Business Problems Facing Proctor and Gamble


Every business faces several challenges in its daily operations. While some problems are unique and specific to a company, others are more general and affect entire sectors and industries. However, every firm has its own experiences, even with general business problems. The modern business environment can be described as highly uncertain, especially due to global events and issues. Examples include the coronavirus (COVID-19) that has devastated businesses and livelihoods since late 2019. Companies were forced to shut down and workers require to isolate. The recovery process has been slow and, even though businesses are once again operational, the financial and economic losses have been massive. Other problems may include global uncertainties resulting from instability. The ongoing invasion of Ukraine by Russia is a geopolitical event whose consequences are felt across the globe. Most notably, the oil prices are affected, which in turn affects commodity prices and potential inflation across the world. Overall, the argument being made is that the current business environment is dynamic and volatile, which forces businesses to adapt accordingly.

The focus of this paper is to explore some of the major problems facing a selected business in this case, the company chosen is Proctor and Gamble (P&G), a provider of branded consumer goods operating on a global scale. P&G currently faces an uncertain business environment, mainly as a result of the environmental changes taking place. A brief overview of the company will be presented, after which some of the major problems are discussed. Examples include supply and demand, shortage of drivers, rising product value, COVID-19 pandemic, and environmental sustainability.

Company Overview

Proctor and Gamble are an American multinational that deals with consumer goods specializing in a wide range of personal care and hygiene products. The company was founded in 1837 by William Proctor and James Gamble, brothers-in-law who were a candlemaker and soap makers respectively. P&G has since become a manufacturer of well-known household products. Among the major brands by P&G include Oral-B, Bounty, Crest, Charmin, Downy, Gain, and Febreze (Fortune, n.d.). In 2014, P&D dropped over 100 brands to concentrate its efforts on the remaining 65 brands since they produced over 95% of the firm’s profits. In 2020, the company reported that it planned to make its operations climate-neutral by 2030, which is an extension o the previous goal to reduce emissions by 50% over the next ten years. Therefore, it can be observed that P&G is keen on addressing some of the environmental issues affecting modern industries, including climate change. Additionally, dropping some brands to focus on others is an indication that the company faces some challenging times, which necessitate adaptation.

As mentioned earlier, P&G is a provider of branded consumer packaged goods with a global market. the company’s market can be broken down into five segments: beauty, health care, grooming, fabric, home care, and baby, feminine, and family care. Across these segments, P&G sells across multiple countries and territories through grocery stores, mass merchandisers, drug stores, department stores, baby stores, specialty beauty stores, membership clubs, e-commerce, professional channels, and pharmacies (Reuters, n.d.). Therefore, it can be argued that P&G is a highly diversified company in terms of both the product offering and marketing channels. The diversification strategy has worked well for the company and it is arguably the main ingredient for the success P&G has had across the planet. Today, P&B is an internationally recognized iconic brand, which also helps it compete with multiple rivals in the same markets and industries. Expanding operations has allowed P&G to build a reputation and position itself above its rivals.

From a historical perspective, it is important to acknowledge the various steps the company has taken in its development and growth. P&G started as a simple manufacturer of soap and candles and evolved into a major producer of consumer goods. Specializing in consumer goods means that the company is assured of the marketability of its products. In the 1800s, candles were essential for light and soap critical for hygiene. According to Butler (2020), this scenario shows that P&G has a history of recognizing areas of demand and capitalizing on them. P&G was founded in 1837, which was a year when the United States was experiencing a financial crisis. Candles and soap became the backbone of the company’s business. P&G started to add the Moon and Stars logo to its products in 1850 and reached $ 1 million in sales in 1859. At the time, P&G was employing dozens of employees, which highlighted upward growth. The demand for its products also grew in 1862 during the Civil War when the company secured deals to supply Northern armies with candles and soap.

Other major milestones include 1887 when P&G initiated profit-sharing deals with its employees. Diversification began in 1890 when P&G lined up over 30 different soaps. The 1920s saw a decline in candle demand and sales due to the invention of the light bulb. In the 21st century, observers believe that there has been slack in the company’s growth as manifested by the stagnating revenues between 2016 and 2017 (Butler, 2020). The stagnancy can also be reflected in some of the decisions that the company has had to make in the recent past. For example, P&G is ending new capital investments and reducing its portfolio in Russia. Additionally, some products have also been recalled for different reasons, including the risk of cancer. These emerging issues indicate some major problems facing the company and some of them will feature in the section below.

