Among the key challenges facing the G&P beauty company is the uncertainty that beholds its idea of expansion in China and Europe. Although Mr. Paolo de Cesare had a lot of experience, he is still not certain how he needs to present his proposal during the global leadership meeting so as to go through. This has resulted from the fact that the organization was not performing well in Japan. This posses a lot of confusion and doubt, even with his experience. It is clear that Mr. Paolo was not ready for this change. May by he wants to make this changes out of pressure.
He is looking for strong evidence so as to convince the Global Leadership he is capable of expanding within the industry. This is a big challenge since this is the first ever proposal to be made. According to Caves, R. E. (1996), before thinking of an investment in any business one should make extensive analysis. This analysis will vary from business to business and place to place. He should consider the business environment and the type of competitors that exist in the new environment. If this survey is not done well it may cause a business to fall.
It is important that the investor knows the environment of the region in and out. Therefore, Mr. Paolo de Cesare seems to have little information and analysis about the new ventures something that may result to losses. So as to go through this process successfully, Mr. Paolo needs to take some more time and educate his leadership about the proposal. His team of management need to know all the risks involved in venturing in this project including the environmental influence within the target area. The competitive strategies and the business strategies are also among the factors to be known by the management.
The management should also be prepared to face all this. According to the information given the director, Mr. Paolo seems to be moving alone towards the accomplishment of this project, which is not realistic. He should also think about all the risks he is going to encounter in this new ground and the benefits that he is likely to achieve. If the risks are many, he should avoid the risk of expansion and move on with the Japan branch alone. Another challenge facing P&G Company is its distribution channels.
Its profitability was based on its monopolist domination of the market that was due to the vast differences that occurred in between this company and its competitors. This therefore provided a big market to this company without stiff competition from other firms. Since this company wants to compete internationally, it is not sure whether it is in a position to keep up to the international standards of production. At the same time the company has not included issues to do with the market in its proposal. From these findings, P&G firm still needs some more time so as to enter into this kind of trade.
The firm had also specialized in the local market therefore to expand to international levels it has to diversify its market area. They should start making products that can be consumed by the target countries in good time before going to those areas. As pertaining to the selling of its products, the company should also work hard so as to come up with new products that will satisfy the desires of customers in new proposed countries. They should also understand that the price of this goods and services will be determined by both the buyer and the seller.
Even in some cases some traditional ways of appraisal approaches produce unrealistic values that have no bearing on market realities, this should be considered as he tries to make a market survey. In case of this it is important to overlay relevant market data and multiple achieved in similar businesses in the real world. The organizational structure of the firm posses another challenge to the expansion of the firm overseas. According to SK-II (2005), P&G’s global organization was in the midst of the bold but destructive organizational restructuring programme.
This gives a worrying stand to this firm, according to Bartlett and Ghoshal (2004). The firm may be push down by the readjusting programme before it attains its goals; this is a factor that the firm should be sure with before it gets into this venture. This firm’s organizational structure is not up to date it is missing some important personnel that are key to the success of any firm, for example it does not have the accounts that are just set aside to carry out accounting duties on their own. This firm also requires a separate unit that will be responsible in carrying out the duties of auditing.
Both internal and external auditing is very important for the success of any firm. This may explain why the firm registered a total USD 2000 in 1984. The sales margin eroded from 75% to 45%. Therefore, a big firm like this without separate offices for accounting purpose is bound to fall. The firm’s structure should also be reformed so as to have more salesmen at its lower organizational structure. As it only have a single sale manager at its base and a single marketing manager. By doing this the firm limits its sales to a smaller area as opposed to when it had sales persons.
There is separate unit that that deals with the workers welfare. Therefore the firm should come up with a new structure that will be more human resource oriented that duty oriented. This will boost the moral of workers hence making them to work harder to achieve the firm’s objective. The organizations structure should also be simple to interpret; the chain of command should be visible as from the presentation of the structure. This will be important both to the workers and the outsides as they will know the correct person to approach in case of a problem.
