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strategic management

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Chapter I Introduction A. Company Profile The Procter & Gamble Company, together with its subsidiaries, engages in the manufacture and sale of a range of branded consumer packaged goods. The Procter & Gamble Company was founded in 1837 and is based in Cincinnati, Ohio. The company uses its slogan Touching lives, improving life to describe itself. The company operates in five segments: Beauty, Grooming, Health Care, Fabric Care and Home Care, and Baby Care and Family Care. The Beauty segment provides antiperspirants, deodorants, cosmetics, hair care products, hair colors, personal cleansings, prestige products, professional salon products, and skin care products primarily under the Head & Shoulders, Olay, Pantene, SK-II, and Wella brand names. The Grooming segment offers blades and razors, electronic hair removal devices, hair care appliances, and pre and post shave products primarily under the Braun, Fusion, Gillette, and Mach3 brand names. The Health Care segment provides feminine care, gastrointestinal, incontinence, rapid diagnostics, respiratory, toothbrush, toothpaste, oral care, and other personal health care products, as well as vitamins/minerals/supplements primarily under the Always, Crest, Oral-B, and Vicks brand names. The Fabric Care and Home Care segment offers bleach and laundry additives, air care products, batteries, dish care items, fabric enhancers, laundry detergents, pet care products, and surface care products primarily under the Ace, Ariel, Dawn, Downy, Duracell, Febreze, Gain, Iams, and Tide brand names. The Baby Care and Family Care segment provides baby wipes, diapers and pants, paper towels, tissues, and toilet papers primarily under the Bounty, Charmin, and Pampers brand names. The company markets its products through mass merchandisers, grocery stores, membership club stores, drug stores, high-frequency stores, department stores, perfumeries, pharmacies, salons, and e-commerce in approximately 180 countries worldwide. More than half of P&Gs sales come from outside the United State. The company is strongly committed to a brand management approach to doing business. Its organizational structure and decision-making processes are closely geared to the brand concept. History P&G was founded in 1837 by William Procter and James Gamble. The company began in Cincinnati as a soap and candle business, developed Ivory soap its first big product hit in 1879, and has been growing ever since. In 1915, P&G built a manufacturing facility in Canada. In 1946 Tide soap was introduced and

became a huge product for the company. In 1948, an overseas division was established to support sales in Mexico, then Europe and Japan. \ P&G expanded its research and development efforts in the 1950s and 1960s, which quickly led to many new products. In 1980, annual sales reached $10 billion, and in 1993, sales surpassed $30 billion. Several acquisitions have grown the company over the past dozen years, such as the acquisition of Bristol-Myers Squibb in 2001. Under the direction of CEO A.G. Lafley, P&G is the only company to appear on seven Fortune magazine company lists in 2004, including;

Best Companies to Work For Most Admired Best Companies for Minorities MBAs Top Employers

B. Paper Design and Methodology

Chapter II Vision / Mission Statement

Vision and Mission statement are key elements of an organization's strategic planning. They must be approved by the board of directors and should be communicated to staff, volunteers, members and other stakeholders Vision sets out what the organization wants to accomplish, and should inspire members, staff and supporters. Mission typically describes what the organization does to achieve its vision. because the vision so often expressed as a dream or ideal. The mission helps clarify the practical aspects of what the organization will actually do. A. Statement of Current Vision and Mission Statements Vision Be, and be recognized as the best consumer products and services Mission Procter and Gamble will continue to serve consumers by continuously innovating products that will allow us to be leaders in household and personal care, health care, and food products. To produce products with the utmost care to give nothing but quality to our communities. And to continue to grow so that we can maximize our shareholders wealth. B. Critiquing of the Current VM Statements

The researcher analyzes/criticizes the current vision/mission statements using the nine (9) essential components introduced by Fred David.

The components include the following: customers, products or services, markets, technology, concern for survival, growth, and profitability, philosophy, self-concept, concern for public image, and concern for employees.

Table 1. An Evaluation Matrix of Mission Statements by Fred R. David Criteria Present? Inclusive Statements Y/N No

1.Customers who are the firm's customers? 2. Products services what are the firm's major services?

