Procter and Gamble is an international corporation that produces detergents, soaps and beauty cosmetics. Recently, the corporation merged with Gillette a leading firm in producing men shaving products. By Procter and Gamble merging with other beauty and cosmetics corporations such as Gillette, it has assisted it in improving the corporation performance by putting the top managers into pressure of improving the governance of the corporation. By merging, the corporation may increase their stock selling. Through these merges, usage of men and women beauty cosmetics have intensely increased in many countries worldwide and have enabled more men to value the necessity of making themselves look attractive. On the other hand, Procter and Gamble merged with this other corporation so that it may correct the problems that arise in the cosmetics industry. Gillette provided good and quality shavers to be used by men efficiently (Isidore, 2005).
This merging shows the importance of the worldwide segment of the external environs with which Procter and Gamble and the merged firms have to put into considerations when dealing with scarce reserves (Isidore, 2005). Additionally, merging has enabled Procter and Gamble to acquire more information on its competitors, stakeholders and customers. This enables the corporation in building their own base of capabilities and knowledge. The reason that led to this merging was the fact that Procter and Gamble was good in innovating products and knew how to nurture various brands.
On the other hand, Gillette was good in technology and had the ability in rolling out new products often. For Procter and Gamble to maximize its profit, it needs to employ a lot of business and corporate level strategies. This will depend mostly on the countries the company is dealing with, the consumers being sold the products and the type of industry Procter and Gamble is working in (Isidore, 2005).
First of all, Procter and Gamble will have to focus on the first world countries in order to sell their products. Then, it will have to focus on the third world countries which will manufacture these products for them. This will enable Procter and Gamble to capitalize on its profits by reducing the inputs costs of a commodity (Isidore, 2005). This strategy is implemented when the company gets cheap commodities and services from a poor country then sells the finished commodity to a wealthier country. Procter and Gamble will alter its image depending on the values and demands of its customers. For instance, as this company serves its markets by producing detergents and beauty cosmetics, it will need to put more consumer tastes on their commodities e.g. smell and color on the commodities. This is just one of the ways of appealing its customers.
United Refining Company is locally based in the United States. British petroleum (BP) would be the suitable company in merging with the latter company. The strategic actions that United Refining Oil Company would take relative to the disaster that occurred in the Gulf of Mexico by BP and to the future of the success of this corporation are to be influenced by the pressure the corporation is getting from its external environment. A main challenge that the corporation’s strategic leader is supposed to understand is the effects of the external environment on the corporation. On the other hand, the strategic leader is supposed to forecast how its forthcoming strategic plans and actions may lead the corporation to success.
In the future, United Refining Oil Company and the additional oil and gas firms focusing on extracting fuels, have to expect regulatory changes in the legal or political segments of the environment generally. A report issued on the disaster showed that the practices conducted by the oil companies need to improve intensely. Since the disaster happened, the government agencies in charge of inspecting drilling platforms are supposed to intensify the drilling permits to the oil and gas corporations. United Refining Oil Company has tried in rectifying the Gulf of Mexico problems by forming extra joint ventures in the worldwide arena.
It has proposed ventures with Rosneft Corporation, British petroleum (BP) and a certain Russian corporation so that it may improve its performances. Incase the deal with Rosneft corporation goes through; National Iranian Oil Company would assist Rosneft and British petroleum (BP) in exploring opportunities in the arctic region. Rosneft Corporation maintained on a shared swap giving them a five percent stake in British Petroleum (BP). Additionally, British petroleum (BP) together with an Indian partner Reliance industry formed a 7.2 billion dollars investment.
It gave the corporation a thirty percent stake in the field of oil and gas off the east coast. These deals show how British petroleum (BP) together with United Refining Oil Company will improve in the future the necessity of the global segments. The oil and gas reserves in Russia are ten years away from producing. British petroleum (BP) needs together with United Refining Oil Company needs to source energy worldwide.
By doing so, it needs to transport the product, refine it and then distribute it over and done with global partnerships. These global partnerships may be internal and external to United Refining Oil Company. In ensuring for any success in a corporation, assessing the external environment influences is important. This assists energy corporations mostly.
This is because these energy corporations are part of the worldwide incorporated process of energy extraction, refining into different products and distributing the products worldwide. British petroleum tactical actions are mainly affected by the conditions that arise in the other segments of the corporation’s general environment. These segments may be political, physical and social environment.
Procter and Gamble is an internationally recognized corporation worldwide for the steady consumer brands it has. The corporation is organized into two international business units. These are the household care unit and the beauty and grooming unit. Additionally, the firm has a lot of products that are produced in different parts of the world. Some of these products are Ivory, Herbal Essences, Cover Girl, Crest, Bounce and Bold.
Twenty four of the Procter and Gamble corporation product lines produce nearly 1billion dollars in their yearly sales. Estimates done reveal that nearly everyone in the world spends 12 dollars yearly in buying Procter and Gamble products. The new chief executive officer of Procter and Gamble Corporation wants to make this yearly average expenditure to 14 dollars a person before 2015 (Bryon, 2011).
