Department of Commerce

Assignment
On
SWOT, PEST & Porter’s Five Forces
Analysis of Procter & Gamble Co.

Submitted To:
Sir Fahad Munir
Submitted By:
Khadija Liaquat 37
Sehar Saeed 02
Nimra Ahsan 38
Subject :
International Business

BS Commerce, 8th Semester

Jinnah Campus, Rahim Yar Khan

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 Procter and Gamble
Company Background

P&G is the world's largest consumer goods company that markets more than 300
brands in over180 countries. Started in 1837 by William Procter and James
Gamble. Main Headquarter in Cincinnati, Ohio. First products were soaps and
candles. Employ 138,000 people. The company is engaged in producing beauty,
health, fabric, home, baby, family and personal care products. The company's
product portfolio also includes pet health products and snacks. The company's
leading market position along with its strong brand portfolio provides it with a
significant competitive advantage. However, slowdown in global economic
condition is making it increasingly difficult for branded product manufacturers
like P&G to maintain their sales volume and revenue growth.
History of Procter & Gamble

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 The

Procter & Gamble Company was established in

1837.Brothers-in-law William Procter and James
Gamble started a partnership, making and selling
candles and soap in Cincinnati, Ohio.The formal
partnership agreement was signed on October 31,
1837.

P&G is an international Company reaching

out to almost the entire world population
with more than 250 brands in 130
countries .Procter & Gamble started its
operations in Pakistan in 1991 with the goal
of becoming the finest local consumer goods
company. Over the years it has proved to be
leading in providing the finest household
consumer goods.

 1879
The inexpensive, but high-quality Ivory soap is introduced
 1924
P&G is one of the first to create a market research department to study consumer
preferences and buying habits
 1955
Crest, the first toothpaste with fluoride clinically proven to fight cavities, is
introduced.
 1961
Pampers is introduced and replaces cloth diapers.
 2005
P&G and Gillette merge into one company develop Gillette and Braun's shaving
products, Oral-B dental care line and Duracell batteries.
 Today
P&G operates in 80 countries worldwide, employing more than 100,000. Has 13
billion dollar brands in its portfolio: Charmin, Tide, Pantene, Iams, Folgers, Crest, 5
Olay, Always, Ariel, Bounty, Downy, Pringles, Pampers.

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Family of Products
 Personal & Beauty
- Cosmetics, Oral Care, Hair Care
 House & Home
- Laundry care, Dish Soap, Snacks & Coffee
 Health & Wellness
- Prescription drugs, Health Care
 Baby & Family
 Pet Care & Nutrition

Main Competitors

 Johnson & Johnson Co.

 Kimberly-Clark Co.
 Unilever Co.

Target Markets

 Homeowners
 Stay-at-home parents
 Women
 B2B

SWOT Analysis
“SWOT is an acronym for the internal Strengths and Weaknesses of a firm
and the environmental Opportunities and Threats facing that firm. SWOT analysis

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is a widely used technique through which managers create a quick overview of a
company’s strategic situation. The technique is based on the assumption that an
effective strategy derives from a sound “fit” between a firm’s internal resources
(strengths and weaknesses) and its external situation (opportunities and threats). A
good fit maximizes a firm’s strengths and opportunities and minimizes its
weaknesses and threats. Accurately applied, this simple assumption has powerful
implications for the design of a successful strategy.

Strengths

 New Management
 Leading Market Position
 Strong Finances in past years
 Gross Margin 15 Times the Industry Average
 One of the best marketers in the world
 Diversified brand portfolio: more than 300 brands with more than 79
billion in Revenue
 Strong brand portfolio
 Tightly integrated with the largest retailers in the US and around the world
 Product innovation
 Talented management
 Distribute to 180 Countries
 Distribution channels all over the world
 New Billion Dollar brands
 Offers multiple products in each category along with more than one brand
 Retains strong bargaining positions with retailers
 Global leader in health and beauty care products, detergents, diapers and
food
 P&G has over than 170-year industry experience and over than 25-year
international operations
 The new acquisitions of companies that are leader in the market of health
and beauty care products in Europe.
 Effective brand management system and brand management team for its
brand to plan, develop, direct their brand in its market
 Strong focus on Research and development
 Diversified product portfolio
 The company has a vast experience in oral and personal hygiene products
as they are working since 1837
 Well-known brands with extensive products line that positions the
company to obtain better brand image as home and personal care
providers.

