INTERNATIONAL BUSINESS STRATEGY: PROCTER AND

GAMBLE
 Executive Summary
The following report will extensively deal with various business strategies and theories and will
apply it to a specific given company. The piece bears a brief introduction on the background of
the company while describing in details its international operations in light of relevant business
theories. The report is essentially analytical to enable the readers to grasp a comparative analysis
of business studies with relevant examples and case study. Evidence and numerical facts and
historical data have been provided according to need for a comprehensive analysis of marketing
operations of the company considering several social, political and economic factors.
 Table of contents
1. Introduction 4

2. Critical Evaluation of the Company 4

3. Relevant Business Theories 6

4. Conclusion 9

Reference List 11
1. Introduction
In the modern era, there has been a sufficient evolution of various principles of business and
commercial enterprise. Growth in population, expansion of economy and rise of professional
skill development programs has vastly widened the sphere of corporate and franchise based
initiatives. Inevitably this has had a huge impact on the domain of scholarly research of business
studies, being constantly modified with changing requirements. Thus, the business theories and
strategies have developed both theoretically and practically, adopted by companies worldwide.
The current report will extensively relate some of these relevant theories to a specific prescribed
company for a comprehensive critical evaluation.
Background of the Company
The focus is on P&G (Procter and Gamble) Company which is an American multinational
consumer goods organization having it’s headquarter at Ohio in the United States. British
American gentleman William Procter and Irish American nobleman founded the firm way back
in 1837 that presently enjoys a jaw dropping revenue of 6600 Crores (pg, 2019). Its subsidiaries
include Gillette, NEWCHAPTER, PGT Healthcare, Swiss Precision Diagnostics, SEBASTIAN,
amongst others. As per 2017 records, there are 95,000 employees working world wide with the
company. Initially beginning as a soap delivering organization during the American Civil War it
has today evolved into a consumer goods giant manufacturing numerous products catering to
daily needs (pg, 2019). CEO David S. Taylor has relentlessly advocated for its expansion
policies reflected in its diversification of products. Net income of the company as pert 2017
results is $15.32 billion (pg, 2019). While it has sold several of its enterprises to its rivals, it has
also restructured its business model, dispensing with a number of brands and retaining only a few
for a simple corporate structure.

2. Critical Evaluation of the Company

International Activities
Strategic Plans
With the level of competition rising each day, the company has rightly adopted means of
diversification and market penetration. It has also realized the need for a suitable alteration of
product packaging considering competitive threats from Unilever and other companies. This is
inextricably related with increased input from the marketing sector of P&G. It has been
previously seen that P&G suffers from a lack of private label products, unlike Kellogg`s and
others. As a result market development had been a tough issue for the company during 2011-
2013. Thus the company has decided in favor of manufacturing innovative products and services,
interesting business models along with updated production engineering. This is evident in its
collaboration with pharmaceutical companies. Currently, P&G manufactures healthcare items
only for women; consider male requirements could be highly profitable for them. Recently, P&G
modelled its global business components into four industry oriented sections as a part of the
company's present plan to improve business performance, namely, Global Beauty, Global Family
Care, Global Home Care and Global Grooming. The company is looking to deal with common
competitors with common technologies for satisfying common customers.
Philanthropic Steps
Along with commercial tactics, P&G has been involved in several initiatives for social welfare.
Since 1995, they have been providing unrelenting support to the US program of Save the
Children. Its devotion to support community impact programs has considerably improved trust
issues of customers. As stated by Buckley (2017), the company leverages its brands to form a
strong culture of health and hygiene. The company has jointly ventured to develop the civic
sense of citizens through improvement of public amenities and conducting of menstrual hygiene
trainings. Its products like Crest, Oral-B, Always and Safeguard have been successfully
integrated with health awareness campaign to provide women and children opportunities in
Nigeria and other underdeveloped areas. Its Fairy dish-soap brand has carried out several
campaigns to promote children's` rights in Saudi Arabia. As opined by Rugman and Verbeke
(2017), it has also supported many disaster relief efforts in drought and famine conditions in Sub
Saharan Africa and during the Nepal Earthquakes. In addition to this it is involved with
emergency services in India, Mexico, Italy, China and Philippines. Besides, P&G has worked
extensively for gender and intersectional equality, promoting education and other opportunities
for refugee girls in Switzerland and Indonesia. Its Children's Safe Drinking Program has
ensured to provide safe drinking water in drought hit areas like Ethiopia, Somalia, Kenya, Sudan
and Uganda.
Consumer Analysis
On 21st February, 2019, the Vice Chairman of the company, John Moeller demonstrated a
concise recapitulation of the company's previous performance, revealing satisfactory results. In
tune with this, the company has devised distinctive ways to build upon this solid foundation.
This includes forming and expanding brand superiority, increasing productivity to increase
investments and margins, constant striving to win and focussing on constructive development for
future development.
Supply Management
The company also honoured top suppliers powering supply network transformation in its
external business partner awards in Cincinnati. Yannis Skoufalos, the Global Product Supply
Officer specifically praised the company's ability for efficient delivery, quality products,
attractive packaging, effective communication, proper retail execution and adequate consumer
value. The company, along with its acknowledged associates, is forming an end-to-end
synchronized supply chain whereby distribution partners and suppliers are employed in a perfect
harmony for customer satisfaction. Consequently, the international business partners of the
company are propelling P&G shareholders for utilizing inventory in a beneficial way. The Chief
Purchasing Officer of the company Steve Atkinson has repeatedly stressed on the need for
expanding productivity and citizenship. As noted by Brannen et al. (2017), it is evident that the
company is looking to form strong and lasting relationship with its suppliers across the globe for
best performances. Tactically, P&G is determined to attract more investors by focussing on
corporate citizenship efforts by addressing issues of social and environmental welfare. This
cannot be accomplished without the constant support of global suppliers. As viewed by Strange
and Zucchella (2017), the company has also set strict guidelines for its external suppliers relating
to legal codes, child labor, harassment, forced labor, discrimination, corruption and
environmental issues.
Marketing Developments
Though P&G has executed extensive market research, occasionally it has relied on gut instincts
in case of marketing strategy. As viewed by Buckley et al. (2017), this is evident in the
company's entry into the Chinese market against all warnings and predictions. Adopting a sound
marketing strategy, it has negotiated the rivalry of several other shampoo marketers in China
through investment in consumer research and customized packaging of products.

