FINANCIAL ANALYSIS: TEMPLATE
Proctor and Gamble® was founded in 1837 by William Proctor and James Gamble in Cincinnati, Ohio. Today the company is the world’s largest producer of consumer goods with over 300 brands in over 180 countries. The company has a significant advantage over its competitors because of market position and brands that everyone knows such as Tide®, Pampers®, Gillette®, Olay® and many more.
The company’s purpose is to “provide branded products and services of superior quality and value that improve the lives of the world’s consumers now and for generations to come. As a result, consumers will reward us with leadership sales, profit ...view middle of the document...
This company has been going strong for 180 years. Chances are they will keep rocking the consumer goods business for another 180.
• Worldwide brand recognition
• Leading market position
• Diversified product portfolio
• Strong focus on research and development
• High visibility due to marketing and advertising
• Strong financial position
• Competition from domestic and international brands
• Slowdown in global economic condition
• No private label products for customers
• Majority of health and beauty products are for women
• New markets in third world countries
• More Green Eco friendly products
• Additional mergers and acquisitions
• Increase penetration of urban areas
• Competition from unbranded or local products
• Rising energy costs
• New regulations
• Global economic conditions
• Counterfeit goods
RECOMMENDATIONS AND JUSTIFICATIONS:
1. RECOMMENDATION #1: Should the firm increase their capital expenditures to increase competitiveness? This will almost always be true but what segments of the business get the most capital allocated to them and why?
Proctor and Gamble may be the leader in its industry, but in order to maintain their status, they need to stay on top of their game if they are going to maintain this ranking. Their biggest competitors, Johnson & Johnson and Kimberly Clark are constantly looking for ways to improve their products and market share.
Fabric and Home care segment stands for 32% of the company’s sales. This includes laundry products, cleaning supplies, batteries, and pet products. This portion could be considered the company’s “bread and butter”. More capital is allocated to R&D in this segment to continue making the products better than they were.
With improvements on already popular brands, consumers will continue to use. Prior consumers that weren’t happy with the product may also be tempted to try again which will increase customer base as well as increase profits.
Capital should also be invested in locating supply chains closer to major hubs. While this investment may be costly, it could generate large returns because shipping costs would decrease which would allow the company to maintain competitive with the pricing of it’s products.
2. RECOMMENDATION #2: Should the firm increase growth by acquiring other companies for synergies or grow internally? Do they have the infrastructure to grow internally? If they buy a competitor, how will the merger be integrated in regards to culture, overlapping businesses, etc.
The firm should look into acquiring other companies. An acquisition will help expand the firms product line, team, market share as well as the possibility of greater geographic presence depending on where the acquired company has been doing business. Finding young...