P&G Case Analysis - Waleed Kalhoro

NED University of Engineering and Technology,
Karachi
Civil Engineering Department
MEM_Construction Management_Weekend Program

EM-503
Strategic Planning and Decision Making
Report Case Analysis
Proctor and Gamble Company - 2011
By Alen Badal The Union Institute
Prepared by:
Course Instructor:
Mr. Waleed Mazhar Kalhoro/CE-107
Hashmi
Mr. Syed Iqbal
Table of Content
1. Vision Statement
2. Mission Statement
3. External Audit
1-2
3.1. Opportunities
1-2
3.2. Threats
4. Competitive Profile Matrix
5. EFE Matrix
3-4
6. Internal Audit
6.1. Strengths
6.2. Weaknesses
5
5
7. Financial Ratio Analysis
8. Net Worth Analysis
9. IFE Matrix
7-8
10. SWOT
10.1. SO Strategies
10.2. WO Strategies
10.3. ST Strategies
10.4. WT Strategies
11. Space Matrix
9-10
12. Recommendations
10
13. EPS/EBIT Analysis

10-11
14. Conclusion
11-12
P&G Case Study
1. Vision Statement
2. To maintain our status as the number one household nondurables
company in the world
3. Mission Statement
4. We will create and promote household nondurable (2) products that are
not only known for quality and innovation (4) but for value (7) and
environmentally (8) conscious.
Our consumers (1) around the world
(3) use our products on a daily basis (5) and trust the Procter & Gamble
name and our brands. At Procter and Gamble we believe good ethics
is good business (6) and strive to conduct business in accordance to
the laws of the nations in which we operate and treat our employees
(9) with the respect they deserve.
1. Customers
2. Products or services
3. Markets
4. Technology
5. Concern for survival, growth, and profitability
6. Philosophy
7. Self-concept
8. Concern for public image
9. Concern for employees
5. External Audit
5.1. Opportunities
1. Younger customers are being fascinated
by
social
media
advertising.
2. The beauty and cosmetics industry is expected to increase globally
by 8.5% in 2014 in accordance with recent research from Euro
Monitor International.
3. Men are increasingly concerned with their appearance, this provides
an opening to grab a new division of consumers.
4. Consumers are interested in natural products.
5. Higher demand for higher-priced products such
as
prestige
cosmetics and fragrances.

6. Social media advertising is more cost effective than traditional
advertising.
Waleed Mazhar Kalhoro
Page 1
P&G Case Study
7. There is an endless possibility to `celebrities endorsing fragrances,

these products are successful because many are persuaded by
celebritys fame.
8. Increase in online purchasing, average monthly visits in the U.S. to
beauty-related websites topped 60 million and grew 94% over past
3 years.
9. Research shows that by 2015, global womens purchasing power is
expected to increase by $5 trillion and beauty is the category these
consumers are most likely to purchase.
5.2. Threats
1. Volatile foreign exchange rates.
2. Substantial investment is necessary to bring new products to the
market and to preserve their high profile.
3. Upsurge in competitor expansion globally from Colgate-Palmolive,
Unilever, and Clorox.
4. Discounting premium cosmetics can damage its prestige image for
the consumers who purchase these products.
5. Diamond foods struggling financially, may not be able to purchase
Pringles.
6. The Este Lauder companies ranks number one in prestige skin care
and number two in makeup in the channel.
7. Subject to anti-trust investigation in Europe.
8. Premium cosmetics are a prime target for counterfeiters. 9%,
according to the Global Congress on combating counterfeiting, of all
the world trade comprises counterfeit goods.
9. Regulations are increasing due to the voicing of different groups
about harmful chemical ingredients in cosmetic products.
6.
7.
Page 2
P&G Case Study
8. Competitive Profile Matrix

9.
11.
10.
stee
&G
13.
Critical
Success
Factor
21. Advertising
29. Market
Penetration
37. Customer Service
45. Store Locations
53. R&D
61. Employee
Dedication
69. Financial Profit
77. Customer Loyalty

