A comparison the business strategy of unilever and procter & gamble in asian market

Nội dung text: A comparison the business strategy of unilever and procter & gamble in asian market

1. THE UNIVERSITY OF DANANG UNIVERSITY OF ECONOMICS  RESEARCH PAPER A COMPARISON THE BUSINESS STRATEGY OF UNILEVER AND PROCTER&GAMBLE IN ASIAN MARKET Academic advisors: Trịnh Thỳy Hường Class: 42K01.5 Student’s name: Phan Cụng Anh Hồ Thị Vui Huỳnh Ngọc Toàn FONGSAVANH VILAYPHONE Danang, June,2020
2. INTRODUCTION iv Chapter 1 THEORETICAL BASIS 1 1.1 Multinational company 1 1.2 Characteristics of multinational companies 1 1.3 The purpose of development of multinational companies 1 1.4 International business strategies of multinational companies 2 1.4.1 The International Strategy 2 1.4.2 The Transnational Strategy 3 1.4.3 The Global Strategy 4 1.4.4 The multi-domestic Strategy 4 Chapter 2 UNILEVER'S ASIAN MARKET STRATEGY 6 2.1 General introduction about Unilever 6 2.1.1 General infomation 6 2.1.2 History of formation 6 2.1.3 Mission, vision, business goals 7 2.1.3.1 Mission 7 2.1.3.2 Vision 8 2.1.3.3 Business goals 8 2.1.4 The organizational structure of Unilever 8 2.1.5 Product 9 2.1.5.1 Food line for processing and eating 9 2.1.5.2 Hygiene and personal care product line 10 2.1.5.3 A line of laundry products for clothing and household utensils 10 2.2 Unilever's Asian Market Strategy 11 2.2.1 Strategy for the product 11 2.2.2 Strategy for the price 13 2.2.3 Strategy for the Promotion 14 2.2.4 Strategy for the place 14 ii
3. Chapter 3 P&G'S BUSINESS STRATEGY IN ASIAN MARKETS 16 3.1 General introduction about Procter & Gamble 16 3.1.1 History of development 16 3.1.2 Business philosophy - purpose - values - Operating principles 19 3.1.3 Organizational structure, size and branch system 21 3.1.4 Scope of activities 22 3.1.5 Success achieved 23 3.2 P&G's strategy in Asian market 24 3.2.1 Strategy for the product 25 3.2.2 Strategy for the price 26 3.2.3 Strategy for the Place 27 3.2.4 Strategy for the promotion 27 Chapter 4 COMPARE STRATEGY OF P&G AND UNILEVER 29 4.1 Business situation of Unilever and P&G in recent years 29 4.1.1 Unilever 29 4.1.2 P&G 30 4.2 General comments 31 4.3 Compare 2 strategies 33 Conclusion 37 iii
4. LIST OF PICTURE Picture 2. 1 Unilever 1 12 Picture 2. 2 Unilever 2 12 Picture 2. 3 Unilever 3 13 Picture 2. 4 Uniever 4 13 Picture 4. 1 P&G 1 30 iv
5. INTRODUCTION 1. Rationale Nowadays, as globalization is becoming popular and necessary for every country in the world, multinational companies are also formed quickly with the desire to reach out to the international market, creating an increase. growth in size and sales. Growth is indispensable to maintain for each company, so choosing the strategy to reach out to the international market plays an extremely important role for each company. The right strategy not only helps the company gain profits in the short term but also paves the way for long-term development. Markets around the world are different in culture, economy, income level, demographics, etc. Understanding different strategies of different companies has become an indispensable experience for each company. In the world, two famous corporations in the field of consumer goods, Unilever and P&G, are typical for approaching the market with different strategies that bring different advantages, especially in Asian markets. . 2. Objects and scope of research The scope of the study is the operation of Unilever and P&G in typical countries in Asia such as Japan, Vietnam, Singapore, The research period is conducted from the time when companies penetrate the market and the main ones. The book has changed to adapt to that market. 3. Methodology The paper is studied by methods of data collection and data analysis. 4. Layout of the thesis v
6. The paper consists of 4 chapters: Chapter 1: Theoritical basic Chapter 2: UNILEVER'S ASIAN MARKET STRATEGY Chapter 3: P&G'S BUSINESS STRATEGY IN ASIAN MARKETS Chapter 4: COMPARE STRATEGY OF P&G AND UNILEVER vi
7. Chapter 1 THEORETICAL BASIS 1.1 Multinational company Multinational companies are often referred to as MNC (multinational corporation) or MNE (multinational enterprise), which refers to companies producing or providing services in two countries, which can greatly influence relationships. international relations when they have a major economic impact on some areas with abundant financial resources, serving public relations and political corridors. Multinational companies operate and are based in many different countries. Multinational companies play an important role in the process of globalization, a new form of MNE is formed corresponding to the process of globalization - it is a global consortium enterprise. 1.2 Characteristics of multinational companies Centralized ownership: affiliates, subsidiaries, and agents around the world are owned by the parent company, even though they have specific daily activities that are not exactly the same. 1.3 The purpose of development of multinational companies First, there is the need to internationalize manufacturing and markets to avoid trade restrictions, quotas, import duties in countries of purchase, use of raw materials, cheap labor, and exploitation of local potential. Second, it is the need to use the competitiveness and comparative advantages of the host country, making the transfer of high-tech industries. Third, seek higher profits and risk dispersion. As well as avoiding the instability caused by the business cycle when manufacturing in a single country In addition, protecting the
8. monopoly of technology or production know-how in an industry that does not want to be transferred is also a reason to expand the locality for production. Besides, cost optimization and market expansion are also the goals of MNC. The operation of MNCs, because it is carried out in an international environment, issues such as input markets, output markets, transportation and distribution, capital mobilization, payment have certain risks. The common risks of MNCs fall into the following two groups: - Risks in buying and selling goods such as: tariffs, transportation, insurance, supply-demand cycles, other macro policies - Risks in transition finance such as risks when local government policies change, risks of exchange rates, inflation, foreign exchange management policies, taxes, debt crisis 1.4 International business strategies of multinational companies 1.4.1 The International Strategy The product is manufactured in the domestic market and sold to other countries with minimum adjustments according to local requirements. Each Strategic Business Unit has the right to actively apply this strategy. This strategy is less under pressure to reduce costs and the pressure of local requirements (because production is primarily localized). But it is highly sensitive to exchange rate and political risks Features of the international strategy: • Exploiting comparative advantage, domestic position to turn into a competitive advantage • Entering into skills-deficient markets of MNC. Value is created by moving the core of competition from the country to abroad, where competitors are not able to develop, respond, and maintain in a similar fashion when expanding markets. foreign school • Centralizing product development functions such as R&D in the country, producing products according to domestic market demand standards. 2