Major Problems in Business

As explained above, P&G has become a global icon due to the brand it has built for over a century. A business that has lasted for that long is expected to have faced difficult experiences and be forced to adjust to survive. Today, it can be argued that P&G faces one of the most difficult eras in its existence that has the potential to disrupt further growth. Such issues as climate change mean that the company is making attempts to become greener. However, P&G faces a shortage of recycled plastic in its efforts to achieve its sustainability goals (O’connell & Kumar, 2021). Additionally, P&G has been hit hard by the COVID-19 pandemic, forcing the company to find means of boosting its resilience. Overall, it can be observed that even the market for consumer goods is extremely dynamic where demand for certain products diminishes after some time as in the case of candles. In this section, several problems that are currently facing P&G are explored, including demand and supply, shortage of drivers, rising product value or prices, talent management, and technology and digitization.

Supply and Demand

Every producer of consumer goods faces challenges in demand and supply, often as a result of changing demographics and consumer behavior. The issue of candles mentioned earlier is one of the most visible examples of how changes in the external environment can affect the demand and supply of products (Butler, 2020). In this case, candles used to be one of the most demanded products since every household needed lighting. The development of electricity and the electric bulb replaced candles, which meant a massive decline in demand to the point where it no longer makes sense to produce this product. This may be a historical issue that P&G experiences, but it helps explain how the problem of demand and supply in the market for consumer goods affects business. in a nutshell, when the tastes and preferences of the consumers change, companies are forced to drop certain products since they are no longer needed by consumers.

The modern market of consumer goods poses almost similar problems to the candles where changes in demand and supply affect how P&G. demand and supply are affected by several factors in the eternal environment besides shifts in consumer tastes. Inflation and delays in shipping are also responsible for changes in demand and supply, even though some of the changes are temporary. According to Zimmerman (2021), P&G has been using alternative suppliers and reformulating its products in response to inflation. The mechanism by which inflation works involved the effects on product prices. In the demand curve, prices are often inversely related to demand. Since inflation raises the prices, it can be argued that P&G expected inflation to reduce the demand. To keep prices stable, alternative suppliers and product designs can be used. low demand could also lower supply, even though higher prices work in the opposite direction. However, this mechanism could only work if the higher prices mean more profits. However, higher prices due to inflation do not translate into higher profits, which means that declining demand pushes the supply down.

The ongoing COVID-19 pandemic is another external factor that has critically affected the company’s demand and supply. Different markets faced different problems in demand and supply based on the severity of the pandemic. A good example is the Chinese market, which is the company’s second-largest (Thompson, 2020). In China, stores closed down or operated for limited hours, which meant low customer traffic. In such a case, weakened demand means that the company has to reduce its supply for a lack of storage spaces. However, shifting delivery online may have eased the supply problem since purchases can still take place. However, the main question is how much this strategy can save the company’s supply chain considering that shutting down economies reduces incomes and purchasing power. The aggregate demand for consumer products declines when people lack the means to afford them. Isolation and social distancing mean that P&G also experienced a labor shortage, which further affects the company’s ability to secure an adequate supply of its products. In other words, when stores cannot employ enough people, they serve fewer customers due to capacity limitations.

Consumer awareness of customer protection also affects the company’s supply and demand. In this regard, P&G has had to disrupt its demand and supply for certain consumer products due to safety concerns. According to Gibson (2021), some of the latest recalls involved products produced in the US, including such brands as Herbal Essences, Aussie, Waterless, and Pantene. Previously, P&G recalled Hair Food and Old Spice hair shampoo brands. These recalls are the result of the products found to contain human carcinogens, including benzene. When a product is recalled, its supply is halted and demand may be compromised due to reputation damages. The recalls are arguably the result of the company’s understanding that consumer awareness has improved drastically over the last few decades and lawsuits could be a major legal risk from these brands. Additionally, consumer protection laws and regulations may be another reason for the recall since the news of human carcinogens could result in government interventions. Regardless of the rationalization of the product recalls, it can be argued that demand and supply are detrimentally affected when a company has to stop the supply of certain products.

