There are several companies in the fast moving and consumer goods companies but the image enjoyed by Procter and Gamble is quite unique and there are no second thoughts about it. This special place so enjoyed by this world famous company can be attributed to the concern for quality and importance of people needs in their eyes. The conduct of the company employees all over the globe is responsible for the image and reputation enjoyed by the company. The conduct comprises of the promises which are made to the target audiences by Procter and Gamble as well as the products made and the services provided to the company. There are no second thoughts about the fact that the employees at Procter and Gamble are conscientious citizens and always do what is right (Laﬂey 2009).
Integrity in a lawful and responsible manner is the only way of conducting all the business activities as far as Procter and Gamble is considered. There are several situations which the company has faced over a period of time and has always emerged out as a winner in rebuilding trust with the consumers, employees and suppliers. All the ethical questions when posed in front of the company are replied on basis of the company values. Both in case of day to day decision making as well as long term decision making the good judgment is carried out pertaining to the fact that which course of action is most appropriate.
All the important policies for business conduct derived in P&G’s Values are a strong companion to their worldwide business conduct. At Procter and Gamble there is very tolerance for illegal or unethical behavior and this defines about the appropriate decisions which are made in every sphere of business. The scope of this article is associated with discussion about the policies of Procter and Gamble with which they are managing to survive in this competitive global business environment. There are several international frameworks making use of which they are leading other FMCG companies and have proved out to be exemplary in nature (Worrell1998).
Critical Issues in Globalization and Response of P&G
The globalized world is a great example in which the physical boundaries have become obsolete and people are consuming not what is available to them but what is preferable to them. This change has led to various critical issues and it is not only business related responsibility but a moral responsibility for each and every multinational company to address these responsibilities and Procter and Gamble has proved out quite competent in this case. The globalized world is a beautiful exemplification in which the consumers of various tastes and preferences are coexisting with each other as there are specialized products and services by companies to address their individual needs (Dhyani 2009).
The international frameworks for examining the policies used by Procter and Gamble reflect the reasons for which the company has attained success. The very basic framework to be discussed in this case is the PESTEL framework. There is no second thought about the difficulty the company has faced over a period of time in which they have not realized political, legal, economic, social or any other forms of differences while international expansion. In spite of this harsh reality the role and scope of success which Procter and Gamble has attained cannot be denied. This is only because of the underlying inclination towards innovation. The company has always believed in innovation and this has helped in managing with the role of strategies which will be discussed later (Porter 2004).
This can be truly stated in line with the think global and act local approach followed by the company that innovation has long been the backbone is growth. The proud chairman, president, and CEO of the company, Bob McDonald, claims, “We know from our history that while promotions may win quarters, innovation wins decades”. Extensive level of research and development activities is carried out on part of the company in its developmental process which assumes out to be the cost of as much as $2 billion. Other aspect which has helped Procter and Gamble to attain such position in the globalized world is the amount of $400 million spent on foundational consumer research. This is done in order to identify opportunities for innovation in nearly 100 countries (Bartlett 2003).
There are several theories of international trade which can be seen in line with the global crisis of year 2000 faced by Procter and Gamble. The very first theory is termed as Mercantilism and in this theory it is believed that accumulated wealth is responsible for any nation’s wealth. The national wealth according to the mercantile theory or in case of our concerned organization Procter and Gamble, the wealth was diminishing as the accumulated amount was declining at a faster rate. This was the result of year 2000’s downturn. The role of this theory can be justified that it motivates for accumulation of wealth by creating trade surplus. The company fell in line with this theory and expanded its global activities and made move into various nations where the potential was untapped (Treat, Thibault and Asin 1996).
The other theories to be discussed in this case are absolute advantage theory, comparative advantage theory, factor proportions trade and international product cycle. The most relevant and obvious theory which has proved out beneficial for Procter and Gamble is the international product cycle theory. In this theory it is believed that as the rate of maturity of the product increases there is need for obvious change in the sales as well as the location of the sale. This fact is again equally important for nations as well as with our concerned organization (Porter 1998).
When the company was faced with leadership crisis in the year 2000 this theory became functional and several changes were carried out. The CEO was changed and the key strategic decisions were also changed in lined with this top level major change. This indicates that the role of all such theories have proved out crucial for the development of Procter and Gamble. Next in line with this discussion the upcoming point is associated with strategy formulation related with various aspects such as risk and organization structure. There is complete history about the evolution of organization structure of Procter and Gamble. Earlier when the structure was evolved it was divisional in nature and then it was transformed into standalone subsidiaries as there was much of international expansion over a period of time (Comai and Tena 2007).
All these changes were a result of strategic planning with regard to international expansion and this has helped in management of company reputation over a period of time. The other aspects in which the growth and polices of Procter and Gamble are to be appreciated is risk. As far as risk is concerned the organization has a high risk aversion tendency as they believe in routine pattern of success which they have visualized in the US markets. They have replicated their models of success into various countries in line like India. The risk can only be reflected into various ways such as cost cutting, new product development as well as research and development (Bivial 2008).
There are calculated risks and high degree risks which have been taken at the very right time to deal with the falling share prices as well as the innovative products introduced in the name of company every now and then. These risks have helped the company to gain stability over a period of time and become successful too. There are ways in which the strategies in relation with the risk taking capabilities of the company can be justified (Middleton 2003).
In line with Porters five forces analysis it can be truly justified that there is need for matching up with the level of other big companies. The role of Porters five force analysis is much important as it helps in dealing with all the crucial aspects of any company. The five distinct elements which are given importance in this analysis are competition level in the market place, threat from the new entrants, threat from the suppliers, bargaining power of the consumers and last but not the least threat from the substitute products. The threat from the substitute products is too high in case of Procter and Gamble as there are several options available with the consumers.
In this global world the consumers are very high on information seeking as they need maximum value for their money. They want to manage with all the varied products available to them and their loyalty towards nay particular company or product will change accordingly. To mange with this threat both at the domestic as well as international level the concerned company is making serious efforts. The second aspect in the Porters five forces model of much importance is the threat from the new entrants and as it is evident that the industry of fast moving consumer goods is much volatile in nature there are several new entrants on regular basis.
A very obvious fact to be mentioned at this point of time indicates that there is need for marinating the status quo as this is an established company over many years. The image so build in the eyes of the consumers is much profound and new entries are not much relevant as a threat in this case. The other aspects in the Porters five forces model are also dealt much carefully in case of the company and it can be concluded that the policies meant for international business are profound in nature.
The role of international frameworks of business are much important in analyzing the actual situation of nay company and this suggests that multinationals have evolved these fundamental rule over a period of time. The mechanisms which are essential will work only when applied in a global context. All those multinational companies which tend to follow the approach of think global and act global will survive in the long run. This suggests that there is need for following a multidisciplinary approach with which success can be achieved at a faster rate.
The concerned came of multinational company Procter and Gamble is an eye opener as how the company dealt with its leadership crisis in the year 2000 and came out with flying colors in the international arena. The various theories of international trade have also been applicable in this case and there is need for continuous improvement in order to maintain this position. The role of such prospective details is essential when examination of international policies followed by a giant like Procter and Gamble is carried out and hence it can be concluded that the company excels its closest competitor just because of this commitment towards quality and innovation.