9. • Establish production and marketing divisions in key regions and countries where they do international business • Headquarters headquarters strictly control marketing strategies and products, local adaptation is limited. • International activities ranked second after the market in the country Limitations: • May miss opportunities in local market. • Not specifically grasping the needs of other localities. • Not a long-term strategy 1.4.2 The Transnational Strategy The strategy that MNC seeks to achieve global efficiency and respond locally, sharing the common mission of MNC but taking action that varies according to local requirements (standardizing where possible, adapting where required) Selecting an optimal location cannot guarantee that the quality and cost of the inputs there will also be optimal. Transfer of experience can be a core resource of competitive advantage, but experience cannot be transferred automatically. Features of the Transnational strategy: • Competitive advantage can be developed in any of MNC's operating units • Try to achieve low cost based on regional economy, economies of scale, effective learning as well as production differentiated products for customers in different areas, encourage opening up in places where developing operational skills in global operations • The product and skills line can be transferred between units in MNC, collective promote the development of skills in global learning institutions • The value created by innovation reinforces and exchanges ideas, products and processes 3
10. Limitation: Implementing this strategy has many difficulties. because local response increases cos Two trends need to be avoided: focus the company's operations too large on a central location, or because it wants to increase the level of local adaptability that distributes the company's operations across too many different locations. 1.4.3 The Global Strategy MNC expands overseas markets based on standardization and competitive costs; Value is created based on product design for the global market and the most effective production and marketing. The scale of production and distribution of products has been improved, facilitating development investment and reducing costs very positively; but difficult to meet local needs. Features: • Link SBU in many countries to share cheap resources, emphasizing the issue of ensuring the size of economic benefits. • Standardize global products to maximize profits by exploiting scale, regional economic learning (strategic location) • Not trying to meet local - Suitable for industrial products • Strategic objectives The strategy is to pursue a global low-cost strategy to support the "aggressive pricing" in the world. some of the most favorable positions on the global scale (outsource) • Decentralized decision at headquarters Limited: inappropriate in markets that need high adaptation 1.4.4 The multi-domestic Strategy 4
11. Strategic decisions and activities disaggregated by business unit of each country. This strategy has a high customer base but limits the exploitation of economic scale, learning and coordinating information. Features of the Mutil-domestic Strategy: • Focusing on competition in each market • Make a profit by offering customers a product that meets the tastes of different national markets, resulting in increased product value in the local national market and pushing up product prices • High local decentralization (proximity to location and culture) • Value created by empowering local administrators to adapt to local economic and legal economic environment • Suitable when available many branches in countries and the pressure to reduce costs is not large - Suitable for consumer products Limitations: high costs 5
12. Chapter 2 UNILEVER'S ASIAN MARKET STRATEGY 2.1 General introduction about Unilever 2.1.1 General infomation Unilever is a global corporation founded in the 1930s of England and the Netherlands that is world-renowned in the field of manufacturing and fast-moving consumer products including home and personal hygiene products, eat, tea and tea drinks. Typical Unilever brands are widely consumed and accepted globally such as Lipton, Knorr, Cornetto, Omo, Lux, Vim, Lifebouy, Dove, Close-Up, Sunsilk, Clear, Pond's, Hazeline, Vaseline, with sales of over millions of dollars for each brand has proved Unilever is one of the most successful companies in the world in the field of consumer healthcare business (Personel Care) Along with Proctol & Gambel (P&G), Unilever currently dominate the world on these products. Some basic information of Unilever Founded: Merged Lever Brothers and Margarine Unie in 1930 Headquarters: London and Rotterdam Industry: Manufacturing (Household Appliance, Food, Personal Care) Type: Mass Key employees: Paul Polman (CEO), Marijn Dekkers (chairman) Website: www.unilever.com 2.1.2 History of formation Unilever was founded with the original name of Lever Brothers, starting its soap business. The initiator of the initial business idea was Wiliam Hesketh Lever. In 1884, he bought 6
13. himself a small soap factory. He then focused on marketing his products, thereby increasing production by 20 to 450 tons per week. At that time, his workshop had two strategic products: Lever’s pure Honey and Sunlight. By March 1888, he decided to expand the factory to an area of over 23 hectares. In 1890, Lever decided to expand the market beyond Britain's borders with the first overseas markets being Australia, Canada, Germany, and Switzerland. In 1906, the company acquired Vinolia, a soap-making company. In 1910, the Company acquired Hudson’s - a major detergent manufacturer in the UK. From 1910-1915, Lever bought three more British soap-making companies, one of which was Pears, one of Unilever's rivals. By 1911, the Lever brothers had a huge market share, and one out of every three soap bars was Lever. After World War I, the company continued to expand into Africa. Until January 1930, a merger of Margarine onion (Netherlands) and Lever Brothers (England) created an Anglo-Dutch alliance with the new name Unilever. To avoid double taxation of the two countries, the company has split into Unilever PCl based in the UK and Unilever NV based in the Netherlands. 2.1.3 Mission, vision, business goals 2.1.3.1 Mission Activity to create a fresher future every day. Unilever's mission is to make everyone feel comfortable, improve their beauty and get rid of life's worries with products that are good for them and those around them. And they achieve this by creating and producing products that are affordable, suitable for all walks of life and society around the world. Inspire people through daily actions through our products to make a big difference to the world. Grow your company with a great caliber but still care about the surrounding environment. 7
