Proctor and Gamble Macroeconomic Analysis
From then, it has expanded to include a majority of what the world consumes today. It deals with detergents, cleaning agents and personal hygiene tools like Gillette, baby products like Pampers, pharmaceuticals and animal food. Though it operates majorly in the United States where it has a majority market shareholding, P&G has significantly diversified in almost all countries with the exemption of a few like North Korea. The company has seen major growth in the last three years closing at sixty-five billion dollars in sales. Though growth has stagnated prompting the company to downscale its many nonprofitable operations, it remains at the top of its game in the consumer goods industry. It dipped in 2015 to 3% only to a recover a bit in 2016 to 3.
Euro Stat 2017). This may be due to reasons like a strengthening dollar which makes exports from America more expensive that imports are hence limiting the outputs from the country. Also, the 2016 elections paid a heavy toll on the economy due to the polarizing effect of the candidates. The election affected the expectation of various stakeholders like investors who greatly determine the rate of growth of GDP. The projected growth in 2017 is only 5. for a figure of 324,700,000(United States Census Bureau 2017). Out of this population, the white makes up 72. of the population; black American follow at 12. while the other minorities are made of Asian Americans at 4. P&G survival dwells mainly on the number of people in its target market and their purchasing power which can only be attained by careful analysis of demographics.
A growing population creates a pool of cheap labor and increases the market size hence more demand and lower costs. Knowledge of different income segments also aids in segmenting and positioning of P&Gs products across the country. Lastly, there is inflation which is defined as the gradual increase in the price of commodities over a given period. Inflation in the US has been rising slowly from 0. This is normally accompanied by increased expenditure by the government in infrastructure, social amenities and together they form expansionary measures which are used to stimulate production. When tax rates are raised, and government expenditure is limited, these are contraction measures which prevent runaway production levels that may be inflationary (Schmidt 2016). Fiscal policies are accompanied by fluctuations in interest rates and revaluation of the currency.
Increased expenditure and lowered taxes increase demand for investments which raise interest rates. Increased interest rates attract foreign investors who invest more in the US. Selling treasury bonds and bills removes money from the market when there is surplus and upon maturity returns the money when surplus income is low. Monetary policies are the primary regulator of inflation (Schmidt 2016). When money is available, demand increases which thus leading to more sales for P&G. However, if this is not regulated, the increase in demand results in an increase in prices of goods. This causes the employees who are now faced with a rising cost of living to clamor for more pay thus inflation. Currently, the United States under the Trump government is seeking to empower local industries which amount to public expenditure.
This may lead to an increase in disposable income which may lead to more demand for P&Gs products. Through tax cuts, demand from consumers will increase, and the surplus amount used for investments will multiply which will be a bonus for firms like P&G and its suppliers. Regarding monetary policies, the Federal Reserve has maintained the inflation level at a minimum of 2. This mild increase increases the profits of P&G in the short term. February 15). Strong Dollar Haunting Huge Companies From P&G To McDonald's. Retrieved from http://www. forbes. com/sites/laurengensler/2015/02/19/strong-dollar-haunting-earnings-huge-companies/#7155e1f84726 Gurufocus. Retrieved from http://www. investopedia. com/articles/economics/12/fiscal-or-monetary-policy. asp United State Census Bureau. Retrieved May 24, 2017, from https://www.
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