85. Market Share
14.
15.
We
Ra
E
12.
Laude
r
17.
16.
Ra
evlon
19.
18.
Ra
22. 0
.
1
2
30. 0
.
0
8
38. 0
.
0
6
46. 0
.
0
7
54. 0
.
0
5
62. 0
.
0
6
70. 0
.
1
3
78. 0
.
0
7
86. 0
.
23. 4
24.
0
t
i
25. 2
26.
0.
31. 4
32.
0
39. 1
t
i
20.
S
27. 1
28.
0.
33. 3
34.
0.
35. 1
36.
0.
40.
0
41. 3
42.
0.
43. 2
44.
0.
47. 4
48.
0
49. 2
50.
0.
51. 3
52.
0.
55. 3
56.
0
57. 3
58.
0.
59. 2
60.
0.
63. 4
64.
0
65. 2
66.
0.
67. 3
68.
0.
71. 4
72.
0
73. 3
74.
0.
75. 2
76.
0.
79. 4
80.
0
81. 3
82.
0.
83. 2
84.
0.
87. 3
Page 3
88.
0
89. 3
90.
0.
91. 2
92.
0.
93. Product Quality
0
9
94. 0
.
1
1
95. 2
101.
Top
Management
102.
0.05
103.
4
109.
Price
Competitiveness
110.
0.11
111.
4
118.
119.
117.
Total
P&G Case Study
96.
0
104.
0
112.
0
120.
3
98.
0.
97. 3
106.
0.
105.
3
114.
0.
113.
2
122.
2.
121.
100.
0.
99. 2
108.
0.
107.
3
116.
0.
115.
2
124.
2.
123.
125.
126.
EFE Matrix
127.128.
132.
1
Opportunities
133.
Younger customers are attracted by social
media advertising.
137. 138.
2
The beauty and cosmetics industry is

expected to increase globally by 8.5 per cent in
2014 according to recent research from Euro Monitor
International.
142. 143.
3
Men are increasingly concerned with their

appearance, this provides an opening to grab a new
branch of consumers.
147. 148.
4
Consumers are interested in products that

are made with all natural products.
152. 153.
Higher demand for higher-priced products

such as prestige cosmetics and fragrances.
Page 4
129.
130.
131.
Weig
ht
ed
Sc
or
134.
0.0
6
135.
2
136.
0.12
139.
0.0
6
140.
3
141.
0.18
144.
0.0
8
145.
3
146.
0.24
149.
0.0
3
150.
2
151.
0.06
155.
3
156.
0.24
154.
0.0
8
P&G Case Study
5
157. 158.
Social media advertising is

effective than traditional advertising.
more
cost
162. 163.
There
is
an
endless
possibility
to
`celebrities endorsing fragrances, these products
are successful because many are persuaded by
fame of the celebrity.
167. 168.
Increase in online purchasing, average

monthly visits in the U.S. to beauty-related websites
topped 60 million and grew 94 percent over past
three years.
172. 173.
Research shows that by 2015, global

womens purchasing power is expected to increase
by $5 trillion and beauty is the category these
consumers are most likely to purchase.
159.
0.0
6
160.
2
161.
0.12
164.
0.0
4
165.
2
166.
0.08
169.
0.0
6
170.
3
171.
0.18
174.
0.0
5
175.
3
176.
0.12
181.
182.
183.
Weig
177.
178.
Threats
179.180.
184.
185.
Volatile foreign exchange rates.
hte
Sco
re
t
186.
0.0
189. 190.
2
191.
0.0
Considerable investment is necessary

to bring new products to the market and to
maintain their high profile.
194. 195.
5
196.
0.0
Increase in competitor expansion

globally from Colgate-Palmolive, Unilever, and
Clorox.
199. 200.
Discounting premium cosmetics can
Page 5
8
201.
187.
4
192.
4
197.
4
202.
188.
0.08
193.
0.2
198.
0.32
203.

