OUM BUSINESS SCHOOL

SEMESTER 1 / YEAR 2
MPU3223
ENTREPRENUERSHIP

REQUIREMENT:
SELECT AN ORGANISATION INVOLVED IN ENTREPRENUERSHIP. EXPLAIN THE
ELEMENTS OF ITS MICRO ENVIRONMENT AND DISCUSS HOW THESE ELEMENTS
AFFECT YOUR SELECTED ORGANISATION. RECOMMEND IMPROVEMENTS THAT CAN
BE MADE BY THE ORGANISATION IN MANAGING THE MICRO ENVIRONMENT
EFFECTIVELY.

TABLE OF CONTENTS

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CONTENT

CHAPTER 1

PAGE

INTRODUCTION
1.1
1.2
1.3
1.4
1.5

CHAPTER 2

DESCRIPTION OF THE ORGANISATIONS NAME 5 6

DESCRIPTION OF P&GS OWNERSHIP...6
DESCRIPTION OF P&GS INDUSTRY..7
DESCRIPTION OF P&GS SIZE. 7
DESCRIPTION OF P&GS PRODUCTS.8 9

EXPLANATION ON THE GENERAL MICRO ENVIRONMENT

ELEMENTS
2.1

CUSTOMERS10
2.2

COMPETITORS 11

2.3

SUPPLIERS....11

2.4

FINANCIAL INSTITUTIONS...11 12

2.5

GOVERNMENT AGENCIES12

2.6

NON-GOVERNMENT ORGANISATIONS..12 13

CONTENT

PAGE

CHAPTER 3IDENTIFICATION AND DISCUSSION ON ELEMENTS OF

MICROENVIRONMENT THAT AFFECTS THE P&G
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ORGANISATION
3.1

CUSTOMERS14

3.2

COMPETITORS......... 15 23

3.3

SUPPLIERS........24

3.4

FINANCIAL INSTITUTIONS...25 27

3.5

GOVERNMENT AGENCIES 28 29

3.6

NON-GOVERNMENT ORGANISITIONS... 30 32

CHAPTER 4

RECOMMENDATIONS TO IMPROVE MANAGEMENT OF

THE MICROENVIRONMENT IN THE P&G ORGANISATIONS

4.1

CUSTOMERS
4.1.1

EXPAND INTO NEW CATEGORIES IN EMERGING

MARKETS.. 33

4.2

COMPETITORS
4.2.1

PRODUCTS TO MATCH AFFORDABILITY IN

EMERGING MARKETS 33

4.3

SUPPLIERS

CONTENT

PAGE

4.3.1

TAP INTO NON-TRADITIONAL DISTRIBUTION

CHANNELS. ...34

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4.4

FINANCIAL INSTITUTIONS
4.4.1

RECONSIDER COLOR COSMETICS STRATEGY 34

CHAPTER 5

SUMMARY 35

CHAPTER 6

REFFERENCE.. 36

CHAPTER 1
INTRODUCTION

1.1

DESCRIPTION OF THE ORGANISATIONS NAME.

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Procter and Gamble is a global consumer goods company and it is also known as P&G. Procter
and Gamble is a multinational company that headquartered in United States.Besides that, Procter
and Gamble has been ranked in the Worlds Biggest Public Companies 2015 in the place of 36 th.
There are two types of P&G logo, which is original logo and current logo as shown as Figure
1.1(a) similarly to the Figure 1.1(b), which is shown the differences of logo between in the year
of 1850s to 2013.

Figure 1.1(a):The original logo compared to the current logo.

Figure 1.1(b): The changes of P&G logo between in the year of 1850s to 2003.

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1.2

DESCRIPTION OF PROCTER AND GAMBLES OWNERSHIP.

In the year 1837, Procter and Gamble Company were introduced by William Procter and James
Gamble.Both of them are born in the United Kingdom. William Procteris emigrating from
England whereas James Gamble came from Ireland.Moreover, William Procter is established
himself as a candle maker and James Gamble apprenticed himself to a soap maker. They met
each and other by chance. In short, they met each and other when they married sisters, Olivia and
Elizabeth Norris. In addition, Alexander Norris is known as their father-in-law, called them for a
meeting in which he persuaded his son-in-law, which are William Procter and James Gamble to
become his business partners. As a result of the suggestion from their father-in-law, Procter and
Gamble was created on 31st of October 1837.

