Why the Selection We can all associate with Beauty & Personal Care – many of us use P&G’s products P&G competes against Unilever in the Arena – a company we are familiar with P&G’s historic style of...

P&G in China 1
P&G in China
P&G in China 2
Introduction:
This era has been marked by internationalization and globalization, with advancement in
innovation and technology.
Globalization is marked by international integration in the international market, which
has increased considerably with the passage of time. Globalization is marked by economic
innovation which is triggered by cultural and political diffusion. Globalization has increased the
opportunity of firms to operate in the global market, it helps the different companies to increase
the economies of scale as well increasing its competencies in manufacturing and operating
activities by adopting different activities a different nations. When a firm operates in the global
market the firm can focus on buying raw material and labour from low cost nation, so that the
company is able to manufacture the goods at comparatively low prices. When the company
operates in the local market it manufactures in one nation, purchases equipment from other
nation whereas manufacture its product in another nation, through this the company is able to
achieve economies of scale and it can manufacture goods at comparatively low price. By
operating in the global market the firm is able to work on a competitive landmark. With
globalization the company is able to tap the uncaptured market in the global market. ―Global
markets are attractive strategic options for some companies, but they are not the only source of
strategic competitiveness. In fact, for most companies – even for those capable of competing
successfully in global markets – it is critical to remain committed to the domestic market. In the
21st-century competitive landscape, firms are challenged to develop the optimal level of
globalization, a level that results in appropriate concentrations on a company‘s domestic and
global operations.‖ (Hitt, 2009).
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A firm operating in the global market is able to gain competitive advantage through
continuous focus on changing technology, innovation and the ability of the firm to focus on mass
market. The companies focus on adopting different global strategies which helps them in
reducing different trade barriers that a firm faces. A firm operating in the global market has to
keep a strong focus on the changes and change its strategies and operations with change in the
global environment. With the ever changing environment the companies needs to focus on
adopting different strategies rather than focusing on a single strategy. Adopting different
strategies help in improving the performance of the company.
Beauty and personal care:
Beauty and personal care has witnessed strong and dramatic growth in China, with the
improvement in the economic condition, and increase in the disposable income levels, has led to
the increase in the higher expenditure on beauty and personal care products. The consumers in
China are strongly focusing on premium products.
Innovation strongly focuses on driving personal care (PC) industry, development in
technology and innovation has led to the increase in development of premium personal care and
beauty products. The improvement in the economic condition aligned with the development of
new products has attracted more and more consumers in China.
Market of Beauty and personal care in China:
The Beauty and personal care market in China is expected to grow by about 34% CAGR
in next four years with the focus on the current market of the beauty and personal care.
Major players in the China Market:
The Chinese beauty and personal care market is driven my international as well as local
players. Procter & Gamble, L‘Oréal, Shiseido, Unilever and Amway are considered to be the top
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five players in 2011 in the beauty and personal care market. Local players like Jala, Shanghai
Jahwa, Shanghai Inoherb and Carlsa also have a strong edge in the market. But the market is still
governed by the multinational players.
Procter and Gamble holds the highest share in the beauty and personal care segment in
China, followed by L‘Oreal and Shiseido.
Proctor and Gamble:
The face of China is changing thanks to Procter & Gamble. P&G is the largest consumer
products company in China due in large measure to the popularity of its skin care and cosmetic
brands among Chinese women, including Olay whitening skin creams, SK-11 skin care products,
and Cover Girl and Max Factor cosmetics. P&G‘s success in China results from a passionate
effort to meet the beauty needs of Chinese women since 1988.
P&G cosmetics have been adapted to Chinese skin tones and fashion trends. So too, the
company‘s marketing practices have been changed. Consider the Cover Girl brand—the best-
selling mass market cosmetic brand in the United States. Only after two years of painstaking
R&D and market analysis, did P&G launch the Cover Girl brand in China in 2005.
16%
11%
5%
5%
4%
3% 3% 3% 2% 2%
2%
2%
1%
1%
40%
% Share - Beauty and Personal Care
Procter & Gamble
L'oreal
Shiseido
Uniliver
Amway
Colgate Pamolive
Mary Kay
Beiersdorf
Johnson and Johnson
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Strategies:
Different strategies are adopted by the companies so that they are able to achieve
competitive advantage, for providing differentiated products to the consumers. The companies
focus on adopting different strategies which is adopted at different levels of the company i.e.
Corporate Strategy, Business level strategy and marketing level strategy.
Corporate Strategy:
Corporate strategy is the strategy which revolves around the overall purpose of the
business. It revolves around developing the strategy of the whole corporate. This strategy focuses
on developing different strategies and functions so that the company is able to fulfill the needs
and expectations of its stakeholders. P&G focuses on growth strategy under this. The company is
able to focus on growth strategy through horizontal integration which focuses on integrating with
the companies operating in the same level and vertical integration which focuses on integrating
with is distributors or suppliers through a focus on backward or forward integration. The
company has strongly focused on innovation so as to attract more and more consumers and
provide them the best possible beauty solution.
The firms also focuses on diversification strategies, which focuses on shared resources
and synergies. These are the strategies which help in reducing the...