P&G halts emerging market expansion to stabilise current businesses

This puts on hold a key priority of chief executive Bob McDonald​, after steering the company into new corners of the globe in order to boost its number of customers.

According to the Wall street Journal, “the limits of that strategy were evident last month when the company reported a drop in earnings and falling market share for the first three months of the year​.”

For generations, P&G has focused on boosting U.S. and European sales with new products, pushing selectively into places including China and Eastern Europe.

However, the Wall Street Journal further points out that while Mr. McDonald decided that the company could no longer cede territory to rivals-he was still talking about new frontiers, speaking about Africa as the new Asia, as recently as late April.

Overzealous​

While addressing Wall Street analysts earlier this month, chief financial officer Jon Moeller said the company may have been overzealous in chasing growth overseas and laid out a strategy to prioritize spending in its coming fiscal year around its 40 largest business lines, mainly in North America and China.

"We will not spend a dollar outside these core businesses until we are broadly sufficient to win in these markets,”  ​he stated.

P&G is also said to be looking at whether it needs to lower prices in other areas; however the chief financial officer makes assurances that; "We will not lose share because prices are too high, we're closely monitoring a few additional situations and will adjust as necessary​."

Adding; "once P&G determines its core businesses are in a position to grow, it will turn toward investing in the rest of the portfolio, starting with ten emerging markets that have the most promise​."

Developing markets now make up about 37 per cent of P&G's total sales, up from 20 per cent in 2000, the company still expects either high-single or low double-digit growth from its emerging markets businesses, offsetting weakness in developed markets.