Headquartered in downtown Cincinnati with 2010 revenue of $78 billion US and 127,000 employees worldwide, Procter & Gamble does business in more than 180 countries. Pursuing a strategy of "Think Globally - Act Locally," P&G reports having 4.2 billion customers worldwide. Now they are focusing their growth on the next frontier: Africa and the potential of another 1 billion customers.
"With its 53 countries and rapidly growing population, (Africa) is P&G's newest frontier and biggest challenge yet.
"To grow here, P&G must persuade people who live on $5 or less a day to buy items they've forever lived without. The company must travel dirt roads to stock 300,000 stores, most of them open-air marts. It must manufacture products in places where power is unreliable and crime is a constant threat." (Cincinnati Enquirer - April 17, 2011)
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| Pampers is a key brand for P&G in Africa |
Earlier this year the Cincinnati Enquirer did a special issue on Procter & Gamble in Africa, which included many articles and resources about Africa and P&G's focus there. Here are a couple to get you started:
Article: Chasing 1 billion new consumers (cover story on P&G's focus on Africa... includes lots of cultural information)
Article: Distribution? Often it's a box on a bike (some of the challenges P&G faces in third-world countries)
Article: P&G at Work: Key Managers in Africa (short profiles of six managers at P&G offices in Lagos, Nigeria)
Photos: Enquirer photos from Nigeria
With 1 billion people, Africa represents a significant potential market, but certainly one with many challenges. Should more companies focus on Africa for business growth? Based on the P&G experience, what are some people-related challenges companies face as they pursue business in Africa?
- Kathy Wood
6 comments:
I think it depends on what type of companies your talking about. Certain companies, I believe should target Africa, companies that target the Bottom of the Pyramid are the companies that should target Africa. Companies will face many technological and logistical promblems as their are not many roads as well Africa not being a very tech savy continent. Some of the people related challenges companies will face will be having a customer base that can actually afford your product. Another problem would be finding employees that you could educate and sell your product efficiently and up to your companies standards.
My concern with P&G's strategy is an ethical one. As Nick says, they are facing a customer base that may not be able to afford their products, and, as the first article emphasizes, P&G's goal here is to expand its market, which has stalled in North America and Europe. If P&G aims to promote products that will better the quality of life for their consumers, that is one thing. However, the article emphasizes that P&G must "persuade people who live on $5 or less a day to buy items they've forever lived without." With such limited incomes, are the consumers being deceived into buying products they do not need so that P&G can make a profit? I hope that P&G keeps in mind how valuable a dollar is to their consumers and promotes only beneficial products at a fair price.
This is a double edged sword issue to me. On one hand I don't really agree to P&G going into Africa, into villages that have been living this certain way for so long. And in a sense I think its breaking up something really natural to feed their pockets. This is such a profitable idea that one could easy think they are doing it just because of that. On the opposite hand, its a good thing that a company that can afford to provide hygiene and health care products to areas that are unstable politically and unable to receive such resources. I agree with the previous post about this being an ethical issue. It is easy to agree with them doing this knowing they will provide a cleaner, healthier life for many, too bad their is a consumer driven world driving it.
In my opinion companies should focus on opening factories in Africa before they try and turn these people into their customers. Africa is a very poor country. I'm not sure how they are going to convince people they need these products they've successfully lived without ever since they can remember, especially when they barely have enough money to get by on a daily basis. Hearing this doesn't make me happy. It makes me feel like they're trying to take the little money these people have just to increase their own profit.
I think that is is a constructive, yet risky move to start business in Africa. I believe that a lot of the violence and corruption may stem from the lack of income or the poor distribution of wealth within the different countries. If the middle to lower class citizens were to benefit from the placement of P&G products in their markets, it would lower the crime rate and the likelihood to extort, bribe and blackmail people with more financial means, in my opinion. If my theory is somewhat correct, the Proctor and Gamble can make a small, but significant difference in the lives of those in Africa and would probably encourage others to begin doing business there as well.
I see the problem mainly as the type of company and product. The question I'll ask is what makes up the cost content of the product. Just like Japan, using technology might increase the total cost of the product but since labor is less expensive as compared to machinery, cutting cost might mean using humans. In my opinion if more foreign companies move into Africa, the overhead cost might be lower. In our world today with advancement of globalization, one will be surprise the influence of modernization and cultural changes in Africa.
If you go in with the same mentality here, you might success. Relationship is key and most part bribery is the way of life. Using local people will be a plus.
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