Pampers International Business PlanCapstone Assignment MGT 420

Nicholas Aiello - Timothy Akers - Shelly Alaska - Krista AlumbaughTeam 1

Pampers’ Mission StatementPURPOSE

to provide patented products of superior quality and value that improve the lives of the world's consumers in more ways than one.

VALUES Proctor and Gamble believe that their

enablers are their employees and their shareholders.

FUTURE GOALS Powering their plants with 100% renewable

energy Using 100% renewable or recycled materials

for all products and packaging Having zero consumer and manufacturing

waste go to landfills Designing products that delight consumers

while maximizing their conservation of resources

Products Approach: “We aim to continue to delight consumers with meaningful

sustainable innovations that reduce the environmental impact of our products across the full product lifecycle.”

Proctor and Gamble value the opinions of their customers and have conducted much research into the minds of their consumers. They also take into account the technological insights using Life Cycle thinking .

Operations Approach: Through every manufacturing step, Proctor and Gamble

strives to reduce waste, water, energy, and CO2 through conservation using innovative eco-design improvements and recycling. In the logistics stage, they have successfully reduced waste in customization by applying more sustainable designs. They have altered and optimized their transportation efficiency by making changes to the rate, route, mode and method of transportation. They have really focused on eradicating inefficiencies such as loading and unloading delays, rush transport up-charges, dead legs (empty trucks) and P&G production line stops. Supplier engagement has also helped the company improve its operations by creating close supplier relationships; implementing a supplier sustainability scorecard (which assesses the environmental footprint of our suppliers) and enabling P&G to partner and help reduce the environmental impact along the supply chain.

ResourcesKey Components of a Diaper:

Absorbent Pad Nonwoven Fabric Other Materials:

Elastic Threads Adhesives Tape Ink (for patterns)

Management StyleAs an American company, P&G will abide to all needs to make this move as effective and expedient as possible.P&G will be using the Democratic Management Style, where employees and managers alike contribute to the success of the company, as a whole, equally.P&G will send information regarding this management style, which will marry P&G's to China.

Management Style cont.AMERICAProcter and Gamble practices the Participatory Management Style. This style is the most laid-back, and displays the lowest level of control management has over their employees and the company (Lafley, 2012).

CHINAChina, nationally, practices the Autocratic Management Style (Walsh, 2006). This style displays the highest level of control, where managements make all decisions for all insubordinates.

Management Style cont.

The Democratic Style displays communication between a highly-expected management structure and a low-expected.

Since Pampers Diapers are a trademark, and a subsidiary company of P&G, Pampers will benefit the most using this as their globalized management style.

Since the management style is so extreme between P&G, and

China's larger businesses, the

management style that sits in between these

two extremities will be used. The Democratic

Management Style is the perfect the intermediary between Autocrat and

Participatory management styles.

Financial LimitationsP&G Net Income: $2.4 billionP&G Levered Free Cash Flow: $8.6 billion (P&G, 2011)

Cost of building production facility Cost of direct materials, direct labor and

overhead once Pampers’ production has begun Increased competition in disposable diaper

market Lower market share, lower profits

Political and LegalThere are three common entity statuses to choose from when setting up in China; equally joint ventures, representative offices, and wholly foreign owned enterprises, or WFOE.

Equally joint ventures require a business to form a partnership with a native citizen of China. As China has banned wholly owned subsidiaries, this method is a popular choice.

Representative offices are strictly non-profit, and “is not a legal entity and is not allowed to directly participate in revenue generating business activities (for example, conclusion of contracts, buy and sell directly, issuance of invoice, etc.)” (LAMOREAUX, 2011).

A company can have 100% ownership using WFOE. However, “a WFOE is much more complicated to set up. It takes more time to get approval from the government, and it requires a minimal capital investment that you must put in a Chinese bank” (Lapowsky, 2010).

Environmental laws

Before the formal manufacturing, the enterprises must abide by the regulated procedure to declare to the environmental agencies for examination and inspection.All foreign-invested projects with environmental impact must abide by regulations for construction projects of the country and carry through the ratification of the environmental impact assessment.Polluting raw materials, products, manufacturing technics [sic] and equipment shall be strictly supervised for importation.

