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Posted on Jul 21, 2024

2 page summary of case 23 - THE PROCTER AND GAMBLE COMPANY Please upload it to D2L Assignment folder. You should write one paragraph about

2 page summary of case 23 - THE PROCTER AND GAMBLE COMPANY Please upload it to D2L Assignment folder. You should write one paragraph about the story of this case. In your summary, you should answer the following three big questions: 1. What is P&G's motivation for the Advanced Seal launch? 2. Does the project appear economically viable? Use the base case assumptions to build a four-year discounted cash flow model for Advanced Seal. 3. What are the key value drivers of the Advanced Seal investment? Paste BIU A ~ Number Clipboard Font Alignment A1 vfx Exhibit 1 1 Exhibit 1 2 THE PROCTER AND GAMBLE COMPANY: CREST WHITESTRIPS ADVANCED SEAL 3 Procter and Gamble Brands 4 5 Beauty and Grooming 6 Always, Anna Sui, Aussie, Braun, Camay, Christina Aguilera Perfumes, Clairol Professional, CoverGirl, Crest, DDF, Dolce & Gabbana Cosmetics, Dolce & Gabbana Fragrances, Dunhill Fragrances, Escada Fragrances, Fekkai, Fusion, Ghost, Gillette, Gucci Fragrances, HUGO BOSS Fragrances, Head & Shoulders, Herbal Essences, Ivory, Lacoste Fragrances, MACH3, Naomi Campbell, Natural Instincts, Nice 'n Easy, Nioxin, Olay, Old Spice, Oral-B, Pantene, Pert, Prestobarba/Blue, Puma, Rejoice, SK-II, Safeguard, Scope, Sebastian Professional, Secret, 7 Tampax, Venus, Vidal Sassoon, Wella 8 9 10 11 Household Care 12 Ace, Align, Ariel, Bold, BounceBounty, Cascade, Charmin, Cheer, Comet, Dash, Dawn, Downy, Dreft Laundry, Duracell, Era, Eukanuba, Febreze, Gain, lams, Joy. 1. Metamucil, Mr. Clean, Pampers, Pepto-Bismol, Prilosec 13 OTC, Pringles, Puffs, Swiffer, Tide, Vicks 14 15 16 17 18 19 2 Exhibit 2 THE PROCTER AND GAMBLE COMPANY: CREST WHITESTRIPS ADVANCED SEAL Value of $1 Invested in P&G Stock or the S&P500 Index beginning January 2001 4 5 $2.5 G 7 8 9 10 11 12 $2.0 13 14 15 16 17 18 19 20 $1.5 21 22 23 24 25 26 27 $ 1.0 28 29 30 31 32 33 34 35 SO. 36 37 38 39 40 41 42 $0.0 43 namh Jan-08 Apr-03 Oct- Ju- Jan-2 Apr-02 Jul-01 Oct-01 Jan-01 Apr-01 Vertical (Value) Axis Major G Jul-04 Apr-04 Jan-05 Apr-05 Jul-06 Oct-05 Jan-06 Apr-06 Jan-07 Oct-03 Jan-04 Oct-04 Oct-06 45 46 47 48 Apr-07 Jul-07 Oct-07 Jan-08 -PG ... S&P500 Jul-04 54.56 55.97 51.5 52.15 5607300 42.72 95.1 50.8 B D E G H Exhibit 3 TAE PROCTER AND GAMBLE COMPANY: CREST WHITESTRIPS ADVANCED SEAL Crest White strips' Revenue and After-tax Profit Since 2001 Launch (in millions) 4 5 6 2001 2002 2003 2004 7 Revenue 2005 2006 $281 $322 2007 $276 8 After-tax po $245 5231 $233 5241 $31 $48 $40 $39 9 $38 $36 $34 10 $350 12 13 $300 14 15 16 17 $250 18 19 20 $200 21 22 23 $150 25 26 27 5100 550 - - 28 29 30 31 32 33 34 35 36 37 SO 2001 2002 2003 2004 2005 -Revenue --Aller-tax profit 2006 2007 39 40 41 42 G H 1 2 3 4 Exhibit 4 THE PROCTER AND GAMBLE COMPANY: CREST WHITESTRIPS ADVANCED SEAL Crest White strips Advanced Seal Packaging 5 6 NEW Crest Whitestrips Advanced SEAL Form fit. No slip. Clean removal 7 8 9 10 11 12 13 14 15 16 12 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 