance new employees undergo a rigorous training program, where they learn the shared values of the organization. This process is called “Procterization” (Icfaian School of Management, 2001).
Proctor and Gamble’s Competition within Singapore
Proctor and Gamble has several competitors within Singapore, both international and domestic. They compete against large international firms like Johnson and Johnson, Reckitt Benckiser Singapore PTE LTD., Wipro, and Food Empire Holdings LTD. They also compete against small local firms like Fab, Lam Soon, and Universal Integrated Corp Consumer Products PTE LTD.
Johnson and Johnson is obviously one of the largest international firms mentioned, but the only information found about their operations was that their subsidiary, LifeScan, a medical products company, sells their OneTouch blood glucose meters there (LifeScan, 2008). “Food Empire Holdings LTD is a leading food and beverage company that manufactures and markets instant beverage products, frozen finger food and confectionary” (FoodIngredientsfirst.com, 2001). They are a major competitor to Proctor and Gamble in the Singapore market. They also export to over 30 other countries and sell more than 40 products such as MacCoffee, FesAroma, and Express. Reckitt Benckiser sells household products and was the leader in the category in Singapore in 2006. Wipro sells consumer electronics and lighting products and just acquired Unza, a consumer products firm based in Singapore who recorded revenues of 169 million in 2006 (Chatterjee, 2007). This acquisition makes Wipro a major player in the consumer products market in Singapore.
Proctor and Gamble also competes against smaller companies in Singapore. Fab is a household maintenance and pet product competitor that is a locally owned company. Lam Soon sells household care products also in the local area of Singapore. Universal Integrated Corp Consumer Products sells household care products as well. P&G also has huge competition in the dog food market. Their Iams brand has a fair niche in the dog and cat food market, but has major competitors in brands like Pedigree and Friskies. They also have local competition in the toothpaste market against their Crest brand by up to 45 different Chinese brands.
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