1.3

DESCRIPTION OF PROCTER AND GAMBLES INDUSTRY.

Procter and Gamble Company are known asa multinational consumer goods company and also
operate for 179 years. Manufacturing operations for P&G are based on the following regions,
namely United States, Europe, Australia, Latin America, Mexico, India, Germany, South Korea,
Canada, Japan, Brazil, France, New Zealand, Africa, Middle East, China, Indonesia, United
Kingdom, and Romania, as well as Philippines.

1.4

DESCRIPTION OF PROCTER AND GAMBLES SIZE.

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In year 1858 to 1859, approximately 80 employees are worked at Procter and Gamble Company
with sales reached at US$1 million. There are 135,000 individuals worldwide are employed and
had global sales which reached to US$79 billion as of 2009. At the same time, the largest
company in the world in terms of market capitalization is falls on P&G as a worlds 8 th largest
company. According to Wikinvest (2010), has been stated that the products of Procter and
Gamble reach to 4 billion of the planets population.Furthermore, P&G has operations in 75
countries with more than US$83 billion in sales in year 2012. Additionally, P&G are recorded in
sales about US$83.1 billion in year 2014. P&G has announced that they are dropping around 100
brands as well as focusing on the remains of 80 brands, which are produced 95% of the
companys profits on 1st August 2014.Last but not least, in the year of 2015, P&G has market
operations nearly 300 brands in more than 160 countries as well as P&G has operations in nearly
80 countries around the world. The revenue of the company was reached to US$76.27 billion
whereas the value of operating income and net income are reached at US$11.79 billion and
US$7.03 billion. The number of employees in year 2015 is increased to 110,000 of individuals
are employed at P&G company.

1.5

DESCRIPTION OF PROCTER AND GAMBLES PRODUCTS.

The Procter and Gamble Company (P&G) manufactured dozens of billion dollar brands for hair,
home, and also health. There are five Global Business Units (GBUs) segments in the worlds
largest maker of consumer goods packaged are divided into:

Beauty
Health Care
Baby, feminine, and Family Care
Grooming
Fabric Care and Home Care

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Table 1.5 below shows some of the examples of P&Gs brands by the products.

Table 1.5: Examples of P&Gs Brands by The Products

PRODUCT TYPE
Beauty

Health Care

Baby, Feminine, and Family Care

Grooming

Fabric Care and Home Care

TYPE OF P&Gs BRANDS

Sky-II
Gucci
Olay
Ivory
Oral-B
Vicks
Crest
Scope
Whisper
Naturella
Always
Pampers
Align
MACH3
Clearblue
Braun
Joy
Febreze
Cascade
Fairy

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CHAPTER 2
EXPLANATION ON THE GENERAL MICRO ENVIRONMENT ELEMENTS

Based on the view of Kuratko and Hodgetts (2004), has stated that micro environment of
business venture is also a part of venture external environment, but it can directly influence the
entrepreneurs decisions and activities. In other words, micro environment is also known as the
task environment or industrial environment. However, the micro environment is consists of six
elements, namely customers, competitors, suppliers, financial institutions, and non-government
organisations as well as government agencies.

2.1

CUSTOMERS

Customers can be defined as a person who has particular quality, which is someone who buys the
goods and services from a business. In the business context, customers are the main targetof
group. The goods and services that manufactured by factories or industries are consume by a
group of customers, such as kids, students, working adults, and also senior citizen.Basically, this
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group of people influences the decision of entrepreneurs. For instance, Dove is one of the
popular product in the world which manufactured by a multinational company that is Unilever, it
provides body lotions, skin care, and hair care for a group of customers. At the same time, there
are millionaires of people are familiar and loyal customers to the Dove product. Additionally, the
consumer is known as a king in the market system and they are decision maker for the
entrepreneurs. Based on the customer needs, entrepreneurs will produce the products for them.

