Research paper about Procter and Gamble Company

Presented to
Prof. Lanuza

Presented by
Mano, Rania I.

October, 2016
 COMPANY PROFILE

The Procter & Gamble Company (P&G) boasts dozens of billion-dollar brands
for home, hair, and health. The world's largest maker of consumer packaged
goods divides its business into five global segments. The company also
makes pet food, water filters, and over-the-counter acid-reflux medication.
About two dozen of P&G's brands are billion-dollar sellers, including Always,
Braun, Crest, Fusion, Gillette, Head & Shoulders, Mach3, Olay, Oral-B,
Pantene, and Wella in the beauty and grooming segment, as well as Bounty,
Charmin, Dawn, Downy, Duracell, Gain, Pampers, and Tide in the household
care segment. P&G's hundreds of brands are available in more than 180
countries.

The Procter & Gamble Company, incorporated on May 5, 1905, is focused on

providing branded consumer packaged goods to the consumers across the
world. The Company operates through five segments: Beauty; Grooming;
Health Care; Fabric & Home Care, and Baby, Feminine & Family Care. The
Company sells its products in approximately 180 countries and territories
primarily through mass merchandisers, grocery stores, membership club
stores, drug stores, department stores, distributors, baby stores, specialty
beauty stores, e-commerce, high-frequency stores and pharmacies. The
Company owns and operates approximately 20 manufacturing sites located
in over 20 states in the United States. In addition, it owns and operates over
100 manufacturing sites in approximately 40 countries.
 Procter and Gamble Company

I. Introduction

About the company

Procter & Gamble Co., also known as P&G, is an
American multinational consumer goods company headquartered
in downtown Cincinnati, Ohio, United States, founded by William
Procter and James Gamble, both from the United Kingdom.[2] Its products
includecleaning agents and personal care products. Prior to the sale
of Pringles to the Kellogg Company, its product line also included foods and
beverages.[3]
In 2014, P&G recorded $83.1 billion in sales. On August 1, 2014, P&G
announced it was streamlining the company, dropping around 100 brands
and concentrating on the remaining 65 brands, [4] which produced 95% of the
company's profits. A.G. Lafley, the company's chairman, president, and CEO
until October 31, 2015, said the future P&G would be "a much simpler, much
less complex company of leading brands that's easier to manage and
operate".[5]
David Taylor became P&G CEO and President effective November 1, 2015.
The Procter & Gamble Company (P&G) boasts dozens of billion-dollar brands
for home, hair, and health. The world's largest maker of consumer packaged
goods divides its business into five global segments. The company also
makes pet food, water filters, and over-the-counter acid-reflux medication.
About two dozen of P&G's brands are billion-dollar sellers, including Always,
Braun, Crest, Fusion, Gillette, Head & Shoulders, Mach3, Olay, Oral-B,
Pantene, and Wella in the beauty and grooming segment, as well as Bounty,
Charmin, Dawn, Downy, Duracell, Gain, Pampers, and Tide in the household
care segment. P&G's hundreds of brands are available in more than 180
countries.

History

Candlemaker William Procter and soapmaker James Gamble, both born in

the United Kingdom of Great Britain and Ireland, emigrated from England and
Ireland, respectively. They settled in Cincinnati initially and met when they
married sisters, Olivia and Elizabeth Norris. [6] Alexander Norris, their father-
in-law, called a meeting in which he persuaded his new sons-in-law to
become business partners. On October 31, 1837, as a result of the
suggestion, Procter & Gamble was created.

In 18581859, sales reached $1 million. By that point, about 80 employees

worked for Procter & Gamble. During the American Civil War, the company
won contracts to supply the Union Army with soap and candles. In addition to
the increased profits experienced during the war, the military contracts
introduced soldiers from all over the country to Procter & Gamble's products.

In the 1880s, Procter & Gamble began to market a new product, an

inexpensive soap that floats in water. The company called the soap Ivory.
William Arnett Procter, William Procter's grandson, began a profit-
sharing program for the company's workforce in 1887. By giving the workers
a stake in the company, he correctly assumed that they would be less likely
to go on strike.

The company began to build factories in other locations in the United States
because the demand for products had outgrown the capacity of the
Cincinnati facilities. The company's leaders began to diversify its products, as
well, and in 1911, began producing Crisco, a shortening made of vegetable
oils rather than animal fats. As radio became more popular in the 1920s and
1930s, the company sponsored a number of radio programs. As a result,
these shows often became commonly known as "soap operas".

