STI College Ortigas-Cainta

Strategic Management

Midterm Task Performance

Submitted by:

Submitted to:
 Procter & Gamble Philippines

I. Company Background
The Proctor & Gamble Company (P&G) is the world's largest manufacturer of soaps, cleansers, and
other household goods (Britannica, T. Editors of Encyclopaedia, 2022). According to P&G (n.d.),
their brands are trusted in millions of homes, including living rooms, kitchens, laundry rooms, and
bathrooms, and they have been passed down from generation to generation. They've defied
convention, driven innovation, and helped define culture over the course of 181 years. P&G has a
presence in over 80 countries. Its almost 300 brands are available in over 160 countries.

I. SWOT Matrix
This section of the paper discusses the industry analysis of Procter & Gamble using the SWOT
Matrix to evaluate their competitive position by identifying their strengths, weaknesses,
opportunities, and threats.
Internal
Strengths Weaknesses

 Strong consumer goods brands  Imitable products

 Economies of scale  Limited online presence
 Efficient product distribution network  Limited degree of business
diversification
External
Opportunities Threats

 Product diversification to reduce risks.  Global and local competition.

 Product innovation for competitiveness.  Imitations or counterfeiting products.
 Online presence development.  Trade barriers in some countries.
Figure 1. SWOT Matrix of Procter & Gamble (P&G)
Internal (Strengths and Weaknesses)
Despite fierce competition from other consumer goods companies such as Unilever, Procter &
Gamble’s capabilities enable the company to maintain its market position. Internal strategic
elements that support corporate growth and expansion are addressed in this section of the SWOT
Analysis. As a result of these variables, Procter & Gamble (P&G) is able to mitigate the detrimental
consequences of competition. To

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further grow the firm, the corporation must expand on its current strengths while simultaneously
establishing new competencies.

Procter & Gamble’s competitive advantage is based on strong consumer goods brands. Tide and
Pampers, for example, are well-known brands that contribute to consumer loyalty and P&G’s stable
market share. On the other side, due to P&G’s global size of operations, economies of scale are a
strength. Because it is one of the largest companies in the market, it enjoys great process efficiency
and cost effectiveness as a result of its size. P&G operates a highly efficient global product
distribution network in this regard. This network includes both company-owned and third-party
service providers. Market penetration and product competitiveness, which are highlighted in P&G’s
generic strategy and intensive growth plans, are supported by the strengths presented in this element
of the SWOT analysis.

On the other hand, despite its strong market position, Procter & Gamble has challenges due to
organizational flaws. Internal strategic factors that impede corporate improvement are identified in
this section of the SWOT Analysis. These obstacles make it harder for P&G to implement its
strategies. Because of flaws in internal processes, the corporation, for example, is having difficulty
increasing its competitive advantage.

The imitability of Procter & Gamble’s products is one of the company’s biggest flaws. This flaw is
common in the consumer goods industry, as items from different companies have a lot in common.
Having imitable products is a flaw since it exposes P&G to copying, which could result in a loss
of market share. Another of the company’s flaws is its lack of web presence. Retailers and
manufacturers are expanding their online businesses all the time. Many small and large consumer
goods companies, for example, sell products online through their respective e-commerce websites.
However, Procter & Gamble’s e-commerce website, the P&G Shop, has a small global presence
and is mostly focused on the United States. The benefits that the corporation receives from the
worldwide online market are limited as a result of this scenario. As a result, expanding Procter &
Gamble’s online presence can help the company’s marketing mix, or 4Ps, while also increasing its
competitive edge. The company’s minimal degree of diversification refers to its predominantly
consumer products operations. Because of this, Procter & Gamble is extremely reliant on the

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consumer products sector. As a result, the company’s low diversification is a flaw that increases its
vulnerability to market risks. Strategic reform for e-commerce, product development, and business
diversification are highlighted in this section of Procter & Gamble’s SWOT analysis.