It will also provide order with the firm. Otherwise, with its current situation, is hard to understand it. Finally each unit should be allowed to come up with its own organizational structure and objectives. This will enhance autonomy hence aggressiveness. At present, the organization is performing well is due to the new products that were invented that serve the purposes of the community in Japan. It also performs well due to the benefit of the wide market area it has this results due to the difference among its competitors.
As a result this firm will sale its goods no matter want happens. But Jensen. (2006) says that it is normal for the firm to encounter transitional problems that will occur in the new countries. These challenges will help the firm to adapt to a variety of challenges within the business realms. The more a business is able to deal with these challenges the more stable it becomes. The other challenge that the director might encounter is the lack of information about the progress of, the firm in Japan and the factors that lead to the opening of new firms in the other countries.
According to the information given the organization had already developed its international timetable. The organizing director could have gone through this so as to establish the consideration that is put in place before opening new branches overseas. This will also help him to identify the best ground to put the company of this nature; the people that developed the timetable had carried out some research on this. Over the last years the company has been going through difficulties. There was a time the company made a lot of losses. Its sales margin reduced from seventy five percent to forty five percent.
This company also made losses of up to two hundred million dollars but with time it managed to get over these issues. Bearing in mind that this firm wants to expand its operation in China and Europe it may undergo the same problems as it tries to establish itself in these countries, since it have learnt from the past mistakes. We can be confident that it can make in this countries, this implies that this firm has a great future. So as to be successful both in the current country and the countries it is indenting to expand to, the following are some of the issues this firm needs to deal with.
Solutions Since the situation facing Mr. Paolo posses a lot of uncertainty, more research should be carried out so as to make sure that the venture is a worth risk. The establishment of P&G company in China and Europe should be given time so as to make sure that it does not enter another loss as it was in Japan. A special unit should be established that is free from biasness from the director so as to come up with more detailed information about the establishment of this firm in China and Europe. This unit should give practical steps of attaining their goals in the new ground.
The unit should also come up with a business strategy: this will help maintain the internal performance within the firm and a competitive strategy; this will help establish a more competitive ground with its competitors. Among the duties of this unit will be to carry out a market survey so as to be sure that their products will be consumed in these countries. The findings from this unit are the one that will determine whether this firm will have their firm established in these countries or not. Therefore the director’s option will depend on these findings. This is important since it will help eliminate cases of selfishness and personal gains.
When a decision is made by many people it tends to be more reliable as opposed to that made by a single person. This unit should also establish a market composition in terms of test and preference, age groups and the nature of packages preferred in this new market region. This problem can also be solved by providing forums to educate the firm’s workers on the importance of expansion of this firm, with good knowledge of the firms’ expansion. The firm should also practice transparency with its workers by so doing the workers will be aware of each step taken by the management.
The worker will be in a better position to own up the challenges. Since these are the implementer of the firm’s policies it will be easy for the director to carry out his duties. Before establishing the new firms in Europe and China the firm should work on its distribution channels, bearing in mind that this firm has been getting its profit as a result of low competition in its current market. A research should be carried out to ensure that it still has a competitive advantage in these countries. The firm should come up with more attractive goods that will compete with their complements in the new countries.
This can be achieved through the establishment of a team of people that will carry out a market research so as establish whether these countries are viable or not. When these countries are viable the firm will be allowed to invest in them. The kind of goods should be of the standard of those produced in the new countries. The researchers should look at the kin of packing used in these new countries, the most selling sizes and other qualities that are needed in this new market place. This will help this firm to avoid packaging sizes that will not be sold in the new market area.
The firm should establish the availability of raw material to their product as well as their cost in the countries it’s going to invest in. This is important so as to determine the cost of production that can be used in these new countries. When its cost of production is high in such way that the company can not make enough profit to sustain it, then the firm can consider investing else where. Other issue that pertains to this team is to establish site of the firm in respect to the source of its raw materials. If the site is far away from raw materials then other parameters can be used to establish whether is a available project or not.