Not specified

Yes

Procter and Gamble will continue to serve consumers by continuously innovating products that will allow us to be leaders in household and personal care, health care, and food products

3. Market Geographically where does the firm compete?

No

Not specified

4.Technology Is the firm technologically current?

Yes

Procter and Gamble will continue to serve consumers by continuously innovating products.

5.Concern for survival, growth and profitability is the firm committed to growth and financial soundness? 6. Philosophy what are the basic beliefs, values, aspirations and ethical priorities of the firm? 7.Self-concept what is the firm's distinctive competence or major competitive advantage?

Yes

To continue to grow so that we can maximize our shareholder's wealth.

No

Not specified

No

Not specified

8. Concern for Public image Is the firm reponsive to social, community and environmental concern

Yes

To produce product with the utmost care to give nothing but quality to our communities

9. Concern for Employees Are the employees' valuable assets of the firm?

No

Not specified

Customers were not specified in the mission statement of the company. P&G must have identified the target customers of the organization. It could individual customer and retailers. Product The company was able to include the type of product of that they intended to provide to the market. The researcher will not make any recommendation for this part. Market as not able to implied in the mission statements. They don't specified their target market but in some point they compete international . Technology The technological aspect was mentioned in the current mission statement. It is very important to them to innovate their product so that they have competitive advantage and still be number one in the market. As a result, the researcher did not made any further recommendation. Concern for survival, growth, and profitability - This aspect was mentioned in the mission statement. As a result, the researcher did not made any further recommendation. profit, so that they could exist at the longest possible duration. Philosophy- this aspect was not specified in their mission statement. Concern for public image this aspect was mentioned in company's mission statement. As a result, the researcher did not made any further recommendation.

Concern for Employees was not mention in the mission statements. But in some aspect they are very concern in their employees growth.

C. Recommendation of Revised VM Statement Even though they don't complete the evaluation matrix in 9 categories, there some point that it is not necessary to have it. Some of them mention in company's principle, purpose and values. D. Proposed VM Statement

Chapter III External Analysis This is an analysis of the Opportunities and Threats that the organization face externally. In other words, organizations have to explore in environment-based analysis to identify opportunities and avoid threats. A. General Environment 1. Social, Cultural and Demographic environment Proctor & Gamble is aware of most of the needs of the market, but are trying to develop a product for every type of need the consumer has. Proctor & Gamble uses its well known brand name to expand its products to its loyal customers. In the socio-cultural aspects there has been a population increase in developing countries compare to Europe and 80% of world population lies in developing countries.

With increased awareness of wellness/well-being and quality of life issues, along with increasing disposable incomes, the market for Beauty care has extended greatly, and is gender-neutral given the growing demand by male consumers for Beauty products. Furthermore, there is a greater demand for products made form Natural/Organic Ingredients.

2. Technological Environment Given how capital-intensive the beauty care industry is, it is imperative for P&G to stay ahead of the curve in terms of the most advanced technological breakthroughs, as the company requires highly mechanized assembly lines designed both for long production runs and flexibility. The proliferation of Internet users also opens up further market opportunities for P&G to market its products. When we say technology first comes to our mind is internet or computer,most of the population know how to use computers. Internet can easily communicate all over the world using a computer. Most of the company use computers for filing documents, for advertisement and for selling products. Technology is a big opportunities for a new market. 3. Economic Environment Economic growth affects P&G to some extent. Specifically, in mature markets like the USA, a recession impacts P&Gs sales/earnings growth, as consumers tend to completely trade-down and only purchase lowest-priced, heavily-discounted goods. From the economic standpoint even though there is a global economic slowdown and political disruption, developing countries shows a growing and stable environment. Another concern from the economic view is the rise in commodity prices due to the decreasing amount of natural resources. 4. Political, Government and Legal Environment

B. Industry Analysis

In analyzing any industry Michael E. Porter has introduced the Five Competitive Forces. Since its development in 1980, it has become an important tool for analyzing an industry, its structure, and strategic processes.

Furthermore, Porter has identified five (5) competitive forces that shape every industry and every market. The said forces aim to determine the intensity of competition and hence the profitability and attractiveness of an industry.