External (Opportunities & Threats)

The global market presents opportunities for business growth. In this case of Procter & Gamble,
business diversification is a major opportunity. For example, the company can enter other
industries via acquisition or new ventures to reduce risks linked to dependence on the consumer
goods market. Procter & Gamble also has the opportunity to increase its competitiveness through
product innovation. Increasing investment for product innovation can lead to more attractive
products, as well as novel products that create new income sources. Moreover, the opportunity to
develop its online presence has significant positive implications for Procter & Gamble’s business.
For instance, a more popular e-commerce website can increase the company’s profits from online
transactions. This benefit is especially significant in exploiting online markets in developing
countries. Also, a stronger online presence can improve Procter & Gamble’s brand image. A more
popular website increases P&G’s brand exposure and consumer awareness. Therefore, this element
of the SWOT analysis shows that Procter & Gamble has the opportunity to grow and improve its
competitive advantage.
On the other hand, Procter & Gamble must continue improving to address the threat of
competition. Competitors are always looking for ways to gain a bigger market share, which
corresponds to a reduction in the company’s market share. In addition, imitation or counterfeiting
is a considerable threat against P&G. For example, small local firms can develop products that are
highly similar to Procter & Gamble’s products. This threat is based on the imitable nature of
consumer goods, which is one of the company’s weaknesses. Moreover, trade barriers are a threat
that can limit Procter & Gamble’s global growth. Such threat is significant in some countries with
protectionist trade policies that restrict imports, or in countries that have questionable policies on
the operations of foreign firms. This element of the SWOT analysis of the Procter & Gamble
Company points to the importance of strengthening the company’s competitive advantage to protect
the business from threats in the market.

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 II. PESTEL Analysis
This section of the paper discusses the industry analysis of Procter & Gamble using the PESTEL
Analysis will tell us the external factors that impact the operation of P&G.

1. Political
P&G is a multinational company that sells its products in 180 countries, political unrest or a
political conflict between countries can impact the operations of P&G adversely. For example, as
the Russia and Ukraine conflict took place recently, P&G had to suspend all its operations in
Russia, due to which it will now observe a financial loss. Besides the political unrest, the
government’s tax policies significantly impact P&G. If a government gives tax reliefs to
manufacturing companies like P&G, the brand will increase its manufacturing which will be
beneficial for the company.

2. Economic
Economic factors directly impact the operations of any organization, and P&G is no exception.
Although many economic factors affect the operations of P&G. However, inflation is one of the
economic factors that directly impact the sales of P&G. High inflation lowers the purchasing power
of consumers. Hence, the demand for products falls when inflation is high in an economy. This is
why high levels of inflation adversely affect the sales of P&G and cause a reduction in the
company’s revenue. Besides inflation, the interest rate also affects the sales of P&G. If the interest
rate in a country rises, people start depositing their money in the banks. This behavior causes a
reduction in the demand for products which is why high-interest rates will impact P&G negatively.
Besides the interest rate, the exchange rate also matters a lot for manufacturers like P&G. A stable
exchange rate suits P&G because it keeps the price of P&G’s raw materials stable.

3. Social
The population is one of the social factors that holds great significance for P&G. If there is a higher
population, P&G will gain benefits since the demand for the products of P&G will increase.
However, in some developed countries like the USA, the population growth rate has decreased to

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0.1%. A decreasing growth rate of the population will cause the sales of P&G to fall in the long
term. Hence, it will impact P&G negatively. Besides that, consumer choice and preference in an
economy really affect P&G.

4. Technological
As technological developments occur, businesses adopt technology to do well in the market.
Similarly, P&G’s competitor, Nestle, is also trying to use technology to increase its market share.
Nestle is currently spending $1.8 billion on R&D to get ahead of its competitors.
Technology is acting as a threat to P&G currently since its competitors are using it to get ahead of
P&G. On the contrary, technology has also provided P&G an opportunity to market its products in
the best way possible by using social media.Other than that, the emergence of eCommerce is
beneficial for P&G since it allows the manufacturing company to use online platforms to sell its
products. This increases the reach of P&G. Moreover, operating at online stores lowers the
operational costs of P&G, which helps it secure huge profits.

5. Legal
Legal factors significantly affect the operations of every organization. This section will discuss the
legal factors impacting a huge manufacturing company like P&G. Every business is bound to abide
by the laws present in society. Similarly, no matter how big of a company P&G is, it still has to
ensure that it has zero-tolerance policy issues like racial and gender discrimination. Any
compromise on such issues can result in lawsuits filed against P&G, which can lead to the heavy
imposition of penalties on P&G. Other than that, P&G has to take care of the safety and security of
the staff employed by the brand.