When expensive, then firm can consider investing else where or even not invest. Another problem that G&P has been facing is the issue to do with its organizational structure. The firm is having problems with its structure; it is only considering its executive management. The lower management level has been over looked. The entire organizational structure has only one slot for the sales manager and the marketing manager. The organizing director should be restructured so as to reduce the number of the executive management. This will reduce the amount spent on paying these people since they are paid heavily.
The restructuring of the organization should be put it in consideration so as to ensure that they can reach many people. The more the lower management the more the firm will be in a position to reach its customers at a lower level. The organization should come up with a structure that will have more sale and marketing people on the ground. This will help this firm to expand it market command. When the firm increases it market then its sales turn over will also be high, the higher the sales the higher the chances of making higher profits.
The organizational structure should also ensure that there is a clear connection between the various departments and offices. There should be clear chain of command between this department and each department should be allowed to exercise its duties as expected. When this is done then the firm will have all its objects achieved. When each department is working they will establish the areas that need expansion and there will be no issues to do with uncertainties as it is in this case. It should be simple to understand with its chain of command visible to all.
The organizational structure should as consider technology in its organization. For example it can establish link in other viable place by the use of internet and other electronic communication. This will help the organization to establish more partners in new countries. It can also consider selling and buying of its products online. The other problem is to consider the kind of products processed. The firm should survey so as to ensure that they process goods that will be relevant to the consumers. To avoid the case of failure like what happened in Japan.
Panibratov (2000) gives the practical steps that Russia took during its internationalization; therefore this firm should ensure that the products are packed in packs that will be purchased. A special unit should be formed so as to establish the kind of products that are needed in China and Europe. This unit should also ensure that the firm comes up with new goods so as to diversify its markets, by doing so the firm will be able to enlarge its market coverage in the new target areas. The prices of these goods should also be put in consideration so that command a larger market. If possible their goods should be cheaper to win more customers.
There should be more channels to educate the executive about the firm objectives, goals and the missions. The management should be all informed about every kind of information that pertains to the firm. The management should know all the policies that govern the organization especially those that relate to expansion of the firm to other countries. In this case the director should understand the international time table and the factors that surround the expansion of this firm. He should be in a position to make any decision that pertains to the firm without a lot of consultations.
From the past speculations and failures, P&G firm failed due to lack of understand its kind of market. This company still will face this challenge even in China and Europe. As it thinks of its expansion it should be ready to provide goods and services that will make meaning in Europe and China. In case this does not work it will find itself in the problems that it encountered in the past. The company should train more persons so as to carry out a market survey in China and Europe. Before launching, a new firm should start advertising their products in these countries and even open up a small center for their products.
This will help the firm to establish the tests and preference of its customers in this region before having their firm there, According to Thompson, Gamble and Strickland (2005), this will help win customers at their new market. This is very important because it helps eliminate the chances of wasting resources on manufacturing goods that are not demanded there. Conclusion and Recommendations This is a big step for P&G beauty firm and it should keep up with its plan. As entrepreneurs, we need to take risks so as to venture into the world of business.
Therefore, this company should learn from its past mistakes and failure so as to better its performance. Christopher (1999) suggests that every firm should always be in a position to make adjustments from its past performance. The firm should also establish its own self evaluating scheme that will enable it to attain its goals and objectives in future. This will include the establishment of a strong internal audit unit that will monitor its finances and assets. This will also ensure that the heads of each department are accountable of every thing in their departments and offices.
There should be a clear guide line on the expansion of firms in other countries that will be followed by any person who comes in leadership of this firm. This will help eliminate the case of selfish desire by some of the organizational leader (Beamish, 2006). The organizing manager of this firm should come up with strategy that will govern any international management. This will enable the firm to face international challenges that makes many international businesses fall. Without these strategies the business will lack a guide or visions, which may lead to its failure.