The Regulations on Environmental Protection for Foreign Invested Enterprises (253, 2007) include such obstacles as:

Wage laws

China has social taxes just like the U.S.  They also have holiday and overtime pay, as well as severance pay requirements, which typically equate to one month pay for each year or portion thereof worked. Total costs of social security, health and unemployment taxes equate to about 40% of basic payroll costs.

According to the Journal of Accountancy (LAMOREAUX, 2011)

Trademark of Intellectual Property

Simply having a trademark set up in the U.S. does not mean the same trademark holds in China.

“In China, the first person to register a trademark owns the rights to it, regardless of whether or not that person is the first person to use the trademark” (Lapowsky, 2010).

Not taking the proper steps to ensure trademarks are correctly secure can cost the company hundreds of thousands of dollars and can set back the project for months.

Resources of the CompanyProcter & Gamble:

Manufactures more than 25 different brands

$82 Billion in Sales $12 Billion Net Earning $16 Billion Operating

IncomePampers

Available in over 100 countries

Manufactured in 25 countries

Economic Home Country Constraints

Diaper WarsAverage Dollar Amount Spent on Diapers:

$2,500 per child (till potty-trained)

27 billion disposable diapers used annually.

V.S.

Environmental Home Country Constraints80% use in the United States2.1% of total waste.Disposable vs. Cloth:

Landfills High-heat washing

The Carbon Footprint 500 years to fully deteriorate

Host Country Economic and Competitive ConstraintsEconomic and competitive constraints on P&G’s incoming FDI

Ownership restrictions Prohibit nondomestic companies from investing in

certain industry or certain types of businesses Performance demands

Guaranteeing that at least part of the disposable diaper initiates locally

Requiring certain quantity be exported Demanding that specific technologies be shifted to local

businesses within China (Wild & Wild, 2012)

China’s Environmental AnalysisSome Technologies Already Greater Than Ours:

High Voltage Transmission High-Speed Rail Advanced Coal Technologies Nuclear Power Alternative Energy Vehicles Renewable Energy Supercomputing

Business Customs to Honor

Working through an intermediary is crucial Face-to-face meetings are preferred Make appointments at least one month in

advance Information about your company and what

you want to accomplish should be discussed at the first meeting

Punctuality, time management, conservatively formal dress etiquette and business cards are essential

Highest ranking member speaks at meetings so a senior member should always be present

Geography: China is located in Southeast Asia

along the coastline of the Pacific Ocean, and is the world's third largest country, after Russia and Canada

It has an area of 9.6 million square kilometers and a coastline of 18,000 kilometers.

The population of China, as of 2011, was 1.3341 billion.

Their capital is Beijing. China is often divided into four

regions; the North, South, Northwest and the Qinghai-Tibetan areas.

Because of geographical differences, residents of each region have distinctive life styles and customs

Target Market StrategyPrimary Target Market

Middle class adults with children between newborn and 3 years of age living in urban areas

Secondary Target Market Lower income adults with children between newborn and 3 years of age living in urban areas

Brand Name

First $10 BillionCompany

The Best of the Best

Feature & Styles Styles:

Pampers Swaddlers Pampers Swaddlers

(Sensitive) Pampers Baby Dry Pampers Cruisers Pampers Extra

Protection

Features & StylesRanges in sizes from NB - size 6.Smaller sizes, NB- 3 have wetness indicators.Print images of cartoon characters and designsSwaddler Sensitives have aloe to make the diapers softer to sensitive skin.NB size diapers have a notch to allow for umbilical cord.

Marketing StrategySERVICEThe former method of both cloth diapers and the total lack of diapers at times will need to be upgraded to disposable diapers to meet the new fast paced lifestyle change.Pampers Swaddlers have a cloth-like feel, allowing parents to feel they are still using a quality, family-styled diaper.

WARRANTY“Warranties are seen as reducing perceived performance risk by providing protection against product defects leading to failures within the warranty period” (AMWarranty, 2012).Placing a warranty on the product, perhaps allowing new consumers the option to sell back the un-used portion of a product they do not like, might help boost customer confidence.