damage its prestige image for the consumers
who purchase these products.
P&G Case Study
0.0
204. 205.
4
206.
0.0
Diamond foods struggling financially,

may not be able to purchase Pringles.
209. 210.
8
211.
0.0
The Este Lauder companies ranks

number one in prestige skin care and number
two in makeup in the channel.
214. 215.
7
216.
0.0
Subject to anti-trust investigation in

Europe.
219. 220.
3
221.
0.0
Premium cosmetics are a prime target

for counterfeiters. 9%, according to the Global
Congress on combating counterfeiting, of all
the world trade comprises counterfeit goods.
224. 225.
4
226.
0.0
Regulations are increasing due to the

voicing of different groups about harmful
chemical ingredients in cosmetic products.
229. 230.
7
231.
Total
1.0
3
207.
2
212.
3
217.
3
222.
2
227.
3
232.
0.12
208.
0.16
213.
0.21
218.
0.09
223.
0.08
228.
0.21
233.
2.84
234.
235.
Internal Audit
235.1. Strengths
1.
New CEO, Mr. McDonald focuses on lower end products aimed at
2.
3.
4.
price sensitive customers.

Market share grew in 14 of top 17 countries in 2010.
Invested over $2 billion in R&D in 2010.
In 2011, Fortune ranked P&G the number one soap and cosmetic in
5.
the world.
Braun, bounty, Charmin, Crest, Downy, Gillette, Pampers are all top
6.
7.
8.
9.
10.
brands owned by P&G.

23 P&G brands routinely earn over $1 billion in revenue per year.
Proposed sale of Pringles line of snacks in 2011 for $1.5 billion.
EPS is 3.94
P&G operates under a SBU structure.
P&G is focused solely on the beauty and personal-care products
business
Page 6
P&G Case Study
235.2. Weaknesses
1.
$57 billion in goodwill on balance sheet.
2.
Profits declined 5% in 2011 yet revenues increased 2.9%.
3.
Spent $772 million in advertising to Johnson & Johnsons $366
4.
5.
million.
No published vision statement.
Consumers may not associate all of our brands with P&G rather
6.
7.
view them as their own distinct companies.

Not operating as efficiently as Johnson & Johnson
Weak profitability ratios
236.
Page 7
237.
P&G Case Study
Financial Ratio Analysis
238.
Growth Rate Percent
239.
240.
241.
P&
Industr
S&P
G
243.
242.
246.
Sales (Qtr vs year ago qtr)
Net Income (YTD vs YTD)
8.9
0
247.
NA
251.
y
244.
10.40
248.
NA
500
245.
14.50
249.
NA
250.
Net Income (Qtr vs year ago
qtr)
1
.
252.
4.00
253.
47.20
9
0
255.
254.
258.
Sales (5-Year Annual Avg.)
Net Income (5-Year Annual
Avg.)
262.
5.0
9
259.
7.5
4
263.
Dividends
(5-Year
Annual
Avg.)
11.
3
256.
5.47
260.
7.90
264.
10.67
257.
8.31
261.
8.76
265.
5.70
7
266.
267.
Profit Margin Percent