Overall, dealing with consumer goods means that a company has to face rapid changes in demand and supply. The changes are often the result of an external environment where changes in consumer tastes and preferences, inflation, pandemics, and product recalls disrupting the demand and supply either temporarily or permanently. For example, the demand for candles was permanent, which ended the supply of these products. The pandemic will end, after which economies may return to normal and the demand and supply may be boosted again. Regardless of the factors involved, the main point is that producers of consumer goods are always at risk of facing disruptions in the demand and supply of their products.

Shortage of Drivers

The shortage of drivers is a national problem in the United States that affect multiple industries, especially those involved in the transportation of products. The news of this phenomenon has triggered debates, especially where economists and other observers examine how the problem affects consumers. A trucking company in Xenia, Homerun Inc., expressed that it currently employed 200 drivers, but it needed an additional 100 drivers to satisfy the needs of its customers (Henry, 2019). P&G is one of the companies that ship products in large quantities, which means that they tend to rely on the services of these trucking companies. P&G’s Associate Director of North American Transportation Andy Butler observed that while the demand for the products is rising, the company is facing a situation where drivers are aging out of the industry. Others retire or leave for better jobs in manufacturing and other industries. Most importantly, it is becoming increasingly difficult to replace the drivers, which means that companies face the challenge of delivering products to the consumers.

The shortage of drivers in the country has a knock-on effect on the supply and prices of commodities. In other words, it is becoming increasingly expensive to transport products and these costs are often reflected in the commodity prices. The situation is compounded by such problems as soaring diesel fuel costs. As such, the company’s transportation costs were up by an extra $100 million in the 2021 fiscal year (AP Agency, 2021). the immediate response by companies facing increasing costs is raising the product prices, which is the action taken by P&G. A temporary inflation has resulted, but the company believes that it will soon end. However, there is no news from the company on what strategies are in place to resolve the issue of the truck driver shortage. An argument can be made that all industries are affected in the same way and that an industry-wide solution will be needed. As mentioned earlier, the baby boomers had dominated this occupation, most of whom have reached or neared the retirement age. the newer generations are not as keen as the previous ones on taking these jobs thereby creating a massive gap.

Considering that the shortage of drivers is a national problem, the government has stepped in to help companies find immediate and short-term solutions. Part of the solution involves allowing younger drivers to operate commercial vehicles in interstate commerce after completing probationary hours. This is a pilot program that was first proposed by the federal Carrier Safety Administration in 2020, which allowed persons between 18 and 20 years to become truck drivers (O’Kane, 2022). For safety reasons, these new drivers are not allowed to transport passengers, special configuration vehicles, or hazardous materials. Such considerations are critical since transportation is an occupation where experience is extremely valuable. The long bureaucratic processes meant that the program was not implemented when it was first approved since many departments had to issue approvals. The main concern for many observers is that inexperienced drivers will be operating on American roads, which poses risks to the safety of all road users. Even without passengers and hazardous materials, it is seemingly impossible to replace the experience and expertise of the older drivers. More drastic measures by individual companies would be needed to resolve the issue.

Employing teen drivers seems to be a workable short-term solution if the pilot program can produce competent drivers who can be retained in the long run. The threat on the roads will be real but the customers will not experience inflation at the same rates as they would when companies cannot get drivers to transport goods and when the freight costs are skyrocketing. The compromise is a sensible one, especially since training young drivers helps replace the retiring generation. However, a major question that arises is how to get young people to accept these jobs. Some observers note that the millennials do not fancy driving trucks since they are after more glamourous and more tech-oriented jobs (Patton & Townsend, 2019). It can be argued that the millennials have become more educated and they feel that their skills are adequate to help them secure better jobs. The bigger picture is making truck driving an attractive occupation that can make it possible to retain workers. Even if the young generation will take these jobs, it would possibly be for short periods until better opportunities emerge.

Rising Product Value/Prices

The United States and other markets across the world are facing a scenario where value addition on products raises costs drastically, which means that the process for consumer goods continues to rise. This scenario is simply described as inflation, where rising prices are the first indicator. P&G has warned that the prices will continue to rise as the inflation persists since there seems to be no end in sight for the rising prices. The problems described above have highlighted how prices are affected by the changes taking place in the external business environment. In this case, it is argued that the collective issues facing the American and other markets make it impossible to predict when the inflation will end and when the prices can stabilize. P&G notes that the inflation rates have reached 30-year heights, which is an indication that the problem persists (Fickenscher, 2021). Considering that markets are still recovering from the COVID-19 pandemic, there are valid concerns about the ability of the consumers to afford to purchase certain products. The rationale is that lower incomes mean reduced purchasing power, which translated into diminished affordability of goods and services.