Weaknesses

 Top Brands Losing Market Share Health and Beauty Women Only
 Lagging behind in online media presence & leadership
 Missing opportunity: Refuses to manufacture private label products for its
retail customers
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  Slow Process Heavy Culture
 Views Product Performance only
 Expansion for brands is limited
 Increased promotional spending to keep healthy sales
 Production cost
 Production capacity for the demand on the first years
 Leads times for alternative pack sizes and designs
 Work capacity
 Different culture, wants and needs of customers
 Unable to protect imitation P&G’s innovative products and marketing
strategies of competition
 Competitors had pre-empted them in national markets where the local
subsidiary was constrained by budget or organizational limitations
 Increasing instances of product recalls
 Dependent on Wal-Mart Stores for majority of its revenue
 Quality control Problem
 Decreased Revenues in their Northeast Asian Market
 The company has not already convinced the markets or investors about the
benefits of acquisitions. This is true since the earnings per share was
estimated to decline by $0.25 and $0.30 per share.

Opportunities

 Health and Beauty for Men

 Doubling Environmental Goals for 2012 and thus, promises more value for
the environment concerned customers today.
 Adding Value for the Conspiracy
 Utilizing online social networks
 Going Green/Eco Friendly
 Capitalizing on online media
 Continue to divest brands that don't align with the company's long-term
goals (i.e., Folgers)
 Emerging & Developing markets
 New acquisition opportunities
 Selling directly to consumers
 Design for better product experience
 Has room to expand margins by improving productivity
 The growth of the shampoo and condition market
 The increase of hair washing products
 The undeveloped conditioner in Europe
 The experience and the leader positioning of the new companies that P&G
bought
 The Know-how of the success of Pert Plus in the US market
 Expansion in developing markets
 Future growth plans
 Growing Indian FMCG market
 Demographic trends across the world
 Company is constantly trying to pursue growth overseas

Threats

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  Competitors
 Substitute brands that have a cheaper price
 Private label growth
 Slowdown in consumer spending in the US & globally
 Key competitors expanding their product portfolios through acquisitions
 Increase in raw material price so cost to the company is increasing.
 Commodity cost and currency exchange rate placed tremendous pressure
on the business
 New and increase of regulations
 The number of suppliers and brands, the European market was even more
crowed as US.
 The top and bottom price classes was even bigger than the US.
 Difference between prices for the same quality.
 Many important competitors
 Regulatory Environment
 Global Economic Conditions
 Counterfeit goods
 Rising cost of energy prices
 Economic slowdown in the US and Eurozone
 Due to recession, the consumer spending has decreased globally.

PEST Analysis
PEST factors play an important role in the value creation opportunities of a strategy.
However they are usually beyond the control of the corporation and must normally be
considered as either threats or opportunities. Remember macro-
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 economical factors can differ per continent, country or even region, so normally a PEST
analysis should be performed per country.

In the table below we find examples of each of these factors.

Political (incl. Legal) Economic Social Technological

Environmental
Government
regulations and Economic growth Income distribution
research spending
protection
Demographics,
Interest rates & Population growth Industry focus on
Tax policies
monetary policies rates, Age technological effort
distribution
International trade
Government Labor / social New inventions and
regulations and
spending mobility development
restrictions
Contract enforcement
Unemployment Rate of technology
law Lifestyle changes
policy transfer
Consumer protection
Work/career and Life cycle and speed
Employment laws Taxation leisure attitudes of technological
Entrepreneurial spirit obsolescence
Government
Exchange rates Education Energy use and costs
organization / attitude
(Changes in)
Competition regulation Inflation rates Fashion, hypes Information
Technology
Health
Stage of the consciousness &
Political Stability (Changes in) Internet
business cycle welfare, feelings on
safety
Consumer (Changes in) Mobile
Safety regulations Living conditions
confidence Technology

So, Pest Analysis is the analysis of political, economic, social, and technological
environment of the company.