14. 2.1.3.2 Vision With the mission set out above, Unilever believes its products can improve the quality of human life. Therefore, for the sustainable development of the company, Unilever focuses on the issues of society and the environment, considers business activities and promotions that bring value to the company and the whole society 2.1.3.3 Business goals • Long-term goals: Meeting the daily needs of consumers around the world, recognizing the wishes and desires of customers in the future. Respond creatively and compete fairly with other brands to improve the quality of life. Especially the goal of sustainable development, developing the company separate from the bad influence on the natural environment. • Short-term goals: For each period, the company will have its own short-term goals depending on business strategies, market activities and the influence of the global economy. 2.1.4 The organizational structure of Unilever Unilever's structure is a combination of senior leaders including executives, non- executive directors, company executives, departments and employees. The departments will undertake their own functions, operating independently. However, there is still a connection between departments to create flexibility in business activities. Functional departments: • Materials supply department: finding and supplying raw materials to serve the increasingly complete production activities. • Accounting Department: is responsible for managing the entire capital and assets of the company, organizing the inspection and implementation of economic and financial policies, timely statistics, and the exact situation of assets and capital sources to help. The director regularly checks the company's business operations. 8
15. • Planning Department: making plans for the company to help the implementation process be more convenient, avoiding mistakes in the implementation process. • Human Resources Department: Managing staff, recruiting personnel. • Marketing Department: Managing product image management. 2.1.5 Product This company owns many large-scale companies producing the world's consumer goods, foodstuffs, detergents and cosmetics. Unilever has more than 400 brands, among the most famous ones are OMO, Surf, Lux, Dove, Knorr, Comfort, Vaseline, Pond's, P / S, Signal, Close Up, AX, Rexona, Vim, Cif (Jif), Sunsilk, Sunlight, Currently Unilever is trading in 3 main product lines including: 2.1.5.1 Food line for processing and eating • Wall’s ice cream: Includes purely flavored diet products. The product is suitable for all audiences, with the convenient ability to help the brand be chosen by many people in the current balanced diet. • Knorr: Knorr is one of the largest and most favorite brands in Unilever in Vietnam market. With the spice products used in Vietnamese dishes, it brings an attractive flavor, suitable for the diets of Vietnamese people. • Lipton: Lipton is one of the leading beverage brands in the world and in Vietnam Lipton is loved by tea bags to suit the taste of all ages. With convenient features when stored in bags and reasonable price Lipton has become a major beverage brand in Vietnam. • Unilever food solutions: This is a brand used for high-class cooking by professional chefs with high expertise. With specific spices, brand standards are gradually becoming an indispensable choice for chefs in the world. 9
16. 2.1.5.2 Hygiene and personal care product line • Lux, Vaseline, Hazeline: known for its shower gel, soap, and facial cleanser with a charming aroma, suitable for many ages. • Dove, Sunsilk, Clear: Famous in the Vietnamese market for hair care products from shampoos, conditioners to professional hair warmers. • Lifebouy: Soap firm is used almost at home in Vietnam • Closeup, P / s: With the main product is toothpaste with compatibility suitable for all ages this is a brand that many people choose to use on the oral hygiene market. • AX: brand of perfume products, hair gel for men • Rxonae: A popular deodorant brand worldwide • Pond’s: owns the skin care products trusted by many women because of its quality and reasonable price compared to cosmetic lines from other brands. 2.1.5.3 A line of laundry products for clothing and household utensils • Omo, Viso. Surf: These are cleaning brands that dominate the market in Vietnam today. With quality, easy-to-use laundry soap products, Unilever is trusted by many customers. • Comfort: Along with clothes cleaning products, comfort is a brand that includes clothing products with many scents suitable for many families in Vietnam. • Sunlight washing dishes, Sunlight cleaning floors, Cif: Sunlight has become a trusted kitchen cleaning brand that has been trusted for the past 15 years. • Vim: Vim is a cleaning product that cleans bacteria in the toilet with simple and effective use. With 3 current product lines, Unilever owns more than 400 outstanding brands including many famous brands in Vietnam, including OMO, Surf, Lux, Dove, Hazeline, Ponds, P / S, Close. Up, Vim, Cif, Sunsilk, Sunlight, 10
17. 2.2 Unilever's Asian Market Strategy From the beginning when penetrating into the Asian market, unilever was oriented to business under the Mutidomestic strategy. For a new market with a large customer base and diverse cultural, consumer habits, Unilever must make product differentiation to meet local needs. The favorable condition for unilever to implement this strategy is that countries in Asia have a large number of people in the same country. For example: China (1.3 billion people), India (nearly 1 billion people); Indonesia (200 million people), In order to pursue this strategy, the company must build activities in almost every function to suit each target market. 2.2.1 Strategy for the product In product research and development in Asian markets, Unilever focuses on meeting the needs and tastes of each country. Each country will need different products with different characteristics. When the decision to enter a new market is made, unilever will select existing products that may be suitable for this market, or research to create a new product based on market resources and needs. Unilever's products are diversified, classified into many models to meet the diverse needs of customers. To pursue the Mutidomestic strategy, the company had a large number of industries with separate product segments. Products with specific characteristics in the same category will make it easy for customers to choose and fit the tastes of customers to change products. Food and beverage group products in Indonesia: 11
18. Picture 2. 1 Unilever 1 Food and beverage products at Phiplipine: Picture 2. 2 Unilever 2 Products of personal care group in Vietnam: 12
19. Picture 2. 3 Unilever 3 Products of personal care group in India: Picture 2. 4 Uniever 4 Besides the differences in product quality among countries, Unilever also focuses on product packaging design according to the tastes of each country. For example, in the Japanese market, eco-friendly products are encouraged to be manufactured and consumed. Products labeled as Green Power are Dove, Lux, Clear, Timotei and Lipton. 2.2.2 Strategy for the price For the price policy, at present, compared to other competitors in the Unilever market, there is a price segment for products that are spread out. This makes it easy to reach a 13
