Business Analysis: Procter & Gamble in the Czech Republic Context

This report provides an analysis of Procter & Gamble's (P&G) operations in the Czech Republic, focusing on its Rakona factory. The introduction highlights the report's objective: to evaluate P&G's current situation and propose recommendations, particularly regarding a potential waste management factory. The report details P&G's history, its US origins, and its growth into a global consumer goods company, including the acquisition of the Rakona factory. It examines the company's structure, including dry laundry, liquid detergents, and deodorant operations. The report also discusses how P&G has met its business destination in the geographical heart of Europe. Furthermore, the report presents a business proposal for expanding P&G's product line with the Olay Soothing Bars and includes a PESTLE analysis to assess political, economic, social, technological, legal, and environmental factors impacting the expansion in Czech Republic, highlighting the country's stable political and economic conditions, and supportive environment for business expansion.

BUSINESS ORGANISATIONS AND ENVIRONMENTS IN A
GLOBAL CONTEXT

Table of Contents
Business Organisations and Environments in a Global Context...............................3
Introduction...............................................................................................................3
Who is Procter & Gamble.........................................................................................3
Meeting business destination in the geographical heart of Europe...........................4
Business Proposal......................................................................................................5
Conclusions...............................................................................................................9
Reference List..........................................................................................................10
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Business Organisations and Environments in a Global Context
Introduction
This report is entirely based on the factory named Procter & Gamble which is in Czech Republic.
The aim of this assignment is to evaluate the current situation of the organization. There are
several facts which can arise after completing the assignment and recommendation has to be
made based on the facts available. The entire report is based on reviewing of the largest plant of
Procter & Gamble which is in Rakona. The entire idea is to see if Procter & Gamble can create
an waste management factory in Czech Republic. This report will help to understand who
Procter and Gamble is and how they have met their business destination in the geographical heart
of Europe and the business proposal of the organization.
Who is Procter & Gamble
Procter & Gamble is an U.S based organization founded in 1837 in Ohio, U.S. The company
produces candles and also makes soaps. The founder of this organization is William Procter from
England and he himself was a candlemaker in Cincinnati. James Gamble used to work as a soap
maker apprentice. The entire business started as a family business which went into become the
most largest and profitable business in the entire world. There was another factory which was
famous for making soap and it later merged with Procter & Gamble to become the largest
consumer goods company in the entire world. The factory which is in Rakona was being bought
by them with the help of National Property Fund (Nahavandi, 2016). The technical center was
introduced in the year 2007 which is basically responsible for the development of new
technologies inside the plants which were located in all parts of Europe and Africa as well as
Middle East. There were several countries where the technical centers were established. The
entire organization P & G is divided into three operations like dry laundry operations which is
not just a landmark but it creates washing detergent products for entire Europe not only made but
also does the packing. Some of the most famous brands actually uses their products. They also
make liquid detergents and also fabric softener (Crane, et al. 2013). There is also a wide range of
products like deodorants and antiperspirant which are being made by P&G. In Czech republic
P&G is considered as the largest exporters of goods. The factory located in Rakona is now being
considered as having one of the largest employers in that region. There are 635 people working
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for working in the factory of Rakona. The entire factory of Rakona started with a grant program
which was being founded to promote the region of Rakovnik.
Meeting business destination in the geographical heart of Europe
The impact of globalisation avails opportunity to the entrepreneurs for expanding or establishing
their business in a global context. Therefore, the need for taking effective decisions is highly in
demand for the owner or the entrepreneur of the concerned firm. As commented by Krause
(2017), there are different issues and thinking nature being considered by the entrepreneurs. The
effort given by an individual entrepreneur solely depends on the type of business one aims to
deal in future. However, by linking the discussion to the country perspective of Czech Republic,
the business person that aims to expand their business within the Czech republic initially requires
to analyse the different geographical elements that would either benefit or hamper the concerned
type of business. In addition to the above made discussion, the country of Czech Republic is
landlocked country between Austria, Germany, Slovakia and Poland. There are reports structured
in context of the Czech Republic marks for 90 percent of their population to belong in minority
group, where 60 percent of citizens are agnostic. Moreover, the Czech Republic has been marked
as one of the most atheistic countries in Europe (Heart-of-europe.org 2017).
As suggested by Špaček and Vacík (2016), the expansion of a company in a new maret always \
requires to highlight the positive factors relating to the target country. Therefore, if an
organisation desires to expand their business in the country of Czech Republic, the heart of
Europe, the concerned entrepreneur or the business person is required to highlight the beneficial
areas for making further investments. The organisation such as the Procter & Gamble (P&G) for
making their further expansion in the country of Czech Republic must consider the internal
economic conditions that are prevailing within the country. Most of the entrepreneurs at some
point consider their relocation of the geographical specifications in order to acquire more growth
across different sectors of the economy (Bomba et al. 2017). However, cost is always the most
important factor to be considered by an entrepreneur for their business expansion. There are
other considerations that further influence the choice of destination for the further expansion.