2.2

COMPETITORS

In the context of business, competitors is a firm that supplying a particular products which offers
the buyers a similar product. In a simple word, competitor can be defined as a business that
offers or provides similar products to consumer. The entrepreneurs of new venture in business
must analyse their competitors in industry. Besides, entrepreneurs can identify their competitors
through the business directories. For example, there are competitions between Pepsi and CocaCola, Burger King and McDonalds as well as Target and Wal-Mart. Hence, the presence of more
competitors in a business can reduce the price of goods as the companies try to gain the profit of
market share.

2.3

SUPPLIERS

According to Armanurah Mohamad (2014), has expressed that suppliers is the second group of
people who have an impact on entrepreneurial activities. In other words, a supplier is also known
as a vendor, which is they supplies the goods and services to an individuals or company. They
can decrease the quality of the goods and services in the market. At the same time, they can
increase the price they charge on the goods and services they sell it to the customers. For

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example, the most top KFC suppliers are Prime, Cardia Bioplastics, CDC Mobile, Accoya, Halal
Sub, Cardia, and Aruba Networks. Aruba Network serves up free Wi-Fi at KFC.

2.4

FINANCIAL INSTITUTIONS

To start a new business venture, one of the sources that will use for external funding is a financial
institution. A financial institution is a firm that are focuses on dealing with financial transactions,
specifically in loans, investments, and deposits. Moreover, financial institutions consist of
organisations, such as insurance companies, building societies, banks, investment dealers, and
trust companies. A financial institution is also one of the sources for external funding to expand
an existing business. For instances, loans from financial institutions are hard to get for new
venture entrepreneurs, such as initiate a new saloon shop. This is because they are lack of track
record as well as the cost that they need to pay in terms of interest payment may burden the new
business of saloon shop. Hence, financial institutions have a direct impact on entrepreneurs.

2.5

GOVERNMENT AGENCIES

Basically, government will influence in the entrepreneurial activities through policy

implementation, such as the Malaysian Agriculture Policy, the New Economic Policy, and also
Privatisation Policy which have been implemented in Malaysia. Some policies will give an effect
on entrepreneurial activities but some are not. There have a purposes and objectives in the
government policies as well as regulations. Furthermore, government agency provides some
support to the entrepreneurs. An example of government agencies in Malaysias Sushi King goes
halal under Halal Industry Development Corporation. Besides, Halal Industry Development
Corporation is an agency under Ministry of International Trade Industry (MITI).

2.6

NON-GOVERNMENT ORGANISATIONS
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A non-government organisation is called as NGO. NGO is a private sector and voluntary

organisation which is organized in the local, national or international level. Example of NGO are
religious group, environmental groups, consumer societies, business society, political
organisations and so forth, which are among interest groups that can influence entrepreneurs.
These kinds of groups can influence entrepreneurs through the campaigns that against goods and
services by spread the information regarding certain products. For example, there are a
McDonalds online campaign put the food on rumours. Therefore, these actions can effect
consumers and pressure for the government to take appropriate action on a certain issues.

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CHAPTER 3
IDENTIFICATION AND DISCUSSION ON ELEMENTS OF MICRO ENVIRONMENT
THAT AFFECTS THE PROCTER AND GAMBLE (P&G) ORGANISATION

3.1

CUSTOMERS

Customers are the main target of group in Procter and Gamble (P&G). As an entrepreneur, P&G
know the needs and wants of customer. Besides, customer is a decision maker and they are
king in the market system of P&G. Therefore, P&G producedozens of billion dollar brands for
consumers based on five Global Business Units (GBUs), mainly beauty, health care, grooming,
and baby, feminine & family care as well as fabric care & home care. The purposes of P&G are:

We will provide branded products and services of superior quality and value that improve the
lives of the worlds consumers, now and for generations to come.

