P&G
Gate China 2014 Procter and Gamble Shaily Shah and Diana Vining
Business Overview Procter & Gamble was founded in 1837 and is based in Cincinnati, Ohio. It is the largest consumer product company in the world, with a presence in Beauty, Grooming, Health Care, Fabric Care and Home Care, and Baby Care and Family Care. As consumers we are familiar many of their brands, including, Head and Shoulders, Olay, Gillette, Mach3, Crest, Oral-B, Ace, Dawn and Duracell. Procter & Gamble operates in over 180 countries. The company market and sells its product across multiple distribution channels, including mass merchandisers, grocery stores, membership club stores, drug stores, department stores, salons, high-frequency stores, and e-commerce stores.12 In 2012, they exited the food business to focus on the higher margin goods.
Operations in China Proctor & Gamble has been in China for 20 years with annual sales of $2 billion. It entered China in 1988, by forming a joint venture P&G (Guangzhou) Ltd. which was headquartered in Guangzhou. Now there are operations in Guangzhou, Beijing (along with a technical center), Shanghai, Chengdu, Tianjin, Dongguan and Nanping. The number one brands represented in China are: Rejoice, Safeguard, Olay, Pampers, Tide and Gillette which represent hair care, personal cleansing, skin care, baby care, powder detergent and male grooming category respectively.3 P&G is planning to invest $1 billion dollars in China by 2015 along with a global initiative of cutting costs by $10 billion in 2016. 4 P&G has to be aware of the debt and currency exposure and import authorization and pricing controls that may expose P&G weaknesses.5
1
Market Line Report http://finance.yahoo.com/q/pr?s=PG+Profile 3 http://www.pghongkong.com/en-us/Company/China.aspx 4 Team, Trefis. “Procter & Gamble Has Big Plans For China And Emerging Markets Growth.” Forbes, 30 Mar 2012. http://www.forbes.com/sites/greatspeculations/2012/03/30/procter-gamble-has-big-plans-for-china-andemerging-markets-growth/ 5 http://library.morningstar.com.proxy.lib.duke.edu/stock/stock-filing/QuarterlyReport/2013/12/31/t.aspx?t=XNYS:PG&ft=10-Q&d=6a9e117df488aa665dd358ac40fdc2fe 2
Financial & Operating Statistics Revenues Net Income Market Capitalization Price per Share
84,167M 11,312M $217.89B $80.36
Stock Exchange Number of Employees # of Locations in China
NYSE 121,000 7
SWOT Analysis Strengths Weaknesses 1. Strong brand portfolio 2. Leading market position, more than twice the sales of Unilever in China 3. Strategic acquisitions to expand brand portfolio 1. Increasing number of such as Ambi Pur air care with strong presence in product recalls Asia 4. Growth investment in China 5. Spending on R&D 6. Spending on marketing Opportunities
Threats
1. Growing consumer base in China 2. More multi-brand advertising and initiatives 3. Organic sales growing by 9% in China
1. Inflation of commodity materials costs 2. Counterfeit goods deprive revenue and dilute brand
Company Visit Questions 1) How does P&G determine which brands and product lines have the potential to do well across the world and which are country specific? 2) What is the style of P&G advertising to Chinese consumers? Is there a focus on utility, lifestyle, value, brand recognition? 3) What has been the biggest change in the business over the 20 years that P&G has been operating in China? 4) Are there any products that seemed promising but did not do well with Chinese consumers? 5) What is P&G China’s strategy for acquiring other companies or brands?
6) What is the difference in operations between China’s different offices?
Business Overview Procter & Gamble was founded in 1837 and is based in Cincinnati, Ohio. It is the largest consumer product company in the world, with a presence in Beauty, Grooming, Health Care, Fabric Care and Home Care, and Baby Care and Family Care. As consumers we are familiar many of their brands, including, Head and Shoulders, Olay, Gillette, Mach3, Crest, Oral-B, Ace, Dawn and Duracell. Procter & Gamble operates in over 180 countries. The company market and sells its product across multiple distribution channels, including mass merchandisers, grocery stores, membership club stores, drug stores, department stores, salons, high-frequency stores, and e-commerce stores.12 In 2012, they exited the food business to focus on the higher margin goods.
Operations in China Proctor & Gamble has been in China for 20 years with annual sales of $2 billion. It entered China in 1988, by forming a joint venture P&G (Guangzhou) Ltd. which was headquartered in Guangzhou. Now there are operations in Guangzhou, Beijing (along with a technical center), Shanghai, Chengdu, Tianjin, Dongguan and Nanping. The number one brands represented in China are: Rejoice, Safeguard, Olay, Pampers, Tide and Gillette which represent hair care, personal cleansing, skin care, baby care, powder detergent and male grooming category respectively.3 P&G is planning to invest $1 billion dollars in China by 2015 along with a global initiative of cutting costs by $10 billion in 2016. 4 P&G has to be aware of the debt and currency exposure and import authorization and pricing controls that may expose P&G weaknesses.5
1
Market Line Report http://finance.yahoo.com/q/pr?s=PG+Profile 3 http://www.pghongkong.com/en-us/Company/China.aspx 4 Team, Trefis. “Procter & Gamble Has Big Plans For China And Emerging Markets Growth.” Forbes, 30 Mar 2012. http://www.forbes.com/sites/greatspeculations/2012/03/30/procter-gamble-has-big-plans-for-china-andemerging-markets-growth/ 5 http://library.morningstar.com.proxy.lib.duke.edu/stock/stock-filing/QuarterlyReport/2013/12/31/t.aspx?t=XNYS:PG&ft=10-Q&d=6a9e117df488aa665dd358ac40fdc2fe 2
Financial & Operating Statistics Revenues Net Income Market Capitalization Price per Share
84,167M 11,312M $217.89B $80.36
Stock Exchange Number of Employees # of Locations in China
NYSE 121,000 7
SWOT Analysis Strengths Weaknesses 1. Strong brand portfolio 2. Leading market position, more than twice the sales of Unilever in China 3. Strategic acquisitions to expand brand portfolio 1. Increasing number of such as Ambi Pur air care with strong presence in product recalls Asia 4. Growth investment in China 5. Spending on R&D 6. Spending on marketing Opportunities
Threats
1. Growing consumer base in China 2. More multi-brand advertising and initiatives 3. Organic sales growing by 9% in China
1. Inflation of commodity materials costs 2. Counterfeit goods deprive revenue and dilute brand
Company Visit Questions 1) How does P&G determine which brands and product lines have the potential to do well across the world and which are country specific? 2) What is the style of P&G advertising to Chinese consumers? Is there a focus on utility, lifestyle, value, brand recognition? 3) What has been the biggest change in the business over the 20 years that P&G has been operating in China? 4) Are there any products that seemed promising but did not do well with Chinese consumers? 5) What is P&G China’s strategy for acquiring other companies or brands?
6) What is the difference in operations between China’s different offices?
