Business Model Innovation in P&G Company

This essay discusses the business model canvas and its relation with disruption in the environment. It also talks about the external environment analysis (opportunities and threat) that are attained to the company P&G with the use of smart connected products. The latter part of the essay talks about the business model canvas of P&G along with its relation with value creation and resource and capabilities.

Running Head: Innovation and Sustainability Business Development
Innovation and Sustainability Business Development

Innovation and Sustainability Business Development 1
“Business model innovation in P&G Company”
Business Model Canvas is a strategic tool that helps organizations in developing a template with
the help of which they can initiate success for the company in the target market. The purpose of
this task is to provide a detailed literature of the business model canvas and its relation with the
disruption present in the environment. It also talks about the external environment analysis
(opportunities and threat) that are attained to the company P&G with the use of smart connected
products. The latter part of the essay talks about the business model canvas of P&G along with
its relation with value creation and resource and capabilities. More details about the essay are
discussed below:
The business model canvas approach is defined by Osteerwalder and Pigneur in the Business
model generation book (2010). Further, according Teece (2010), the business model pronounces
the information and provides valuable data and evidence that helps the company in identifying
the values that the company can provide to the customers. Further, it should be noted that the
model is a tool that includes different aspects and their relation with various activities of the
company (Chesbrough, 2010) . The business model canvas is a tool that innate all the process of
the organization and provides ways in which an organization can create value in the target
market.
Further, Zott et. al. (2011), in their literature stated that the business model canvas refers to a
statement , description, representation, an architecture, a conceptual tool or a model that
represents value of different departments of the company. The business model should of an
organization should expressive the value proposition of the company by creating value in the
products and services offered. It should identify the market segment (the users of products), the
model should also define the value chain structure in the organization that should be used to
supply the products. The model should also estimate the cost structure and profits that are to be
earned using company’ value proposition. It should also describe the position of the company
with the network linking the key people of the company; and lastly, it should formulate the
competitive strategy to earn success in the target market Morris et al. (2005).
A business model canvas in the current environment can only attain success by using technology
and innovation in their process. With the changing environment it has become important to use

Innovation and Sustainability Business Development 2
disruption in the model to capture the value of the company and provide it to the customers
present in the market (Osterwalder, & Pigneur, 2010). It should be noted that disruption has
become a buzzword in the competitive environment; with the use of such disruption, an
organization can easily transform their business activities to efficiently provide its services in the
target market. The companies that include disruptive innovation in their business activities tend
to earn more benefit in the market (de Jong, & van Dijk, 2015). This disruption in technology
and innovation changes the complex and costly products in simple and easy affordable products
that can be used by people. It should be noted that the companies now days are shifting their
focus on the needs and requirements of the customers present in the market. AirBnB has become
one of the examples in this case by becoming disruptor in the environment by improving their
hospitality services and providing better conditions to the customers to live in. Thus, it increases
the customer satisfaction and sales for the company accordingly (Johnson, Christensen, &
Kagermann, 2008).
Further talking about the company P&G, it should be noted that the organization is an American
multinational organization that was founded in the year 1837 by British American William
Procter and Irish American James Gamble. The company provides a wide range of personal care,
cleaning agent and healthcare products in the market (P & G, 2018). The company has attained
various opportunities in the market with the use of efficient and effective smart connected tools.
These tools refer to a technological innovation that assists the organization in expanding their
business activities to achieving the success in the market. These are the tools that are related to
the IoT (internet of things) and helps in connecting, transferring and sharing the information
from one department of the organization to another. These products add functionalities in the
activities of the company P&G that helps them in growing the profits in the market. The smart
connected tools are developed with the software, processors and sensors that allow the company
to share data to different departments (Zott, Amit, & Massa, 2011).
The company P&G is regarded as one of the biggest company initiating its activities in the
external environment. So, these tools provide opportunities to the company in effectively
operating its business in the international market. With the help of such tools the company can
shares data with the branches of the company in different parts of the world in seconds which
increases the effectiveness of the system. Also, the company connected its various products with

Innovation and Sustainability Business Development 3
the software that helped in increasing the efficiency of the product as well (França, et. al., 2017).
Like, in the case of Oral-B brush, the connected created an application and connected with the
brush that helped them in customers in knowing the areas where they have hygiene issues in their
mouth. Further, these tools also helped the company in managing the supply chain management
system by easily monitoring the supply of products in different parts of the world (Al-Debei, &
Avison, 2010).
Along with many benefits, these tools also provide various threats to the company in the market.
The major threat that the company face is the reduction in the privacy of the organization. If
these tools are hacked or used by some other person then it might leak the price sensitive
information of the company and information of their customers as well. Thus, it can hamper the
image of the company present in the market. Also, these tools are complex in their usage so the
employees might face difficulty in managing the operation along with managing these tools. It
can act as an additional work for the employees that can reduce their concentration towards main
motive of the company (Porter, & Heppelmann, 2014). Thus, these are the opportunities and
threats related to the use of smart connected products in P&G Company.
Business model of Procter & Gamble Company
Key Partners
 Product offered
under different
brands (Bounty,
Pantene, Venus,
Olay etc.)
 Contact
manufacturers
 Media
 Suppliers
 Advertisement
agencies
 Retailers and
distributors
 Sponsorships
 Acquisitions
Key Activities
 Manufacturing the
consumer products
under different
brands.
 Advertisement
 Distribution
 Marketing
 Research and
development
 Branding
 Quality check
 International
expansion
Value Proposition
 Includes
diversified
range of
personal care
and health care
products
 Products with
optimum
quality
 Vast presence
in retail stores.
 Massive brand
image
 Different
market
segments
Customer
Relationships
 Brand
awareness
 Word of
mouth
 After
sales
response
from
customers
 Direct
communi
cations
with
customers
 Recomme
Customer
Segments
 Mass
Population
 House hold
products
 Different
targeted
audiences for
different
product
segment i.e.
men, women
and kids.
 People from
all income