Additionally, the chief executive officer wants the firm’s annual report sales revenues to rise up to 100 billion dollars from today’s roughly 80 billion dollar mark, and for the number of Procter and Gamble customers to increase 5 billion dollars from the current 4.2 billion. The corporation has implemented various strategies in meeting these objectives. According to the corporation officials and analysts, these objectives issued are to be reached through plans that are now in place to move quickly and broadly into developing countries such as China and India. Furthermore, the objectives are to produce products that will be appealing to new but lower income customers.
Efforts will simultaneously continue to satisfy the needs of Procter and Gamble’s huge stable of its current customers. These intended actions appear to support the view that Procter and Gamble likes to use its capabilities and competencies to grow organically rather than through mergers and acquisitions or through cooperative relationships. In the words of the previous Procter and Gamble CEO, he asserted that organic growth in a corporation is more vital as it is developed from the corporation’s competencies.
He went on to state that organic growth exercises the innovation muscles of the corporation (Bryon, 2011). Moreover, he said that if the corporation implemented organic growth, it would become stronger in the market. Cutting edge technology, supply chain management skills, advertising expertise and marketing research and development skills in regards to fat and oils, a broad portfolio and emulsifiers are a few of Procter and Gambler’s highly regarded competencies. All of these competencies, which are as result of the combination of the firms tangible and intangible resources allow Procter and Gamble to perform the tasks that must be completed to produce, sell, distribute and service its branded goods.
By the corporation implementing these strategies, it is a step further as it discovers that these competencies contribute to the firm’s five core competencies or fundamental strengths. For instance, R&D capabilities are foundational to Procter and Gamble’s innovation which is the core competence. Similarly, Procter and Gamble marketing and advertising skills contribute to its brand building core competencies and customer understanding. The supply chain management capability is critical to the go-market core competence.
This competency allows Procter and Gamble to be efficient in its productions and retain its customers as a result. Thus, some of the Procter and Gamble’s competencies are seen how they are joined to the competencies of other corporations. From an operational perspective, these core competencies are activities Procter and Gamble carries out especially well relative to competitors and through which the firm is able to create unique value for its customers (Bryon, 2011).
The corporation’s external environment factors lead to the threats and opportunities of a corporation. For instance, the opportunities United Refining Oil Company gets when it enters the worldwide markets and the possibilities of the additional regulations in the market, British petroleum (BP) conducts reducing opportunities in extracting oil and gas. Cooperatively, threats and opportunities affect the strategic actions of a corporation. The external environment influences the corporation when they are seeking for the above average returns in revenue and strategic competitiveness.
How this oil corporation presents global economy is different from the historical conditions. For instance, changes in technology increased the corporation need in developing competitive actions that are competitive. British petroleum (BP) would assist United Refinery Oil Company in its growth. This is because British petroleum Company is a multinational company well recognized and carries out different oil drilling practices. Moreover, British petroleum (BP) has well trained employees with a lot of expertise in the oil, coal extraction field.
A business level strategy to be considered by this corporation is to be determined by the people the corporation will serve and the needs needed to be satisfied by the customers. One of the business strategies to be implemented is strengthening the relationships of the customers by presenting to them superior values. The customers are supposed to be assisted in developing new competitive advantages. On the other hand, the corporation should enhance the values of the competitive advantage that are in existence. In addition, the company needs to implement actions that are mainly designed in producing or the goods and services by using the lowest costs available (Ford & Ford, 2010).
These costs must be relative to the corporation’s competitors, having acceptable features to the customers. This is by issuing good features that customers will accept, put a low competitive price in their products and standardize the products they offer. In order for the corporation to fulfill this strategy, it needs to minimize its costs of sale, build manufacturing facilities that are efficient, control production costs tightly and observe the costs of activities delivered by the outsiders.
Additionally, a corporate level strategy required by this corporation is product advertisement (Ford & Ford, 2010). This will assist the corporation in convincing their customers and new entrants that the products they offer are distinctive. By a customer valuing the uniqueness of a product, he or she tends to be loyal to the corporation and the product itself. Advertisements help the corporation at large by extending their reach to great number of people. Additionally, the United Refinery Oil Company should look for acquisitions and mergers.
This will be effective for the company’s growth at the corporate level. In order to increase its market share, this company can merge with other bigger recognized companies. For this merging to be profitable to the United Refinery Oil Company, it needs to control all the costs such as training of new employees and streamlining procedures costs. On the other hand, the company grows after merging with other firms of the same industry.
Ford, J. D. & Ford, L.W. (2010). Stop blaming resistance to change and start using it, Organizational Dynamics, 39:24–36.
Bryon, E. (2011). At P&G beauty makeover needs to prove it has legs, Wall Street Journal, January 26, B1.
Isidore, C. (2005). P&G to buy Gillette for $57B. Stock merger would link some of the world’s best-known household brands, could spur more deals. Retrieved 19 Feb. 2013 from http://money.cnn.com/2005/01/28/news/fortune500/pg_gillette/index.htm
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