Procter & Gamble's Business Operations and Market Analysis Case Study

This case study provides an in-depth analysis of Procter & Gamble (P&G), a multinational consumer goods corporation, focusing on its market structure, business operations, and historical performance. It begins by describing P&G's venture, products, and history, highlighting its evolution from a candle and soap maker in 1837 to a global leader with a diverse product line including fabric care, home care, beauty, health care, and grooming products. The analysis explores the various market structures in which P&G could operate, such as perfect competition, oligopoly, monopolistic competition, and monopoly, concluding that P&G primarily operates in an oligopolistic market. The study further examines how P&G's market structure has evolved over time, emphasizing the interdependence among sellers, the importance of advertising, and the barriers to entry. It also discusses the nature of the industry in which P&G operates, noting the advantages of a diverse market structure that allows for cost-effective resource acquisition and increased customer preference. The case study concludes by highlighting the importance of understanding different market conditions for making informed business decisions and maximizing profitability.

Management Economics
Assessment 2

Contents
Contents...........................................................................................................................................2
INTRODUCTION...........................................................................................................................1
MAIN BODY..................................................................................................................................1
Description of the venture, its products, and history...................................................................1
Analysis of market in which the company is operating since inception......................................3
Did the business operate in various market structures in historical time....................................4
Nature of industry wherein the business operates.......................................................................6
CONCLUSION................................................................................................................................7
REFERENCES................................................................................................................................8

INTRODUCTION
Business related decisions for products and services entails thorough research of market
addition to data analysis. In a company, managerial economics guides in decision making for
worthy investments and other decisions (Shao, 2019). It is field of economics in which
microeconomic analysis are applied in techniques to devise decisions concerned with
management units. For the assessment, Procter & Gamble is taken into consideration which
operates in consumer products industry since 1837.
The assessment entails information about company with its history and product offerings.
It also analyses market in which venture is performing since inception. Further, different market
structures are focused and suggestion for government intervention are provided.
MAIN BODY
Description of venture, its products and history
Procter & Gamble operates for improving lives of consumers in small yet meaningful
manner. The company encourages its people for making positive contribution each day. It offers
ample number of personal health, hygiene and other products within regional, domestic and
international market (Singh, and et.al., 2021). Vision of the premise is to become best consumer
goods organisation on the globe and provide branded goods of higher quality addition to values
which improvises standards of living of now and future generations consumers. It’s Values of
Integrity, Passion for winning, leadership and trust shape the ways its people work individually
and collectively.
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Figure 1: Products of Procter & Gamble, 2021
(Source: Products of Procter & Gamble, 2021)
From the graph, it can be said that Procter & Gamble has huge product line including
fabric care & home care, beauty, heath care, grooming, baby, feminine & family care (Products
of Procter & Gamble, 2021). Each of the product segment of the venture has own set of
international business units. For instance, beauty segment comprises of hair care, prestige, salon
professionals and many more. Key product of the company is Baby Wipes which has annual
sales of around 17.81 billion in 2019 and 18.36 billion in 2020.
Procter & Gamble was set and managed through William Procter addition to James
Gamble in 1837 as candle maker and soap maker. In the year 1850, the venture added Moon and
Stars logo to offerings and build a new plant for growing business sustainability (Marcus, and
Sant’Anna, 2021). In 1882, Procter & Gamble spend huge resources on advertising and
marketing of soap across the world by using newspaper. In 1887, it initiated first profit sharing
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deals and provided its people a piece of pie. In 1915, the firm opens its first store outside United
States in Canada. Further, in 1930s, the business buys overseas assets and expanded its products
into line-up comprising of shampoos, detergents, toilet goods and many more. In 2000s, the
enterprise has achieved growth in various aspects that are far beyond imagination of founders. It
remained strong contender in home commodities that are Crest toothpaste, tide laundry
detergent, baby wipes and many more (Yousaf, and Ali, 2021). At present, the business setting
performs with more than 99000 workforces with operating income of approximate US$16.39
billion in 2020. It has presence in around 180 nations on globe.