 The rapid change in the past two decades has affected the industry badly.
Different governments with different policies and different benefits have
different affects on the industry.
 As the manufacturing trend in the economy has changed from 4.5 to 8.6
during the last five years, also maximum level reached at the 14.0 percent
level. But still no positive and consistent changed has seen.
 For the new entrants in the industry there are also some measures set by
the government which are no completely in the favor of any investment
activity with reference to the detergent industry.

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  There are many groups in the country as well as which have a very limited
approached towards the advertisement policies of the industry. Such
groups only perform activities for there own political interest.

Political & Legal Factors

 Manufacturing trend in the economy has changed 4.5 to 8.6 for last 5 years
 Manufacturing of detergents are no more in the country
 Company shifts their business outside the country because of government
taxes

Economic Factors

 National income & GDP is growing

 The infrastructure did not support the industry
 Company did not like to do business in this economic situation

Social & Culture Factors

 People now much conscious about branded products

 Detergents is now available on different prices
 Company awareness in people about detergents uses

Technology Factors

 Using latest technology to attract customers

 No technology transformation
 Company has intense competition for using latest technology

Porter’s Five Forces Model

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1.Threats of New Entrants

 In detergent industry the production is on large scale. Here the fixed cost is
same whether you produce one unit or thousand. The only thing that
matters here is the variable cost. Like the marketing expenses to capture
the share of unorganized sector or to get market of loose detergent. The
research also required heavy amount of investment, so barrier exist here.
 All the brands are well know and very mannerly identified by customer.
 Huge amount of capital is required and an expense to new entrants like
marketing and distribution expenses requires heavy investment.

2.Bargaining Power of Supplier

The bargaining power of supplier is low in detergent industry. Ariel is imported

from Egypt and surf excel is assembled here and have supplier in different
countries. Bouns, brite, wheel have different supplier for different ingredients. So
the bargaining power of supplier is zero.

3.Threats of Substitute

The major substitutes for the industry are:

 Bar Soap
 Liquid Soap
 Sawaiyan

Bar Soap

Following are the major brands of soap:

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  Gai Soap
 Ladoo Soap
 Sufi soap

Sawayian

Following are the major brands of sawaiyan:

 Gai
 Millian
 Sufi

4.Bargaining Power of Buyer

 The bargaining power of buyer is high in detergent industry because

 The detergents are equal in quality and standard for each segmented
customers.
 The numbers of substitute are in number and have switching cost is
negative.
 Very less difference in price for each segmented customer so switching
cost is either zero or in negative.
 Like customers of Aerial have zero cost if they switch to surf excel and
negative switching cost if they to bonus.

5.Current Competitors Jockeying within the Industry

There is intense competiton with in industry to capture the market in terms of

SOM. Major key players in the industry and their SOM are given below:

 Colgate Palmolive Pakistan 45%

 Procter & Gamble 17%
 Unilever 36%
 Other 2%

- Colgate Palmolive is catering to specified high class customers while

Aerial is catering to same class. The technology used here is the stain free.
- While bonus and brite total is catering to middle class and vastly used for
white clothes.
- Te other 2% is the unorganized sector of detergent.

OR

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Porter’s Five Forces Model (Analysis)
The analysis of Procter and Gamble (P&G) Company by using five forces
analysis. The following part will show the insight and limitation of five forces
analysis. The analysis of shampoo industry in United Kingdom will be discussed
by using five forces analysis in the last part.

Part 1. Procter & Gamble Company

Procter and Gamble Company is a leader company for producing some essential
products in daily life such as toiletry products. In recently, the company has
established five strategies for sustainability; products, operations, social
responsibility, employees and stakeholders (P&G website, 2010).

