P&G Analysis_en
FINANCIAL STATEMENT ANALYSIS
PROCTER AND GAMBLE CORPORATION
PREPARED BY: MAYSA DARWISH AND NOWAR AZIZA
SUPERVISED BY: LECTURER: EMAD ABUSHAABAN
Executive Summary
Procter & Gamble is the largest maker of consumer packaged goods in the world and the largest advertiser in the United States. P&G is behind some of the most popular beauty care, household care and health items on the market.
We choose it for our analysis because it's very successful & creative company .
P&G is a great company with great leadership and employees, and highly satisfied customers. P&G will be around for the next 100 years .. P&G will continue to grow high single digits even in this economy because of the breadth of its products, creativity and innovation, global market share, and delighted repeat customers who will not buy another brand
Financial Health: P&G is a stable company operating in a very mature and stable steady growth industry. It has an average Return on Assets of 10.5% and a high average Return on Equity of 20%. It turns its Inventory around 4.4 times a year, which is also an industry average .
One weak aspect of P&G is its relatively poor liquidity position. One reason is the high STD (short term debt). P&G, being a low risk firm is able to get STD at low interest rates and hence uses this instead of LTD. It generates huge positive free cash flows to ensure prompt payment of interest. we feel P&G prefers STD due to its speed and flexibility (no covenants).
Thus we saw that the key ratios are maintained and the profit margin, ROA, and the total assets turnover ratios are improving. P&G still finds itself in a tough situation as far as liquidity is concerned with the liquidity ratio showing a further decline .
We found that P&G is the strongest among it's competitors in all aspects .
P&G have two competitive advantages which are innovation & human resource & they working hard to keep them up .
P&G have many levels of strategies an overall for sustainability & environment
In addition to business & corporate strategies,, all of them are sufficient .
P&G have significant current success sides & achievements based on certain core competencies like understanding consumer , go to market capability , scale , innovation & brand building .
P&G have very impressive future plan which treat all the weaknesses they have whether internally or externally with time limits & clear goals .
Finally we concluded that P&G is not only the larger brand and the category leader but it is also the most efficient company and is strategically placed to continue its market dominance without any real threat .
Table of Content
1. EXCUTIVE SUMMARY
· PART(1) >> Background
- Procter & Gamble Identity
- P&G Brands
- One Billion Dollar Brands (23 brand)
2. Half Billion Dollar Brands (20 brand)
- History
- Logo controversy
- Manufacturing
- Ranks Achieved
3. PART(2) >> Accounting
· New Accounting Pronouncements and Policies
· Summary of Significant Accounting Policies
4. PART(3) >> Financial Analysis
· Financial statements
1. Income Statement
2. Balance sheet
3. Cash flow Statement
· Key Changes over 3 years in FS's elements
· DIVIDEND
1. Dividend history
2. Dividend Policy
· Stock price
1. History of stock price (5 years)
2. Reasons of stock price change over 3 years
3. Comparison to (KMB , S&P500)
· Ratio Analysis
· Future Estimation
5. PART(4) >> Industry Analysis
· Consumer goods Industry
· Categories Of FMCG Industry
· Corporations
· Structural Analysis of FMCG industry
· SWOT analysis of the FMCG industry:
· HYPOTHESIS related to the industry
· Industry Competition Dynamic
· Challenge affecting the industry
· Porter's Five Forces
- PEST Analysis
- Competition
- Overall analysis (KMB vs. P&G)
6. PART(5) >> Corporate Analysis
- Board of Directors
- Board Purpose and Responsibilities.
- Four committees of the board of directors
- Board Committees.
- Corporate Governance
- Leadership
- Ownership
- Organizational Structure
- Products by Category
- Developing MarketsCore Strengths
- Vision Statement
- Mission Statement
- P&G Values
- P&G overall strategies
- Stakeholders
7. PART(6) >> Company Analysis
- P&G Adding value to society
- P&G STRATEGIES
- Strategy Formulation
- Functional strategy
- General Business Level Strategy
- Corporate Level Strategy
- Operational strategies
- SWOT Analysis
- Value Chain
- Competitive Advantage
- P&G Innovation
- Human Resources
8. PART(7) >> Current & Future Success
- Current Success
1. Current Success Quotations
2. P&G beats estimates
3. Simplification plan almost done
4. P&G attributions to environment
5. industry in the future
6. according to P&G
7. P&G attributions to environment
8. consumers and competitors respond to short-term changes
- Future Success
1. Strategy Renewal
2. Where to Play
3. How to Win Choices
4. Improving Consumer Value
5. Future Prospects
6. P&G investing effort
9. PART(8) >> Solution Analysis
- Development of Strategic Alternatives & Options
- Evaluation and Recommendations & Strategic Choices
- Strategic Implementation & Control Mechanisms
10. PART(9) >> Recommendations
- Recommendations
- References
Procter & Gamble Identity :. (P&G, NYSE: PG)
is a Fortune 500, American multinational corporation headquartered in Cincinnati, Ohio, that manufactures a wide range of consumer goods. As of 2008, P&G is the 8th largest corporation in the world by market capitalization
Procter & Gamble is the largest maker of consumer packaged goods in the world and the largest advertiser in the United States. P&G is behind some of the most popular beauty care, household care and health items on the market. P&G is credited with many business innovations including brand management and the soap opera.