Analysis of market in which the company is operating since inception
Market structure defines how business entities differentiates and categorises as per kind of
good they sell along with the ways their operations are impacted through extrinsic elements. It
makes it easier for economists to understand features of diverse markets. There are various types
of market structure that are described below:
Perfect competition - Structure of market wherein there are huge sellers and purchasers
which attributes to free barriers of trade, deal with homogenous commodities with no
differentiation and fixation of prices by market is termed to perfect competition. If Procter &
Gamble operates in the market structure, it acts as price taker because process for goods are
devised by industry as whole. In this, all producers and purchasers faces no transaction costs,
competes with one another and have symmetrical information.
Oligopoly - Within the market structure, small number of businesses work collectively to
control majority of shares of market and customer base. If Procter & Gamble work in oligopoly
market, they are neither price takers nor price makers. It tends to avoid price war with other
companies because of following price rigidity (Ivanov, 2021). The company also focuses on
monitoring competitors’ prices and make changes in price related strategies accordingly.
Moreover, operations of the enterprise in the market structure emphasis closely towards quality
addition to productivity of offerings so as to compete with others.
Monopolistic competition - In this, few sellers work to sell products having close
relations but differentiations to others. It exists when multiple sellers carry out functioning to
look somewhat different from that of another company. In aspect to Proctor & Gamble, if
operations are carried out in this market structure, then principle good aims to maximize profits,
the consumer perceives nonprice differences and producers have control on prices. Other
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features that define the market include the availability of factor prices, businesses earning normal
profits, and spending substantially on advertisements.
Monopoly - It is termed that this is a market structure in which there is a seller of basic
products that restricts the entry of other companies. For example, operating with a monopolistic
market structure will help Procter & Gamble operate as an individual seller of specific products
without similar substitutes (ATMADJA, and et.al., 2021). The company fully controls the
supply of goods and will get affects the price of products because it is the price creator in the
field of the business. In the field of the market, new organizations cannot enter freely due to the
government licensing, supervision, technical complexity, large capital needs, and economies of
scale. The benefits of working in a monopolistic market include operating unaccompanied,
controlling the entire industry, increasing prices, decreasing the manner of the services without
any consequences, and obtaining a huge amount of profits.
Among the discussed market structure, Proctor & Gamble operates in an oligopoly
market since the inspection.
Did the business operate in various market structures in historical time
Market structure –
Historically, Taylor's has always operated in a perfectly competitive market, but over
time, the company's managers have changed their decision to operate in an oligopoly market.
Since few companies sell homogeneous products, the actions of one company can affect other
companies. The characteristics of the oligopoly market structure related to Procter & Gamble are
as follows –
Interdependence - One of the aspects or characteristics of the oligopoly market structure is the
interdependence between sellers. Every oligopoly company is aware of variations in the cost of
the prices, preferential attributes, promotions, and many more. These changes will offset the
movements of the competitors in the field of the area. For example, Procter & Gamble, which
operates in the market and will lower or increases the price of the entire market by selling more
quantities and affects the ability of other sellers to make profits as effectively (Rusydiana,
Sanrego, and Pratomo, 2021). This means that every seller or company knows the price changes
of other sellers or companies and their impact on their profits that are directly based on the price
changes in the actions of competitors. In terms of exit pricing policy, the management of Procter
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& Gamble and other suppliers are completely interdependent. In essence, each market seller has
a direct and determinable influence on all other sellers in the field of the market.
Advertisement - In the field of the market, the key reason for the interdependence of decision-
making is that the chance of the product that is depends on the policies of other manufacturers or
buyers. To this end, regarding customer service, the company will also spend a lot of money on
advertising (Shofiyanti, 2021). Concerning Procter & Gamble, advertising expenditure is a
feature of operating in an oligopolistic market to promote effective terms of the products and
services to attract and retain customers for a longer period. As it is certain that when an oligopoly
advertises or sells its offer other companies that will follow and will also maintain the manner of
the sales.
Competition - The oligopoly market structure is characterized by competition. In the field of the
market, few sellers will goal-orientated actions that are taken by sellers that immediately have an
impact on the competitors. For example, when Procter & Gamble makes some adjustments to its
pricing structure then it will affect the pricing policies of other companies in a shorter period. It
is very important that every salesperson is always attentive and pays close attention to the actions
or activities of competitors in respect to achieving their objectives and targets as effectively and
efficiently in the field of the area.