The first strategy focuses on their products. They attempt to improve their
environmental profile from delighting customers with the sustainable innovations
such as using biodegradable materials (ibid, 2010). The second strategy is the
improvement of their operations with environmental concerning such as using an
additional 20% reduction in carbon dioxide emissions (ibid, 2010). The third
strategy is the concerning in improving children's lives by social responsibility
programs (ibid, 2010). The forth strategy focuses on employees by supporting
them to have the sustainability thinking and implementing the thinking to daily
works (ibid, 2010). The last strategy considers in stakeholders by supporting in
transparent working with them.

The recent change of strategy might be considered as the results of some business
environmental changes for example the increasing of environmental concerning
behaviors. Therefore, environmental threat and opportunity can be reckoned as the
crucial factors for managers. It is their responsible for adapting the organizations
to cope with the changes.

Part 2. Five forces analysis

The five forces analysis is a framework for analyzing industry for developing
business strategies created by Michael Porter (Narayanan and Fahay, 2005,
P.208). Johnson et al said the attractiveness of an industry could be identified by
such framework in terms of competitive forces (2008, P.59). Note that the word
industry means a group of companies that produce the same products or serve the
same services (ibid, P.58). There are five elements in such framework; threat of
new entry, threat of substitute products, the bargaining power of customers, the
bargaining power of suppliers and the intensity of competitive rivalry (ibid, P.60).

The first force of the analysis is the threat of entry that involve with barriers to
entry. Johnson et al (2009, P.61) mentions the barriers to entry are factors that
new entrant need to conquer for entering to the business successfully. There are
several factors to be considered as such barriers such as scale and experience,
access to supply or distribution channels, expected retaliation, legislation or
government action and differentiation. The second force is the threat of
substitutes. Johnson et al describes, "Substitutes are products or services that

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offer a similar benefit to an industry's product or services, but by different process
(ibid, P.62)". For example, in airline industry, the substitutes can be cars,
train, and boats. However, their price to performance ratio should be less than
such ratio of industry's products or services (ibid, P.62). It means that substitutes
should have cheaper prices if it serves the same product performance. The third
force is the power of buyers that tend to be high if some conditions occur such as
concentrated buyers, low switching costs and buyer competition threat. The forth
force is the power of suppliers that are organizations that supply whatever for
producing products or services (ibid, P.63). The power seems to be high if there
are low concentrated suppliers, high switching cost and high supplier competition
threat (ibid, P.63). The last force is competitive rivalry. This force will be high if
the former forces are intense. Moreover, it depends on some factors such as
competitor balance, industry growth rate, high fixed costs, high exit barriers and
low differentiation (ibid, P.64).

Limitations

However, there are several limitations of Porter's framework, such as:

One of the limitations of five forces analysis is the underestimate of strength of

company competency. Due to five forces tool focuses on the industry layer of the
business environment (ibid, 2009), so such tool might lack of concerning in core
competency of companies. For example, five forces ignore the strength
organization structures such as the advantages of occupying innovative staff.

Moreover, the industry value chains are oversimplified by five forces framework
such as the lack of segmentation of buyers and the differentiation of channels,
intermediate buyers and end buyers. (Grundy, 2006, P.215).

Besides, the model ignores the interdependence of large organization because it

analyzes in individual business strategies (Twelve manage website, 2010). For
instance, hardware and software can be the complementors that can be worth than
separately.

In addition, the continuous changing of industry boundaries might change the

definition of industry (Johnson et al, 2009, P.67). The convergence of telephone
and photographic industries could be an example of the changing of industry
boundaries. Because the addition of photographic functions in mobile phones, so
they can be the substitutes of photographic industry.

Part 3. The analysis of Procter and Gamble (P&G) Company by

using five forces analysis.

In this section, five forces analysis will be applied to shampoos industry in P&G
Company and follow by some recommendation in each force.

