P&G

Procter & Gamble

Procter and Gamble

Introduction

Procter and Gamble is a global leader in consumer packaged goods. It sells products in more than 180 countries. The manufacturing process is carried out in 70 countries. It has five reportable segments effective July 1, 2013. These are Global Beauty; Grooming; Global Baby, Feminine & Family Care; Global Health; and Global Fabric & Home Care. The company recorded revenues of $84,167 million during the financial year that ended on June 2013. The operating profit of the company was $14,481 million during fiscal year 2013. The net profit was $11,312 million in fiscal year 2013 (P&G Annual Report, 2013, pp. 23-24).

Macro Business Environment

Global Economic Conditions

Demand for P&G products is dependent on global macroeconomic factors. The current economic conditions are highly volatile. Recession originating from American mortgage crisis and the recent European debt crisis has increased the uncertainty in the economy. Although such challenges are often short-lived, some have longer durations. Variations exist in the magnitude of their impact, and there are regional differences in the severity of a downturn and the strength of a recovery (Byrd et.al, 2012, pp. 6-10). P&G's success will depend in its ability to manage uncertain economic conditions, particularly in key geographic markets.

Regulatory Environment

Regulatory environment includes changes in tax laws, product laws, accounting standards, and state laws. P&G's ability to manage regulatory environment, patents, and intellectual property matters will have a significant impact on its business. It also needs to focus on resolving pending legal matters within estimated timeframe (P&G Annual Report, 2013, pp. 17).

Venezuela Currency Impacts

The economy of Venezuela suffers high pressures of inflation. Therefore, P&G uses U.S. dollar instead of using local currency of Venezuela. The Venezuelan government significantly reduced the value of its currency on February 13, 2013. This necessitated adjustments in the balance sheet to reflect the impact of currency devaluation. Hence a reduction in net sales was witnessed as a result of this devaluation (Business Wire, 2013, p. n.d).

Micro Business Environment

Key Customers

P&G customers include mass merchandisers and retailers. It supplies products to grocery stores, drug stores, distributors and e-commerce retailers. It has met all its obligations and has no backlog orders (P&G Annual Report, 2013, p. 13).

Employees

P&G has workforce of around 121,000 employees. Ongoing business and organizational changes may require opting for services of third parties. This option may increase operational, reputational, and compliance risks. (P&G Annual Report, 2013, p. 17).

Suppliers

P&G purchases all of the raw and packaging materials from suppliers. Some of the suppliers are single-source suppliers. P&G produces certain chemicals at its own for the manufacturing process. Fuel and natural gas are important commodities used in the manufacturing process. Derivative products are also used in the distribution of input materials. They are also used for the distribution of the final product to customers (P&G Annual Report, 2013, pp. 13-14).

Shareholders

In fiscal year 2013, P&G returned $12.5 billion to its shareholders. This figure reflects the amount of dividend as well as the ...