1. Threat of New Entrants (Moderate) Under Procter & Gamble's name, the sheer scale of products that are distributed creates a challenge for new entrants. Since the Company has a significant amount of many market shares around the world, a company without the capital for heavy marketing or research and development (R&D), would hardly be able to compete. However, there is concern about firms that specialize in specific markets. This type of company could become a threat to P&G's corresponding business segment. Proctor and Gamble must continue to expand its operations internationally, due to the decline of the US dollar to other currencies and the emergence of new markets, such as India or China. The rank scale of products that are distributed under Procter & Gamble's name creates a challenge for new entrants. Since the Company has a significant amount of many market shares around the world, a company without the capital for heavy marketing or research and development, would hardly be able to compete. However, there is concern about firms that specialize in specific markets. This type of company could become a threat to P&Gs corresponding business segment. A small manufacturer could develop a superior product and compete with Procter & Gamble. The real test is whether the small manufacturer can get its products on the shelves of the same retailers as that of its much larger rivals. 2. Rivalry among Competitors (High)

While P&G enjoys exceptional brand name recognition and commands a considerable market share, the truth is that switching costs in the industry are quite low. It does not cost anything for a consumer to buy one brand of shampoo instead of another. That, combined with the size of other competitors such as Unilever, makes this a highly competitive industry. Significant Competitors include: Unilever, ColgatePalmolive, Playtex, Avon and Estee Lauder. To keep its current percentages of market share, P&G needs to place high priority on continued growth and research and product development activities. Marketing strategies and brand name awareness will set the Company apart from its competitors. An important growth factor is the implementation of their products to internationally emerging markets. This is for two reasons: Markets, such as India, are taking to American culture and consumerism and provide a budding market for US retailers. The decline of the US dollar to foreign currencies makes international trading promising due to the changeover of exchange rates. Growth in foreign markets will provide P&G with strong revenue, along with its recession-proof products available to American consumers.

3.Threat of Substitute (High) There are considerable substitutes for all of P&G's product offerings, creating an intense competitive environment. In order to differentiate itself, the firm must continue to provide new, innovative products and branding to the customer. Furthermore, the pricing power of brands can be eroded with substitutes such as store-branded private-label offerings. In fact, some of these same store-brand private-label products are manufactured by the large consumer-products firms. The firms believe that if they can manufacture and package a lower-price alternative themselves, they would rather accept the marginal revenue from their lower-priced items than risk completely losing the sale to a private-label competitor. P&G notes that working collaboratively with customers and developing deep shopper and consumer understanding will improve the in-store presence of its products and win the "first moment of truth." This happens when customers choose which brands to buy. Winning the "second moment of truth," when consumers decide whether P&G products deliver on the brand promise, is essential for growth in such a competitive environment. 4. Bargaining Power of Suppliers (Low) A codependent relationship exists between P&G and its suppliers. In order to generate above average revenues the Company needs various quality materials for product production at the best prices available.

Suppliers of these materials also need key customers like P&G for profitable revenue generation but will most likely have little bargaining power because of its size. P&G can use its generous size and available cash to its advantage during the current credit crisis. Rising interest rates and the declining availability of credit should not affect P&Gs relationship with its suppliers. The companys successful history and large market share can be used to back its borrowings, under the assumption that P&G continues to maintain its current market share. 5. Bargaining Power of Buyers (High from retailer) Although P&G is a very large company, its future is dependent on buyers. Wal-Mart and affiliates represent 15% of the firm's total revenue in 2006. This percentage of total revenue gives Wal-Mart the ability to bargain with the Company for lower prices, which would result in lower earnings. The current credit crisis will not have a significant impact on P&G because of the diversity and recession-proof status of its products. The products that P&G offers can sustain a slowdown or recession in the US economy because of the their product types. Consumers will continue to purchase these goods through an economic correction. While P&G had disappointing 2nd quarter earnings due to higher commodity costs, analysts reported strong sales forecasts and growth opportunities. P&G faces weak buyer power because customers are fragmented and have little influence on price. But if we consider the buyers of P&G products to be retailers, rather than individuals, then P&G faces very strong buyer power. Retailers like Wal-Mart and Target are able to negotiate for pricing with P&Gbecause they purchase and sell much of P&Gs products. Summary of Porter's 5 forces of Competition Criteria Threat of New Entrants Rivalry among Competitors Threat of Substitute Bargaining Power of Suppliers Bargaining Power of Buyers Low Moderate High