It is important to notice that the rising prices are reflected across the entire supply chain. This means that the costs of raw materials are on the increase, which ultimately reaches the consumers through higher product prices. According to Fickenscher (2021), the rise in raw material costs has resulted in customers spending an extra $175 per month on daily items. The supply chain snarls are responsible for the rising costs, as well as the pile-up of cargo ships at US ports. The snarls mean that the company cannot get materials when needed and the delays are often associated with extra handling costs at the ports. As of 2021, P&G estimated that it would spend $2.1 billion more in the fiscal year ending June 2022 only on transportation and raw materials, as well as pulp for paper products. Overall, the company faces a situation where value addition across the supply chain affects the costs exponentially, which will cause it to charge more for the consumer products it produces. With the rate of inflation reaching 5.4%, it can be expected that the consumer will continue to suffer.

The case of P&G reveals that the inflation is not uniform across all products. According to (Lonas, 2022), Tide and other personal care products are among the most affected by inflation. P&G estimates that fabric care, family care, baby care, hair care, oral care, grooming, and feminine care products will all see an increase in prices. The price hike for the fabric care products began on February 2, while the rest of the products will follow suit in April. Inflation and broader economic events have made it impossible for P&G to implement any meaningful strategies for containing the rising costs. The rationale is that most of the factors in the external environment are beyond the control of P&G. For example, the shortage of drivers and the resulting freight costs cannot be resolved by the company on its own. Even if P&G were to implement feasible solutions, one of the most logical approaches would be to pay higher wages for drivers to attract and retain them. However, even such a move will mean higher freight costs in the form of labor, and inflation will persist.

Even with the rising product value and prices, it can be argued that the demand for consumer goods will not decline rapidly as a consequence. From a theoretical perspective, scientific studies reveal that consumers tend to attach value to the value of a firm’s prices. The value can be described as the maximum price a consumer is willing to pay for a product (Brozozowicz & Krawczyk, 2022). Therefore, many of the current consumers can start to develop this perception that rising prices mean rising value. Therefore, their demand may not be affected, especially if the particular group of consumers is actively seeking to purchase products based on value perceptions. P&G also hits at this phenomenon when the company’s CEO notes that the prices may not deter demand. He states that a company whose business model is founded on innovation offering higher levels of delight and solving customers’ problems better can comfortably charge more for the prices (Lonas, 2022). Therefore, P&G remains confident that the consumers will absorb the price hikes with relative ease since the company’s products are more valuable than those of the competitors.

However, it is not guaranteed that the customers will perceive the higher prices as increases in value. The value can be attached to such aspects as quality since many high-quality products are often expensive. According to Chenavaz (2017), customers are sensitive to both price and quality. Therefore, P&G may face a declining demand due to changes in prices without any discernible changes in the quality of the products. Therefore, it can be argued that the only aspect that will help the company sustain the demand for its products is if the rivals face a similar situation and where the price hikes are uniform across the entire industry. In such a scenario, consumers will be more likely to stick to their preferred brands where their conception of value may remain. Additionally, the relationship between prices and quality is complex and can be affected by such elements as costs, sales, and markup. In this case, remaining the most innovative producer of consumer goods will allow customers to value P&G’s products more than those of its rivals. If the company can raise the value, the demand can be sustained.

COVID-19 Pandemic

From a theoretical perspective, the emergence of a pandemic is expected to have detrimental consequences for the manufacturers of consumer products. As explained by Min and Jianwen (2020), COVID-19 was expected to result in unsatisfied market demand due to logistical setbacks, bankruptcy risks of small and medium enterprises (SMEs), and disruptions in the production of raw materials. For countries that serve as regional manufacturing and distribution hubs, the effects tend to spread across all the markets served by firms from that particular country. The case of China and the United States serve as the perfect examples of this interrelationship between pandemics and the production and distribution of consumer goods. P&G could be expected to face similar challenges where the closure of the SMEs affects the company’s supply chain. With logistical delays and freight costs rising, P&G faces a likely inflationary scenario, which causes price hikes and a resulting decline in demand. Considering that many businesses experienced these results, the theory remains sound but did not apply to many businesses, especially those that produced essential products and services.