PricingCurrent Exchange Rate:

1 USD = 6.36 CYR CYR is Chinese Yuan

RenminbiAverage cost of a single diaper is $0.30Diapers are a better deal if they are bought in bulk.

AdvertisingCurrent Advertising:

Television Newspaper (Periodicals) Magazines Retail

Promotion in China: Focus on moving from

cloth diapers Relate to the audience

MediaGood Media:

Pampers wants to get good reception from China. Bringing new jobs to their

country Offering an easier way to

perform a common task Bringing publicity to the

country.Bad Media:

Pampers will receive poor media from the U.S. probably for moving jobs to China.

PromotionCulturally sensitiveTarget market appropriate

Parenting magazines Floor displays in grocery and specialty stores Commercials on television and radio Social media

Monetary incentives Coupons and discounts

Social Responsibilities

“Since its inception, P&G has improved life for more than 300 million children around the world through our Live, Learn and Thrive cause. Every second of every day, two children benefit from P&G Live, Learn and Thrive initiatives (Live, Learn and Thrive Overview, 2012 ).”

As part of their ongoing efforts to maintain their social

responsibilities, Proctor and Gamble have created an

organization called Live, Learn and Thrive where they help

disadvantaged youth through donations, disaster relief and

employee engagement. To this day there are more than 100

programs in over 65 countries that are running continuously towards this great cause (Live,

Learn and Thrive Overview, 2012). This goes to show that some companies are not just in it for the money; they are

also focused on the wants and needs of their consumers.

Marketing StrategiesAt first, the company was focusing solely on the diapers’ outstanding ability to stay dry. When this stopped working in Europe, they found their new brand ideal: Pampers didn't just keep babies dry; it was a product that would partner with parents throughout their baby's stages of physical, social and emotional development.

They broadened their product range as well:

newborn to large size diapers big kid’s training pants wipes for every skin type swimming diapers Soaps and more.

They even provide services like: online forums Tips free products for expecting mothers Coupons Samples contest prizes and sweepstakes

Packaging features: lot of yellows to give off a comforting vibe

to consumers with infants bright exciting colors for motivation with

their training pants different sizes and designs are aimed

towards every consumer through the child’s different stages.

every box is sure to have the defined Pampers logo

and they also take the incentive to use their packaging to inform consumers with tips on proper baby sleeping and information on SIDS.

Distribution includes: almost all grocery and retail stores, as well

several convenience and drugstores, including Wal-Mart, Target, CVS and much more. When expanding to China, they have several options for distribution since many U.S. stores like Wal-Mart are opening over there in several different areas.

Marketing AdaptationPampers now have products in over 60 countries and have individual website branches

with appropriate languages and customizations for each.

They also have their own forum for parent’s thoughts and concerns and is customized for the wants and needs of each country.

Their packaging also differs according to country and more times than not, the pictures of ‘example babies’ will be altered as well.

For products in China, the packaging will mirror the classic and formal attitude of Chinese people and all logos and information will be written in Chinese. Any sales promotions will be altered to fit the preferences and customs of the Chinese people.

Marketing StrategyPERSONAL SELLINGWater waste, and the harmful chemicals from disinfecting of cloth diapers, can steer the view of not only safety, but necessity. Consumers are moving forward in life, almost like they are evolving with the changing nation. Staying updated with current trends is part of the desire of a progressive nation.LOGISTICS

Pampers China, should be made in China. Not only does this help China’s workforce, it also allows transportation to be minimized.

Marketing Strategy

Channels

To get the product into the hands of the

consumers, there are several paths to take. From the factory, they

will be moved in bulk to stores and then into consumers’ homes.

Also, from the factory, they should be

packaged in singles and triples, and disbursed to homes, hospitals, and

ob/gyn offices.