6. Environmental
Campaigns are being launched by governments and private institutions for the preservation of the
environment. Moreover, governments are making policies to limit greenhouse gas emissions and
taking action on improper waste disposal. In such an environment, P&G has to make sure that it
minimizes the emission of greenhouse gases and properly disposes of waste, or else it could face
severe consequences in the form of penalties. Besides that, as people are getting more aware of the

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preservation of the environment, they are demanding that companies stop the usage of plastic in
packaging. Meanwhile, all the products of P&G are packed in plastic. P&G should look for
alternative packing materials, or else the customers of P&G might announce to boycott the brand
due to its excessive use of plastic.

III. Porter’s Five (5) Forces

This section of the paper discusses the industry analysis of Procter & Gamble using the Porter’s
Five (5) Forces to measure and evaluate their competitive strength and position in the market by
identifying the five forces that can make an impact to their competitiveness. To discuss the five
components, the group obtained some questions to be answered from Lucid Software Inc.
Source: Lucid Content Team (n.d.). Retrieved from https://www.lucidchart.com/blog/what-is-
strategy

1. Supplier Power
This section analyzes how easily suppliers could increase their prices and thus affect Procter &
Gamble’s
bottom line.

 How many suppliers does your company have?

According to Procter and Gamble (P&G), their global network of over 60,000 suppliers, large and
small, is critical to their ability to deliver in this time of crisis. They rely on diverse-owned
businesses as well, spending $2 billion a year with businesses owned by ethnic minorities, women,
LGBT+, persons with disabilities, and Veterans.

"Ana Elena Marziano, Chief Purchasing Officer, stated, “Supporting our suppliers through key
challenges has long been a part of how P&G has operated,”. “As much as P&G consumers trust and
depend upon P&G, we trust and depend upon our network of suppliers. From raw materials,
packaging and transporting products to store shelves…to the services that support our marketing,
keep our facilities running, and provide IT support, we are thankful for our suppliers’ partnership as
we take on this challenge together.”

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  How unique is the product or service that they provide?
Procter and Gamble (P&G) is divided into six business segments based on its product lines. Such as
baby, feminine, and family care, as well as beauty, fabric, and home care, grooming, and
healthcare. For more than 181 years, P&G products have earned a reputation for combining "what's
needed" with "what's possible," making laundry rooms, living rooms, bedrooms, kitchens,
nurseries, and baths a little more appealing. They create branded products and services of
outstanding quality and value that benefit people around the world now and in the future.

 How many alternative suppliers can you find? How do their prices compare to your
current supplier? How expensive would it be to switch from one supplier to another?
If a problem arises, Procter & Gamble (P&G) or any other company has alternative suppliers to rely
depend on. Switching suppliers is also affordable. As a result, they have little control over the
prices. If the company has a problem with suppliers who have raised prices, increasing the
company's costs, P&G can quickly replace the suppliers as needed. The smooth manufacturing and
delivery of products in FMCG or Fast-Moving Consumer Goods companies requires a well-
functioning supply chain. The corporation must ensure that the raw materials it receives are equal
and of high quality. As a result, suppliers must agree to the company's rules and regulations.

2. Buyer Power
This section determines whether buyers have the power to drive P&G’s prices down.

 How many buyers control your sales?

*Buyers come from different regions:
North America 47%
Europe 22%
Greater China 10%
Asia Pacific 9%
Latin America 6%
India, Middle East, & Africa (IMEA) 6%

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 TOTAL 100%
Figure 2. 2021 Net Sales by Geographic Region
Source: Procter & Gamble (2021)
Retrieved from
https://www.annualreports.com/HostedData/AnnualReports/PDF/NYSE_PG_2021.pdf

 How large are the orders you receive?