20. wide range of customers, everyone can access Unilever products as the company's original mission. The customer segments that the company wants to target are those with low and medium income. Those who have a basic need for using Unilever products. Having a large market share in 90 countries around the world, Unilever focuses on not only countries with developed economies in Europe but also poor countries in Asia. Unilever is also taking advantage of the development of a wide range of different product lines to meet the needs and income of millions of people around the world. in many different countries. Unilever is also the first company to introduce small packages of shampoo for poor customers. In many countries like China, Bangladesh, Pakistan, Sri Lanka Unilever is also considered as a "local company". 2.2.3 Strategy for the Promotion In advertising policy, Unilever focuses on exploiting traditional images, imbued with the identity of each country. The advertising style changed from classics, direct product introduction to metaphor in television ads is a prominent highlight in the ads of Unilever. The advantage of this style is simple, easy to understand and suitable for customers in many large markets. The ads of Sunsilk, Clear, Dove are now more closely following new market developments, have a more attractive storyline and not only limited to the introduction of pure products but have focused more on the impact factors. targeting specific customers, so that customers can remember, identify, distinguish and select its products among similar products in the market. 2.2.4 Strategy for the place With the low price segment of products and based on the demographic situation of the Asian market, Unilever's target customers are those who live in rural areas where there is a high demand for protective products. birth, daily consumer goods. In order to bring 14
21. products to this group of customers, unilever has built a large dealer network everywhere, from the city to the countryside. Accompanied with advertising and branding, the company has reached out to a large number of customers and has taken the upper hand of this market leader. 15
22. Chapter 3 P&G'S BUSINESS STRATEGY IN ASIAN MARKETS 3.1 General introduction about Procter & Gamble 3.1.1 History of development The name Procter & Gamble (P&G) is known as a “giant” in the production of consumer goods in the US and the world. P&G established on October 31, 1837 in Cincinnati, Ohio by William Procter and James Gambler, British and Irish immigrants, they merged Procter candle manufacturing company with Gamble soap production facility. By the early 1860s, the company had revenues of nearly a million dollars. At the moment, there are about eighty employees working for P&G. During the American Civil War, the company signed a contract to supply soap and candles to the Army. In addition to the experience and increased profits during the war, these contracts also introduced their products to soldiers around the world. In 1879, James Norris Gamble, James Gamble’s son organized research and development of cheap but high quality white soap and exported to areas of central Spain. The product is called Ivory and this name is due to the idea of Harley Procter - son of William Procter. Ivory is associated with clean, pure, gentle and lingering aroma. In 1882, P&G used $ 11,000 to advertise Ivory in the weekly newspaper. In 1886, Ivory began to be produced at the Ivorydale factory. In 1887, P&G started a program of distributing profits to workers based on their capital contribution to the company, which was associated with their survival with the success of the company. This program was proposed by William Cooper Procter. By dividing the shares in the company, he thought that they would be less likely to go on strike. 16
23. In 1890, P&G increased its charter capital to expand the company. William Alexander Procter established a research laboratory at Ivorydale to research and develop the soap making process. It was one of the first product research laboratories in America. After William Alexander Procter died. In 1907, William Cooper Procter became chief executive of P&G. In 1911, P&G introduced Crisco, which is one of the first vegetable oils in the world, it is a healthy solution when no longer cooking with animal fat and more cost effective than using butter. In 1915, P&G built its first factory outside the United States. The company is located in Canada with 75 workers, producing Ivory and Crisco. In 1924, the company sets up a market research department to research customers' interests and shopping behaviors. In 1930, based on Thomas Hedley company, P&G acquired Newcastle upon Tyne and became an international company. After this merger, P&G has become a solid bridge between the US and Northwest England The company expands its production and sales to other countries. A lot of new products and brands have been launched. P&G continues to open more branches in many other areas. In 1935, the company expanded its global business, Philippine Manufacturing Company was the first company established in Asian countries. In 1950, established the first branch in Venezuela. In 1946, P&G introduced Tide laundry detergent, it is a product that is superior to the products currently on the market. Tide took the lead in the market in 1950. In 1960, P&G opened its first office in Frankfurt, Germany with 15 employees. This year P&G also introduced Downy fabric softener, P&G's first fabric softener. In 1973, P&G started manufacturing and trading its products in the Japanese market. 17
24. In 1988, P&G entered into a joint venture with a manufacturer in China, the largest consumer market in the world. In 1992, P&G received the World Environment Center Gold Medal for its international business achievements. Introduced Pantene Pro-V and later became the fastest growing shampoo in the world. In 1993, the company's turnover was 30 billion USD and 50% of it was in other countries around the world. Procter & Gamble have acquired a number of other companies that diversify product lines and increase profits significantly. Some of these companies are Folgers Coffee, Norwich Eaton Pharmaceuticals, Richardson-Vicks, Noxell, Shulton's Old Spice, Max Factor, and the Iams. In 1994, P&G had to draw public opinion because of the losses from borrowing using derivative interest rates. The company sued its bank for fraud, which placed its management in an unusual position when confronted in court about their involvement in transactions they did not understand. In 1995, P&G received the Medal of Technology, which is America's highest medal for achievements, inventions, and application of science and technology to improve the lives of billions of people around the world. In 1996, Procter and Gamble decided to invade the food and pharmaceutical market again. The company developed a new product called Olestra, also called Olean and used Olestra. Replace fat in chips and snacks In 2000, Alan G. Lafley became the new CEO of P&G and completely changed the structure and orientation of the company, opening a new chapter in history for this corporation. 18
