Procter and Gamble (P&G) PESTLE Analysis

Published in Companies category by MBA Skool Team, Last Updated: October 12, 2019

Here is a detailed PESTLE analysis of Procter and Gamble (P&G) which examines political, economic, social, technological, legal & environmental factors.

Political Factors:

The political factors in the Procter and Gamble (P&G) PESTLE Analysis can be explained as follows:

Procter and Gamble (P&G) operates across various countries and keeping a tab of the changes in policies is a must. The future of the products in a particular region are more or less dependent on the political conditions in the region. The more the stability of the government, the higher is the ease of working in that region. There are various opportunities that P&G can utilize, and thus make it as strength rather than just a policy to be followed. With governments across the world supporting the efficient use of its natural resources and P&G working towards a sustainable environment, it has a chance of getting involved with the government for the overall societal benefit. The company itself has a political action committee. This committee works on issues that directly affect its operations.

It is registered with the U.S. Federal Election Commission (FEC) and various state offices. It allows its employees to pool personal and voluntary financial contributions to support candidates at the federal, state and local level. These people elected at these different levels; help shape the future policies that directly affect the company’s daily operations. Thus P&G makes sure its voice is heard, and the political factors do not create much of a turmoil.

Image: company website

Economic Factors:

Below are the economic factors in the PESTLE Analysis of Procter and Gamble (P&G):

Procter and Gamble’s business gets affected when the market changes be it anywhere across the world. Higher the disposable income, the better it is for the company since more of its product will be sold.

Majority of its income comes from North America. With any changes in the policies relating to income, there will be a sharp change in consumption of necessity goods. It may be higher or lower depending upon the new policy. The second largest contributor is Europe, followed by Asia, both of which are a mixture of developed and developing countries, which shows the effect of disposable income increase helps boost sales. With growth opportunities across various markets, be it mouthwash or baby care all show trends towards increase in the near future. These are the opportunities that will help P&G reach greater heights and increase its brand value as well as profits. The major focus should be on maintaining a proper marketing mix that depicts these changing trends.

Social Factors:

Following are the social factors impacting Procter and Gamble (P&G) PESTLE Analysis:

P&G believes in a holistic product. It believes that its consumers interact with the product, package, and how they feel about the brand, how they experience it in the store or online, and whether it truly creates value for them versus the alternatives he or she has to choose from. These factors need to be considered in order to obtain a positive category growth and build competitive advantage. With changing trends people are looking for better quality/high quality products at affordable rates. With inclusion of Ariel and tide pods into its fleet of products the company has proven that social needs are what drives innovation. P&G has been awarded the best company in terms of social inclusion and gender inclusion. With its policies treating all genders equally, P&G has made a mark in this segment. Most of the edible products are needed to be healthy for the consumer and thus these changing trends provide an opportunity for the company to mix and match or create newer and better products thus helping the society grow and make life easier.

Technological Factors:

The technological factors in the PESTLE Analysis of Procter and Gamble (P&G) are mentioned below:

P&G relies on technology for both its operations as well as marketing and consumer sales. With increase in online market, the need for analytics to be implemented through its system is justified. Using this system, it has been able to optimize distribution, merchandising, shelf sets, targeted sampling and marketing. With being able to analyze the changing trends, Procter and Gamble can focus on products that sell more and generate majority of its revenue. ‘Reduced complexity in its operations’ is what the company believes in. In order to deliver better products in lesser time, the company has opened its first smart lab dedicated solely to research and development. With creation of Oral-B Genius X, P&G has managed to bring AI to the oral health segment. Keeping a tab on changing technologies in the automobile industry is important.

Only through implementation of latest technology can fuel efficiency be achieved.

Following are the legal factors in the Procter and Gamble (P&G) PESTLE Analysis:

With increasing regulations related to health and hygiene of the consumer-based products, P&G has an opportunity of increasing its internal standards to provide superior quality. With superior standards Procter and Gamble can claim its products to be superior to its competitors thus expanding its market. All its plants are subject to emission limits set by the various countries, and any issues related to any of the compliances will lead to major lawsuits which might tarnish its brand name. Avoiding lawsuits is a major concern for a company of this scale. P&G also faces situations where its patents have been infringed. Recent example was Unilever’s Dollar shave lawsuit that was settled by the giant. Keeping a tab on all such events is important to avoid market share loss.

Environmental Factors:

In the Procter and Gamble (P&G) PESTLE Analysis, the environmental elements affecting its business are as below:

With P&G being able to satisfy majority of its customers across various countries, it also feels the need to satisfy a sustainable development of the company in these countries. Based on the United Nations sustainability development goals, P&G has established certain goals for itself wit set deadlines. Their first ambition is to shift to 100% renewable energy sources and reduce the GHG emissions. Their second ambition involves utilizing water efficiently across all its processes. They wish to establish a cyclical process for all their products, such that waste generated is minimal. In order to do so, P&G along with Terracycle and SEUZ created the first recyclable shampoo bottle from beach plastic. A majority of its packaging material is now recyclable, and their target is to 100% recyclable with packaging material by 2030. Procter and Gamble created history when they launched Tide Pureclean, which is 65% biobased and is made in a plant that produces zero waste. In fact, even the packaging material used for the product is 100% recyclable. They believe in responsible sourcing especially in the case of wood based raw materials.

Their ambition is to support expansion of certified forests and enhancing the policies associated with these certifications. The have launched products that are required in less quantity as compared to the competitors and thus help in saving paper. With many such ambitions and initiatives, P&G is trying to bring about a significant change in the condition of the environment across the various countries it operates.

To conclude, the above Procter and Gamble (P&G) PESTLE Analysis highlights the various elements which impact its business performance. This understanding helps to evaluate the criticality of external business factors for any brand.

This article has been researched & authored by the Content & Research Team. It has been reviewed & published by the MBA Skool Team. The content on MBA Skool has been created for educational & academic purpose only.

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