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Procter & Gamble faces moderate threats from new entrants due to its large size and long history. However, it competes across five industries against specialized competitors. Buyers have high bargaining power due to rising costs, competition, and media fragmentation, allowing them to demand lower prices. There is also a high threat of substitute products across P&G's five markets. While suppliers have some power, P&G's reputation, quality, and large purchasing volume provide it with negotiating leverage. Finally, rivalry is high among P&G's 80+ global competitors, but P&G has succeeded through focus on research, development, and responsiveness to consumer demand and feedback.

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232 views

Task Environment

Procter & Gamble faces moderate threats from new entrants due to its large size and long history. However, it competes across five industries against specialized competitors. Buyers have high bargaining power due to rising costs, competition, and media fragmentation, allowing them to demand lower prices. There is also a high threat of substitute products across P&G's five markets. While suppliers have some power, P&G's reputation, quality, and large purchasing volume provide it with negotiating leverage. Finally, rivalry is high among P&G's 80+ global competitors, but P&G has succeeded through focus on research, development, and responsiveness to consumer demand and feedback.

Uploaded by

les
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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A.

Task Environment

Threat of New Entrants


Procter and Gamble, being a large and global company, has spent the better
part of the last two centuries establishing their name and market niche. These
specific factors make the threat of new entrants only moderate for a company
as large and established as Procter and Gamble. Though it is unlikely and
extraordinarily hard for a company to compete on such a global level against
Procter and Gamble, it is not unheard of. Because Procter and Gamble
competes in 5 separate industries, threat of new entrants is exponential
because they are competing against companies that specialize in just one of
these sub-categories.

Bargaining Power of Buyers


The overall bargaining power of buyers is high with Procter and Gamble. This
is largely due to rising commodity prices, price competition and media
fragmentation. With the everyday household products that Procter and
Gamble supply, there are 20 others whom they compete with and are
advertised through media outlets such as television and billboards. When
consumers are offered similar products for lower prices, they will often choose
that route thus forcing companies such as Procter and Gamble to abide by
the consumer’s price demand along with the demand in product quality.

Threat of Substitute Product/Services


Procter and Gamble has a high threat of substitute products. As mentioned
earlier, having a wide range of products simultaneously leads to having more
potential for competitors in their five penetrated markets. Another reason the
threat of substitutes is so high is the level of ease for one to produce such
household commodities. Procter and Gamble reaction to such a high threat of
substitutes has been focusing on the top ten brands that are responsible for
eighty percent of sales.

Bargaining Power of Suppliers


This is largely due to continually acquiring and merging horizontally and
backward to benefit from cost leadership. However, what allows them to have
some power would be that of the reputation and quality rated products.
Because Procter and Gamble has to deal with a variety of suppliers to supply
them with the goods for their vast products, they have a decent amount of pull
with said suppliers. A supplier wants a company to buy their supplies so they
can turn a profit, and with a large global company such as Procter and
Gamble, not only do they purchase a significant amount of supplies but they
produce a quality product and sell it for a sensible price which ensures
consumerism’s demand to remain high thus allowing the supplier and
distributor cycle to continue.

Rivalry among Competing Firms


Procter and Gamble has a high rivalry among competing firms with over 80
competing companies globally. However, Procter and Gamble has been
successful at continually producing favored products and altering such
products to meet consumer’s demand. This has largely been affected by their
focus on research and development programs. Though there are a large
number of products that can replace the ones produced by Procter and
Gamble, what these competing firms don’t offer is a mutually beneficial
relationship that allows for Consumer ideas and opinions to be heard. It is this
relationship that has set Procter and Gamble up for a sustainable future.

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