Economic & Industry Analysis
The Procter & Gamble company (PG) headquartered in Cincinnati Ohio, Incorporated in 1905, provides branded consumer good products. The company markets over 300 branded products, and operates through three global business units: beauty, health and well-being, and household care. The company’s products are sold primarily through, mass merchandisers, grocery stores, drug stores and sales to Wal-Mart.
The direction of economic activity, such as government and monetary policy has a minimal effect on Procter & Gamble. Interest rate cuts may help PG, but the economic turn down, will hurt. Other economic factors play a larger role; an increase in inflation can cause consumers to spend their money on generic brands versus PG name brands. The company is also exposed to market risk through interest rate changes, and foreign exchange rates. If not managed property the company could lose billions. To safeguard against sudden exchange rates PG uses the forward contract option that provides a fixed exchange rate between the two currencies. Overall PG produces need based products and not luxury items, which will keep the company in good standings through most economic down falls.
An industry analysis has shown Procter & Gamble’s top competitors; in the personal product industry are Kimberly Clark, Elizabeth Arden, Colgate Palmolive and Avon. PG is a mature saturated company and finds it difficult to expand market share, for a company of its size. To deal with market share expansion and competition PG focuses on cost reduction through a decrease in promotions, coupons and plans to advertise heavily. PG recently teamed with Coke, Wrigley, and Gillett and has the available cash flow to make several businesses i ...