Based on the statement above, the user will lead to feelingof trustworthy on the goods and
services that provided by P&G. Thus, there are billionaires of people are buying and using the
products of P&G because of the standard of quality on products are very good as well as
branded. Moreover, P&G has served their brands around 4.6 billion of people in more than 180
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countries. Among the products that are often purchased by consumers are Olay, Pantene, Head &
Shoulder, Downy, Pampers, Whisper, Gillette, Ariel, Febreze, Mr. Clean, Ambi Pur, Always, SKII, and Rejoice. Figure 3.1 below illustrate the P&G products that consume by consumer.

3.2

COMPETITORS

Figure 3.1:P&G products

There are some of the competitors occur in the industrial of Procter and Gamble (P&G)
Company. The top P&G competitors are Unilever, Kimberly-Clark Corporation, Johnson &
Johnson, and Avon Products. Now, let us look at the following figures that illustrate the
comparison between P&Gs company and competitors.

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Figure 3.2(a): Competition by P&Gs divisions

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Figure 3.2(b): P&Gs competition by segment and its market share.

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Figure 3.2(c): P&Gs versus competition, revenue growth by segments.

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Figure 3.2(d): P&Gs versus competition, income growth by segments.

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Figure 3.2(e): P&Gs versus competition,data.

Figure 3.2(f): P&Gs Company versus competitions results

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Figure 3.2(g): List of P&Gs competitors and stock performance

Figure 3.2(h): P&Gs comparisons of quarterly growth rates to its competition

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Figure 3.2(i): P&G Companys Competition Data

Figure 3.2(j): P&Gs efficiency versus its competition

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Figure 3.2(k): P&Gs management effectiveness versus its

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Figure 3.2(l): List of P&Gs competitors and valuation comparisons

Based on the figures above, by comparing the results to the P&Gs competitors, P&G Company
has stated that the total revenue have been decreased in the 4 th quarter of 2015 year on year by
-16.1%, more faster than the overall decline of P&G Companys competitors by -13.4% are
recorded in the same quarter of year. On the other hand, P&G has achieved higher profitability
than its competitors, which is 19.08% of net margin.

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3.3

SUPPLIERS

As mentioned before, supplier is a vendor inwhich it supplies the goods and services to a
company. Table 3.3 shows the list of top P&Gs suppliers.

Table 3.3: List of Top P&Gs Suppliers

NO
.
1.

COMPANY
Coca-Cola

EXPLAINATION
Coca-Cola rewards app to the P&G Company.
P&G are partners with the technology company Mobeam to

2.

Mobeam

3.

Verix

4.

Savoye

5.

Terra

6.

Arvato System

7.

Runbook

8.
9.
10.
11.

IBM
Simulia
Tobii
Plug Power

3.4

FINANCIAL INSTITUTIONS

launch mobile couponing system into market.

P&G became partners with Verix to strengthen and build
business intelligence further.
Savoye supplies an automated order preparation system for
P&G.
Terra supplies Technologys Demand Forecasting tool to P&G.
Arvato supplies to P&G for proficiency in delivering Omnichannel solutions and innovative.
Runbook supplies to P&G for preferred solutions of financial
close process.
IBM supplies to P&G for cyber security.
Simulia supplies software for P&G.
P&G partners Tobii for shelf testing and packaging.
Plug Power supplies fuel cells to power lift of P&G.

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Before a financial institution give loans, investments, deposits or insurances to the P&G
Company, there are needed of track record, such as income statement, balance sheet, and cash
flow of P&G as a prove. So, that financial institution will feel confident to invest in the P&G
Company. This can be seen in the following figures as below.

Figure 3.4(a): Income statement of P&G Company

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Figure 3.4(b): Balance sheet of P&G Company.

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Figure 3.4(c): Cash flow of P&G Company

3.5

GOVERNMENT AGENCIES
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Government agencies influence the entrepreneurial of P&Gs activities through policy

implementation, such as public policy. By Principles, Values, and Purpose of P&G in the
political process, it helps to form a public policy that has a great impact on the P&G Company.
The functions of P&G Company in having relationship with Government Relations are play an
essential role, which is ensure the interest of P&Gs shareholders, consumers, and employees as
well as protect and also build global business of P&G are fairly represented by all the levels of
government around world. Additionally, Governance, senior business leaders, and Public
Responsibility Committee of the Board of Directors always reviewed P&Gs legislative as well
as public policy priorities regularly. P&G are engaging in political with the three main
components, which are:

i)

P&G Political Action Committee.