*Comes from different regions:
Reported Segment % Of Net Sales % Of Net Earnings Product Categories
(1)
Beauty 19% 22% Hair Care

Grooming 9% 10% Grooming

Oral Care
Health Care 13% 12% Personal Health Care
Fabric Care Home
Fabric And Home Care 34% 31% Care
Baby Care Feminine
Baby, Feminine and Family Care 35% 25% Care
Family Care

(1) Percent of Net sales and Net earnings for the year ended June 30, 2021 (excluding results
held in Corporate).

(2) The Grooming product category is comprised of the Shave Care and Appliances operating
segments.
Figure 3. P&G’s Reportable Segment
Source: Procter & Gamble (2021)
Retrieved from
https://www.annualreports.com/HostedData/AnnualReports/PDF/NYSE_PG_2021.pdf

 Could your buyers switch suppliers—and how much would it cost for them to switch?

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Yes, they can switch suppliers if they no longer like the product or have found a better product,
P&G is ready for such an event, so what they do is give a product promotion and adjust the pricing
on the product, so that the customers or buyers stay with them.

3. Competitive Rivalry
This section analyzes the intensity of the competition in the marketplace.

 How many competitors do you have?

Competition in the consumer goods sector, particularly in the product category for cosmetics, body
care, laundry and cleaning supplies where the Procter and Gamble (P&G) Philippines belongs to, is
quite fierce as there are many firms, small or large, operating in the same sector. No articles,
however, provided the actual number of competitors that Procter & Gamble (P&G) Philippines
currently has.

Rank/Company Net Revenue ($M) 1-Year Sales Growth Key Product

Categories
Household Goods,
2. Procter & Gamble $66,832 2.70% Health & Beauty Aids,
OTC Pharma
Household Goods,
4. Unilever N.V.* $56,188 -5.10% Food, Health & Beauty
Aids
Apparel/Footwear/Acc
6. Christian Dior* $51,607 7.20% essories, Wine & Spirits,
Health & Beauty Aids
7. LVMH Moët Apparel/Footwear/Acc
Hennessy Louis $51,607 9.80% essories, Wine & Spirits,
Vuitton* Health & Beauty Aids
12. 3M Co. $32,765 3.50% Household Goods
14. L’Oreal* $29,687 3.50% Health & Beauty Aids
25. Henkel AG* $21,931 -0.60% Household Goods,

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 Health & Beauty Aids
32. Kimberly-Clark $18,486 0.80% Household Goods
Corp.
36. Colgate-Palmolive $15,544 0.60% Household Goods
Co.
39. Kao Corp.* $13,995 1.30% Household Goods,
Health & Beauty Aids
41. Johnson & OTC Pharma,
Johnson (Consumer) $13,853 1.80% Household Goods,
Health & Beauty Aids
48. RB* $12,597 -0.20% Household Goods
49. Essity* $12,239 8.40% Household Goods
54. Shiseido Co.* $10,160 8.90% Health & Beauty Aids
60. Coty, Inc. $9,398 22.80% Health & Beauty Aids

Household Goods,
64. Newell Brands $8,631 -9.60% Housewares/Appliances

67. GlaxoSmithKline $8,440 -1.20% OTC Pharma

Consumer Healthcare*
68. Beiersdorf AG* $7,972 2.50% Household Goods,
Health & Beauty Aids
79. Unicharm Corp.* $6,388 7.30% Household Goods
83. Clorox Co. $6,124 2.50% Household Goods
84. Bayer Consumer $6,006 -7.00% OTC Pharma
Health*
Health & Beauty Aids,
89. Avon Products $5,248 -5.70% Apparel/Footwear/Acc
essories,Household
Goods

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92. ITC Ltd.* $5,048 -22.00% Tobacco, Food, Health
& Beauty Aids
Food, Household
93. Herbalife Ltd. $4,892 10.50% Goods, Health &
Beauty
Aids
98. Husqvarna AB* $4,244 4.30% Housewares/Appliances

99. Church & Dwight $4,146 9.80% Household Goods,

Co. Health & Beauty Aids
100. Spectrum Brands Household Goods,
Holdings $3,809 2.80% Housewares/Appliances

Figure 4. Top 100 Consumer Good Companies of 2019

Source: Consumer Goods Technology (2019)
Retrieved from https://consumergoods.com/top-100-consumer-goods-companies-2019
This table is extracted from Consumer Goods Technology (CGT)’s 2019 ranking of publicly traded
consumer goods companies based on their annual revenue. Only the companies who provides the
same key products or segments as Procter & Gamble (P&G) are included on the table, the rest were
removed. The full ranking is available in this link: https://consumergoods.com/top-100-consumer-
goods-companies-2019

 Who are your biggest competitors?