P&G is arguably one of the companies that seemed to benefit from the pandemic. Many plants for P&G witnessed COVID-19 outbreaks and the company followed what the biggest American companies did – reducing their workforce to maintain social distancing and drive down production costs. The firms that used this approach flourished while the workers were off their jobs with no incomes (MacMillan et al., 2020). The companies, including P&G, turned a profit, indicating that the pandemic was not detrimental to the business. The sales of P&G’s products rose steadily through the pandemic, especially throughout the earlier stages. For example, the sales during the April-June quarter of 2020 rose by 3.5% to 17.7 billion. As a result, P&G posted a profit of $2.5 billion as compared to the same period a year earlier when a $5.2 billion loss was suffered (Coolidge, 2020). These figures indicate that the COVID-19 pandemic was not majorly a problem in an economic sense.

As a manufacturer of consumer goods, the shifts in demand and supply can be caused by multiple forces. In this case, the pandemic resulted in high demand for cleaning products, which form part of P&G’s core businesses. One of the responses to the virus was boosting sanitation with such products as sanitizers and cleaning agents became a popular choice for the general public. Therefore, the demand for such products was a forced one and all businesses manufacturing essential products remained active and recorded high profitability. As for P&G, the cleaning products boosted the company’s profits by an estimated 234% (Watson, 2020). The company acknowledges that the sales have not been this strong since 2006. Cleaning health and hygiene needs can be considered a special market that arose as a result of the pandemic.

Even though the profits rose throughout the pandemic, it can be argued that a bigger problem lies with how the workers were treated. Many P&G workers contracted the virus across multiple plants, which means that there is a negative human cost. Reputational damage can arise among the consumers due to the news of companies making profits at the expense of the health and wellbeing of their consumers. Additionally, the end of the pandemic means that the organic demand for cleaning products will no longer be guaranteed. Most importantly, the end of the pandemic would most likely cause a sharp decline in demand due to the declining need for hygiene and cleaning products. Overall, it can be argued that P&G faced different challenges from most companies as a result of offering critically needed products.

Environmental Sustainability

Environmental sustainability is a problem that affects everyone involved in the production and consumption of consumer goods. Climate change has become a serious issue across the planet where shifts in climatic conditions are increasingly becoming devastating. Temperature rises and heat waves have caused deaths, while some regions record wetter patterns and rising sea levels. All these are the effects of industrialization, which means that businesses are a critical part of the resolutions. Scholars and experts have attempted to develop strategies that can help businesses ease the burden on the environment. A circular economy in fast-moving consumer goods is an example described by Stewart and Niero (2018). In this case, the circular economy is seen as integrating sustainability goals as a result of focus and emphasis on reuse products as opposed to scrapping and extracting new resources. Even with a circular economy, companies remain a threat to the environment. Additionally, the only way that firms can truly become sustainable is when they have a net-zero emission of greenhouse gases. Otherwise, the damage has already been done and any positive figures in emission levels will only accelerate the problem.

Currently, P&G acknowledges the need for sustainability and is implementing measures to help reduce its carbon footprint. The chief sustainability officer, Virginie Helias, recently expressed that sustainability is good business hinting at the company’s commitment to environmental sustainability. Some of the efforts are often reflected in the company’s innovations in the design and processes used in the production of consumer products. Reduced packaging and improved recycling mean that production uses less energy, water, and materials, three of the most important components of corporate sustainability (Malone, 2021). The rationale is that energy, water, and materials represent the areas in which resources are extracted and exploited to aid in production. For example, paper production requires trees, a critical part of the natural environment. Other inputs include water, which is a natural resource, and electricity, which can either be from a nuclear power plant, coal plant, or fuel-based generators. All these energy sources are pollutants, which has resulted in many firms attempting to supplement them with cleaner alternatives. However, it can be observed that a manufacturing company can hardly make significant reductions in the carbon footprint without overhauling entire production processes.