The P&G Political Action Committee is also known as a P&G PAC. P&G PAC can be
defined as a voluntary of unbiased political action committee. Moreover, P&G PAC has
been registered in the United States of Federal Election Commission (FEC) and also an
appropriate state office. On the other hand, PAC also allows P&G voluntary for financial
contribution. This is because it can support the candidates, such as at local, state, and
federal level. Furthermore, PAC allows P&Gs employees to pool the personal. Thus,
they can support the vital issues of the quality of life in the business and communities.

ii)

United States Corporate Political Activity.

P&G has involved in the P&Gs Public Policy Team. P&Gs Public Policy Team is a
multi-functional teamthat representative from Public Policy, Corporate Communications,
Legal, Global Government Relations, and Human Resources. This team will make
recommendation to the Chief Legal Officer, Chairman as well as CEO for approval. Such
of the participation and effort may result to guide P&Gs Principles, Values, and Purpose
is fully reported regarding to governing laws.

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iii)

Lobbying Activity.
P&G Global Government Relations and Public Policy is also called as P&G GGRPP.
P&G GGRPP is a team which represents the companys point of view in Washington,
D.C, at United States. In additional, P&G GGR are concentrate on the public policy
issues and legislative which give an impact to the company. Besides, P&G obey with all
the United States laws and federal, including the Open Government Act as well as
Lobbying Disclosure Act and Honest Leadership on lobbying activities and also
certification of compliance on Congressional laws.

3.6

NON-GOVERNMENT AGENCIES

On the contrary, there is also occurring of non-government agencies (NGO) in the P&G
Company. There are several of NGO which leading the animal protection groups. One of the
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non-government organisations in the P&G Company is The Humane Society of the United States
(HSUS) which has been worked for more than 20 years. The function of HSUS is successfully
change animal testing practices and regulations. Besides, P&G plays an important role of
developing the test of animal and promoting the acceptance of brands. The types of NGO in
P&G Company can be summarised as shown in Table 3.6.
Table 3.6:Types of Non-government Organisation (NGO) in the P&G Company
NON-GOVERNMENT ORGANISATIONS
(NGO)
1. Humane Society of the United States
(HSUS)

EXPLAINATION
HSUS is known as a largest animal
protection of an organisation at United
States.
HSUS also considered as a non-profit
that works to protect all the animals
through

investigation,

advocacy,

litigation, field work and legislation as

well as education.
AltTox.org is a website.
Its supported and sponsored by P&G.
AltTox.org led by HSUS, which is

2. AltTox.org

dedicate to the advance non-animal

texting methods through information
exchange in the online discussion.
3. European

Consensus-Platform

Alternatives (ecopa)

for

The European Consensus-Platform for

Alternatives (ecopa) is an international
non-profit.
Its brings together national consensus
platforms, especially in the industry,
academia, and animal welfare groups.

4. Institute of Vitro Science (IIVS)

IIVS is also known a non-profit

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organisation.
The aim of IIVS is to purify the science
as well as broaden up the use and
increase the presence of vitro testing.

5. Interagency Coordinating Committee

on

the

Validation

of

Alternative

Methods (ICCVAM)

ICCVAM is the United States research

agencies and federal regulatory.

The function of ICCVAM is to

promote or marketing the regulatory
presence of toxic test methods that
reduce or replace the animal use.

6. European Union Reference Laboratory

EURL ECVAM is hosted by Consumer

for Alternatives to Animal Testing

Protection, Joint Research Centre, and

(EURL ECVAM)

Institute for Health.

EURL ECVAM aim is to increase the
new method of proposed and develop it
for validation.

7. European Partnership for Alternative

Approaches to Animal Testing (EPAA)

EPAA are works to marketing the new

development of 3R methods, mainly
reduce, refine, and replace.
At the same time, EPAA is a joint of
the

European

Commission,

trade

federations as well as companies.