The main competitors of Procter & Gamble (P&G) Philippines cannot be identified as a whole, but
by its segments. As previously mentioned, the company is divided into different business segments
which includes (1) Fabric and Home Care, (2) Family Care, (3) Beauty, (4) Healthcare, and (5)
Grooming. The following are the main competitors of the overall P&G company (The Investopedia
Team, 2022):

1. Fabric and Home Care

This is the company’s best-selling segment which accounts for 33% of their net sales in the year

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2019 with brands like Tide, Bounce, Downy, and Febreeze. Palmolive, Ajax, Colgate-Palmolive’s
Fleecy, Unilever’s Surf and Percil, and Church and Dwight Co.’s Oxi Clean and Arm & Hammer
product line are among the major competitors of P&G in this segment.

2. Family Care
27% of the company’s 2019 net sales came from this segment with brands like Luvs, Bounty, and
Charmin. P&G’s major competitors in this segment include Colgate-Palmolive’s Tender Care,
Unilever’s Zwitsal, and Church and Dwight Co.’s Viviscal and Rephresh.

3. Beauty
This segment is accountable for the 19% of the total net sales of the company for the 2019 fiscal
year. One of the biggest competitors of P&G in this segment is Avon, one of the world’s leading
direct-selling beauty, household, and personal-care company. Other competitors of the company
include Colgate- Palmolive, Estee Lauder, Revlon, and Unilever.

4. Healthcare
This accounts for the company’s 12% of the total net sales in 2019 with popular brand names like
Vicks, Pepto Bismol, and Prilosec. Colgate-Palmolive, Church & Dwight Co., Ecolab, Stepan
Company, and United-Guardian are among the major competitors of P&G in this segment.

5. Grooming
This segment represents the 9% of the company’s net sales in 2019 with the brand Gillet as the
leading market player in the said segment. However, another major razor-blade manufacturer, Bic,
became one of the major competitors due to its large international presence. Additionally, the
segment has experienced a significant growth in startups, like Dollar Shave Club (now owned by
Unilever).

 How does the quality of their products or services compare with yours?
The following are a brief comparison of Procter & Gamble’s product and/or services against some
of their major competitors:

 Procter & Gamble and Colgate-Palmolive

Both companies started in America as a candle and soap businesses and today runs as the major
manufacturers and distributors of consumer goods. Procter & Gamble is a multinational consumer
goods company focused on providing branded products of superior quality and value to improve the
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lives of world’s consumers. On the other hand, Colgate-Palmolive is an American diversified
company that manufactures and distributes household and commercial cleaning products, dental
and other personal-care products, and pet foods in the United States and in more than 200 other
countries and territories worldwide. Both companies directly compete in the segments of
household, personal-care, and oral-care products.

In terms of common oral-care products, Procter & Gamble has Crest and Colgate-Palmolive has
Colgate. Both of these toothpaste brands are among the most popular in the United States.
Furthermore, they both claim to be effective in all major oral health categories, ranging from cavity
prevention to teeth whitening to breath freshening. Colgate Total contains an active ingredient,
triclosan, which according to the U.S. Food and Drug Administration (FDA), it is an antibacterial
agent that aids in the prevention of gingivitis. Crest Pro-Heat, on the other hand, contains stannous
fluoride, which is bound by the element tin. Barnes, Richter, and DeVizio (2010) conducted three
clinical trials to compare the impact of Crest and Colgate toothpastes on the formation of dental
plaque over a 24- hour period of time. Colgate Total significantly reduced plaque regrowth over a
24-hour time period (p or = 0.05) compared to Crest Pro-Health in all three clinical trials. A paired
t-test was used to determine whether there were any differences, and it was found that Colgate Total
was statistically significantly different from Crest Pro-Health. In conclusion, the results show that
Colgate Total outperforms Crest Pro-Health in inhibiting the formation of dental plaque.