Innovation and Sustainability Business Development 4
worldwide. ndations
 Discounte
d coupons
and offers
 Online
availabilit
y of
products.
 Coupon
and gift
vouchers.
levels.
Key Resources
 20 manufacturing
sites in 20 parts of
the world.
 Distribution
network
 Huge brand
portfolio
 Human Resources
 Extensive
distribution
network
 Facilities
 Connect with
different people to
enhance
productivity
 Retail stores
Channels
 Grocery Stores
 Retailers
 E-commerce
 Baby shops
 Trade partners
 Shopping malls
 Drug stores
 Promotion and
advertisement.
Cost Structure
 Supply chain and logistics
 raw materials
 Taxes
 Marketing
 Production costs
 Staff salaries
Revenue Streams
 Sales of good from retail stores
 Online stores
 Cash on delivery of products
 Payment by debit and credit cards
 Licensing
The two selected aspects of the business model canvas are resource and capabilities and value
proposition. These are the two most important aspects of the business model canvas that have a

Innovation and Sustainability Business Development 5
major role in influence the growth of the company in the external environment. The company
P&G has many resource and capabilities due to which they are easily operating their business in
different parts of the world. The company has 20 manufacturing plants in 20 cities of US where
products are being produced and sold (P & G, 2018). Further, the organization has also
developed a qualified distribution channel that helps them in delivering the products and services
to customers on time. P&G has a leading brand portfolio that helps them in earning good returns
in the external market. The company has 65 main brands that produces 95% of profits for the
company (Vizlogi, 2018).
Talking about value proposition, the biggest value of the company is added in its personal care
and hygiene products. The company provides a diversified range of hygiene products under
different brand names with efficient quality. Quality is the main aim of the organization due to
which the company is able to manage its growth in the external market. This feature helps the
management in initiating repeated sales of their products (Porter, & Heppelmann, 2015).
Thus, considering the above facts, it should be noted that the company P&G is progressively
initiating its activities in the external environment. The organization is satisfying the
requirements of the customers present in the market due to which they are gaining successful
brand image as well. The company earns competitive advantage in the market by properly using
their resource and capabilities. Further, the above mention essay explained the meaning of
business model and disruption and its use in an organization.

Innovation and Sustainability Business Development 6
References
Al-Debei, M. M., & Avison, D. (2010). Developing a unified framework of the business model
concept. European Journal of Information Systems, 19(3), 359-376.
Chesbrough, H. (2010). Business Model Innovation: Opportunities and Barriers. Long Range
Planning, 43(2–3), 354-363.
de Jong, M., & van Dijk, M. (2015). Disrupting beliefs: A new approach to business-model
innovation. McKinsey Quarterly.
França, C. L., Broman, G., Robèrt, K. H., Basile, G., & Trygg, L. (2017). An approach to
business model innovation and design for strategic sustainable development. Journal of
Cleaner Production, 140, 155-166.
Johnson, M. W., Christensen, C. M., & Kagermann, H. (2008). Reinventing your business
model. Harvard Business Review, 86(12), 50.
Osterwalder, A., & Pigneur, Y. (2010). Business Model Generation. New Jersey: Wiley (the unit
textbook). The textbook is available from the CQUniversity library for free.
P & G. (2018). Our brands. Retrieved from https://www.pg.co.uk/our_brands
P&G. (2018), Caring About Your Look & Beauty. Retrieved from
https://www.pg.com/en_EG/products/look.shtml.
Porter, M. E., & Heppelmann, J. E. (2014). How smart, connected products are transforming
competition. Harvard Business Review, 92(11), 64-88.
Porter, M. E., & Heppelmann, J. E. (2015). How smart, connected products are transforming
companies. Harvard Business Review, 93(10), 96-114.
Vizlogi, (2018). Procter & Gamble business model canvas. Retrieved from
<https://vizologi.com/business-strategy-canvas/procter-gamble-business-model-canvas/>
Zott, C., Amit, R., & Massa, L. (2011). The business model: Recent developments and future
research. Journal of Management : JOM, 37(4), 1019-1042.

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