Harvard Case - The Procter & Gamble Company: Plastic Waste and the Sachet Economy in the Philippines
"The Procter & Gamble Company: Plastic Waste and the Sachet Economy in the Philippines" Harvard business case study is written by Emily Young, Megan Singh, MacKenzie Bier, Tulika Sharma, Helen Tang, Wren Montgomery. It deals with the challenges in the field of General Management. The case study is 7 page(s) long and it was first published on : Dec 13, 2022
At Fern Fort University, we recommend that Procter & Gamble (P&G) implement a multi-pronged strategy to address the plastic waste challenge in the Philippines while capitalizing on the sachet economy's growth potential. This strategy should prioritize environmental sustainability, corporate social responsibility, and sustainable business growth by leveraging P&G's core competencies in innovation, product development, and supply chain management.
2. Background
This case study examines P&G's challenge in the Philippines, a rapidly growing market with a significant reliance on single-use sachets for consumer goods. While this model has driven P&G's success in reaching low-income consumers, it has also contributed to a growing plastic waste problem. P&G faces pressure from stakeholders to address this issue while maintaining its market share and profitability.
The main protagonists are P&G's leadership team in the Philippines, who are responsible for navigating this complex situation and finding a solution that balances economic growth, environmental responsibility, and stakeholder expectations.
3. Analysis of the Case Study
Strategic Framework:
This case study can be analyzed using a Porter's Five Forces framework to understand the competitive landscape and identify opportunities for P&G.
- Threat of New Entrants: The sachet economy is attractive to new entrants, increasing competitive pressure.
- Bargaining Power of Buyers: Consumers in the Philippines have limited options, giving them less bargaining power.
- Bargaining Power of Suppliers: P&G's dependence on local suppliers for packaging materials gives them significant bargaining power.
- Threat of Substitute Products: The rise of alternative packaging formats (e.g., refillable containers) poses a threat to the sachet model.
- Rivalry Among Existing Competitors: The sachet market is highly competitive, with numerous local and international players.
Key Issues:
- Environmental Sustainability: P&G needs to find sustainable solutions for plastic waste while maintaining its affordability and accessibility.
- Corporate Social Responsibility: P&G must demonstrate its commitment to responsible business practices and address stakeholder concerns.
- Business Growth: P&G needs to maintain its market share and profitability in a dynamic and competitive market.
Opportunities:
- Innovation: P&G can leverage its R&D capabilities to develop sustainable packaging solutions, such as biodegradable or reusable sachets.
- Supply Chain Management: P&G can optimize its supply chain to reduce waste and promote recycling initiatives.
- Marketing: P&G can educate consumers about sustainable consumption and promote its environmentally friendly products.
- Strategic Partnerships: P&G can collaborate with local NGOs and government agencies to address the plastic waste issue.
4. Recommendations
P&G should implement the following recommendations:
1. Sustainable Packaging Innovation:
- Develop biodegradable or compostable sachets: P&G should invest in R&D to develop sustainable packaging solutions that can be safely disposed of or composted.
- Introduce reusable or refillable options: P&G can offer larger, refillable containers for certain products, targeting consumers willing to pay a premium for sustainability.
- Partner with packaging innovators: P&G should collaborate with startups and research institutions to explore cutting-edge packaging technologies.
2. Enhanced Supply Chain Management:
- Optimize logistics for waste reduction: P&G should implement efficient logistics systems that minimize waste generation and transportation costs.
- Promote recycling initiatives: P&G can partner with local recycling organizations and incentivize consumers to recycle their packaging.
- Invest in closed-loop systems: P&G can explore closed-loop systems where used packaging is collected, recycled, and reused.
3. Responsible Marketing and Consumer Engagement:
- Educate consumers about sustainable practices: P&G should launch campaigns that promote responsible consumption and waste management.
- Highlight sustainable product features: P&G should clearly communicate the environmental benefits of its sustainable packaging options.
- Engage with consumers on social media: P&G should use social media to foster dialogue and address consumer concerns regarding plastic waste.
4. Strategic Partnerships and Collaboration:
- Collaborate with NGOs and government agencies: P&G should work with local NGOs and government agencies to implement waste management programs and promote recycling initiatives.
- Support local communities: P&G can invest in community projects that address plastic waste and promote environmental sustainability.
- Engage with industry peers: P&G should collaborate with other companies in the consumer goods industry to develop industry-wide solutions for plastic waste.
5. Basis of Recommendations
These recommendations are based on the following considerations:
- Core competencies and consistency with mission: P&G's core competencies in innovation, product development, and supply chain management are essential for developing and implementing sustainable solutions. These recommendations align with P&G's mission to improve lives through its products and services.
- External customers and internal clients: These recommendations address the concerns of both external customers (consumers) and internal clients (employees). They aim to provide consumers with sustainable options while also promoting a culture of environmental responsibility within P&G.
- Competitors: By embracing sustainability, P&G can differentiate itself from competitors and gain a competitive advantage in the long term.
- Attractiveness ' quantitative measures: While quantifying the impact of these recommendations is challenging, P&G can track key performance indicators (KPIs) like waste reduction, recycling rates, and consumer satisfaction with sustainable products.
6. Conclusion
By implementing these recommendations, P&G can address the plastic waste challenge in the Philippines while maintaining its market share and profitability. This strategy will demonstrate P&G's commitment to corporate social responsibility, enhance its brand image, and position the company for long-term sustainable growth in the emerging markets.
7. Discussion
Alternatives:
- Phased withdrawal from the sachet market: This would be a drastic measure with significant negative impacts on low-income consumers and P&G's market share.
- Continuing with the current model: This would maintain P&G's current market position but exacerbate the plastic waste problem and damage the company's reputation.
Risks and Key Assumptions:
- Consumer acceptance: Consumers may be hesitant to adopt sustainable packaging options due to perceived higher costs or inconvenience.
- Technological advancements: The development of sustainable packaging solutions may be slow or face technical challenges.
- Government regulations: Changes in government regulations regarding plastic waste management could impact P&G's operations.
8. Next Steps
P&G should establish a dedicated team to oversee the implementation of these recommendations. This team should develop a detailed implementation plan with clear timelines, milestones, and resource allocation. Key milestones include:
- Year 1: Conduct pilot projects to test sustainable packaging solutions and engage with local stakeholders.
- Year 2: Launch sustainable product lines with a focus on consumer education and marketing.
- Year 3: Expand sustainable packaging options across the product portfolio and establish partnerships with recycling organizations.
By taking these steps, P&G can position itself as a leader in sustainable business practices and secure its long-term success in the Philippines and other emerging markets.
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Case Description
The Procter & Gamble Company (P&G) was named a top ten plastic polluter by the Break Free from Plastics coalition in 2019. P&G faced backlash over the plastic waste associated with the distribution of consumer goods in single-use sachets. While sachets provided access to everyday household necessities to low-income individuals, they also created negative environmental externalities. The company had to decide how to tackle the problem of waste they were responsible for and, at the same time, deflect accusations of greenwashing. How could this environmental issue be solved without raising prices for low-income individuals? What did P&G's key stakeholders expect? How could P&G achieve the "triple bottom line" by caring for profits, people, and the planet?
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