 Procter & Gamble and Unilever

Unilever was founded more than a century ago and claims to be one of the world's largest consumer
goods companies (Unilever, n.d.). They produce and sell a wide range of household goods,
including soaps and detergents, toiletries (toothpastes, hairsprays, deodorants), packaged and
processed foods,margarines, cooking fats, salad dressings, ice cream, and beverages. Just as
Colgate-Palmolive, Unilever and P&G has its common segments of products in which they directly
compete.

In terms of their personal-care products, Unilever is best known for their Dove brand with a range
of products from body washes, hand and body lotions, facial cleansers, deodorants, shampoos,
conditioners, and hair styling for both men and women. P&G, on the other hand, has their famous
Olay brand in this segment, which includes lotions, whitening and hydrating body washes, beauty
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bars, cleansers, toners, wipes, and BB and CC creams. Dove is well-known for its gentleness,
whereas Olay is well-known for its anti-aging properties (resTORbio, n.d.).

 What distinguishes your company from the competition?

Procter & Gamble (P&G) focuses on branded consumer packaged goods, with well-known brands
such as Crest, Gillette, Pampers, Vicks, and Pantene. Smithson (2017) claims that P&G uses
differentiation as its generic strategy and partially employs cost leadership to gain competitive
advantage. Pampers, for example, one of the world's best-selling disposable diaper brands, is being
reinvented to appeal to their target market. Pampers' initial design in 1966 was a "wing fold," which
evolved into a "third size" by 1969, before being replaced by tapes in 1971. (First Versions, n.d.).
“In the US, Pampers is a tape diaper because parents typically change diapers on a changing table.
But in Japan, the babies’ diapers are changed on a ‘tatami’ (traditional Japanese mat),” said James
Kaw, Director of P&G’s Singapore Innovation Centre (SGIC). “Since it’s done on the floor, babies
tend to run around the room, which makes it harder for the parents to put on the diapers. And that’s
why we’ve come up with pull-up diapers for this group of consumers.” P&G, as a consumer goods
company, emphasizes quality and value in their consumer goods. According to Kaw, businesses
must innovate their products to meet the needs of their customers. Because customer needs are
constantly changing, P&G's innovations are centered on the needs and demands of the customers.
Furthermore, to drive preference for their brands and provide meaningful value, they should
provide their customers with product options at all price points. Pantene hair care products, for
example, are less expensive than competitors such as Unilever's Dove hair care products.

4. Threat of Substitution
This section determines the likelihood that the customers will replace P&G’s product or service
with an alternative that solves the same need.

 What are the differentiators between your product/service and the substitute?
Even if substitute products allow customers to attain the same benefit through other consumer
goods companies, they may not be able to match or outperform Procter & Gamble's products. In
contrast to P&G, certain substitute products may be cheap or low price. Downy from P&G and Surf

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from Unilever are two examples of this. Both companies have powder and fabric. Downy is
extremely popular because of its capacity to make clothes feel softer with or without the use of
washing machines, as well as providing long-lasting freshness and softness to the clothes and fabric
protection. The scent was very popular and attractive, which is why some millennials prefer to use
it now. They even offer a BTS-inspired collection, which some fans appreciate. While in Surf fabric
from Unilever, which is one of the competitors of P&G, they also make the clothes soft, and long-
lasting freshness but it requires to dry it on an open or hot area to dry it faster to avoid to the clothes
to smell unpleasant. Because Downy has a variant known as the Downy Antibac "kotra kulob,"
which differentiates it from Surf.

 How many substitute products are available in this market?

Procter & Gamble is with no doubt one of the most well-known consumer products companies in
the world. However, a lot of corporations are competing for each of their categories. Procter &
Gamble competes with several smaller companies in the international categories where it reports
sales, in addition to the big names. Some products on the market can be used as a substitute for
Procter & Gamble's products. Also, the limited number of substitutes lowers their impact on Procter
& Gamble. Colgate-Palmolive, Church and Dwight, and Unilever products can be substituted for
Procter & Gamble products.

 What is the cost of switching to a substitute product?