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1. The threat of the entry of new competitors

When the new competitors want to invest in any business, they have to face with
some barriers of entry. Note that the barriers of entry are the factors that the
entrants have to overwhelm to survive in their new business (Johnson et al, 2009,
P.61). For shampoo industry, there are many factors for new entrants too. In this
section, some factors: scale and experience, access to supply or distribution
channels, and brand royalty, will be mention.

Scale and experience

In shampoos industry, the large numbers of shampoos need to be produced for

fulfilling to customers demands because shampoos can be considered as mass
products that are essential commodity used for cleaning bodies in every day;
therefore, economics of scale is very important. Before they can reach the large-
scale production of incumbents, the new entrants might be advert in some point
such as producing the higher unit costs when compared with the incumbents (ibid,
P.61). Therefore, this is an advantage for P&G because P&G has already achieved
producing in lower unit costs.

Moreover, the high investment is required for producing shampoos. This

investment might include machines costs, costs from researching of shampoos
recipes, costs from logistics and costs from advertisements or marketing expenses.
Especially, new product management expense and marketing budgets are big
investments for toiletry industry (Key Note, 2009, P.81). Advertisement are very
necessary because they can be regard as a significant factor for customers to make
a decision to buy shampoo as we can see from a large amount of advertisement in
2008, £53.8m was spent as main media advertising expenditure (ibid, P.56). The
continuous marketing activities could affect customers to accept and attract them
to trial products (Brassington and Pettitt, 2007). Therefore, the high investment
will be an obstacle for new entrants.

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Access to supply or distribution channels

The entrants have to make efforts to wholesalers and retailers for placing their
products in the good locations; for example, place in eyes-level shelves by giving
the better proposal such as paying an extra money or reducing their prices.
However, the incumbent as P&G can react by offering the same or better proposal
too. In addition, an extensive product spreading is also needed because it has to
response to mass consumers that spreading on all areas of United Kingdom.
Therefore, the entrants have to allocate a budget for managing the logistic to
satisfy customers and preventing from insufficient products situations.

Brand Royalty

Brand is one of the important factors when customers decide to buy. It takes times
for letting customers accept and be familiar with new brands, so the entrants have
to concern a lot in marketing to promote their brands. Furthermore, it is not easy
to make customers alter their mind to use new products. Marketing activities and
continuous development of products are needed to make brand royalty for P&G
Company.

In shampoo industry, it is not easy for entrants to be successful because the strong
brand royalty appears (Key Note, 2009, P.81). However, there are some group of
customers are willing to try new products (ibid, 2009, P.81). The entrants might
search the opportunity from new product sectors of market and then rapidly
preoccupy. Therefore, P&G Company should set a marketing team to explore
possible markets and observe coming changes before the new entrants found. For
instance, nowadays, people tend to concentrate on organic substance or green
ingredients. The Soil Association's Organic Market Report 2009 indicated organic
toiletries products grew quickly in 2008 (ibid, P.4). P&G Company might research
for launching new product to response the needs. However, as we have seen in
their strategy, they try to generate sustainable image that can support them to be a
green organization and also differentiate P&G from other competitors. Another
example may be men products. The demand of men's toiletries increases
according from the speedily increasing of men in the population (ibid, P.4). P&G
Company should have more concerning in men products such as launching
shampoos for men and set the team for analyzing men behavior in buying
shampoos.

2. The threat of substitute products

The substitutes for shampoos are rather few. The most proximal product might be
soaps. However, people do not admire to use soaps for washing their hair because
the properties of soaps is different from shampoos. However, there is a possible
substitute: two in one product. H&BC Company has launched a men shower gel in
Radox brand. Such shampoo has distinctive properties that it can use as both
shower gel and shampoo. It can be assumed that H&BC Company's researchers
might explore the men behavior before launching such product. Because such
product is easy for using and convenient to carry for traveling that it might be
similar to almost men behaviors. Besides, the price of Radox is quite cheaper than
some P&G shampoos. This can attract consumers to buy. Therefore, P&G should

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be careful by monitoring their sales. If they are successful in sales, P&G might
launch the similar products and attempt to occupy their market. However, P&G
has soaps industry, and hence it is not difficult for P&G to compete the rivals.