25. In January 2005, P&G announced it had acquired Gillete, forming the world's largest consumer goods manufacturing and distribution group, pushing Unilever into second place. Brands like Gillette razors, Duracell, Braun and Oral-B batteries added to the company's product range. The acquisition was agreed by the EU and the Federal Trade Commission, provided P&G agreed to sell the brand of battery-powered toothbrushes to Church and Dwight. The company also abandoned the line of toothpaste toothpaste products of Gillette, Rembrandt. Right Guard, Soft & Dri and Dry Idea deodorant brands are sold to Dial Corporation. 3.1.2 Business philosophy - purpose - values - Operating principles Business philosophy, goals, values and principles are fundamental to P&G's unique cultural traits. Throughout more than 170 years of history, although the business of the company has grown and changed, these factors have remained and will continue to be promoted even in the future. • Business philosophy: "For a good life" (Touching lives, improving life). To accomplish this goal, P&G annually devotes a sizable budget, to social and charitable activities. The company is well aware: consumers are owners. P&G places consumers at the heart of every decision and always researches what they need and seeks to precisely meet their needs. • Business culture: For the past 165 years, P&G has the goals, values and principles in their business. At the core of P&G's goals, values and principles are personal integrity and respect for personal freedom. Since the beginning of business, P&G has always focused on ethical issues and basic management principles. Developing brand and people at P&G is the foundation to build the success of the company. P&G does improve the lives of consumers around the world in many ways such as supporting humanitarian, educational and social efforts. What P&G does, the products P&G produces give people greater benefits in life. Sustainability and philanthropy are fundamental principles of P&G's survival. P&G Live's charitable programs, Learn and Thrive, help disadvantaged children 19
26. aged 1-13 get a healthy start, go to school, learn the life skills needed to build a fresh future brighter. People at P&G who volunteer their time and expertise to create contentment around the world. UK & Ireland Community Matters is just one of P&G's sustainable development programs for economic, social and environmental development. • Purpose: unify the development strategy, provide valuable and high quality products to improve the lives of consumers, contributing to making life more and more meaningful. • Value: Attract and recruit the best people in the world, build a solid organizational structure from within, reward all things that impact the company well. Every person who works at P&G is a valuable asset of the company. - Unity: P&G always tries to achieve the right goals; always frank and honest in the work; comply with the provisions of law; uphold values and principles in every action and decision. - Leadership: P&G has a clear vision for the goal it is aiming at; focus resources to achieve leadership and strategic goals; Develop strategies, eliminate barriers. - Ownership: Accept individual responsibility to meet business needs, improve the system and help others improve their performance. Everyone is the owner of the company, considering the company's assets as its own property, associating its survival with the success of the company. - Passion for victory: Always the concept that "To be the best at doing what matters most". Always dissatisfied with the current position. Always improving to win the market. - Trust: Respect colleagues, customers and consumers. Believe in the ability of others. Always believe that people will work best on the foundation of trust. 20
27. • Operating principle: P&G trusts all employees to work with the company, judging through the differences that each individual and organization can do; inspire people to work and allow people to reach their full potential with challenging standards and goals. The interests of the company and the individual are inseparable, P&G believes that the success of the company is the success of the individual. The company encourages individuals to continuously develop their creativity. Concentration at work is essential to aligning goals and strategies, adding value to the business. P&G is often concerned with standardizing, simplifying, and arranging existing work for innovation in the way work is done. P&G attaches great importance to developing the superior understanding of consumers to be able to offer advanced products and services of better quality to meet the increasing demands of consumers. Building and developing good relationships with customers and suppliers, linking with universities and governments to achieve their goals effectively. 3.1.3 Organizational structure, size and branch system Headquarters: Downtown Cincinnati, Ohio • Currently, P&G has a large scale with 180 branches in more than 80 countries on all continents: - In America, there are typically branches: Canada P&G Inc., Central America P&G Interamericas Inc., Chile P&G Inc., Colombia P&G S.A. , South Africa Procter and Gamble SA (Pty) Ltd., P&G do Brazil (Brazil), The Procter & Gamble Company (United States), Venezuela Procter & Gamble, - In Europe, typically branches: P&G Rakona (Czech Republic), P&G Portugal SA (Portugal), Procter & Gamble Marketing Romania (Romania), Yemen P&G Yemen Ltd. (Western Europe), Procter & Gamble Oy (Finland ), P&G Espana SA (Spain), P&G France (France), Procter & Gamble Switzerland Sarl (Switzerland), Procter & Gamble Nordic Inc. (Sweden), Procter & Gamble UK (United Kingdom), 21
28. - In Asia, with branches such as: Procter and Gamble OOO (Russia), Thailand P&G Manufacturing (Thailand), Vietnam Procter & Gamble (Vietnam), P&G Guangzhou (China), Singapore P&G (Singapore), P&G Egypt (Egypt), Saudi Arabia Modern Products Co. Procter & Gamble Distributing Philippines, Incorporated (Philippines) - In Oceania, there are branches: Australia P&G, Austria P&G, Subsidiaries established overseas only deal in a number of key products, the structure of the company is a hierarchical structure of products, with brand managers. To be more effective in building relationships with the company's customers, Procter & Gamble has established an office near its major department store. • Procter & Gamble's board of directors currently has thirteen members: Alan Lafley, Robert A. McDonald, Charles Lee, Ralph Snyderman, MD, Margaret Whitman, James McNerney, Lynn Martin, Johnathan Rodgers, Ernesto Zedillo, Scott Cook, Rajat Gupta, Patricia Woertz, and Kenneth Chenault 3.1.4 Scope of activities P&G produces a variety of products and goods. Starting with soap and candles, their product lines have expanded significantly. For more than a century, P&G is one of the leading companies in the number of brands produced. P&G branded products reach consumers worldwide more than 3 billion times a day. To achieve that success, P&G has provided high quality products that create great value and increasingly improve the lives of consumers. This is most evident in the sales, profits and creative value that the company has brought, allowing all employees and shareholders to operate and develop stronger . To date P&G has more than 300 brands, divided into the following categories: • Personal & Beauty: Olay, Head &Shoulder, Pantene, Gillette • House & Home : Duracell, Tide, Downy, Pringles . o Health & Wellness : Oral-B, Braun, Align 22