Many companies seeking to become sustainable have initiated sustainability goals to be achieved at the end of a specified period. For many companies, 2030 is seen as the year all or most of the goals will be accomplished. P&G has set new goals dubbed “Ambition 2030” that seek to create value for consumers through positive environmental impact (Proctor & Gamble, 2020). Among the key goals include cutting emissions by 50% and using 100% renewable energy to power all of the company’s plants. While this seems to be positive progress, it can be argued that the effects of climate change will continue if companies can only promise to cut their emissions by 50%. The rationale is that more drastic measures are needed to reverse climate change, which means that the least that companies can do is achieve a net zero-emission. Some countries are spearheading a program labeled Net Zero, which forces businesses to reduce emissions as much as possible and remove the emissions they make from the atmosphere to achieve net-zero emissions. P&G’s promise of cutting the emissions by half is inadequate.

Overall, it can be argued that P&G will soon come under pressure, alongside other businesses with high emission rates, by lobbyists and even the consumers. Today, P&G is known to generate over 230 million metric tons of greenhouses each year (Bloomberg News, 2020). Half of this figure amounts to 115 metric tons, which is still an extremely high figure for a single business. it means that even with the pledges to cut emissions, most of it will remain untouched and the environmental implications will remain. This presents P&G with a major problem regarding achieving greater sustainability results to meet the expectations of most stakeholders. Ambition 2030 does not seem convincing enough, which means that the firm has to develop new goals and deploy all necessary resources and mechanisms toward a cleaner environment. The challenge is made more difficult by the fact that investing in green energy can be costly, which would upset the production and reflect on the final prices paid by the consumers.

Technology and Digitization

Technology and digitization can be described as both an opportunity and a challenge for most businesses. The opportunities are only realized when firms can exploit the advances to achieve greater efficiency and gain a competitive edge. On the contrary, a lack of digital competencies and the inability to adapt can spell doom for businesses, including a potential collapse and the loss of markets. In this case, P&G is regarded as one of the traditional businesses that still rely heavily on the brick and motor business model. Digitization can become a challenge since implementing new systems can become costly for the company due to the high costs of acquiring, implementing, and maintaining new technologies. The emergence of Industry 4.0 has caused a revolution across businesses in terms of rethinking designing supply chains and meeting customer expectations (Tantawy, 2017). The digital revolution across industries has been deployed to help achieve more customer centricity, ad hoc responses to changes in demand, and agility through faster delivery of products. While P&G has its strategies to address these issues, it can be argued that the company’s digital transformation lags.

Technology has helped P&G achieve great success in certain areas. Examples include the Integrated Workers Systems (IWS), which has helped the company save over $1 billion despite the raging pandemic. Therefore, it can be argued that P&G can deploy modern technologies to achieve the desired efficiencies across the supply chain. However, technology and digitization pose a challenge for the business majorly due to the actions of the competitors. Today, such businesses as Amazon have grown tremendously due to their ability to harness the power of the internet and social media through e-commerce platforms. P&G faces problems with the big social media firms and does not seem to embrace them as marketing platforms. Rather than embracing social media, P&G seems to complain about the weaknesses of social media expressing that most networking sites were designed for mass communication and not advertising. As a result, P&G has decided to advertise only on those channels listed as safe (Vizard, 2019). Therefore, it can be argued that the company has wasted a massive opportunity to become part of the marketing community by exploiting the power of social media.


Proctor and Gamble are one of the largest producers of consumer products in the world. The company relies on a global supply chain network, which means that the problems it faces reflect across all the markets it serves. The focus of this essay has been on the business problems that P&G faces, most of which have been experienced by most businesses. The changes in the external have been disruptive, even if not all of the problems have been overly devastating. Supply and demand is a problem that has affected the company in multiple ways. First, collapses in demand have seen P&G lose some of the most profitable products in its portfolio. The example given is candles that were replaced by the electric bulb. However, the company has also targeted products with high demand, which means that lost opportunities have been effectively replaced.

Shortage of drivers is another challenge for P&G, especially since the company relies on large-scale shipping of products across all the markets. In the United States, this shortage has caused price hikes and has been met through such proposals as young drivers as an alternative however, the risks involved in these solutions are deemed to be extreme. Other challenges explored include COVID-19, which has seen the company reap profits and face personnel problems and environmental sustainability where the company’s efforts are deemed inadequate.


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