International expansion

The company moved into other countries, both in terms of manufacturing

and product sales, becoming an international corporation with its 1930
acquisition of the Thomas Hedley Co., based in Newcastle upon Tyne,
England. After this acquisition, Procter & Gamble had their UK Headquarters
at 'Hedley House' in Newcastle upon Tyne, until quite recently. Numerous
new products and brand names were introduced over time, and Procter &
Gamble began branching out into new areas. The company
introduced Tidelaundry detergent in 1946 and Prell shampoo in 1947. In
1955, Procter & Gamble began selling the first toothpaste to contain fluoride,
known as Crest. Branching out once again in 1957, the company
purchased Charmin paper mills and began manufacturing toilet paper and
other tissue paper products. Once again focusing on laundry, Procter &
Gamble began making Downy fabric softener in 1960 and Bounce fabric
softener sheets in 1972.[7]

One of the most revolutionary products to come out on the market was the
company's disposable Pampers diaper, first test-marketed in 1961, the same
year Procter & Gamble came out with Head & Shoulders. Prior to this
point, disposable diapers were not popular, although Johnson & Johnson had
developed a product called Chux. Babies always wore cloth diapers, which
were leaky and labor-intensive to wash. Pampers provided a convenient
alternative, albeit at the environmental cost of more waste
requiring landfilling.

Further developments

Procter & Gamble acquired a number of other companies that diversified its
product line and significantly increased profits. These acquisitions
included Folgers Coffee, Norwich Eaton Pharmaceuticals (the makers
of Pepto-Bismol), Richardson-Vicks, Noxell (Noxzema), Shulton's Old
Spice, Max Factor, the Iams Company, and Pantene, among others. In 1994,
the company made headlines for big losses resulting from levered positions
in interest rate derivatives, and subsequently sued Bankers Trust for fraud;
this placed their management in the unusual position of testifying in court
that they had entered into transactions that they were not capable of
understanding. In 1996, P&G again made headlines when the Food and Drug
Administration approved a new product developed by the company, Olestra.
Also known by its brand name 'Olean', Olestra is a lower-calorie substitute for
fat in cooking potato chips and other snacks.

In January 2005, P&G announced the acquisition of Gillette, forming the

largest consumer goods company and placing Unilever into second place.
This added brands such as Gillette razors, Duracell, Braun, and Oral-B to
their stable. The acquisition was approved by the European Union and
the Federal Trade Commission, with conditions to a spinoff of certain
overlapping brands. P&G agreed to sell its SpinBrush battery-
operated electric toothbrush business to Church & Dwight, and
Gillette's Rembrandt toothpaste line toJohnson &
Johnson. The deodorant brands Right Guard, Soft and Dri, and Dry Idea were
sold to Dial Corporation. The companies officially merged on October 1,
2005.Liquid Paper and Gillette's stationery division, Paper Mate, were sold
to Newell Rubbermaid. In 2008, P&G branched into the record business with
its sponsorship of Tag Records, as an endorsement for TAG Body Spray.

P&G's dominance in many categories of consumer products makes its brand

management decisions worthy of study. For example, P&G's corporate
strategists must account for the likelihood of one of their
products cannibalizing the sales of another.

On August 25, 2009, the Ireland-based pharmaceutical company Warner

Chilcott announced they had bought P&G's prescription-drug business for
$3.1 billion.

P&G exited the food business in 2012 when it sold its Pringles snack food
business to Kellogg's for $2.75 billion after the $2.35 billion deal with former
suitor Diamond Foods fell short. The company had previously sold Jif peanut
butter and Folgers coffee in separate transactions to Smucker's.

In April 2014, the company sold its Iams pet food business in all markets
excluding Europe to Mars, Inc. for $2.9 billion. It sold the European Iams
business to Spectrum Brands in December 2014.

Restructuring

In August 2014, P&G announced it was streamlining the company, dropping

around 100 brands and concentrating on the remaining 65, which were
producing 95% of the company's profits.

In March 2015, the company announced it was selling its Vicks VapoSteam
U.S. liquid inhalant business to Helen of Troy, part of a brand-restructuring
operation. This deal was the first health-related divestiture under the brand-
restructuring operation.

In July 2015, the company announced the sale of 43 of its beauty brands
to Coty, a beauty-product manufacturer, in a US$13 billion deal. It cited
sluggish growth for its beauty division as the reason for the merger.The sale
is planned to be completed in the second half of 2016.

In February 2016, P&G completed the transfer of Duracell to Berkshire

Hathaway through an exchange of shares.
II. Presentation of Procter and Gamble Logistics

Procter & Gamble (P&G) has one of the best supply chains in the world. But
when their top supply chain executives talk about supply chain management,
it can be hard to understand what they are talking about. P&G has rather
forgone talking about supply chain systems and instead talks about their
investments in analytics. They believe their supply chain systems are too
siloed and they are missing global optimization opportunities. They are
looking for a fully interconnected platform that delivers holistic
optimization. If they can get to a real-time instrumented supply chain,
P&G believes the upside is a 1-2% sales increase, 2-5% margin improvement,
and 5-10% improvements in asset utilization.

