The Procter & Gamble Company is among the dominant firms in the global consumer goods market. The company maintains this market position by addressing the concerns enumerated in this SWOT analysis. The SWOT Analysis framework is a strategic decision-making tool that identifies the internal strategic factors (strengths and weaknesses) and external strategic factors (opportunities and threats) in the business. Procter & Gamble capitalizes on its strengths and exploits its opportunities, while addressing the issues based on organizational weaknesses and business threats. For example, P&G wields its popular brands to penetrate markets around the world. In this case, Procter & Gamble’s vision statement and mission statement are supported in the process of addressing the issues determined in this SWOT analysis. As one of the biggest players in the industry, the company must keep evolving to overcome such issues based on changing market conditions. To maintain relevant strategic decisions, managers must keep abreast of changes in the strategic factors identifiable in this SWOT analysis of Procter & Gamble.
A SWOT analysis of the Procter & Gamble Company indicates the significance of developing stronger competitive advantage. Competitiveness is crucial to withstanding the force of competitive rivalry. The fulfillment of strategic objectives based on organizational strengths and consumer goods industry opportunities contributes to Procter & Gamble’s long-term success. Also, strategies to address P&G’s organizational weaknesses and the external threats against the business are essential. Such strategies support Procter & Gamble’s growth and development.
Procter & Gamble’s Strengths (Internal Strategic Factors)
Procter & Gamble’s strengths enable the business to maintain its market position despite high levels of competition with other consumer goods firms, such as Unilever (Read: SWOT Analysis of Unilever). This element of the SWOT Analysis deals with internal strategic factors that support business growth and expansion. Such factors enable Procter & Gamble to counteract the negative effects of competition. The company must build on its current strengths, while also developing more capabilities to further strengthen the business. The case of this SWOT analysis of Procter & Gamble highlights the following strengths:
- Strong consumer goods brands
- Economies of scale
- Efficient product distribution network
Strong consumer goods brands ensure Procter & Gamble’s competitive advantage. For example, Tide and Pampers are household names that contribute to consumer loyalty and P&G’s stable market share. On the other hand, economies of scale are a strength based on Procter & Gamble’s global scale of operations. As one of the biggest firms in the market, the company benefits from high process efficiencies and high cost effectiveness based on its organizational size. In relation, Procter & Gamble maintains a high-efficiency global product distribution network. This network involves company-owned facilities as well as third-party service providers. The strengths shown in this element of the SWOT analysis support market penetration and product competitiveness, which are emphasized in Procter & Gamble’s generic strategy and intensive growth strategies.
P&G’s Weaknesses (Internal Strategic Factors)
Despite its prominent market position, Procter & Gamble experiences barriers based on organizational weaknesses. In this element of the SWOT Analysis, internal strategic factors that limit business improvement are identified. These factors create difficulties in implementing Procter & Gamble’s strategies. For example, the company encounters challenges in enhancing its competitive advantage because of weaknesses in internal processes. Procter & Gamble must address the following weaknesses to minimize such challenges in its consumer goods business:
- Imitable products
- Limited online presence
- Limited degree of business diversification
One of Procter & Gamble’s main weaknesses is the imitable nature of its products. This weakness is typical in the consumer goods market, where products from different companies have considerable similarities. Having imitable products is a weakness because it makes Procter & Gamble susceptible to imitation, which could reduce market share. Limited online presence is another weakness of the company. Retail companies and manufacturers are continuously increasing their online operations. For example, many small and large consumer goods firms are using their respective e-commerce websites to sell products online. However, Procter & Gamble’s e-commerce website, the P&G Shop, has limited presence that operates mainly in the United States. This condition limits the benefits that the company gets from the global online market. Thus, improving online presence can enhance Procter & Gamble’s marketing mix or 4Ps, while boosting competitive advantage. The limited degree of diversification refers to the company’s operations primarily in the consumer goods industry. This condition makes Procter & Gamble highly dependent on the consumer goods market. As a result, such limited diversification is a weakness that maximizes the company’s exposure to market risks. In this element of the SWOT analysis of Procter & Gamble, strategic reform for e-commerce, product development, and business diversification are emphasized.
