Management Economics: Procter and Gamble Company

Management Economics

INTRODUCTION
The management economics refers to the application of various economic theories
and concepts with different methodologies with the purpose of solving the business problems.
It provides assistance to the management in taking proper decision and also acts as the link
among the theory and the practice. In this report, Procter and Gamble is taken as an
organization. It has a wide range of products but this report focusses on the baby wipes
product of the company. This report provides an insight about the company history, market
structure and the industry in which it operates.
MAIN BODY
1. Company background, its products and services and history
Company History
The Procter & Gamble Company (P&G) is the growing American MNC in the FMCG
sector and it was initiated in the year 1837 by the two men who came across by chance,
namely, William Procter and James Gamble. In the year 1858-1859, the revenue of the
company reached $1 million having nearly 80 employees (A Company History 1837 – Today.
2020). At the time of American civil war, P&G had acquired contracts in respect to offering
of soaps and candles to the Union Army. In 1887, it began the income division program by
giving stake to the workers of the business entity to reduce the chances of going on strike.
After the acquisition of Thomas Hedley Co., the company had it headquarter in UK.
Background
P&G products is the iconic brand which is the combination of what’s needed with the
what is possible by making the living little more enjoyable for over181 years. It is the
publicly traded Fortune 500 company. It serves over 5bn customers all across the globe with
its wide range of products.
Products and services
It has the solidest range of product all with the reliable quality headship which involves
Always, Ambi Pur, Lenor, Oral-B, Gillette, Pampers, Wella etc. The P&G community has
established it operation in approximately across 70 countries across the world. It has
categorized its global business segments into 4 sectors which is a crucial aspect of the

organization’s present plan for the purpose of improving its business performance. The
sectors are given below:
 Fabric and Home Care, such as Ariel, Ambi Pur, Tide
 Beauty and Personal Care product range, like Herbal Essences, Vicks, Head &
Shoulders
 Health and Grooming, example, Gillette, Olay, Old Spice
 Baby & Family Care, such as Pampers, whisper, Oral-B
2. Market analysis since inception
In the early years of its inception the company was facing competition from at least
14 competitors but as the business was expanded rapidly it dominated the market. In 1848
Cincinnati was also attached to the major cities and the P&G grew. In 1851, it created the
mon and stars symbol which become famous and a symbol of quality. After then the
company started growing rapidly. It moved its operation in the bigger factories with all new
routes of trade. Therefore, it can be said that there was no such tough competition it was
facing in the market. The company was mainly operating the oligopoly market. The main
cause for assuming this is that at that time not much competitors were there and only few
were there in the market. In the year 1859, the revenue of P&G touched at $1mn with just 80
staffs at that time. P&G can be considered as an oligopoly. It is a market where only few
firms operate and control mainstream of the market share as there were less number of
sellers. Under this, only few firms dominate the market by selling the either homogeneous
products or differentiated products. Every seller in the market has the potential to influence
the behaviour of one another. In case of consumable producing organizations, Colgate,
Unilever and the Arm & Hammer were the firms that were the key competitors. These
companies dominate the market share.
But now the situation has changes from the year 2005, the company is no more the
oligopoly as there is continuous expansion of the business through mergers and acquisition.
Each of these companies presented the oligopolistic behaviour while this industry started
becoming more and more consolidated, importantly when the industry leaders started to enter
into mergers and acquisition, it cannot be no longer characterised as an oligopoly. The
acquisition of Gillette in the year 2005 has completely changes the picture. Now the company
has entered the monopolistic market with these big competitors along the local market