P&G into Asia Pacific region
Introduction and Case
Procter and Gamble, the MNE which is placed fifth in the list of “World’s Most Admired Companies” per the press release in 2011, entered new markets around the globe after its production capacity had subverted the domestic demand for products. Besides location diversification, it also diversified its product base. We are going to discuss how the MNE entered the South Asia Pacific region on the basis of its consumer goods by taking into consideration the Porter’s Diamond of National Competitive Advantage. We will understand how the 4 attributes have favored or impeded the entry of P&G in the nations Japan, India and China.
Theory
Per the Porter’s theory, the nation’s international success in a particular industry largely depends on the factor endowments, related and supporting industries, demand conditions and firm strategy, structure and rivalry. P&G first entered the Japanese market. America and Japan are big time rivals when it comes to technology and development. P&G had 2 options either through exports or through FDI. It considered FDI as a better option due to the existing trade barriers and strong foot of the existing related industry. Through FDI, P&G established its value-chain activities in Japan and gained better control over its operations in Japan (Tamer, C. ). However, initially P&G had faced negative figures until it realigned its marketing strategy to suit the Japanese culture (Rastogi, C, 2012) by entering into the compact technology. In India, P&G faced tough rivalry against the J&J and HLL, subsidiary of its major universal competitor. The demand was concentrated only in bigger cities due to the higher valuation of P&G goods. It first launched itself in the soaps and detergents market and later diversified its product portfolio. With various product variants and good marketing strategy, it finally sustained itself. However, it still faces intense rivalry when it comes to prices. This has by no means impeded the
Procter and Gamble, the MNE which is placed fifth in the list of “World’s Most Admired Companies” per the press release in 2011, entered new markets around the globe after its production capacity had subverted the domestic demand for products. Besides location diversification, it also diversified its product base. We are going to discuss how the MNE entered the South Asia Pacific region on the basis of its consumer goods by taking into consideration the Porter’s Diamond of National Competitive Advantage. We will understand how the 4 attributes have favored or impeded the entry of P&G in the nations Japan, India and China.
Theory
Per the Porter’s theory, the nation’s international success in a particular industry largely depends on the factor endowments, related and supporting industries, demand conditions and firm strategy, structure and rivalry. P&G first entered the Japanese market. America and Japan are big time rivals when it comes to technology and development. P&G had 2 options either through exports or through FDI. It considered FDI as a better option due to the existing trade barriers and strong foot of the existing related industry. Through FDI, P&G established its value-chain activities in Japan and gained better control over its operations in Japan (Tamer, C. ). However, initially P&G had faced negative figures until it realigned its marketing strategy to suit the Japanese culture (Rastogi, C, 2012) by entering into the compact technology. In India, P&G faced tough rivalry against the J&J and HLL, subsidiary of its major universal competitor. The demand was concentrated only in bigger cities due to the higher valuation of P&G goods. It first launched itself in the soaps and detergents market and later diversified its product portfolio. With various product variants and good marketing strategy, it finally sustained itself. However, it still faces intense rivalry when it comes to prices. This has by no means impeded the
References: Press Release, (2011, March 3). "P&G Ranks 5th Overall, 1st in Our Industry and a "Green Star" Among Fortune Magazine 's World 's Most Admired Companies". Procter & Gamble. (Retrieved May 21, 2013). Rastogi, C. (2012). International Marketing, Market Selection, Modes of Entry in International Market [Powerpoint slides]. http://www.slideshare.net/charurastogi/6-international-marketing-market-selection-modes-of-entry-in-international-markets (accessed 21st May, 2013). Tamer, C. 2009, International Business, First Edition, Pearson Education India, ISBN=8131725170.