Transnational Corporation Article Example | Topics and Well Written Essays - 2500 words

Transnational Corporation - Article Example P&G is no exception .It has launched a systematic expansion strategy in such foreign markets to acquire a truly international hue. This paper addresses the issue of globalization of P&G and explores the details of the strategy adopted by P&G within the framework of an examination of strengths, weaknesses, opportunities and threats. P&G is a US company and has its main office in Cincinnati; USA.P&G is one of the largest manufacturers of fast moving consumer goods (FMCG) in the world. P&G enjoys a noticeable proportion of market share in numerous product categories: beauty care (Pantene, Olay, Cover Girl), paper goods (Bounty, Charmin, Pampers), food and beverages (Folgers, Pringles, Duncan Hines), laundry and cleaning (Tide, Cascade, Dawn), and health care (Crest, Scope, Metamucil). A literature piece in the Fortune Europe edition (April 17th, 2006) reported that Procter & Gamble ( ranked number 24 in the Fortune 500 list) had as many as 22 brands in its stable with each exceeding 1$ billion in sales. P&G had acquired 5 of these brands during the course of its $61 billion acquisition of Gillette (which was acknowledged as the largest merger of the year 2005). The strength and size of P&G was conclusively certified by ACNielsen, which surveyed and found that 99% of U.S. households use one or the other P&G produc t. P& G completed the acquisition of The Gillette Company for approximately $53.43 billion on October 1, 2005. At that point of time Gillette was the leading consumer products company that had $10.48 billion of sales in its most recent pre-acquisition year ended December 31, 2004. (Annual Report 2006). Theory behind the strategy of Globalization Dunning (1981) posits that three conditions need be met concurrently in order to initiate an FDI decision. The investing organization should derive both an ownership (O) advantage and an internalization (I) advantage, as the foreign market presents a clearly calculated and reckoned locational (L) advantage. P&G has been carefully vetting all three in its strategy for globalization. Globalization has brought about intense competition for global markets amongst the major multinational companies. These companies have been looking outwards to reorient their organizational structures and strategies to capture the global markets by positioning their products strategically. A recent study of the US and European companies revealed that 75 percent were taking up the above strategic reorganization in order to stay competitive and staying competitive was considered the single most important external issue on their agenda. Past experiences have shown that poor planning further embattled by rudi mentary understanding of the cultural aspects of the global market places had ruined the huge marketing campaigns of even the multinational companies. Coke CEO stated," Coke has had to come to terms with a conflicting reality. In many parts of the world, consumers have become pickier, more