29. o Baby & Family : Luvs, Pampers, Charmin . o Pet care & Nutrition : Eukanuba, Iams . In addition, P&G also has brands that bring in 500 million dollars or more in annual sales. Combined with these 23 well-known brands, becoming the 43 leading brands among the 300 brands of the company, accounting for more than 85% of sales and 90% of profits, 20 brands of 500 million dollars. 3.1.5 Success achieved P&G owns dozens of famous brands such as Pantene, Rejoice, Pert, Head & Shoulder, Vidal Sassoon, Camay, Xest, Tide, Max Factor, Oil of Olay, Pampers, Whisper, Pringles More than 300 P&G products Being consumed in nearly 200 countries around the world. The group's sales reach Euro 44 billion annually, equivalent to about 55 billion USD. After just acquiring Gillette Corporation in 2005, this figure reaches to over 70 billion USD. In 2008, revenue reached 83.5 billion USD, profit 12.1 billion USD. In 2007, revenue reached 76 billion USD, profit was 10,034 billion USD. 24 brands of P&G with sales of over 1 billion USD (Crest, Pampers, Olay, Pantene, Head & Shoulders, Ivory, Tide, Charmin ) and more than 18 other brands with sales from 500 million USD up to 1 billion USD P&G products are sold in nearly 200 countries around the world with about 6 billion users. The company also produces its products in more than 80 countries around the world concentrated in the US, Canada, Latin America, Europe, Africa, Australia, some countries in Asia, especially China. In 2008, P&G ranked 5th in the "Global Most Admired Company" poll and 2nd in the "Top Companies' Leader" category created by the magazine. Holding Fortune, 8th place for the "American’Most Admired" award, P&G also ranks 4th in the World ’most Innovative Company list. And was voted No. 1 by the Consumer Goods Companies Association for 23 years On April 22, 2009, P&G was awarded the "Presidential Green Chemistry Challenge Award for Designing Greener Chemicals" by environment protection on behalf of the White House. This award is given annually to 23
30. individuals, companies and technology organizations that create products with chemical formulations that do not harm the environment. P&G Chemicals, together with Cook Composites and Polymers (CCP), received this award thanks to Chempolđ MPS technology developed and commercialized by partner organizations. According to expert judgment, Chempolđ MPS is a technological innovation with the use of adhesive compounds derived from dicarboxylic acids. 3.2 P&G's strategy in Asian market In Asia, P&G pursues a strategy of transnational international business, characterized by the following characteristics: - Understand the high cost reduction force: If in the European market, P&G only cares about the quality of its products without worrying about how much they have to sell the product at. , P&G had to change. For example, in the Chinese market - Asia's largest market, P&G had to adjust the prices of all its products in order to compete with domestic rivals. - Due to high local pressure: P&G has brands originating from Europe and America, so many of their products are not suitable for Asians. Especially for family care products because the culture in Asia is very different P&G, in turn, moved towards the Asian market by setting up factories in Asian countries, typically Vietnam in 1995. In Vietnam, the company opened 2 factories of international standard in the province. Binh Duong with over 30% of output is exported to Australia, Japan, Korea, Europe, India, etc. P&G Vietnam has consistently achieved double-digit growth and has received great praise from the government and the community. P&& products began to have a clear differentiation between countries. However, P&G products are still popular, regional and high-priced, not fully meeting the needs of many in the low-end segment. 24
31. Strategic decisions and activities are broken down by business unit by country. This strategy has a high customer base, but exploits limitations on economic scale. 3.2.1 Strategy for the product P&G pursues a cautious strategy when selecting the most profitable segments, high product positioning, targeting the urban consumer group so highly effective. The way P & G's product development in Asia has also been said by its top executives is to monitor market demand and expand to other brands in the same field, respectively. Currently in Asia there are about more brands of P&G in areas such as: - Childcare (Pampers) - Fabric care (Ariel, Downy, Tide) - Women's care (Whisper) - Hair care (Head & Shoulder, Pantene, Rejoice) - Home care (Ambi Pur) - Groming (Gillette) - Dental care (Oral - B) - Skin and personal care (Gillette, Olay, Safeguard) Although the number of brands is not much like Unilever but Unilever's products are always innovative. Science and technology are increasingly advanced and developed, resulting in increasing demands as well as requirements and choices of different products of customers. Therefore, P&G is always actively innovating its products to keep up with new consumer trends. They always focus on bringing good brands to consumers, not those that are backed by aggressive advertising but quality that does not satisfy consumers. 25
32. P&G always tries to market quality products above average. After being accepted and used by customers, their products continue to be continuously improved. When P&G declares to its customers that their products are "new and improved", they will actually be of better quality. This is in contrast to many other companies, after their products are released to the market, they often maintain or even reduce the quality of their products for higher profits. P&G has used multi-brand art for the same product. For example, they have launched Oral - B and Crest which are all brands of oral hygiene products, Rejoice, Head & Shoulders and Herbal Essences are all brands of hair care products or Olay and SK-II. are all brands of skin care products. The purpose of this policy is to serve many different customers and compete with competitors with similar products. Because there are so many products on the shelves, P&G occupies the exhibition space and has a great influence on the distribution agents 3.2.2 Strategy for the price In the European market, P&G products are mainly concentrated in the high-end segment, with high prices compared to other similar products. However, in Asian market, there are many developing countries so P&G needs to change the price policy to suit consumers' income in this market. P&G uses quite a variety of pricing strategies: - Low price strategy to maximize profits: The company spends huge amounts of money on research, development and improvement of production activities to keep the cost of products not higher than similar products in In order to maximize sales, the company has increased its production capacity. However, P&G also applies and sets different prices for different markets. - Price strategy "skimmed milk": When launching new products in the market, P&G will set high prices for these products and this price will decrease gradually in the following months. Usually P&G usually reduces prices by about 30% compared to the previous product. Once they have made a profit from the "must-have" market segment, they will 26