269.
268.
Gross Margin
50.
0
273.
272.
276.
Pre-Tax Margin
17.
Net Profit Margin
8
277.
Page 8
270.
53.3
274.
16.3
278.
271.
39.8
275.
18.2
279.
P&G Case Study
13.
280.
5Yr
Gross
Margin
(5-Year
Avg.)
284.
285.
9
281.
50.
8
282.
53.7
13.2
283.
39.8
Liquidity Ratios
287.
286.
Debt/Equity Ratio
290.
Current Ratio
294.
Quick Ratio
298.
299.
Profitability Ratios
0.5
300.
304.
Return On Assets
308.
Return On Capital
312.
Return
On
Equity
0.8
295.
1.0
296.
1.3
297.
0.7
0.9
3
305.
8.7
309.
11.
Avg.)
316.
Return
On
Assets
(5-Year
Avg.)
320.
Return
On
Capital
(5-Year
Avg.)
Net Worth Analysis (000,000)
0
313.
16.
7
317.
8.0
321.
10.
1
324.
Page 9
1.00
293.
18.
(5-Year
0.80
289.
292.
0.5
Return On Equity
288.
2
291.
301.
325.
12.4
302.
32.6
306.
11.1
310.
15.4
314.
32.2
318.
10.0
322.
13.9
303.
26.0
307.
8.9
311.
11.8
315.
23.8
319.
8.0
323.
10.8
326.
Net Income
328.
Stockholders Equity
330.
332.
P&G Case Study
327.
58,985
329.
$
67,640
331.
$
Share Price
Net Income
EPS
189,47
1
333.
Number of shares outstanding X Share Price
174,02
334.
0
335.
Average
122,52
9
336.
337.
IFE Matrix
340.
W
338.
339.
Strengths
342.
e
341.
Weight
ed
Scor
t
343.
1
344.
New CEO, Mr. McDonald focuses on
lower end products aimed at price sensitive
customers.
345.
0.0
6
346.
4
347.
0.24
349.
Market share grew in 14 of top 17
countries in 2010.
350.
0.0
8
351.
4
352.
0.32
354.
Invested over $2 billion in R&D in
2010.
355.
0.0
6
356.
4
357.
0.24
361.
4
362.
0.12
348.
2
353.
3
358. 359.
4
In 2011, Fortune ranked P&G the

number one soap and cosmetic in the
world.
Page 10
360.
0.0
3
363.
5
364.
Braun, bounty, Charmin, Crest,
Downy, Gillette, Pampers are all top brands
owned by P&G.
365.
0.0
9
366.
4
367.
0.36
369.
23 P&G brands routinely earn over
$1 billion in revenue per year.
370.
0.1
1
371.
4
372.
0.44
374.
Proposed sale of Pringles line of
snacks in 2011 for $1.5 billion.
375.
0.1
3
376.
4
377.
0.52
379.
EPS is 3.94
380.
0.0
4
381.
4
382.
0.16
384.
P&G operates under a SBU structure.
385.
0.0
6
386.
4
387.
0.24
389.
P&G is focused solely on the beauty
and personal-care products business.
390.
0.0
7
391.
4
392.
0.28
368.
6
373.
7
378.
8
383.
9
388.
1
P&G Case Study
393.
394.
Page 11
P&G Case Study
397.
W
395.
396.
Weaknesses
399.
e
398.
Weight
ed
Scor
t
400.
1
401.
$57 billion in goodwill on balance
sheet.
402.
0.0
5
403.
1
404.
0.05
406.
Profits declined 5%
revenues increased 2.9%.
407.
0.0
2
408.
2
409.
0.04
411.
Spent $772 million in advertising to
Johnson & Johnsons $366 million.
412.
0.0
6
413.
1
414.
0.06
416.
417.
0.0
3
418.
1
419.
0.03
422.
0.0
4
423.
1
424.
0.04
426.
Not operating as efficiently as Johnson
& Johnson.
427.
0.0
4
428.
1
429.
0.04
431.
Weak profitability ratios.
432.
0.0
3
433.
2
434.
0.06
436.
Total
437.
1.0
0
438.
439.
3.24
405.
2
in
2011
yet
410.
3
415.
4
No published vision statement.
420.
421.
Consumers may not associate all of
our brands with P&G rather view them as
their own distinct companies.
5
425.
6
430.
7
435.
440.
441.
SWOT
441.1. SO Strategies
Page 12
P&G Case Study
a. Allocate $100 million for advertising and promoting male skin care
products using celebrities as spokesmen.
b. Spend $400 million in R&D to produce 3 new lines of higher end
fragrances.
442.
442.1. WO Strategies
a. Increase social medial advertising targeting teenagers by $100M.
443.
443.1. ST Strategies
a. Engage in talks with Pepsi to purchase Pringles if the deal with
Diamond Foods is not completed.
b. Continue to market low end cosmetics and fragrances.
444.
444.1. WT Strategies
a. Reduced advertising by $300M on well-established products letting
their brand name sell for itself.
445.
446.
SPACE Matrix
Page 13
P&G Case Study
447.
448.
454.
449.
Intern
450. 451. 452. 453.
al Analysis:
460.
Financial
rnal
455.456.457.
458. 459.
Analysis:
464.
Stabilit
461.462.463.
Position (FP)
Exte
y
(SP)
Page 14
Position
465.
466.
467. 468.
P&G Case Study
473.
469.
Return
on
Investment (ROI)
470.
3
472. 471.
Rate of Inflation
478.
475. 476.
474.
Leverage
Technological
477. -
Changes
483.
480. 481.
479.
Liquidity
Price Elasticity of
482. -
Demand
488.
485. 486.
484.
Working Capital
Competitive
487. -
Pressure
493.
490. 491.
489.
Barriers to Entry
492. -
Cash Flow
6
into Market
495.
496. 497. 498. 499. 500. 501.
502.
503.504.505.506.
507. 508.
494.
510.511.
509.
Financial Position
(FP) Average
Position
Average
514.
Stability
Page 15
513.
(SP)
512.-
P&G Case Study
520.
515.
Intern
516. 517. 518. 519.
al Analysis:
526.
Exte
rnal
521.522.523.
524. 525.
Analysis:
529.
Industr
Competitive
527.528.
Position (CP)
Position
530.
531.
532. 533.
(IP)
535.
-
534.
Market Share
537. 538.
536.
Growth Potential
541.
Financial
540.
539.
Product Quality
542. 543.
Stability
545.
544.
546.
Customer Loyalty
Ease
of
Entry
into Market
547. 548.
4
550.
549.
Technological know-
551.
how
Resource
552. 553.
Utilization
555.
554.
Control
over
Suppliers and Distributors
557. 558.
556.
560. 561.
Profit Potential
7
562.
563.564.565.566.
567. 568.
570.571.
Industry
559.
569.
Competitive
Position (CP) Average