C. Competitive Analysis 1. Profile of Competitors Procter & Gamble 's three main competitors are Johnson & Johnson, Kimberly-Clark and ColgatePalmolive. P&G believes it differentiates itself from these and its other major competitors by having more brands, a larger global presence, strong growth and better product innovation.

Johnson & Johnson (J&J) with over 108,300 employees, J&J ranks number 30 on the Fortune 500 list. The company has three main product segments, including over-the-counter drugs, medical devices and diagnostic testing and pharmaceuticals. J&J pharmaceuticals segment is the company's largest and includes drugs for an array of ailments, including cardiovascular disease, dermatology, gastrointestinal health, oncology and pain management. J&J's 2004 sales were $47,348 million, a 13.1 percent increase from 2003 sales. In a recent announcement, J&J said it plans to acquire Guidant in a deal worth nearly $24billion

Kimberly-Clark (KC) ranks number 135 among the Fortune 500, with 2004 sales of $15,083 million. The company specializes in personal paper products, facial and bathroom tissues, paper towels and other household products. It is best known for its products for babies. Noted brand names include Huggies, Kotex and Depends. In 2004, KC realigned its North American and European businesses and formed a unit to increase sales in merging countries abroad. The company spun off its paper, pulp and timber operations in July 2004.

Colgate-palmolive (CP) ranks 210 on the Fortune 500 list and set a record with 2004 sales of $9.8 billion, up 6.6 percent from previous year. The company has 36,000 employees and leads all competitors worldwide toothpaste sales. CP focuses primarily on oral care, personal care, household care, fabric care and pet nutrition products. It manufactures and markets a wide range of products and brand names, including Colgate, Palmolive, Softsoap, Fab and Ajax.

2. Competitive Profile Matrix

Critical Success Factor Sales/Revenue (2004)

P&G weight V R 0.25 51,407 m 4 26 4 4 4

Johnson & Johnson Kimberly- Clark S V R S V R S 1.00 47,348 m 3 0.75 15,085 m 2 0.50 1.20 30 3 3 3 0.90 0.30 1.05 3.00 135 2 0.60

Colgate- Palmolive V R S 9,8 m 1 0.25 210 36000 6.60% 1 2 2 0.30 0.20 0.70 1.45

Company position(Fortune Magazine Rank) 0.30 No.of Employees Revenue growth (2004) TOTAL

0.10 110000 0.35 18.50% 1.00

0.40 108300 1.40 13.1% 4.00

1.10

Conclusion: Based on the total score of CPM Procter & Gamble is the most competitive company in the consumer product with the total score of 400

Rating Scale:

Competitive More competitive Highly competitive Most competitive

1 2 3 4

D. Summary and Conclusion 1. Summary of Key External Factor Opportunities There is a clear demand for greater Beauty products designed for Men. And, significant demand for Natural/Organic ingredient products. P&G can increase its presence in Developing Countries. It can also market to Lower Income Consumers in both Developed and Developing countries, especially in order to diversify its customer base and to capture greater market share, especially in emerging markets such as Russia, China and India. Increasing the depth and number of distribution channels in emerging markets also provides great opportunities to expand market share and customer reach. E-commerce also offers further revenue streams and customer penetration.