33. reduce the price in order to profit from the next segment of the market, and so on. market for new products. - Discount strategy: Like other companies, P&G also has promotion periods by reducing the prices of existing products to attract customers' purchasing power. P&G is willing to lower prices as much as possible to prevent the entry of competitors in the market. 3.2.3 Strategy for the Place According to the company's strategic orientation of providing high-class products to best serve the needs of consumers, P&G not only focuses on manufacturing products, but the company is also interested in building a system, supply value to customers. Like most companies operating in the field of consumer goods production, P & P does not directly sell products to consumers, but through intermediaries, distributors who have expanded their distribution network nationwide, set up separate distribution channels to stores directly by offering, delivery, dedicated service. There is also an increase in the number of warehouses to serve and provide customers with enough and timely. Using a professional sales force, working effectively with key retailers to gain exhibition space, cooperating in on-site display and promotion activities are just a few strategies. P&G's remarkable distribution strategy 3.2.4 Strategy for the promotion P&G, like other companies, uses different forms and means of image promotion. Every year, P&G spends billions of dollars on advertising budgets. They are so aggressive in spending advertising money to make customers have a strong impression to identify products and love their brands. The company is also willing to spend large sums of money to beat new competing brands and prevent competitors from entering their markets. In addition, P&G conducts media such as on television, newspapers, radios, etc. to increase customer awareness and announcements about new and changed products. The company relies on markets and targets to establish specific forms and means for image promotion, namely: discounts, sample testimonials, product offerings under many forms, 27
34. sweepstakes, organizing various events, sponsoring game shows on television as well as sports events P&G also trains the professional sales team, as well as often organizes. and sales force to specific markets to best serve customers and increase sales efforts to increase sales of large customers.P&G often used its strong brand name to launch coming out with new products. For example, the Ivory brand specializing in soap has expanded into baths, dishwashing liquid and shampoo. The launch of a new product with a strong brand name has made it more accepted and trusted faster, while saving a lot of costs. P&G distributes products globally but makes adjustments to be more local. P&G TVCs have also been changed, not only have to use one TVC to advertise a product around the globe, in which country to advertise, use the language of that country. P&G advertisements are tailored to specific countries, using popular local stars to promote their products. For example, Head & Shoulders shampoos in Vietnam, invited actor Minh Hang as an advertising representative 28
35. Chapter 4 COMPARE STRATEGY OF P&G AND UNILEVER 4.1 Business situation of Unilever and P&G in recent years 4.1.1 Unilever Unilever CEO Paul Polman stated in 2014 that the company is targeting beauty care brands and is likely to buy these brands, especially those from high-end products. . Earlier, Unilever's business report also showed that the company is using the financial revenue from the food business to fund the expansion of the beauty care product sector. In the final report of 2014, merging and acquiring the beauty care business was one of Unilever's top priorities in 2015. In 2014, Unilever had no major mergers. Its personal healthcare and hair and skin care products market share has declined. However, in early 2015, the group made 3 mergers and acquisitions (M&A) and many experts predict Unilever will continue M&A deals in 2015. However, Unilever's move to expand its personal care business was accompanied by its decision to reduce its operations from food and beverage. In 2014, Unilever sold seven brands of low-growth products and said the company's non-core brands would be separated into a separate business. Polman CEO also stated that the group will focus on core business activities, while restructuring its portfolio of brands. The above statements show that expanding the business structure is an important goal of Unilever but restructuring and focusing on core business with higher priority. The food business segment has provided a good profit before tax for Unilever, but the company's revenue growth has slowed down in recent years. Many experts believe that 29
36. the food business segment is shifting away from Unilever's core business and the group is shifting its focus to high-end cosmetics and beauty products. 4.1.2 P&G For many years, revenue and profit of P&G continuously decreased. In particular, 2015 was a difficult year for P&G with revenue and profit down by 8.2% and 38.6%, respectively. Picture 4. 1 P&G 1 Facing this situation, P&G decided to narrow its business scale and focus on core products. In keeping with the trend, for many years, P&G successfully expanded its business by acquiring a number of famous brands such as Gillette, Wella Professional, Iams and Ambi Pur. However, revenue and profit of P&G have decreased significantly in recent years due to too many brands, even the "dead" brands. At the end of the 2015 fiscal year, only 21 P&G 30
37. brands reported annual sales of over $ 1 billion. P&G's revenue and profit both dropped sharply, by 8.2% and 38.6%, respectively. As a result, P&G announced a recall of 100 less effective brands and focused only on 70 brands in 10 business areas. These leading brands account for over 90% of revenue and 95% of P&G's net profit. While many other multinational corporations are actively promoting business expansion and acquiring many valuable brands, P&G has chosen to narrow, focusing on developing core products. P&G has announced the resale of Duracell to Berkshire Hathaway. It also left a joint venture with a Chinese battery company. Then, P&G announced the resale of Camay and Zest soap brands to Unilever in July 2015, along with 43 beauty brands (including cosmetics such as Hugo Boss perfume, fashion like Gucci and Dolce & Gabbana, and a number of another hair styling brand) for cosmetics company Coty Inc in a deal worth $ 12.5 billion. 4.2 General comments In terms of global strategy, P&G is still superior to U with a more advanced position and occupying a unique position in many important industries and markets. By acquiring Gillete and focusing on its strategic commodities, P&G will continue to expand. P&G has a very modern and effective management model, always one of the pioneers of management model innovation in the world. From a revenue perspective, P&G is still much better, and if you look at the position of the strategic product, P&G is clearer. In the Asian market, the strategies of the two sides are also different, difficult to comment fairly. P&G targets a group of customers with a high average income, choosing the most profitable segment (more premium & urban than U), 31