The cost of switching to a substitute product is short of stocks because they easily substitute for
another brand if they don't have the product they are looking for, the price of the product, if
your product is higher than the other brand buyers can switch because it is cheaper compared to
the product that P&G has.

 What products or services can you offer that might substitute a market leader?
P&G may consider improving on their e-commerce side. According to the Insights Team (n.d.),
“Technology has revolutionized the way we shop, whether this is online, or in person. From
proposed drone delivery of items ordered online, to interactive “self check-in” airports, technology
is playing a much more fundamental role in managing the interface between shopper and seller”
Consumers are increasingly preferring to purchase goods or services over the Internet rather than in

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person at a store or a shop. Consumers have chosen online shopping due to a variety of factors such
as the COVID-19 pandemic and people living a digital lifestyle. Aside from the convenience of
shopping from home 24/7, consumers prefer shopping online because of the lower prices and better
deals available. P&G should take this opportunity to improve on their e-commerce side to reach and
engage with a larger number of potential consumers. Moreover, because it would allow them to
easily collect and process consumers’ feedback and suggestions on their products where they could
take into consideration and improve where the consumers believe they are lacking.

5. Threat of New Entrants

This section determines how easily others could enter the same market and threaten P&G’s
position.

 How much does it cost and how long does it take to enter your market?
The costs to start a consumer goods company would depend on the size of the company as well as
the products that will be sold on the market. According to Starter Story (n.d.), $39,287 is the
average startup costs for a consumer goods company; $62 being the minimum and $70,447 being
the maximum. Starting
a consumer goods company is one of the most complex industries to enter as it involves activities
that needs constant and intense effort such as in creating or innovating a product from “nothing” to
a product that the potential consumers would enjoy, satisfy their needs, and something that makes
them choose a company rather than their rival/s. It also involves both high amount of effort and cost
needed for product’s research, designing, prototyping, the actual manufacturing, marketing,
retailing or distributing, and the like which creates quite a high barrier for new rivals to enter.

 What are the barriers to entry (e.g., patents, rights, etc.)?

Common barriers to entry include special tax benefits to existing firms, patent protections, strong
brand identity, customer loyalty, and high customer switching costs. Other barriers include the need
for new companies to obtain licenses or regulatory clearance before operation.

 What does it take to make the business scalable?

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P&G focuses on innovation and the company's leaders designed a "new-growth factory," which is
still in the works. However, it has already aided the corporation in strengthening both its core
operations and its capacity to seize inventive new development prospects. P&G's efforts to
systematize the serendipity that so often fuels new-business creation provide valuable lessons for
CEOs facing shortening product life cycles and increased global competition. P&G's growth has
historically been based on innovation (Brown & Anthony, 2011).

 Have you protected your key technologies?

Procter and Gamble protected their key technology because P&G owns any IP linked to P&G
businesses that they generate as individuals while employed by the Company, to the extent
permitted by law. Whether the IP is patent or protected by copyright, trade secret, or trademark, this
is true. They must not use this IP in a way that violates P&G's intellectual property rights.

 How strictly is your market regulated?

Figure 5. Value-stream Mapping for the Consumer Goods/Retail Industry

Source: Development Academy of the Philippines (2019)

Retrieved from https://coe-psp.dap.edu.ph/wp-content/uploads/2021/06/MGRPO-

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 Format_Consumer-Goods-and-Retail-Industry-Regulatory- Review.pdf

The Development Academy of the Philippines (2019) created this value-stream map of the
regulatory process, to which the consumer goods/retail industry adheres. The first column, as seen
in the image, starts with the most basic of business registrations, registration with the SEC (or with
the Cooperative Development Authority [CDA] in the case of a cooperative-owned business), and
progresses through several more steps at the LGU and national government levels.
The value-stream map clearly shows that market regulation in the consumer goods/retail industry,
particularly in the Philippines, is quite rigid due to the significant amount of effort required in
processing time and money on the documentary requirements needed by a business entity in each
step of the process. Moreover, this is also what makes it quite difficult for new rivals to enter the
market.

IV. Ecosystem Assessment Tool

Is a managerial tool for determining how the external environment affects the business. Many of
Procter & Gamble's strategies are based on an understanding of the external factors in the remote or
macro-environment of the consumer goods industry.

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