3. Relevant Business Theories

Absolute cost Advantage theory
When a certain country is in a favourable situation with respect to climate, geographical
dimensions and natural resources, it is bound to produce goods at a relatively lower cost. This
theory is explicitly evident in P&G`s penetration into the Chinese supermarket as almost all the
experts had predicted that Chinese people would not be able to purchase P&G Products.
However, within a few years the company has acquired the superior position in the sphere of
consumer goods in China (Zhao et al. 2017). However, it should be noted that this theory fails
when there is emergence of trade between two countries when a single country produces multiple
items with absolute cost advantage.
Comparative cost advantage theory
As opined by Doh et al. (2017), Comparative cost advantage refers to the ability to produce a
specific object or service at a considerably lower marginal or opportunity rate over another
company (Trigeorgis and Reuer, 2017). In this context, P&G is able to maintain honest and
reasonable pricing for its products in comparison to its various competitors such as Nestle,
Unilever and Kellogg`s.
Free mobility of Capital theory
According to this theory, while a company may still initially be in a disempowered position in a
specific scenario, companies are supposed to resort to investment in industries until globally they
become a fierce competitive force to reckon with. In this context, free flow of capital and
investment in a globalized world is highly significant. According to the viewpoint of Tulung
(2017), flow of capital in the most prospective areas ensures that the company is not plagued by
hidden charges and retrospective changes. In this context, P&G has carried out efficient global
supply chain management utilizing inventories through its international suppliers (pg, 2019).
Heckscher-Ohlin Theory
This theory focuses on as to how a company could gain comparative advantage by
manufacturing products that utilized factors that are in abundance. As evidenced by Vernon
(2017), the factors include land, labor and capital that pave the path for investment in different
schemes and investment programs.
P&G has sufficiently realized that the cost if any factor or resource is an inevitable outcome of
supply and demand. As noted by Ridder (2017), factors in great supply relative to demand are
considerably cheaper while those in great demand relative to supply are expensive. For acquiring
cheaper production factors, P&G has managed to dispense with over a hundred brands while
retaining only 65 during the 2013-14 economic sessions.
Leontief Paradox theory
This theory is relevant to the operations of P&G concerned with the socio-economic situations of
America in the early part of the 20th century. P&G has been exemplary in this context in terms
of delivering capital intensive goods in place of labor intensive goods (Pg, 2019). In following
years, economists have noted that labor flow had been steady and productive in the United
States.
Product life cycle theory
This theory is inextricably related to the marketing strategies deployed by P&G in competitive
global market, especially its entry into South-East Asia. As observed by Cantwell (2017) three
distinct and interrelated stages in product life cycle is discernible. These are new stage, Maturing
stage and Standardized stage. It is believed that the production of new products will complete a
full circle back to its origin. This theory has been considerably modernized by P&G with respect
to its current trade patterns (Strange, R. and Zucchella, 2017). P&G had started its operations
through contractual dealings of soap and candles during the American Civil war. However, today
as a global company it is conducting research and development programs in emerging demand
markets in Africa and Asia where efficient human labor and other business amenities are
relatively cheaper (Zhao et al. 2017). Consequently, it is highly ironical that vast developing
markets like India and China are offering highly skilled manual labor and innovative research
opportunities at a reasonable cost advantage for a multinational firm like P&G.
Global strategic Rivalry theory
This concept popularized by Krugman and Lancaster has been effectively assimilated by P&G as
a MNC to gain competitive lead against other global firms. Competitive advantage on part of
P&G is barriers for its rivals all over the world. These rivals include opponents in a new market
who apparently seem to possess a psychological and practical home advantage, as seen in the
case of China (Tulung, 2017). However, P&G has successfully cemented its place in worldwide
consumer goods industry through research and development, ownership of intellectual property
rights, economies of scale, control of and access to resources and innovative business
methodology derived from exhaustive industry experience.
Present status and future
P&G essentially aspires to leadership and thus competes in more than the premium segments.
Emerging and developing economies is bound to become a bigger component of its prospective
business in the next ten years as the company is looking to improve upon the consequences of
the US slowdown by entering into the fast developing markets of China (Prospects.ac.uk, 2019).
It is highly commendable on their part that they are currently the largest consumer goods
company in China, enjoying a skyscraping annual sale of $2.5 Billion. By the early 2000s, the
company had made significant changes in its market research methodology. It is interesting that
instead of finding out what products the customer use, this company has been bent on trying to
assess as to how the customers use them. With its innovative business ideas, it has invested more
than sufficiently for an authentic research of Chinese market.
Though this investment had raised a few eyebrows, it helped the company to devise a plan
exclusively for Chinese supermarket. In case the domain of consumer goods industry is taken
into account, P&G has been the most successful company with respect to product development,
owning over 900 brands (Prospects.ac.uk, 2019). With over 3000 marketing executives all over
the world, P&G has successfully carried out brand stretching in China and other emerging
markets. In 2010, the shampoo and toothpaste of P&G had been too able to maintain 55% of
market share in Asian supermarket. The present status of the company also reflects the
company's brilliant overseas human resource management that has enabled the company to
recruit 98.67% of its employees from native resources in foreign markets. As P&G looks ahead
to the future, it is specifically targeting more emerging markets in Asia and Central Africa.
Specifically, it is trying to enlarge the sphere of healthcare and medicinal products catering to
special customer requirements for becoming unrivalled in the next few decades in consumer
goods industry.