P&G Brands : ( it has 43 Brand )
- One Billion Dollar Brands (23 brand) …
- ALWAYS
- ARIEL
- BOUNTY
- BRAUN
- CHARMIN
- CREST
- DAWN
- DOWNY/LENOR
- DURACELL
- FUSION
- GILLETTE
- HEAD & sh
- IAMS
- MACH3
- OLAY
- ORAL-B
- PAMPERS
- PANTENE
- PRINGLES
- TIDE
- WELLA
- Half Billion Dollar Brands (20 brand) …
- ACE
- BOLD
- BOSS
- CASCADE
- DASH
- DOLCE
- EUKANUBA
- FEBREZE
- HERBAL ESSENCES
- COVER GIRL
- MR. CLEAN
- VICKS
- PRILOSEC
- REJOICE
- SAFEGUARD
- SKII
- SWIFFER
- TAMPAX
- VENUS
HISTORY:
Established in 1837, The Procter & Gamble Company began as a small, family operated soap and candle company in Cincinnati, Ohio, USA. Today, P&G markets almost 400 products to more than five billion consumers in 180 countries,
1837 Brothers-in-law William Procter and James Gamble start a partnership, making and selling candles and soap in Cincinnati.
William Procter quickly established himself as a candle maker. James Gamble apprenticed himself to a soap maker. The two might never have met had they not married sisters, Olivia and Elizabeth Norris, whose father convinced his new sons in-law to become business partners. In 1837, as a result of Alexander Norris' suggestion, a bold new enterprise was born: Procter & Gamble.
On April 12, 1837, William Procter and James Gamble start making and selling their soap and candles. On August 22, they formalize their business relationship by pledging $3,596.47 apiece. The formal partnership agreement is signed on October31, 1837.
1859
P&G sales reach $1 million.
By this point, approximately eighty employees worked for Procter & Gamble. During the American Civil War, the company won contracts to supply the Union Army with soap and candles. In addition to the increased profits experienced during the war, the military contracts introduced soldiers from all over the country to Procter & Gamble's products.
1879
The inexpensive, but high-quality Ivory soap is introduced
1924
P&G is one of the first to create a market research department to study consumer preferences and buying habits
1930
becoming an international corporation with its acquisition of the Thomas Hedley Co., based in Newcastle upon Tyne, England. Procter & Gamble maintained a strong link to the North East of England after this acquisition. Numerous new products and brand names were introduced over time, and Procter & Gamble began branching out into new areas
1955
Crest, the first toothpaste with fluoride clinically proven to fight cavities, is introduced
1961
Pampers is introduced and eventually replaces cloth diapers
1980
Sales reach $10 billion
2003
P&G operates in 80 countries worldwide, employing 98,000. Have 13 billion dollar brands in its portfolio: Charmin, Tide, Pantene, Iams, Folgers, Crest, Olay, Always, Ariel, Bounty, Downy, Pringles, and Pampers $43.3 billion in net sales in 2003.
2004
P&G's Safe Drinking Water Program wins the World Business Award from the United Nations Development Program & International Chamber of Commerce in support of the UN's Millennium Development goals. Actonel is P&G's newest billion-dollar brand, and the first pharmaceutical brand to reach this important milestone.
2005
P&G and Gillette merge into one company and add five more Billion Dollar Brands to our product portfolio including Gillette and Braun's shaving and grooming products, the Oral-B dental care line and Duracell batteries.
Procter & Gamble acquired Gillette in 2005 for over $50 billion in its largest acquisition to date. In 2004, the last full year before the acquisition, Gillette generated over $10 billion in sales, about $6 billion of which came from razors and Duracell and Braun products and the remainder sourced from the Oral-B brand, which was moved into the Health & Well-Being segment.
A key piece of the acquisition beyond Gillette's product lines was its distribution network and supply chain. Gillette's distribution network and supply chain in emerging markets had been extremely successful for Gillette and, once acquired, has worked to complement P&G's own distribution network.
On August 24, 2009,
the Irish-based pharmaceutical company Warner Chilcott announced they had bought P&G's prescription-drug business for $3.1 billion
Firsts :
P&G's dominance in many categories of consumer products makes its brand management decisions worthy of study. For example, P&G's corporate strategists must account for the likelihood of one of their products cannibalizing the sales of another
P&G produced and sponsored the first radio soap operas in the 1930s.
Past serials produced by Procter & Gamble include:
n Another World
n Lovers and Friends
n The Brighter Day
n The Catli
Logo controversy...
n The company received unwanted media publicity in the 1980s when rumors were spread that their previous corporate logo was a Satanic symbol. The company has sued and attempted to sue a number of companies like Amway and individuals who have spread rumors of this type, in some instances because they sell competitive products and have spread such rumors for the purpose of tarnishing P&G's image to increase sales of their own brands.
n However, the continuous media coverage prompted P&G to adopt an entirely new logo consisting of just the letters P&G. In television commercials in China, the former P&G logo still appears at the end of each commercial, and up until 2004, it appeared at the end of each commercial in Japan.
Manufacturing ...
Procter & Gamble manufactures its products across the globe.
Manufacturing operations are based in the following regions:
n United States
n Canada
n Latin America
n Europe
n China (31 wholly-owned factories) and other parts of Asia
n Africa
n Australia
Ranks Achieved ...
n 8th largest corporation in the world by market capitalization. (2008)
n 14th largest US company by profit.
n 10th in Fortune's Most Admired Companies list (as of 2007).
n P&G was named 2008 Advertiser of the Year by Cannes International Advertising Festival spending $2.62 billion
n Awarded inaugural social innovation award by the financial times.
n Ranked 2nd in the chief executive magazine’s “best companies for leaders”.
n In October 2008, P&G was named one of "Canada's Top 100 Employers" by Mediacorp Canada Inc.,
n Barron’s Magazine 100 Most Respected Companies ,,Ranked #3 & Ranked #5 in 2006-2009
n Harris Interactive/Wall Street Journal World's Best Corporate Reputations Ranked #10 for 2006 - up from # 13 in 2005. Ranked in the top five companies for best “Products & Services”
n Consumer Goods Technology Magazine ... Most Innovative Company