These includes the education system that relates to the highly skilled workforce; capacity for
innovation; diverse culture; living standards; modern infrastructure that are combined with a
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position in the heart of Europe. The destination of Czech Republic is well known for the foreign
capital and further attacks high volume of FDI from the year 1990s. As indicated by Munshi and
Dutta (2016), the activities related to the FDI in the country of Czech Republic stand out as the
most effective and essential feature on which an organisation can assume their level of income
through the business expansion. The country underwent major economic changes and thus
results to privatise most of its sectors comprising from banking to telecommunication sector. As
stated by Krause (2017), the annual report held for the country deals with the development of the
economy as per the GDP per capita, that further reach to 80% on an average of the European
Union. However, the country of Czech Republic is also as the most stable states that registered
an annual GDP growth of more than 5% in the last three years.
Czech Republic, as a country is the most successful states in the European Union in terms of
attracting the majority of the foreign investors. The factors that contributes or supports the above
mentioned factors may comprise of the perfect blending of an efficient infrastructure and natural
resources. Moreover, the country is well now for the ample storage of timber, coal, uranium,
coke and magnesium. Therefore, for an organisation that desires to expand their business in such
a country rich with the natural resources, would effort to reduce the costs of the heat that would
be required in the production process of the their products. Another important factor considered
for a successful expansion deals with the market size of the country that already exists in Czech
Republic. The population of the country is more than a billion and is thus known as one of the
largest market in Europe. Moreover, the Government of Czech Republic as set up an investment
encourage network that would attract foreign investment in the country. Therefore, the
Government of Czech Republic offers incentives to the foreign investors ranging from 40-60%
of the total investment. Thus, the environment of Czech Republic is best suited for making any
further expansion of a organisation.
Business Proposal
Business proposal of any organization is highly crucial for the proper implementation of the
expansion of the product of the organisation. The P&G is up with the expansion plan of the
newly include product att includes the Olay Soothing Bars of different essences. This particular
product is yet not introduced. In order to anticipate the success of the expansion of the product in
Czech Republic, it is very important to identify the external environment of the locations along
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with a market analysis of the industry that is the cosmetics and soap industry. This is possible
only through the employment of the research and analytical tools that includes the Porter’s Five
Forces and PESTLE analysis. The analysis is thus produced hereafter.
Political factor: This includes the governmental regulations that are related to the operational
activities of the organization which must be done as per the governmental policies. This is one of
the macro environmental factors that externally impact the operations of the organisation. The
political condition of the organisation is another way by which it impacts the expansion of the
organization (Zalengera et al. 2014). If there persists any political turmoil then the expansion
faced failure since the consumers are highly affected by the political turmoil. However, here in
this case of the expansion in Czech Republic, the political conditions are stable and the
governmental regulations are supportive of the expansion of any new product or company as
well. The support and availability of the e-commerce and retail industry is another factor that is
going to support the expansion.
Economical factors:
This includes the economic stability of the country where the company is going
to expansion or launching new product as well and P&G is no exception. The
economic condition of these particular conditions is highly supportive. This is
because the country has witnessed a robust economic growth in the past 10 years
and the moderate growth is that of 2% for more than 5 years. This is a positive
indication to P&G that expansion in terms of new product is going to help
the company yield the result in terms of sale that it is expecting. The economy
of the country is export oriented and thus a sustainable economy persists within
the organization that is going to be beneficial for the company (Zalengera et al. 2014). The
availability of the investors is also considerable and there has been a trend of GDP growth
and population in the next five years as well. However, strategic decisions need
to be taken by the company in order to utilize the opportunities that are
prevailing within the economical environment of the organisation. Have there
been negative indications regarding the economic environment then the expansion
of the company in terms of the product could not have been possible.
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Social factors: This particular macro factor includes the life style, the habit and the cultural
background of the particular location or country. These are factors that are very crucial and
determinant of the purchasing behaviour of their organisation. The soothing bars are very
common that is going to support the organization. The soap and cosmetic market is not very
diverse with huge diverse products. This particular factor is going to support the expansion of the
however, it depends on the acceptability of the common people as well (Zalengera et al. 2014).
Technological factors:
Technological factors in this era of globalisation are highly influential in
the establishment of any new business or expansion of the organisation through new
products. The need to employ technological aspects within the different functional
departments is highly required gat includes the distributions channel, marketing
and sales. Connectivity with the different departments is as required so as to
make the execution of the operational activities in organization more effective and
result oriented (Zalengera et al. 2014). This is again dependent on the availability of the skilled
labors
that could operate the technologies. The local employees have to be skilled
enough or immigrants have to be brought which may lead to extra cost and other
legal activities as well.
Legal factors:
The legal factors include the regulations and d the different acts that are mandated
by the legislation of the country. These often include the Employment Act,
Equal opportunity, Data Protection Act and the Organisational Health and
Safety. These must be followed by the organisation while carrying out the
expansion of this particular product in order to avoid any legal issue (Zalengera et al. 2014). The
wage structure should also be as per the industry standard.