4. Conclusion
Based on the report, it can be concluded that international business strategy of P&G has helped
the company to raise the revenue along with the brand value of company. This also shows that
company have sufficient human resource to satisfy their customers. International business
strategies and theories is a complex branch of economic studies that is in a continuous flux with
ever changing conditions. Though these studies are included as imperative topics in business
educational institutes curriculum, in the light of modern socio-political situations and
competitive rivalry, this is almost entirely practical and has got little to do with traditional
theories. P&G has been able to grasp the real nature of business tactics by keeping itself updated
with the dynamics of the commercial world. Their operations have transcended the sphere of
mere profit making operations and are catering to larger citizenship goals in tune with the spirit
of international brotherhood and global peace and understanding all over the world.
Reference List
Books
Buckley, P., 2017. International business. Abingdon: Routledge.
Rugman, A. and Verbeke, A., 2017. Global corporate strategy and trade policy. Abingdon:
Routledge.
Journals
Brannen, M.Y., Piekkari, R. and Tietze, S., 2017. The multifaceted role of language in
international business: Unpacking the forms, functions and features of a critical challenge to
MNC theory and performance. In Language in international business (pp. 139-162). Palgrave
Macmillan, Cham.
Buckley, P.J., Doh, J.P. and Benischke, M.H., 2017. Towards a renaissance in international
business research? Big questions, grand challenges, and the future of IB scholarship. Journal of
International Business Studies, 48(9), pp.1045-1064.
Strange, R. and Zucchella, A., 2017. Industry 4.0, global value chains and international
business. Multinational Business Review, 25(3), pp.174-184.
Trigeorgis, L. and Reuer, J.J., 2017. Real options theory in strategic management. Strategic
Management Journal, 38(1), pp.42-63.
Tulung, J.E., 2017. Resource Availability and Firm’s International Strategy as Key Determinants
Of Entry Mode Choice. Jurnal Aplikasi Manajemen, 15(1), pp.160-168.
Vernon, R., 2017. International investment and international trade in the product cycle. In
International Business (pp. 99-116). Routledge.
Zhao, E.Y., Fisher, G., Lounsbury, M. and Miller, D., 2017. Optimal distinctiveness: Broadening
the interface between institutional theory and strategic management. Strategic Management
Journal, 38(1), pp.93-113.
Online Articles
Cantwell, J., 2017. Innovation and international business. Industry and Innovation, 24(1), pp.41-
60. Available at: https://www.tandfonline.com/doi/abs/10.1080/13662716.2016.1257422
Accessed on 2nd march 2019
Doh, J., Rodrigues, S., Saka-Helmhout, A. and Makhija, M., 2017. International business
responses to institutional voids. https://link.springer.com/article/10.1057/s41267-017-0074-z
Ridder, H.G., 2017. The theory contribution of case study research designs. Business
Research, 10(2), pp.281-305. Available at: https://link.springer.com/article/10.1007/s40685-017-
0045-z Accessed on 2nd march 2019
Website
Pg (2019) Official site of pg Available at: https://www.pg.co.uk Accessed on 2nd march 2019
Prospects.ac.uk (2019) Importance of international studies Available at:
https://www.prospects.ac.uk/jobs-and-work-experience/job-sectors/business-consulting-and-
management/why-study-international-business Accessed on 2nd march 2019