Threat

Rising Commodity prices could put a real squeeze on P&G as it can only pass on the added costs to the end consumer for so long without risking consumer attrition. The highly competitive nature of the business means that P&G must constantly price its products competitively and continually strive to develop innovative products. The existence of smaller corporations focused on a market niche that operate regionally or even locally still poses a challenge to P&Gs sales. 2. External Factor Evaluation (EFE) Matrix

4= superior 3= above average 2= average 1= poor 3. Key Strategic Issues of the Company The P&G 2004 annual report contains a statement from CEO Lafley about the company's strategy, direction and growrh. He writes that the company's goal are to deliver a 4 to 6 percent annual sales growth ( excluding the impact of foreign exchage), 10 percent for better earnings-per-share (EPS) growth and free cash flow equal to 90 percent or more of net earnings. He reports that in the three year period following 2001 (2001 has a down year for P&G), cumulative sales increased 50 percent. In the same period, EPS grew more than 40 percent and shareholders accumulated a return of 81 percent. CEO Lafley points out that the company faces significant challeges, but he is confident that the company can deliver balanced, consistent growth. A.G. Lafley is the president of Proctor and Gamble has confirmed that the companies business strategies are working better than ever. Their business strategy is to focus on creating new brands and categories so the company can focus on being the best in branding, innovation and scale. This is what sets this company apart from many of its competitors. Lafley states that Proctor and Gamble are the global leader in all of their core businesses within the company which consists of laundry, baby care, hair care and feminine protection. This shows us that Proctor and Gambles global organization design in the company is creating for them a huge competitive advantage.

Chapter IV Internal Analysis Internal analysis os the process of evaluating an organization's resources and capabilities. It reveals the most significant and relevant strengths and weaknesses of an organization. A detailed internal analysis will typically give a business a good sense of its basic compentencies and the desirable improvement that it can make to help meet the requirements of potential customers within its intended market.

A. Management The corporate culture at Procter & Gamble is well defined and impacts just about every aspect of the company and how it does business, internally and externallly. According to the company's web site. Our Purpose: we will provide branded products and services of superior quality and value that improve the lives of the world's customers. As a result, consumers will reward us with leadership sales, profit, and value creation, allowing our people, our shareholders, and the communities in which we live and work to prosper. The company additionally has a values statement.Our Values: P&G is its people and the values by which we live. The values statement includes wording about attracting and recruiting the finest people in the world, building the organization from within and rewarding pople based on performance and it states that the men and women of Procter & Gamble will always be our most important asset. The values statement specifically addresses five topics : leadership, integruty, trust, ownership and passion for winning. The company also has statement entitled Our Principles. whish includes wording about eight topics: We show respect for all individuals, the interest of the Company and individual are inseparable, we are strategically focused in our worl, innobation is the conerstone of our success, we are externally focused, we value personal mastery, we seek to be the best and mutual interdependency is a way of life. Based on this authors's conversations with several P&G managers and professionals, it is apparent that the company does good job of communicating these guiding statements of purpose, values and principles.

P&G has fairly comprehensive written corporate governance. It makes four main points: (1) management, shareholders and the board work together; (2) employees are long-term investors; (3) a foundation of integrity, control and stewqarship; and (4) doing what's right. It is clear that P&G puts more emphasis on ethics and good conduct than most other large corporations.

P&G does not publish a formal oraganizational chart, but information from its 2005 annual report dicusses how P&G unique oraganizational structure creates advantage. The company is organized around Global Business Units (GBUs), Market Development Organizations (MDOs), a Global Business Services organization (GBS) and Corporate Functions, CEO Lafley says that the company plays to two unique combinations of strengths: Market Development Organizatons and Global Business Services, He also reports that because of the MDOs, the company is able to focus all its resources on local customers without duplicating product innovation, product sourcing, brand advertising, or other activities are led by the GBUs.

B. Marketing

Marketing strategy is a process that can allow an organization to concentrate its resources on the optimal opportunities with the goals of increasing sales and achieving a sustainable competitive advantage. Marketing strategy includes all basic and long-term activities in the field of marketing that deal with the analysis of the strategic initial situation of a company and the formulation, evaluation and selection of market-oriented strategies and therefore contribute to the goals of the company and its marketing objectives.

Procter & Gamble has a long history of putting emphasis on developing brands that become well-known and trusted among consumers. The better-known brands onclude pampers, tide, ariel, always, pantene, bountym folgers, pringles, charmin, downy, iams, crest and olay. P&G has introduced and then dropped or sold off many products that have not delivered reasonable, profits, such as olestra (no-fat cooking oil),

punica juice-based drink and Reflect.com . Nonetheless, the company continues to find and introduce new products. In October 2004, P&G expanded its ethics beauty products when it signed a licensing agreement with I-Iman products. In early 2005, the company signed one of its former young Cover Girl faces, Christie Brinkley, to a multi-year contract designed to cross-market the Cover Girl and Olay brands.

