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Economic risks
Proctor & Gamble (P & G) market share is facing competitive threats from well-financed companies. In this regard, the company is experiencing difficulties maintaining its market share. It is difficult for the company to maintain steady revenue from brands that require extensive marketing efforts (Butler, 2012). Also, the increasing consumer sensitivity among the company’s target markets poses an economic threat.
Changes in tax regulations may hamper the company’s international operations (Butler, 2012). The company risks facing new tariffs, trade barriers, and quotas especially on sales in foreign markets. With ongoing turbulence in global economic conditions, the company risk disrupted operations and low demand for products.
Cost fluctuations especially in commodity prices, energy, and raw materials could hinder the company’s ability to manage its finances (Butler, 2012). Consequently, this affects the company’s maintenance of its profit margins and market share. Besides, some risks affect the global manufacturing and supply chain. Such risks include labor disruptions, natural disasters, and political instability. Eventually, these factors affect product supply and profitability.
Economic opportunities
P & G economic opportunities are from emerging markets. Considering the shift in consumption behaviors among the consumers, the new markets exhibit growth opportunities. It is important to understand that the company’s flexibility in re-engineering its beauty and personal care products in new markets is a competitive advantage (Madhok & Keyhani, 2012).
The current company’s strategy to focus on core businesses using brand rationalization offers P & G an opportunity to target the mid-range market segment. This economic strategy provides the company with an opportunity to save on costs. P & G’s global presence offers the company with economic opportunities. The company’s global presence is integral in establishing a premium focus on low-income consumers from developing countries (Madhok & Keyhani, 2012). Most of the developing countries use market-based economic strategies to attract foreign investors. From this perspective, P & G can benefit from reduced tariffs, government subsidies, low labor costs, and foreign exchange rates.
As indicated earlier, global positioning offers the company an opportunity to focus on differentiation. For example, the company can invest its manufacturing operations in high growth and less-developed markets like Brazil, China, and India (Madhok & Keyhani, 2012). These regions are a notable economic force in the global arena due to the availability of cheap labor, large market base, reduced taxes, and tariffs.
References
Butler, K. C. (2012). Multinational Finance: Evaluating Opportunities, Costs, and Risks of Operations. Hoboken, NJ: John Wiley & Sons.
Madhok, A. & Keyhani, M. (2012). Acquisitions as entrepreneurship: asymmetries, opportunities, and the internationalization of multinationals from emerging economies. Global Strategy Journal, 2(1), 26-40.
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