Barriers to firm entry - Due to the fierce or fierce competition in the oligopoly market structure,
there are no entry and exit barriers in the field of the market. For the management of Procter &
Gamble, market control and professional investment will include the price, output, resources, and
many more to make it difficult for the new company to sustain the field of the market. However,
concerning this, there is also various sort of entry barriers that have long restricted the entry of a
new set of companies into the food processing industry (Gundlach, and Hofmann, 2021). In the
field of the market, the large business of management will enjoy economies of the scale with the
high set of capital requirements that will control the professional investment and the existence of
unemployed potential by which it will make the processing industry less attractive or influensive.
When an entry is hindered by the barriers then it will increase the chances of excess profits in the
field of the industry.
Demand curve - In an oligopoly market structure, it is difficult to draw the demand curve for the
goods or the services as effectively and efficiently. It is not possible to ascertain the exact
behavior patterns of manufacturers that are certain because it is apart from certainty. As it is
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impossible to accurately plot the demand curve for a longer period. For Procter & Gamble, the
management can't ignore the reaction of their competitors in the field of the market. Any kind of
price change for one entity will cause the price of other businesses to change and thus moving
the demand curve indefinitely. As it will affect the venture capital sales because its sales are
more dependent on existing prices and competitors' prices in the field of the market
Nature of industry wherein the business operates
For the management of Procter & Gamble, they operate in a diverse market structure that
is the best for the company as because the company will ascertain the market where resources
can be obtained at low cost and will increases the customer preference for goods and services
(Skorková, and et.al., 2021). Because different types of market structures lead to a series of
different choices in the manner of the business decision-makers and the suitable business
operations in varied market structures benefit from issues including the company's product
pricing and the potential to increase the profitability. In a highly competitive market, the
performance of the operations and functions under different market conditions will help the
financial analysts determine short-term and long-term business prospects as effectively and
efficiently. In the business of management of Procter & Gamble, the managers can make
decisions to minimize the influence of other suppliers' decisions when working in different
market conditions. It will help to increase the sales, customer base, and profitability or
productivity of the business. For example, when Procter & Gamble, operates in a perfectly
competitive market it will help to fully understand what other companies are performing and
there are no barriers to entry and it shares the relevant information between the various business
of management, thereby generating normal profits to cover opportunity costs is effectively
important in the field of the business.
At the same time, operating in an oligopolistic market is more suitable for the companies
to adopt a competitive strategy that will lead to price stability, additional profits, and more
product improvements in the field of the market. The company should focus on market share
affordability by operating in different types of market structures in the field of the business (Yu,
Zhang, and Huo, 2021). When organizing a business to take advantage of various market
structures then it is best to eliminate unexploited efforts to increase productivity and profitability.
In these markets, Procter & Gamble will ascertain it will be easy to identify the market segments
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that are most likely to buy the goods and services. It will also help to emphasize marketing
efforts to avoid the wasted resources and achieve an expected turnover in the business of the
management. The different market structure has a significant impact on the company because it
will improve the company's ability to set higher prices and makes profits with a small number of
companies and low barriers to entry (Sánchez-García, and et.al., 2021). It will also ensure that
the company's operations are in line with the government's purposes for the market structure that
will improve and increase the opportunities of avoiding losses.
As there is various sort of stages of market governance in the field of the market as
effectively and efficiently. In the market structure, decisions are made jointly by individual the
buyers and sellers. As per the analysis, when the government intervenes to a greater degree in
Procter & Gamble practice then it can lead to decisions that are more beneficial to society than
the business of management. The government has the power to set subsidies, tariffs, tax the
public, tax international goods, and make domestic products more attractive. In terms of the
business of management, and effective supervision can obstruct the entire company or the entire
society. With, less government intervention will lead companies to use resources and power to
pay lower wages to employees and charge consumer prices as effectively and efficiently.
CONCLUSION
From the above mentioned report, it has been concluded that management economics will
resolve the business conflicts and will also direct their sections in the decision making with a
particular set of theories of economics. Market structures are termed oligopoly, monopolistic
competition, perfect competition, and monopoly. In an oligopoly market situation, there is no
exact boundary of the management but activities of one company will have an impact on the
other one as effectively and efficiently. The market structure is considered as no barriers on entry
and exit, the interdependence of companies, deficiency of consistency, price inflexibility
existence, and rivalry.
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REFERENCES
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Online:
Products of Procter & Gamble. 2021. [Online]. Available through: <
https://marketrealist.com/2015/07/overview-procter-gambles-5-segments-product-
categories/>
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