P&G strategy essentially was a disguised price increase. P&G lowered their wholesale price, but the retailer only enjoyed higher margins and did not pass the savings on to the customer.

In a way, P&G could promote their product through advertising, media, public relation and sale promotion.

C. Finance/ Accounting Finance department is the backbone of a company's operations and processes. The task of this department is to finance projects and programs that will enhance the performance of the company. It is one of the important parts of the organization.

P&G composite statement of earnings and consolidated balance sheets are provided in Exhibits 2 and 3. Recent financial information for P&G five segments indicates that Snacks and Beverages sales have increased somewhat and the Beauty Care and health care segments have increased dramatically. The other two segments (fabric care and home care) had significant increase. Exhibit 4 illustrates the net sales and net earnings of P&G's five segments.

D. Production/Operations P&G has operations in about 80 countries. P&G's well-known, trusted brands touch the lives of consumers in more than 180 countries.

The companys global scale enables competitive advantage through knowledge sharing, common systems and processes, and best-practice reapplication. P&G views its global scale as one of its five core strengths, seeing scale as a way to drive efficiency and consumer value. To deliver local agility, P&Gs global operations are divided into five regions. This structure delivers the benefits of scale while leveraging local focus, letting the company respond faster to local consumer needs and dynamic market demands. Those five regions are: ASIA One of the fastest growing economies in the world, Asia is home to over three billion consumers, more than half of the worlds population. P&G Asia includes: China, Japan, Korea, Hong Kong, India, Australia, New Zealand, Indonesia, Philippines, Singapore, Taiwan, Vietnam, Thailand, Sri Lanka, Malaysia, Bangladesh. Innovation is a key focus for P&G Asia, which employs about 800 scientists in four technical centers in Bangalore, India; Beijing, China; Kobe, Japan and Singapore. Asia Regional Headquarters: Singapore

CENTRAL & EASTERN EUROPE, MIDDLE EAST AND AFRICA (CEEMEA) CEEMEA is P&Gs largest geographic region, stretching from the western edges of Turkey to the far eastern regions of Russia and including nearly all of Africa. P&G CEEMEA includes: The Balkans, Central Europe North, Central Europe South, Eastern Europe, Middle East, Sub Sahara, Turkey/Caucasia & the Central Asian Republics. CEEMEA Regional Headquarters: Geneva, Switzerland LATIN AMERICA Procter & Gambles presence in Latin America dates back more than 60 years with the opening of the Mexican subsidiary in 1948. We employ people across 14 countries, including 19 manufacturing sites, 12 distribution centers and a service center. Latin America Regional Headquarters: Panama City NORTH AMERICA

Our North America region operates in Canada, Puerto Rico and the United States. The average American consumer spends $110 per year on P&G products, where sales make up more than 40% of the companys total. Nearly every family in the U.S. has at least one P&G product in their home. We have more than 35 manufacturing plants handling production for products around the world. North America Regional Headquarters: Cincinnati, Ohio, USA WESTERN EUROPE Our European business dates back to 1930 when we opened a subsidiary in the UK. Today, P&G has a presence in every country in Western Europe; the region represents about 20% of P&Gs total business. We have about 35 manufacturing plants handling production for products around the world. In Western Europe, P&G markets over 100 brands and has developed deep connections with diverse consumers and has built highly collaborative relationships with our retail partners. P&G Western Europe employs about 3,000 scientists working in nine Innovation Centers in the UK (London, Newcastle, Reading), Belgium (Brussels), Germany (Kronberg, Schwalbach, Darmstadt), and a combined innovation center in Italy (Pescara and Pomezia). Western Europe Regional Headquarters: Geneva, Switzerland E. Research and Development Research and Development is an investigative activities that a business chooses to conduct with the intention of making a discovery that can either lead to the development of new products or procedures, or to improvement of existing products or procedures. Research and development is one of the means by which business can experience future growth by developing new products or processes to improve and expand their operations. P&G stated that their research and development is "The Magic Behind Our Brands" P&G known through their brands, such as Pampers, Tide, Pantene, and Gillette. What you may not know is the cutting-edge science and technology behind each of our brands. P&G is widely recognized as the global innovation leader in the consumer products industry. We hold more than 41,000 active patents, and receive about 3,800 new ones each year. And even new hires have been named as inventors on patents.