BudgetProduction facility construction budget

Covering all aspects of construction of facility and equipment for production

Launch budget Allocation of 10% of total budget for advertising and

promotional incentivesSales budget

Approximately ¼ of Pampers’ budget in the U.S. Sales are expected to grow by 40% in the first year

Action ProgramAdhering to LEED standards will allow P&G the ability to assure the Chinese people that they care about their lives. Environmental issues have a huge impact on doing business in China. Taking this serious will show P&G’s dedication to such issues.Advance risk management solutions and tools to provide the most efficient methods of containing risk.Improve global communication, improve training at all levels, and develop the management style to individualize P&G/China’s relationship.Utilize marketing to allow the Chinese citizens to understand why disposable diapers are a valid choice for their lifestyle. Keep abreast to changes in Chinese customs and traditions, as to market an unfamiliar product correctly.Boost CSR to focus, in part, on China. P&G already has an extensive social responsibility program. Enhancing this to incorporate China’s youth is an exciting opportunity to connect P&N with the Chinese people.

References253, S. (2007). Regulations on Environmental Protection for Foreign Invested Enterprises. Retrieved August 21, 2012, from PI XIAN CHINA: http://english.pixian.gov.cn/newsDateil.asp?cid=6&pid=37&id=295

7 Technologies Where China Has the U.S. Beat, Adam Aston, December 2010, http://www.greenbiz.com/blog/2010/12/07/7-technologies-where-china-has-us-beat?page=0%2C0

AMWarranty. (2012). The Role of Warranty in Marketing - 10.4.3 Warranty and Product Choice. Retrieved August 21, 2012, from AMWarranty: http://www.amwarranty.com/PDFFiles/The%20Role%20of%20Warranty%20in%20Marketing.pdf

China - Language, Culture, Customs and Etiquette, Kwintessential, N/A, http://www.kwintessential.co.uk/resources/global-etiquette/china-country-profile.html

China Geography, TravelChinaGuide.com, 2012, http://www.travelchinaguide.com/intro/geography/

Employee Engagement, 2012 http://www.pg.com/en_US/sustainability/employee_engagement.shtml

Fam, K., Jozsa, L., & Richard, J.E. (Eds.) (2010). Sales promotion techniques: Best practice from Asia and Europe. Asia Business Corporation Limited

ReferencesLafley, A. (2012, August 15th). Innovation at Procter & Gamble. Retrieved from Mini Workshop Series: http://www.miniworkshopseries.com/highlights/?p=1330

LAMOREAUX, M. G. (2011, May). Business Basics in China. Retrieved August 21, 2012, from Journal of Accountancy: http://www.journalofaccountancy.com/Issues/2011/May/20113840.htm

Lapowsky, I. (2010, July 12). 10 Steps to Starting a Business in China - 3. Choose an entity status. Retrieved August 21, 2012, from Inc.: http://www.inc.com/guides/2010/07/how-to-start-a-business-in-china_pagen_2.html

Lapowsky, I. (2010, June 12). 10 Steps to Starting a Business in China - 7. Trademark your intellectual property. Retrieved August 21, 2012, from Inc.: http://www.inc.com/guides/2010/07/how-to-start-a-business-in-china_pagen_3.html

Live, Learn and Thrive Overview, 2012 http://www.pg.com/en_US/sustainability/social_responsibility/live_learn_thrive_overview.shtml

Marketing Analysis of Pampers Diapers, 2012 http://www.centrorisorse.org/marketing-analysis-of-pampers-diapers.html

Operations and Supplies, 2012 http://www.pg.com/en_US/sustainability/environmental_sustainability/operations_suppliers/index.shtml

ReferencesOverview, 2012 http://www.pg.com/en_US/sustainability/overview.shtml

P&G. (2011). Investor Relations, Financial Reporting, Financial Statements, Annual Report. PG.com. Retrieved from http://annualreport.pg.com/annualreport2011/financials/statements.shtml.

Pampers - baby steps to movement marketing, Jim Stengel, January, 2012, http://uprisingmovements.com/case-studies/pampers-baby-steps-to-movement-marketing/

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Walsh, T. (2006). Talent: A Key Human-Resource Challenge. Retrieved from Rimas.Org: http://www.rimas.org.sg/files/Understanding%20China's%20Business%20Risk%20Environment.pdf

Wild, J. J., & Wild, K. L. (2012). International Business (6th ed.). Upper Saddle River, NJ: Pearson Education.

Zhongxim, Z. (2004, July 16). Open-crotch pants make way for disposable diapers. China Daily.com. Retrieved August 17, 2012 from http://chinadaily.com.cn/english/doc/2004-07/16/content_349150.htm.