Procter and Gamble have been operating internationally for decades.
Number of countries in which P&G has been operating over years
As we can see, there had been brisk development during the ‘50s and the ‘60s. Then, the internationalization process stagnated during the ‘70s. A second wave of development occurred in the ‘80s, which can be explained by the collapse of the Communist system and the opening of new markets. However, as internationalization opportunities will be hard to come by in the 21st century, P&G has to find new prospects for growth.
This is also illustrated by itsfinancial results
It is interesting to note that at the beginning of the ‘80s, as P&G internationalization was slowing down, it experienced a sluggish growth in sales, which resulted in stagnation. A similar phenomenon was witnessed at the end of the ‘90s, and this might be related to a decline in the internationalization opportunities for Procter and Gamble.
[...] Issues faced in the internationalization 2 A structure and a culture that prevent the quick spread of innovation Since the beginning of the globalization process, top managers at P&G headquarters felt that it was compulsory not only to adopt a global strategy (i.e. to manage a profitable and coherent portfolio of famous international brands) but also to act locally and adapt each product according to the needs of national consumers. First, they decided to implement country subsidiaries which were highly independent and “local market-oriented” concerning marketing and R&D. [...]
[...] There are different problems that might hinder the successful entry of SK- II in Europe: - As in America, people spend less time on cleaning, and a long regimen as imposed by SK-II might not be consistent with this time constraint. - The market is already highly competitive, and is packed with many brands, even at the very high end spectrum of the market. There are many competitors; this would require tremendous advertising expenditures in order to raise significant brand awareness. [...]
[...] - SK-II is a luxury brand, not a mass-market brand, and this might be destabilizing for P&G executives, who do not possess the know-how on how to manage it correctly. - Japanese women love this product but they are not reluctant to invest time in skin care, contrary to most other women, who are less conscientious,and want efficient products that combine several functions in order to save time. The different stages involved in the process may not please some women, and could even bore them. [...]
[...] Therefore, even if there are interesting opportunities to trigger SK-II's international development, the assumption that this brand still has to be part of the Procter and Gamble portfolio can be called into question An organization dedicated to high-volume products The recent records for the fine fragrances business in Europe show that as the focus is on volume in sales, and not on profit, high volume products are favored by the country subsidiary general managers. Indeed, selling detergent or toothpaste is easier than selling anti-wrinkle cream. [...]
[...] In this manner, SK-II fulfilled the personal needs of the demanding and stylish Japanese women; the channels of distribution and the added services (advice) were wholly adequate too. Since Japanese women are very loyal and the top users of beauty care products, all these elements together contributed to the success of SK-II in Japan. Will it fit with other consumers in other markets? 2 SK-II international potential There are several downsides to SK-II's globalization: - Outside Japan, very few are aware about this brand, and consumers and distributors are equally confused about the position of SK-II . [...]
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