3. The bargaining power of customers

The bargaining power of shampoos customers can be reckoned as high because

some conditions are propitious to customers such as concentrated buyers, low
switching costs and brand royalty.

Concentrated buyers

As shampoos can be accounted as an essential commodity in daily life, so there

are many choices for buyers in markets. Johnson et al (2008, P.62) said buyers
have the chance to select the most preferable products when such products have a
high percentage of the buyers' total purchases. Therefore, customers tend to have
the higher power in this topic. P&G might solve the problem by persuade the
other companies to institute an association for identifying approximate ranges of
shampoos prices. This could ease the price war and it is an advantage for
everyone. However, it is difficult to do because this might give the opportunity for
new entrants to sell in lower prices and occupy the marker share. Porter (1979)
recommends three competitive strategies: differentiation in product, producing in
lower cost and launching marketing campaign. P&G can take these strategies to
have the upper hand.

Low switching costs

Buyers tend to have the higher power in this topic because they can change to use
another shampoos by no switching costs. Therefore, the efficiency of products is
very important for maintaining customers because the customers will be
continuous buying the products if they impress such products. In addition, P&G
might launch the idea of membership to create a barrier of switching decision. For
example, the members might have privileges in reduced prices on P&G products,
special services or can use member cards to get other benefit such as having the
ability to attend P&G activities, having discount on theater or plays. However,
they should specify some rule for pushing customers buy their products usually.
For instance, the cards might be activated when customers buy their product in
normally by identifying the minimum period such as 500 pounds per year or the
cards will activate by collecting points. Another ideas might be selling the
combination of products. P&G might sell their shampoos with other products such
as conditioners, shower gels or new launching products in special prices. Such
ideas will be advantages for P&G from increasing motivation in trial new products
and this also increase brand loyalty.

Brand loyalty

P&G tend to have the higher power in brand loyalty aspect because there is a
group of buyers prefer P&G shampoos. The quality of shampoos can account as
an important factors. Buyers will buy shampoos if they feel such shampoos can
propose the effective results. Therefore, P&G should maintain their quality and

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attempt to develop their products by researching or concerning new technology.
Besides, they should support the presenting of shampoos qualification by
advertisement.

Customer competition threat

The priority customers of shampoos industry are shampoos users. However,

retailers can be regarded as customers too because retailers act as intermediate
organizations. Moreover, retailers recently launch their products in cheap prices.
This could be considered as a threat of P&G. However, customers tend to dislike
retailers' products because there is differentiation of product's quality. The
important of quality is shown here again. Another ideas for P&G to differentiate
their products might be the differentiation of packaging. Customers will be
appreciated the beautiful and modern packages and the convenient appearance
might persuade them to buy. Moreover, this will affect to customers that buy the
product for gifts. Therefore, P&G might combine the other products and design
their packages for selling to customers that want to buy in souvenir purpose.

4. The bargaining power of suppliers

The power of suppliers will be considered in these aspects: ingredient of

shampoos and supplier competition threat.

Ingredient

For P&G, power of suppliers tends to be low because there is no specific or rare
ingredient and there is more than one supplier that has ability to provide raw
materials. Therefore, there are many selections for P&G to select another
company instead of the old one. For instance, P&G could buy active chemical
ingredients from the Swiss company Lonza Group Ltd, Cognis, Dragoco (Great
Britain) Ltd and Ciba Specialty Chemicals (Key Note, 2009, P.40). However, the
concerning of organic materials trend might increase supplier power. There are
two major aroma chemical suppliers: Treatt PLC and Swiss Company Givaudan
(ibid, P.40). According to green trends, both companies make progress for organic
aromas (ibid, P.40). If one of aroma suppliers successes in producing of 100%
organic fragrances, this will differentiate such supplier and they will have more
power than P&G. However, it is less possible that the other suppliers surrender to
one supplier. They would research and develop in producing organic aroma.
Therefore, P&G can be reckoned as having the higher power then suppliers.
Moreover, P&G tend to have higher power than suppliers because the suppliers
depend on P&G. P&G is a giant company, so the company will order their
material in large amount. P&G will have more power in negotiation.