575.
Position
574.
(IP)
572.
573.5
Average
576.
Recommendations
1. Allocate $100 million for advertising and promoting male skin care
products using celebrities as spokesmen.
2. Increase social medial advertising targeting teenagers by $100M.
3. Spend $400 million in R&D to produce 3 new lines of higher end
fragrances.
4. Engage in talks with Pepsi to purchase Pringles if the deal with
Diamond Foods is not completed
Page 16
577.
EPS/EBIT Analysis (000,000)
578. Amount Needed: $600M

579. Stock Price: $64
580. Shares Outstanding: 2,750
581. Interest Rate: 5%
582. Tax Rate: 22%
583.
584.
Page 17
P&G Case Study
586.
585.
Common Stock
587.
Financing
589.
588.
P&G Case Study
Recess
ion
590.
591.
592.
Bo
Reces
Normal
sio
m
598.
Debt Financing
594.
593.
Normal
596.
EBI
$15,00
T
602.
o
m
601.
$2
595.
Bo
$2
0
599.
597.
$15,0
$17,000
00
0
600.
$17,000
Int
e
r
e
s
603.
604.
605.
606.
607.
608.
0
612.
30
30
30
615.
20,
609.
EB
610.
611.
T
616.
15,000
17,000
Tax
e
19,
613.
14,97
0
619.
9
614.
16,970
4,4
617.
618.
s
623.
3,300
624.
3,740
625.
EAT
11,700
13,260
0
622.
4,3
620.
621.
0
626.
3,293
627.
3,733
628.
3
629.
15,
11,67
13,237
15,
6
0
Page 18
5
7
P&G Case Study
633.
636.
2,7
2,7
630.
#
S
h
631.
632.
s
637.
2,759
2,759
EP
638.
639.
4.24
4.81
634.
635.
9
640.
2,750
2,750
0
643.
5.6
641.
642.
5.6
4.25
4.81
644.
645.
646.
649.
648.
647.
20% Percent Stock
Recess
ion
650.
Stock
651.
652.
Bo
Reces
Normal
80% Percent
sio
m
658.
654.
653.
Normal
656.
EBI
$15,00
657.
T
662.
0
663.
Int
24
$2
0
659.
$15,0
660.
$17,000
664.
0
665.
00
666.
$17,000
667.
0
668.
24
24
e
r
e
s
o
m
661.
$2
655.
Bo
Page 19
0
0
P&G Case Study
669.
EB
670.
671.
T
676.
14,976
16,976
Tax
672.
675.
19,
19,
673.
14,99
6
679.
9
674.
16,994
4,3
677.
678.
3,295
3,735
9
5
686.
680.
681.
3,299
3,739
687.
11,69
685.
EAT
690.
11,681
13,241
9
9
689.
15,
5
684.
4
682.
4,3
15,
683.
5
688.
13,255
#
S
h
a
693.
696.
2,7
2,7
691.
692.
s
697.
2,752
2,752
EP
698.
699.
S
704.
4.24
4.81
705.
Conclusion
694.
695.
2
700.
2,758
2,758
8
703.
5.6
701.
702.
5.6
4.24
4.81
706. For year 2010, the companys overall earnings fell to $12.736 billion
from $13,436 billion a year earlier. During that year, P&G raised prices
across all divisions and regions to help make up for higher costs for
commodities. P&Gs overall 2010 net income fell 5.20 percent, but sales
Page 20
P&G Case Study
increased 2.92 percent to $78.938 billion, from $76.694 billion earlier.

