Analysis Of Procter And Gamble

Alan G Lafley, the former CEO of Procter & Gamble, once said “Let’s execute along this strategy, but know that we’ll probably get some of this wrong, so be open to changing it (AZQuotes.com). Procter and Gamble has undergone many strategic changes in the last 15 years which have had a profound impact on the company’s profits and market share. The strategic changes that Procter & Gamble has undergone have been both positive and negative. While it is important to document the financial impact of the changes under Alan Lafley, it is also important to track the changes and growth under the current CEO David S. Taylor, while also showing Procter & Gamble’s competitive advantage. Procter & Gamble is a leader in the consumer products industry

Lafley then served as CEO from 2013 until 2015 when he was replaced by current CEO David S. Taylor. Under David Taylor’s leadership, Procter & Gamble launched two strategic initiatives. The first initiative was to “refocus its portfolio on the company’s 70 to 80 most lucrative product-market-market combinations, which are responsible for 90 percent of the revenues and almost all of its profits” (When Will P&G Play to Win Again, pg. 450). Procter & Gamble sold off almost 100 brands such as Iams and Duracell. This allowed Procter & Gamble to focus on the brands like Tide, Pampers, and Olay which are the most successful brands This initiative cut over $10 billion in expenses and has resulted in a Gross Profit Margin of 50% in 2016 (Fool.com). Procter & Gamble also focused on emerging markets as part of this initiative. Tide was launched in India and Pantene was launched in Brazil. The second initiative was “implementing strict cost-cutting measures through eliminating all spending not related to selling” (When Will P&G Play to Win Again, pg.450). According to Google.com/finance, Procter & Gamble’s stock price on September 21, 2012 was $69.42 and has increased to $93.55 on September 15 of this year. Currently Procter & Gamble’s market capitalization is $240.13

Clorox’s ROS was 11.2% in 2016, 10.3% in 2015, and 10.1% in 2014. Unilever’s ROS was 11.2% in 2016, 10.3% in 2015, and 10.1% in 2014. Procter & Gamble’s average ROS during the last 3 years is 13.87% which is higher than Clorox’s 10.53% and Unilever’s 9.9%. Procter & Gamble has been more profitable than Clorox and Unilever over the last 3 years. Procter & Gamble has not only a higher revenue than both Clorox and Unilever, it also has a higher net income than both companies. This shows that Procter & Gamble has a competitive advantage over both Clorox and Unilever since they are more profitable than both