Supplier competition threat

In addition, Johnson et al described power of suppliers might increase if buyers

act as intermediates (2009, P.63). The suppliers of P&G might expand their
business by producing shampoos but this is almost impossible. Because there are
many factors to attract shampoos consumers to buy shampoos such as brand

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royalty, shampoos recipes, experiences of shampoos industry and high advertising
costs, therefore it is difficult to suppliers to success.

5. The intensity of competitive rivalry

The last force is the intensity of competitive rivalry that it will be affected from
other forces as well. The intensity will increase if the other forces are high. This
section will mention in four factors for shampoos industry of P&G; competitor
balance, industry growth rate, high fixed costs and low differentiation.

Competitor balance

The competition of shampoos industry tends to be intense because there are not
many competitors in each segment. For example, in premium shampoo segment,
P&G might consider Unilever (Dove brand) and Loreal as competitors of P&G
(Pantene brand). The high rivalry can be seen from the activity of marketing
especially advertisement that can maintain their existed customers and introduce
new products. Furthermore, the attempting to attract new customers by developing
new products can reflect the intense of rivalry.

Industry growth rate

Due to shampoos industry is nearly saturated point (Key Note, 2009, P.81), so it is
in situation of low growth rate, only 0.3% change of value from 2007 and 2008
(ibid, P.16). Moreover, in low growth market, high price competition could be
seen (Johnson et al, 2009, P.64). Therefore, the degree of competitive rivalry
seems to be high in this topic.

High fixed costs

Shampoos industry is required high investments such as equipments costs and

research expenses therefore shampoos companies will produce in high volumes to
decrease unit costs. This will lead to high rivalry from price wars.

Low differentiation

Moreover, shampoos can be regard as a commodity products that there are poorly
differentiated therefore it is easy to customers for switching between competitors.
This would be occurred price competition in order to hold more penetration.
However, for P&G, the company has continuously developed their product to be
effective by concentrating on researches. This could differentiate P&G among
competitors if customers can feel the better result from using P&G shampoos.
Moreover, the attempt to construct sustainable or green image will differentiate
P&G from others.

Conclusion and Implication

The ability to cope with changes can be regarded as important to current

organizations. P&G is one of organization that attempts to improve their business.
In this report, the five forces analysis was applied to P&G for
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analyzing threat and opportunity in shampoos industry and evaluating their
strategy as well as recommend some ideas.

In five forces analysis, there are some forces that can considered as weak for
P&G. Therefore, they should implement some strategies to solve such
weaknesses.

From five forces analysis, there is a weak point in threat of substitutes that come
from two in one product, Radox brand. P&G should provide some researches
about customer behavior in two in one products and monitoring their sales. If
there is tendency to success in such product, P&G might launch similar products
and attempt to conquer by using competitive strategies such as producing in lower
costs or sale in lower prices. Another strategies might be concentrating in
marketing activities such as promotion.

Furthermore, from the risk of power of suppliers that increase from the
emergences of environmental concern, P&G might invest in their suppliers' shares
to have more power. However, P&G should only invest in suppliers that can be
considered as important suppliers.

However, some strategies of P&G can be evaluated as appropriated strategies such

as they attempt to create corporate image as sustainable organization. Another
strategy is the concentrating on continuance of developing products that can
differentiate their products. It would affect to decrease power of customers
because they have no choice if they want to buy the products that have the same
properties. It also seems to decrease the intensity of rivalry. Besides, the focus on
market segment could help P&G to eliminate both forces too. In addition, as we
can see from P&G strategies, they try to develop their organization image in
sustainable ways. This can reckon as a good idea for coping with the changes
because it can embed the green images into P&G products.

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