Opportunities for the Procter & Gamble Company (External Strategic Factors)
Procter & Gamble can exploit opportunities for growth and expansion in the global consumer goods industry and in other industries. This element of the SWOT analysis enumerates external strategic factors that impose barriers against the company’s growth and development. In this case, Procter & Gamble must take appropriate strategic action to ensure that the business benefits from the most significant opportunities. The company can strengthen its competitive advantage through such opportunities. This SWOT analysis of Procter & Gamble stresses the importance of the following opportunities:
- Business diversification to reduce risks
- Product innovation for competitiveness
- Online presence development
The global market presents opportunities for business growth. In this case of Procter & Gamble, business diversification is a major opportunity. For example, the company can enter other industries via acquisition or new ventures to reduce risks linked to dependence on the consumer goods market. Procter & Gamble also has the opportunity to increase its competitiveness through product innovation. Increasing investment for product innovation can lead to more attractive products, as well as novel products that create new income sources. Moreover, the opportunity to develop its online presence has significant positive implications for Procter & Gamble’s business. For instance, a more popular e-commerce website can increase the company’s profits from online transactions. This benefit is especially significant in exploiting online markets in developing countries. Also, a stronger online presence can improve Procter & Gamble’s brand image. A more popular website increases P&G’s brand exposure and consumer awareness. Therefore, this element of the SWOT analysis shows that Procter & Gamble has opportunity to grow and improve its competitive advantage.
Threats Facing P&G (External Strategic Factors)
External conditions can reduce the performance of Procter & Gamble, thereby threatening the business. Such threats or external strategic factors that have potential to bring down the company’s performance are identified in this element of the SWOT Analysis. Procter & Gamble must continue monitoring its external environment to determine threats based on the dynamic consumer goods market. The company must develop capabilities to protect itself from the effects of these threats. The following threats are significant strategic considerations in Procter & Gamble’s business:
- Global and local competition
- Imitation or counterfeiting of products
- Trade barriers in some countries
Procter & Gamble must continue improving to address the threat of competition. Competitors are always looking for ways to gain a bigger market share, which corresponds to a reduction in the company’s market share. A Porter’s Five Forces analysis of the Procter & Gamble Company shows that competition is a major external factor that affects the consumer goods business. In addition, imitation or counterfeiting is a considerable threat against P&G. For example, small local firms can develop products that are highly similar to Procter & Gamble’s products. This threat is based on the imitable nature of consumer goods, which is one of the company’s weaknesses. Moreover, trade barriers are a threat that can limit Procter & Gamble’s global growth. Such threat is significant in some countries with protectionist trade policies that restrict imports, or in countries that have questionable policies on the operations of foreign firms. This element of the SWOT analysis of the Procter & Gamble Company points to the importance of strengthening the company’s competitive advantage to protect the business from threats in the market.
Summary & Recommendations – SWOT Analysis of the Procter & Gamble Company
Procter & Gamble’s market position helps ensure resilience in spite of organizational weaknesses, and despite threats in the external environment. For example, this SWOT analysis highlights the strengths in economies of scale and strong brands. Such strengths make it difficult for other firms to directly compete against Procter & Gamble. The company also has high competitiveness based on the global scale of its operations. These conditions lead to capabilities in exploiting the opportunities available for Procter & Gamble in the consumer goods industry.
Despite its profitable and strong market position, the Procter & Gamble Company must develop measures to overcome its weaknesses and address external threats. Competitive rivalry is the most significant of these threats. On the other hand, limited online presence and limited business diversification are the most significant weaknesses of Procter & Gamble. Given these factors, the company must strengthen its competitive advantage and business capabilities in the consumer goods market. Based on the results of this SWOT analysis, the following are recommendations to address such issues facing Procter & Gamble:
- Develop P&G’s competitive advantage through innovation and technology.
- Expand e-commerce operations to exploit online market growth.
- Diversify by entering new industries to minimize Procter & Gamble’s market-based risk exposure.
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- The Procter & Gamble Company, Form 10-K.