38. In terms of marketing effectiveness, P&G is better because the segment they choose is easier to make money. Perhaps because the Unilever culture is very Political and Positive, this is the situation. P&G seems more intellectual, more peaceful. P&G and Unilever in Asia of course Unilever will prevail. This is because P&G initially misjudged the Asian market, for example in Vietnam, as evidenced by the fact that Vietnamese people had heard about Omo before hearing about Tide and listening to Comfort before knowing about the existence of Downy. in other markets, since then, P&G has won completely, especially in the US P&G is "inviolable". P&G products seem to be too small and overshadowed by Unilever products. Therefore, if P&G keeps this situation, sooner or later, it will lose market share for Unilever's customers. Loyal to P&G also feel bored when walking to find and find goods of Unilever. Unilvever seems to be more powerful when marketing and advertising techniques seem to "suppress" P&G competitors, so to speak, because Unilever seems to be quite imposing on European style and Asia lifestyle up its products. Besides, Unilever is more multidisciplinary: consumer goods, food, while Unilever chose a strategy of uniform spread, expansion and emphasis on it. The Unilever leader has applied better pioneering rules in Asia than P&G Unilever's product identification system is still better than P&G. Unilever has spent a lot of time on product marketing campaigns, product recommendations, gifts and promotions. For example, during the golden age of the Sunsilk dynasty, U's budget for Mark & Sale for Sunsilk was equal to the total budget of Pepsi Vietnam for all products. You should pay attention to the budget of Sunsikl = Pepsi Coola + 7up + Mirinda + Aquafina + Twister. 32
39. Unilever spends on PR and creates better products for P&G through the events: Cloth couple's wedding - OMO Festival, Unilever has spent too much net profit may not be as big as P&G But it is popular and reach many customer segments. 4.3 Compare 2 strategies A business strategy must have 5 elements: strategic objectives, strategic scope, core competencies, competitive advantages and operational strategies. So, how are the 5 elements in two multinational companies producing consumer goods like U and P&G? Let's take a look at the comparison table below: UNILEVER P&G - The annual growth rate for these - P&G aims to provide products products annually reaches about of superior quality and value to 20-25% improve the lives of consumers - Helping over 1 billion people to around the world in the present improve their health and happiness time and tomorrow. Since then index P&G is known as a leading brand - Reduce by half the impact on the in terms of revenue and value environment creation; This contributes to the STRATEGIC - Use 100% sustainable materials prosperity of the employees, OBJECTIVES - Make consumers feel and shareholders of the Group and the appreciate U's products compared whole community where P&G to other company's products on the operates. market - Product design pleases consumers but still maximizes resource protection - Minimize waste in the production process and promote recycling 33
40. - Serving the target group of - P&G customers include large retailers, supermarket systems or traders with groceries, stores with distributors member clubs, drugstores, - Unilever provides products to focusing on developed countries. consumers who are middle-income - A global cosmetics group with consumers, targeting developing 80 brands in 5 product segments: countries. + Beauty, Hair and Personal Care - One of the multinational + Grooming STRATEGIC corporations supplying consumer + heal Care SCOPE goods with 400 food and hygiene + Fabric and Home Care products for families and + Baby, Feminine and Family individuals with 4 main product Care groups + Food and drink + Home Care + Personal Care + Water Purifier - Is a large corporation in the world - Consumers belong to the middle providing consumer goods with class belong to urban areas, so the 400 brands worldwide quantity with the ability to collect - Product innovation creates great is very high competitive power for Unilever - As one of the world's leading ADVANTAGE - In addition to the array of consumer goods companies Cosmetics, U also provides - High market access, loved by additional array of food many retailers - Linking the top 5 global - Choose the stars in the Showbiz organizations: Oxfam Oxford world, sports and information Committee for Famine, transmission that have a great 34
41. International Population Service influence on consumers. For (PSI), Child Protection, UNICEF example, in Vietnam, singer Minh United Nations Children's Fund, Hang (Head and Shoulder World Food Program to open shampoo), singer My Linh (Ariel Giving recommendations to washing powder), Messi is the consumers for personal hygiene global ambassador for Head and and helping to improve the lives of Shoulder for man shampoo brand those in need. Since then, the product quality as well as the - The ability to understand company's reputation are further customers through strong confirmed in the eyes of investment in market research consumers. - P&G is considered a leader in - Wide distribution network, investing in industry research especially in developing markets, accounting for 53% market share of developing countries - Being a leading company in promoting products, especially on television - As a holder of source technology around the world on the production of these products - Always work with integrity - Integrity + The central responsibility is + Always try to do the right things integrity, respect for people, + Honest and straightforward Competition organization and operating + Operating under the law environment - Leadership - Positive impact + High responsibility 35
42. + Social commitment to brand + Clear vision activities and commercial + Focusing resources to achieve relationships, voluntary goals contributions. - Ownership - Continuous commitment + Accept personal explanations to + Commitment to how to influence meet business needs, improve the the environment system and help others improve + Activities towards sustainable efficiency development goals + See corporate assets as their - Set aspirations in the field of assets to achieve long-term operation success + Aspirations are based on business - Passionate victory principles, providing an approach + Determined to do best what is to management and corporate most relevant responsibility + Not satisfied with the status quo - Provide consumers with high + Desire to improve and win the quality products at reasonable market prices wherever they need to be - Credibility + Respect and trust colleagues 36
43. Conclusion International business strategy greatly affects the brand and the long-term development of a multinational company. Companies can choose different types of strategies to grow their companies or they can choose the same strategy with different practices. Two large corporations, Unilever and P&G, have been rivals for decades and have achieved much success in their development. The right international business strategy gives them many benefits and experiences for the future. Although in Asian markets, Unilever often dominates in terms of product quantity and market size. However, each company has its own identity, increasing the difference with competitors is also a strategy for the company to exist. In the future, when the world market is constantly changing and markets become saturated, corporations need to have new business strategies to adapt to market conditions and to survive and develop. 37
44. REFERENCE Nguyễn Tuyết Anh, Khỏi niệm và cỏc loại hỡnh chiến lược kinh doanh quốc tế là gỡ, Luan van 1080, April,3, 2019. Quach Thi Buu Chau. (2010), Researching business strategies International group of Procter & Gamble, Ho Chi Minh City University of Economics. 38