F. Management Information Systems A management information system (MIS) provides information that is needed to manage organizations efficiently and effectively. MIS are not only computer systems - these systems encompass three primary components: technology, people (individuals, groups, or organizations), and data/information for decision making. MIS are distinct from other information system in that they are designed to be used to analyze and facilitate strategic and operational activities in the organization. G. David's Functional Audits FUNCTIONS MANAGEMENT AUDIT 1. Does the firm use strategic management concepts? 2. Are company objectives and goals measurable and communicated? 3. Is the organization's current structure appropriate? 4. Are the job descriptions and job specifications clear? 5. Is employee morale high? 6. Are employee turnover and absenteeism low? 7. Do managers at all levels plan effectively? MARKETING AUDIT 1. Is the organization positioned well among competitors? 2. Does the firm conduct market research? 3. Are quality and customer service good? 4. Does the firm have an effective promotion, advertising, and publicity strategy? 5. Does the firm have effective publicity strategies? 6. Do the firms marketing managers have adequate experience? 7. Are the firms products/services priced appropriately? 8. Are the marketing, planning, and budgeting effective? FINANCE/ACCOUNTING AUDIT 1. Can the firm raise needed short-term capital? 2. Can the firm raise needed long-term capital? 3. Does the firm have sufficient working capital? 4. Does the firm have good relations with its investors? 5. Are the firms financial managers experienced & well trained? PRODUCTION/OPERATIONS AUDIT Y/N

1. Are facilities, equipment and the office in good condition? 2. Are operations policies and procedures effective? 3. Are facilities, resources and market strategically located? 4. Does the firm have operational efficiencies? 5. Does the firm have technological competencies? MANAGEMENT INFORMATION SYSTEMS AUDIT 1. Is there an "Information System Administrator" in the firm? 2. Are data in the information system updated regularly? 3. Do different functional areas contribute input to the system? 4. Are there effective passwords for entry into the firms system? 5. Is the information system user-friendly? 6. Is the firms information system continually being improved in content and userfriendliness?

H. Current and Previous Strategies Used by the Company I. Summary and Conclusion 1. Summary of key internal factor

2. internal Factor Evaluaion (EFE matrix)

Key Internal FactorsSTRENGTH 1.Leading Manufacturer and marketer of consumer product 2. P&G does business in more than 160 countries and manufacturer products in 43 countries 3. Large variety of product. Product portfolio 300 products 4. P&G strongly committed to a brand management approach

W

R

Total

0.30 0.22

4 3

1.20 0.66

0.22 0.10

3 2

0.66 0.20

5. Strong spending on research and development 6. Net income increase 11.9% in 2005 TOTAL

0.06 0.10 1

1 2

0.06 0.20 2.98

WEAKNESS 1. Merger between P&G and Gillette has not been finalized 2. P&G weak balance sheet, highly leverage 73.3% and low liquidity ratio 0.81:1 in 2005 3. Lack of product variety of green products that are environmental friendly 4. Business ethics lack of women leadership in the executive board TOTAL Total Net Score Conclusion: The strength have out weighted the weaknesses by 0.17 1 -2.81 0.17 0.20 -2 0.40 0.28 -3 0.84 0.17 0.35 -1 -4 0.17 1.40

Rating scale Attractive - 1 More attractive- 2 Highly attractive- 3 Threatening- (-1) More threatening- (-2) Highly threatening- (3) Most Attractive- 4 Most threatening- (-4)

3. Key Strategies issues of the Company From the consumer demand point or view there has been demand a growing trend of consumer product in international market. And from the product segment of consumer goods, increasing trend of beauty product usage around the world. Meanwhile the health care products companies are experiencing price competition due to consumer switch to cheaper products especially in developing countries. .

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