But what could a real-time instrumented supply chain actually be? Some
hints are starting to emerge. One thing it appears to mean is a cross
functional control tower that exists in a visually immersive data
environment. P&G does not call it a control tower, they call it a Business
Sphere.

One of the partners they list that helped them build this patent-pending
integration of technology, visualization, and information is BOI Solutions.
The BOI technology is really cool. In science fiction movies we see users
manipulating computer images with their hands, stretching some images,
swatting other images off the screen.
Another partner for the P&G Business Sphere solution is SAP. Perhaps not
entirely coincidentally, SAP begun talking about their new supply chain
control tower solution last year. Their control tower incorporates the idea of
reacting to alerts with prebuilt playbooks that allow an organization to react
quickly and with agility to unexpected situations. P&G, being P&G, appears
to be using a more difficult to understand vocabulary to describe the
playbook concept.

P&G says they were able to leverage supply chain sufficiency models to
bring together multiple data points, analytics, and visualizations in a
manner that resulted in an inventory savings of tens of millions of dollars.

An optimization solution starts with certain policies and network flows in

place. The optimization is based upon those flows and policies. Optimization
is great, but optimizing an inefficient network and nonoptimal policies is itself
not optimal.

III. Compare of Procter and Gamble Logistics

The Procter & Gamble Company, or P&G (PG), is one of the leading consumer
staples stocks in the world. It operates five business segments with famous
household products including Tide, Olay, Pampers, Pantene, and Crest.

Since former CEO A.G. Lafleys return, the company has undergone major
restructuring to improve sales and profitability. P&Gs stock price touched a
record high of $93.46 on December 26, 2014. The prime reason for the
increase was the announcement of the sale of the Duracell battery business
to Warren Buffetts Berkshire Hathaway (BRK-B).
Since January 1, 2015, P&Gs stock price has fallen by over 10%. The
stronger dollar is mainly to blame. It reduced reported sales from overseas.
Also, the company made lower-than-expected earnings in the Beauty
segment.

Rumors of P&Gs beauty brands divestitures also had an impact on its stock
price. The stock rose by 3.5%, from $78.12 on June 15, 2015, to $80.82 on
June 18, 2015.

P&Gs return on equity, or ROE, in 3Q15 was 13.6%, the lowest ROE of
its peers. Estee Lauder (EL) and Kimberly-Clark (KMB) had ROEs of 31.7%
and 59.9%, respectively.

Consumer staples stock

Procter & Gamble is a megacap stock with a market cap of over

$215.3 billion.1 Its a component of the S&P 500 ETF Trust (SPY) and the
iShare Core S&P 500 ETF (IVV), making up 1.2% of each.

Combined, consumer staple companies P&G and its peers, KMB and Colgate-
Palmolive (CL), constitute ~17.3%2 of the Consumer Staples Select Sector
SPDR EFT (XLP).

Future stock price drivers

Economic jitters in many emerging markets, including Russia, Brazil, and

China, as well as US dollar concerns, might have an impact on P&Gs stock
price in the future.

P&G aims to strengthen its more profitable segments such as Fabric Care and
Home Care and Baby, Feminine and Family Care. P&Gs focus remains new
product initiatives for Beauty care. For example, it wants to turn Olay and
Pantene around and get them growing again in critical markets. Aside from
divesting non-core brands, P&G is planning to close some of its distribution
centers to revive stock price and profitability.

IV. Analysis
Procter & Gamble (P&G) is Americas biggest maker of household products,
with at least 250 brands in six main categories: laundry and cleaning , paper
goods,beauty care ,food and beverages, feminine care and health care.P&Gs
famous brands include Ariel, Pantene, Head & Shoulders, Fabreze, Sunny
Delight, and Oil of Olaz. About half of P&G's sales come from its top ten
brands. This report will show a picture of and explain for these successful
results by focusing on the external and internal analysis of PG, assessment of
performance in terms of efficiency, effectiveness, and return on investors, a
review of options available and recommendations for structures, systems,
and policies.

V. Recommendation

I strongly recommend all the options available for PG company to develop

which are quality enhancement, technology enhancement, cost reduction,
advance localization, focusing on growing market and pursue to the desire
goals.

VI. References
https://www.stock-analysis-on.net/NYSE/Company/Procter-Gamble-Co

https://en.wikipedia.org/wiki/Procter_%26_Gamble