8. Cosmetics Europe

Cosmetics Europe is known as the

Personal Care Association.
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The Personal Care Association of
Europe already reaches to 70 billion,
excluding of sports.
Since in year 1962, its manufactured
toiletry,

cosmetics,

and

perfumery

industry.

CHAPTER 4
RECOMMENDATIONS TO IMPROVE MANAGEMENT OF THE MICRO
ENVIRONMENT IN THE P&G ORGANISATIONS

4.1
4.1.1

CUSTOMERS
EXPAND INTO NEW CATEGORIES IN EMERGING MARKETS

P&G Company has the scope to expand into a new product. For an instance, in the country of
India there are presences in hair care but it is no conditioners and colorants for the hair. At the
same time, it should launch Gillette Fusion brand at Brazil as well as build a market for mens
skin care. In addition, Gillette brand has potential to overcome the male reluctance in the use of
Gillettes products. Thus, P&G Company could increase the member of customers compared to
last year.

4.2

COMPETITORS
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4.2.1

PRODUCTS TO MATCH AFFORDABILITY IN EMERGING MARKETS

There is a few ways to succeed in emerging markets. One of the recommendations is P&G need
to adopt a successful strategies employed by Unilever. Unilever is a competitor of P&G
Company. Actually, P&G has already begun to offer a small perfumed bag that used to scent
clothes, that is sachets. Its keep the price down in this market. Conversely, there are further work
are required to develop a distribution network. Hence, P&G can overcome or win among the
competitors.

4.3
4.3.1

SUPPLIERS
TAP INTO NON-TRADITIONAL DISTRIBUTION CHANNELS

By allowingL'Oral, P&G was in the risk condition. This is because the skin brand of Olay
topples P&G Company from leading the position in skin care at China. This is the strategic of
market. It will lead the market to develop in personal care and beauty. On the other hand,
Shiseido is known as a multinational company that increasing the pressure too. Both of the
Shiseido and L'Oral are developing in the different channels of distribution. So, P&G could
consider doing the similar things. Therefore, P&G Company can develop its markets in the
industrial.

4.4
4.4.1

FINANCIAL INSTITUTIONS
RECONSIDER COLOR COSMETICS STRATEGY

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A color cosmetic is considered as one of its smaller operations. Unfortunately, it need of huge
resources. This is because it is driven the P&G Company with a dedicated focus from the
competition. Furthermore, invest the resources in cosmetics color can divert the resources from
the larger categories. It holds the industry-leading positions. As a result, it will need to expand
P&Gs brand to the Max Factor or Cover Girl brand to the emerging markets, such as in the
country of India. On the contrary, it is require of considerable in commitment and also financial
resources.

CHAPTER 5
SUMMARY
In general, micro environment is known as a competitive environment and is considered as task
environment or industrial environment. However, there are occurred six micro environments,
which is competitors, consumers, financial institutions, suppliers and government agencies as
well as non-government organisations. P&G Company have to tackle or manage those elements
because to develop the growth of P&Gs industries and achieved the goals of the company. In the
terms of customers, P&G could increase the numbers of consumers by introducing new products
in the emerging markets as well as manufactured the products in a good quality and so forth.
P&G company can manage those elements by expand it into new categories, tap into-traditional
distribution channels, reconsider colour cosmetics strategy, and products to match affordability in
emerging markets.

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(2956 words)

CHAPTER 6
REFERENCES

Geo

(2011).Procter

and

Gamble

Introduction.

Retrieved:

March

3,

2016

from

http://www.bitlanders.com/blogs/procter-and-gamble-introduction/30254

Susan Gunelius (2009). The Procter & Gamble Logo Then and Now. Retrieved: March 10, 2016
fromhttp://www.corporate-eye.com/main/the-procter-gamble-logo-then-and-now/

Tom

Marcko

(2012).

Suppliers.

Retrieved:

March

3,

2015

from

March

18,

2015

from

http://www.businessdictionary.com/definition/supplier.html

Tom

Marcko

(2012).

Competitor.

Retrieved:

http://www.businessdictionary.com/definition/competitor.html
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