Environmental Factors:
This is one of the major factor that needs to be followed while operating in
the industry. The product and the production of the product must be eco-friendly.
This particular factors needs to be followed as this is going to serve the
purpose of the carrying out the Corporate Social Responsibility of the
Organisation (Zalengera et al. 2014).
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In addition to the above made discussion, the application of Porter’s Five Forces for analysing
the possible threats and aspects of the market of P&G has been discussed in the following
information:
The organisation of Procter & Gamble is the most dominant firms for the global consumer goods
market. This dominance is sustained by the external factors in the industry atmosphere.
However, the manager of Procter & Gamble can evaluate the situation of the business for
identifying the most important external factors among the consumer goods industry environment.
The following are the five forces being analysed in context of Procter & Gamble:
Competitive Rivalry (High)
The workforce of Procter & Gamble faced high competition from their rivalry companies. There
are various firms operating in the consumer goods industry. Thus, this imposes a strong force on
Procter & Gamble for getting assured of the tough competition that will faced\] rom thor
competitors (Dobbs, 2014).
Bargaining power of buyers (Low)
The organisation of Procter & Gamble aims to satisfy their target consumers as per their needs
and references. This satisfaction further determines the influence of the buyers in the industry
and its related environment (Dobbs, 2014). The lower switching costs acts as strong force that
decrease the overall market demand.
Bargaining power of suppliers (Low)
The suppliers support the company in terms of the constant availability of the required
intermediary or raw materials needed by the company of Procter & Gamble. Moreover, the level
of supply and population of suppliers are low in comparison to the demand of the consumers
(Dobbs, 2014). Therefore, the supplier's considerable towards the firm but in a limited form of
sale and distribution of their products to thee company of Procter & Gamble.
Threat of substitutes (Low)
There is moderate level rate of threat from the substitutes in this particular industry which is due
to factors like that of the low switching costs which is a strong force no doubt. However, the
variety of substitutes is low which is going to support the business plan. The availability of the
substitutes is also low and a weak force which is why the threat of the substitute is low and no
very alarming that is supportive of the expansion of this product (Dobbs, 2014). Therefore,it is
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evident that this external force is not going to impact the growth of the business negatively in
this particular country.
Threat of new entrants (Moderate):
The consumers can move to other brands as well which is a risks as evident from the market
analysis based on the threats of the entrants. The low switching cost is the factor that is a strong
force and influencing on the customers as well. The capital cost is moderate and the moderate
economies scale is another moderate force that is not very alarming and thus supportive as well.
In addition to the held discussion, the main am for the above analysis is to ensure the capabilities
sustained by the company of Procter & Gamble. Moreover, the impact of such external factors
on the activities of the workforce has been further analysed (Dobbs, 2014).
Conclusions
Thus it can be concluded that Procter&Gamble has all the characteristics to be in a stable
situation and also gave opportunities and problems which are based on the external factors of
consumer industry. There are different methods which has been used to get the success they are
having now. The organization has expanded from a small family business into on the largest
consumer goods in entire Europe, Middle East and Africa. The entire organization has grown
with the help of different operations. The organization is now one of the largest factory in Czech
Republic.
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Reference List
Bomba, J., Ježek, J., Hýsek, Š., Sikora, A., Stolariková, R., Palacká, A., Berková, M. and
Kolbabová, T., (2017) . Polyurethane Coatings on Hardwood and Softwood Surfaces: Their
Resistance to Household Liquids as an Educational Case Study. BioResources, 12(3), pp.5867-
5877.
Crane, A., Matten, D. and Spence, L.J., 2013. Corporate social responsibility in a global context.
Heart-of-europe.org (2017) About Czech Republic Available at: http://heart-of-europe.org/about-
czech-republic/ [Accessed on 15 December 2017]
Krause, J., (2017) . The impact of investments in energy conversation technologies on the
economic performance of companies-example from the Czech Republic. Engineering
Economics, 28(4), pp.354-362.
Munshi, D. and Dutta, S., (2016). Sustainability reporting quality of Indian and American
manufacturing firms: A comparative analysis. Serbian Journal of Management, 11(2), pp.245-
260.
Nahavandi, A., 2016. The Art and Science of Leadership -Global Edition. Pearson.
Špaček, M. and Vacík, E., (2016). Company Value Creation through Effective Innovation
Process Management. Journal of Innovation Management, 4(3), p.65.
Zalengera, C., Blanchard, R.E., Eames, P.C., Juma, A.M., Chitawo, M.L. and Gondwe, K.T.,
2014. Overview of the Malawi energy situation and A PESTLE analysis for sustainable
development of renewable energy. Renewable and Sustainable Energy Reviews, 38, pp.335-347
E. Dobbs, M., 2014. Guidelines for applying Porter's five forces framework: a set of industry
analysis templates. Competitiveness Review, 24(1), pp.32-45.
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