a. What strategy was Procter & Gamble pursuing when it first entered foreign markets in the period up until the 1980s?
Procter & Gamble clearly used an international strategy for their expansion into foreign markets throughout a large portion of the 20th century. Not until they began to experience slower growth, profits and sales in the in the early 1990’s did they take a serious look into their business model for international expansion. But up to this pint they were unparalleled by any other competitor as the chart shows below.
b. Why do you think this strategy became less viable in the 1990’s?
• P&G’s costs were too high because of extensive duplication of manufacturing, marketing, and administrative facilities in different national subisidiaries. The duplication of assets made sense when national markets were segmented from each other by barriers to cross-border trade. (Products produced in one country could not be economically sold in another due to high tariff duties levied on imports to Germany for example).
First, the changing global market created a better market for companies to expand and compete with less restrictive policies from host nations and more openness to foreign direct investment have all aligned to make the older strategy almost doomed to be defeated.
Second, a combination of cheaper more efficient transportation of goods and markets more free for the import and export of materials aided to P&G losing some market share and profitability.
c. What strategy does P&G appear to be moving to ward? What are the benefits of this strategy? What are the potential risks associated with it?
P&G initially expanded internationally when it earned Canada in 1915. However, even after expanding into Western Europe and Asia in 1960s and 1970s, the company still maintained all product development at its headquarters location