BU 240 International Business - [Fall, 2021]

To: Prof. Marshall

From: Michelle Horvath

Date: September 05, 2021

Re: Executive Brief # 1 - Global Business Opportunities for Procter & Gamble in Russia and Japan.

Introduction

The Purpose of the Executive Brief (EB) is to provide a summary of information on Proctor & Gamble
(P&G), highlighting its global operations in Russia and Japan.

Company Overview and Background

Proctor & Gamble (P&G) is one of the largest producers in the world of popular consumer goods for home
and health purposes operating for over 180 years. Founded by entrepreneurs, William Proctor and James
Gamble who met by family and became business partners deciding to come together in a joint venture in
selling products they were each already producing which were candles and soap in Cincinnati, Ohio. They
were very fortunate because the main ingredient for both of their products they were producing was
available to them at a local butcher shop. Although the nation was experiencing a nationwide depression,
they persisted on creating the world’s largest company for consumer goods. Proctor & Gamble offers five
main categories of products such as, hair, skin and personal, oral, family, feminine, fabric care, grooming,
and baby care. Proctor & Gamble is in 180 countries selling close to 35 brands such as Bounce, Crest,
Gillette, Pampers, Swiffer and many more popular household brands. Proctor & Gamble prides itself in
innovation, environmental responsibility, and putting the people first. Currently, for Proctor & Gamble
the Chief Executive Officer is David Taylor but, will be replaced in November 2021 by Jon Moeller.

Factors for Global Business Opportunities

Proctor & Gamble should consider and be aware of the various factors when producing products and
when conducting import and exports for its operations in Russia and Japan. One similarity they share is
that they are both located in the Asia continent. However, they have many differences which can affect
the way business operates. It is important to understand this difference before conducting work in these
countries. The factors that should be considered among the executives are geographic, economic, cultural,
political, and technological.

Geographically in Russia, it is one of the largest countries in the world expanding across 11 time zones
which give opportunity for growth. However, the population is considerably low for the expansive land.
Russia is surrounded by major seas, oceans, and has rivers for transportation of goods. Consider that the
northern parts of Russia are a Tundra and is too cold for the natural resources that the southern part of
the country could offer and isn’t population dense because of the extreme temperatures. The land also
offers vast forests and mountains in the south. Russia is a high income, but in the transition of becoming a
developed country compared to Japan. Russia thrives at producing coal, oil, gas, and chemicals. They have
an established trade relationship with China, Germany, and the Netherlands. However, they don’t have a
great trade relationship with the United States. The labor force has declined over the past 5 years, but
still beats Japan with a total of 72,298,425 in 2020. In general, they have a considerable market size and
labor force. The population total in Russia is 144,373,535 in 2019 with a GDP per capita of $29,181. The
government is a federation; the chief of state is the president who is President Vladimir Putin. Russian is
the main language in Russia and tend to be more guarded until they form a relationship with the person.
They can go both ways of being indirect or direct with their communication style. Handshakes are
appropriate when first meeting regardless of gender. It is noted that the person should take off their
gloves when giving the handshake regardless of how cold it is. Thumbs up and the “OK” gesture that the
United States use is considered to be rude. In a business setting, they value being well dressed. Any
meetings are best short and to the point but expect to wait for an answer for big decisions. Compared to
Japan, Russia is considered to be an acceptable risk for businesses while Japan is little to no risk. This is
because of Russia’s declining demographics, no trade agreements beyond the neighborhood, and
corruption in government are just a few reasons why they receive a B rating score.

Japan geographically is much smaller in comparison to Russia and is considerably lacking natural
resources. Weather is similar to the United States but consider that Japan is located in the Pacific Ring of
Fire which is a risk because 60 out of 186 volcanos are still active. Japan is a leading fishing nation due to
the people being oriented to the seas, but you will find mountains and plains. Japan strengths are in its
farmland for its rice and fishing. However, Japan needs to import 60% of its food. Imports and exports
can occur by land or sea, it’s technology for land transportation such as trains has improved. Japan
experienced a boom of the birthrate, and its population will continue to raise to 127 million, but
emigration doesn’t affect this number. It is expected to drop to 113 million by 2025 due to its birth
control, legalizing abortion, and the fertility rate being at a new low. Overall, Japan is a very populous,
developed, and high-income country which is a strength for Proctor & Gamble because of the household
items and personal care that is offered for families and people in general. Japan’s total workforce in 2020
was at 67,802,081 total. The GDP per capita is $43,236 (2019) which is significantly higher than Russia’s
GDP. Japan has a relationship with the United States due to its imports and exports of goods which can
positively affect Proctor & Gamble since that relationship has already been created. According to
GlobalEDGE, “The business environment is very good”. Japan receives a great score for both the risk of
doing business is considerably low and business climate being rated as good. Women do work, but most
are expected to stop working once they have kids. Regardless of if they are working or not, they are
expected to take care of the home and children. Japanese is the dominate language across the country.
The verbal and nonverbal communication of the Japanese is both indirect. They prefer to be indirect
about what they are saying and would rather not have direct eye contact. The major religion in Japan is
Shinto/Buddhist, but 16% of its population follows other religions. The government type is a
constitutional monarchy. Japanese value relationship building in a business setting which can affect when
debating or negotiating because they tend to want to remain indirect to not affect the relationship.
Business attire is formal and arriving on time is very important to them.

Foreign Business Opportunities

Russia and Japan provide opportunities for Proctor & Gamble by both being population dense countries
with a relatively big workforce. Both countries can benefit from the household and personal care items
that Proctor & Gamble offer because of the number of people and families within these countries. These
items can be for infants and up because Proctor & Gamble offers diapers for infants, laundry detergent,
toothpaste, and many more items that any age may need. Both countries are relatively developed
meaning they would see the value in obtaining these items. Russia, for example, values being well dressed
and groomed or Japan, where women more than often stay home to take care of the house and children
which is an opportunity for Proctor & Gamble can provide quality products. Both countries have their
strengths in their location due to natural resources, the ability to transport materials, and the innovation
of technology in both countries look fair. These countries should be considered for Proctor & Gamble to
expand their operations in. Both Japan and Russia have a market for the product that Proctor & Gamble
are producing.

Summary

In summary, this Executive Brief provided us with a brief introduction of Proctor & Gamble and an
overview of the business opportunities within Russia and Japan. As the information suggested, Proctor &
Gamble have opportunities in both countries because of both countries market size and labor force. Areas
of weakness that was identified were Russia’s uncertainty in government and relationship with the
United States. Japan on the other hand, has a good trade relationship with the United States but may need
additional items imported in. Although there may be challenges, Proctor & Gamble sees the opportunities
in both countries to provide individuals with quality products they can trust.

References

The Proctor & Gamble company, Company Profile: Cincinnati, OH, https://www.dnb.com/business-
directory/company-profiles.the_procter__gamble_company.42cd900fbb248adffa5d9c23190d38a0.html.

Procter & Gamble. (2020, March 23). P&G history. Procter & Gamble Company. https://us.pg.com/pg-history/.

Finlayson, C. (2019, June 14). Russia. World Regional Geography.

https://worldgeo.pressbooks.com/chapter/russia/.

Japan: Introduction. globalEDGE: Your source for Global Business Knowledge.

https://globaledge.msu.edu/countries/japan/.

Geography of Japan. FSI. https://spice.fsi.stanford.edu/docs/geography_of_japan.

Culture crossing. http://guide.culturecrossing.net/basics_business_student_details.php?Id=21&CID=104.

Russia: Introduction. globalEDGE: Your source for Global Business Knowledge.

https://globaledge.msu.edu/countries/russia.