Procter and gamble and its business environment

Contents

1 EXECUTIVE SUMMARY 1

2 INTRODUCTION 2

3 MICROENVIRONMENT 2
3.1 Customers 3
3.2 Suppliers 3
3.3 Competitors 4

4 MACROENVIRONMENT 4
4.1 Political 5
4.2 Economic 5
4.3 Socio–Cultural 5
4.4 Technological 6
4.5 Environmental factors 6
4.6 Legal 6

5 BUSINESS ANALYSIS 7
5.1 SWOT ANALYSIS 7
5.2 FIVE FORCES ANALYSIS 7

6 PROCTER AND GAMBLE CHALLENGE. 8

7CONCLUSIONS. 9

8 RECOMMENDATIONS. 10

9 REFERENCES 11

1 EXECUTIVE SUMMARY

This report describes and evaluates the changing business environment, and its components, giving some business’ examples from Procter and Gamble environment, and explaining appropriate theories and models, which help to understand all those forces that could have an effect on a company.

2 INTRODUCTION

Businessorganizations as Worthington and Britton (2006, p.3) define: “differ in many ways, but they also have a common feature: the transformation of inputs into output. This transformation process takes place against a background of external and internal influences which affect the firm and its activities”.

The business environment is where business is developed: internal and external factors that couldhave an effect, positive or negative, direct or indirect upon the business. Companies need to know deeply their business environment and their constant changes in order to make right decisions, and to supply its customers with goods or services that satisfy their expectations and their needs, for a profit; companies that do not take into account those changes tend to be not competitive and a mediumto longer term to disappear.

All these aspects surrounding business are categorized in two : microenvironment and macroenvironment, where microenvironment means the factors that affect the internally develop of the company, its purpose, its performance and decision making freedom, such as employees, customers, suppliers, shareholders, media and competitors and the macroenvironment areexternal factors that could affect the company but in which this cannot have any influence, such as tax changes, new laws, demographic change, government policy and are categorized for most managers using the PESTEL model: Political, Economic, Social, Technological, Environmental and Legal factors, is very important for managers to use this analysis to found and think about the likelihood of changesand to ranking them to develop their strategies.

3 MICROENVIRONMENT

Business microenvironment is known as the factors that affect internal development of a company, as is explained by some authors, Singla (2009), Worthington and Britton (2006), Palmer and Hartley (2008) are those factors that can have a direct effect over the decisions and strategies the company makes, which are generally notpossible to be controlled by their managers, but they can have some influences on them.

Business microenvironment are the stakeholders of the business, such as: customers, competitors, employees, suppliers, shareholders and media.

Business and its microenvironment have a two-way relationship; decisions the company takes could affect all or some of the microenvironment factors and viceversa, as is said by Gillespie (2007, p.9) “They all have a direct interest in the activities of the firm and are clearly affected by its actions”, e.g. if the company reduce some product references, this decision could affect: suppliers: if the company do not buy some raw materials, customers: if they have to buy another products; or in the other case, e.g. some supplier is increasing its prices, itcould affect the prices of the goods the company sale, and affects the customers as well; as shown, business decisions and changes could have a chain of positive or negative effects.

3.1 Customers

Business are based on the possibility of meet existing customer needs, to gain an economic benefit, they are one of the most important issues of the business, and should be managed as such;...