International Expansion

Procter & Gamble first became an international company in 1930 with their acquisition of Thomas Hedley Co., an English company.  Procter & Gamble sells their products in 180 countries around the world.  Their Global Business Units consist of beauty & grooming and household care.  With its strong international presence, in countries where people can make as little as $2 a day, a new perspective needed to be found.  P&G launched a skunkworks to approach this demographic of their customers.  The market for developing countries is growing at a much larger rate than that of developed countries, 6% to 8% annually versus 1% to 2%.  P&G also relies on something called "mass prestige" that capitalizes on the middle and upper classes that purchase Procter & Gamble products like Tide, Crest, and Max Factor.  I think that P&G's strategies relating to pursuing the developing markets since the recession yet still relying on the middle and upper class markets is a great balance to have.  "It's a myth to say poor people only want function," says Graulty, who has headed P&G's $2-a-day initiative since October 2009. "They care about beauty. Just like us." (P&G and the $2 a day market)

Business Level Strategy

What is Procter & Gamble's business level strategy? 

There are three options to choose from: overall cost leadership, differentiation, and focus strategy.  I believe that P & G focuses on differentiation with their brands.  They do not provide the lowest cost on all of their items.  Tide laundry detergent is one of the more expensive brands.  Their shaving products, dish soap, and toilet paper brands also fall on the higher end of the price spectrum.  Procter & Gamble's products are not entirely unique, you can find many brands of laundry detergent, makeup, and bath soap, however P & G has a differentiated portfolio of brands and these brands are trusted and found in many homes in the United States.  Their reputation provides them with a solid customer base as well.  

Book Value vs. Market Value

Procter & Gamble has a higher market value than they do book value.  What this means is that their intangible assets have a high value.  Human capital and social capital are part of these intangible assets.  Along with them is "knowledge."  The two parts of knowledge are explicit and tacit knowledge.  It is a good thing for Procter & Gamble that their market value is higher than their book value.  Other companies that share this type of ratio are Apple, Google, Microsoft, and Oracle.

Procter & Gamble employees volunteering at Meals on Wheels.