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David answered on Dec 21 2021
Olay in China
Student Name
University Name
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Table of contents
Introduction 3
Company Review 3
Industry analysis 4
External Environment Analysis 5
PESTEL analysis 5
Competitor Analysis of Olay 7
Porter’s Five Forces Model 7
Influence of Environment Factors over Organizational Business Strategy 9
Evaluation of Olay’s Strategies: Ansoff matrix 10
Conclusion 11
References
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Introduction
Globalization and its derived benefits act as the active stimulus for the multinational
organizations to expand their business and operational scope beyond the national boundaries.
Such strategic decisions help in enhancing the customer base and exploration of new
opportunities through penetrating in untapped or unexplored markets. In consideration to the
unexplored opportunities of South Asian region, most of the multinational organization, with
global scope, headed towards fast growing potential markets. With expansion in the middle class
population, China has presented itself as one of the largest and high potential market for the
multinational organizations. (BCG, 2007) Huge potential customer base and increasing urban
purchasing power has attracted multinationals like Adidas, Proctor & Gamble, Carrefour etc. In
order to understand the market potential of China and influence of external environment over the
growth of organizations an evaluation is made in next parts of paper, in consideration to the
business of Proctor & Gamble’s brand Olay
Company Review
Olay brand has been created in South African region by chemist Graham Wulff in year
1950, which eventually became globally recognized skin care giant. (Field, 2011) It’s being the
part of renowned Proctor & Gamble (P&G) product portfolio has earned high brand recognition
and business through facilitation of sophisticated and premium cosmetics for the middle class
population of West Europe, North America, Japan and South Asian region. (Euromonitor, 2007)
Olay is the part of P&G’s $25 billion worth product portfolio, whose own value has been
evaluated as $11.8 billion. (Annual Report P&G, 2012) Through its innovative and affordable
skin care products like anti-aging, skin whitening, wrinkle free creams, tinted moisturizers,
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regenerists lotions etc, Olay has established itself as most valuable global brand. P&G has
optimized its business value and became thrice more efficient than its next largest competitors, in
which prime role has been played by the strategic choices, extended innovation initiatives,
brilliant execution and sustainable and socially responsible operation frameworks. (P&G, 2012)
Olay has adopted the business development strategies based on the specific imperatives related
to the exploration and capitalization of future growth opportunities and reach, touch and
improvise the lives of the targeted nation’s people.
Industry analysis
Attaining whiteness or white skin is considered to be the important constituent of
defining male or female beauty in Asian culture. In consideration to such factors growth of skin
whitening and lightening products in Asian markets has achieved dramatic increase in sales and
significant position in market. (Li et. al, 2008) Such enhancing beauty industry interest of Asian
or Chinese population has helped Olay in attaining rapid volume growth and successful
implementation of policies related to high penetration rate and reach to large untapped market.
This specific industry is considered to be operational and productive on base of the innate
demand of the population towards attainment of white, young and refreshing skin through use of
anti-aging, skin lightening or enhancing creams, moisturizers, lotions etc. (Belk and Zhao, 2003)
Olay has attained significant position in the Chinese market based on its globally well-
known brand recognition or acceptance and portfolio of affordable range of skincare products.
(Jing, 2012) With the growth of GDP of China the per capita disposable income of the female
population against cosmetics and toiletries has rose by almost 50%, which has provided
significant boost to the cosmetics and skin care industry. On basis of such opportunities
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Companies like Olay has explored and developed its growth path and enhanced its profitability
and productivity which helps it in reaching to the top most position of the skin care industry.
External Environment Analysis
In order to get comprehensive insight about the effectiveness of Olay’s business strategy
it seems imperative to acknowledge the influence of different external environmental factors
related to Chinese economy. Success and growth prospect of an organization is considered to be
influenced of different environmental factors or situations; a brief description of which is
presented below in consideration to Olay as an organization and Chinese economy as
environmental analysis platform.
PESTEL Analysis
Specific constituents of PESTEL analysis is considered to be the external environmental
factors like political, economic, social, technological, environmental and legal factors. Such
macro economic factors are considered to be highly influential to the competitiveness of the
international business environment.
Political: Political situation of the economy is considered to be dependent on the specific nature
and framework of the government. China is a socialistic state, where communist nature of
government is playing role in governance and establishment of regulatory social and legal
framework within economy. Chinese politics has adopted the ideology that whatever resources
are available that should be owned or shared by the people for the social welfare and growth.
Thus most of the resources and industry activities or related aspects like prices, manufacturing
processes etc are decided or controlled by the comparatively stable Chinese government.
(Country profile: China, 2008)
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Economic: Chinese economy is considered to be the one of the largest and fast growing
economy, which has projected itself as the high volume potential market for the global
companies. Emergence of 1.3 billion of Chinese population as the potential consumers,
development of the state owned distribution facilities to strengthen sales and distribution
framework and evolution of domestic Chinese companies has strengthen the economic system.
(Wharton, 2005) Such factors create highly competitive but profitable and large volume business
opportunities...