Procter and Gamble Analysis

Jason Didier, Chris Jazak, and Philip Wood

Company Overview
S Created in 1837 by a soap maker, William Procter, and a

candle maker, James Gamble.

S Consistently ranked in Fortunes magazine as a top 10

company to work for.

S Due to the breadth of the companys products, the

operations are separated into six business segments.

S Twenty-six of Procter and Gambles brands gross over a

billion dollars worth of revenue annually.

Strengths
S One of the most diverse and efficient companies in the

world
S Procter and Gamble has over 300 brands in markets

ranging from hair care to healthcare. S All companies under the P&G umbrella are operated by their respective brand and require minimal supervision from the business segment they are categorized by S Despite the diversity, most of their products still have a majority market share in their

Weaknesses
S An unusually high number of product recalls in recent

years.
S Although the companies owned by Procter and Gamble are

supervised by their business segments, they operate independently making quality control weak at times.
S High dependency on Walmart to sell and advertise low

prices on their products.

S Most revenue is earned from sales in Walmart stores. One

of the few places the company doesn'tt practice diversity.

Opportunities
S Most products are made systematically, making

outsourcing a viable option.

S Already done with the larger brands but can simply be done

with the smaller ones as well if benefits outweigh costs.

S Constantly potential to buy out competitors.
S The company has enough capital at any given time to buy

out competition if they have a need to liquidate.

Threats
S Biggest threat is generic brand products that can price

cut below Procter and Gamble.

S Recent economic downturn has made consumers more

price conscious and seeking value.

S High dependency on brand loyalty to justify higher prices

for most of their products.

S Must have consistently better product to prevent consumers

to switching to cheaper brands.

Human Resources
S 126,000 full-time employees S Special training emphasis

S Six divisions of company that specialize resources to fit

the product they produce

Logistics

S 30,00 trucks

S 20 category planning organizations

S 57 customization operations S 34 distribution offices

Logistics

S Route Changing

S Elimination of empty trucks

S A strong focus on reducing loading and unloading delays S Supplier sustainability scorecard

Service

S Customer service requirements

S Reduction in shipment defects

S Website updates S Sourcing product displays

Operations

S Lean manufacturing

S RFID incorporation
S 116 manufacturing site in 86 countries S 900 terabytes of data on products

Liquidity

S Long-term
S Debt to Equity- .48

S Short-term
S Quick Ratio- 0.4 S Current Ratio- 0.9

Asset Utilization

S Inventory Turnover- 5.6

S Receivables Turnover- 13.6

Profitability

S Gross Profit Margin- 53.2%

S Return on Assets- 8.2%

S Return on Equity- 17.5%

Market Value

S Price-earnings Ratio- 18.8

S Market to Book Ratio- 3.04

Recommendation

S Increase outsourcing, even for smaller segments

S Focus on quality control despite having hundreds of

brands.
S Liquidity ratios are too high. Find safe and liquid

investments to increase value of excess capital.

S Emphasize customer service and product differentiation.

Many alternative products so above average quality is crucial.