707.
For that year of 2010, P&Gs Beauty division sales increased 2.99
percent to $ 19.491 billion.
However, this division reported that net
earnings also increased 1.80% to $2,712 million. Also for year 2010, P&Gs
grooming division reported a 3.01 percent sales increase to $7.631 billion,
also that divisions earnings increased 8.62 percent to $1477 million. For
year 2010, P&Gs Health Care sales increased 1.81 percent to $11.493
billion.
Sales of Snacks and Pet care increased about 0.67 percent to
$3.135 billion and net income increased by 39.3% to $ 326 million. For year
2010 P&Gs Fabric Care/Home Care sales increased by 2.66% to $23.805
billion and net earnings increased by 10.1% to $ 3.339 billion. For year
2010 P&Gs Baby Care/Family Care sales increased by 4.48% to $ 14.736
billion and net earnings increased by 15.76% to $2.049 billion.
Page 21

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Civil Engineering Department

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Mr. Syed Iqbal

4. Competitive Profile Matrix

7. Financial Ratio Analysis

8. Net Worth Analysis

11. Space Matrix

13. EPS/EBIT Analysis

Strategic Planning and Decision Making

P&G Case Study

Our consumers (1) around the world

cosmetics and fragrances.

Strategic Planning and Decision Making

P&G Case Study

7. There is an endless possibility to `celebrities endorsing fragrances,

Waleed Mazhar Kalhoro

Strategic Planning and Decision Making

P&G Case Study

8. Competitive Profile Matrix

37. Customer Service

45. Store Locations

69. Financial Profit

77. Customer Loyalty

Waleed Mazhar Kalhoro

Strategic Planning and Decision Making

93. Product Quality

P&G Case Study

The beauty and cosmetics industry is

Men are increasingly concerned with their

Consumers are interested in products that

Higher demand for higher-priced products

Waleed Mazhar Kalhoro

Strategic Planning and Decision Making

P&G Case Study

Social media advertising is

Increase in online purchasing, average

Research shows that by 2015, global

Volatile foreign exchange rates.

Considerable investment is necessary

Increase in competitor expansion

Discounting premium cosmetics can

Waleed Mazhar Kalhoro

Strategic Planning and Decision Making

P&G Case Study

Diamond foods struggling financially,

The Este Lauder companies ranks

Subject to anti-trust investigation in

Premium cosmetics are a prime target

Regulations are increasing due to the

price sensitive customers.

brands owned by P&G.

Waleed Mazhar Kalhoro

Strategic Planning and Decision Making

P&G Case Study

view them as their own distinct companies.

Waleed Mazhar Kalhoro

Strategic Planning and Decision Making

P&G Case Study

Financial Ratio Analysis

Growth Rate Percent

Sales (Qtr vs year ago qtr)

Net Income (YTD vs YTD)