Molds and Adheres to Teeth Removes Clearly Start Seeing Results After 3 Days Once A Day BUMESAFE.DENTAL WHITENING FORMA 14 POUCHES: EACH WITH TUPPER AND LOWER STRP 8 TOOL SIRIPS) D E F G H EXION THE PROCTER AND GAMBLE COMPANY: CREST WHITESTRIPS ADVANCED SEAL Whitening Category History 4 5 Nm 009 6 May 2001 Apr 2003 Sep 2003 Jan 2004 Apr 2005 May 2005 Jan 2007 Jul 2007 7 WIN REMBRANDT Whitestrips Wiers LISTERINE Wouleng 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Sept 2002 May 2003 Oct 2003 Sep 2004 Apr 2005 Jan 2006 Mar 2007 Mar 2008 | mely While C Private Label NIGHT EFFECTS newal 23 24 25 26 27 Title Page Exh 1 Exh 2 Exh 3 Exh 4 Exh 5 Exha i D F B C E Exhibit 6 THE PROCTER AND GAMBLE COMPANY: CREST WHITESTRIPS ADVANCED SEAL Crest Whitestrip Products: Gross Profit Comparison Advanced Seal Premium Product Basic Product Per unit revenue and costs Revenue Cost of goods sold expenses Gross profit $22 $12 $10 $18 $7 $11 $13 $6 $7 0 1 Note: The cost of goods sold figures exclude depreciation expense. 2 L3 14 15 16 17 18 19 20 21 22 23 24 25 THE PROCTER AND GAMBLE COMPANY: CREST WHITESTRIPS ADVANCED SEAL Base Case Valuation ssumtions Advanced Seal Premium Product Basic Product Per unit revenue and costs Revenue COGS Gross profit Cannibalization rate $22 S12 $10 S18 S7 SII 50% $13 $6 $7 15% Year 1 Year 2 Year 3 Year 4 2,000 - 1,000 -300 700 1,000 6,000 4,000 20.0% 9.0 Year 0 Volume Adv Seal Premium Basic 3 Incremental 9 O SG&A expenses 21 Advertising (Adv Seal) 22 Foregone advertising (Prem + Basic) 23 24 Capital investment 4,000 25 Startup costs 1,500 26 Depreciation schedule 27 Networking capital turnover 28 Tax rate 40% 29 Discount rate 8% 30 31 Rece 32 Adv Seal 33 Premium+ Base 34 Incremental revenue 36 GB 37 Adv Seal 38 Premium+Basic 39 Incremental gross profit 40 41 Incremental advertising exp 42 SG&A expenses 1,500 43 Depreciation 44 Incremental EBIT -1,500 45 Taxes 46 NOPAT -900 44,000 -21.900 22,100 33 20,000 6,900 2.000 1,000 800 3,100 1240 1,860 2.456 2,456 3,200 48 Networking capital 49 Net PAE SO 51 Eree Cash Flow 52 NOPAT 53 Depreciation 54 - Capital expenditures Investimenti NWC 56 Free cash flow -900 1.860 2,660 58 NPV 59 TRR NP with meble (3045) 2 page summary of case 23 - THE PROCTER AND GAMBLE COMPANY Please upload it to D2L Assignment folder. You should write one paragraph about the story of this case. In your summary, you should answer the following three big questions: 1. What is P&G's motivation for the Advanced Seal launch? 2. Does the project appear economically viable? Use the base case assumptions to build a four-year discounted cash flow model for Advanced Seal. 3. What are the key value drivers of the Advanced Seal investment? Paste BIU A ~ Number Clipboard Font Alignment A1 vfx Exhibit 1 1 Exhibit 1 2 THE PROCTER AND GAMBLE COMPANY: CREST WHITESTRIPS ADVANCED SEAL 3 Procter and Gamble Brands 4 5 Beauty and Grooming 6 Always, Anna Sui, Aussie, Braun, Camay, Christina Aguilera Perfumes, Clairol Professional, CoverGirl, Crest, DDF, Dolce & Gabbana Cosmetics, Dolce & Gabbana Fragrances, Dunhill Fragrances, Escada Fragrances, Fekkai, Fusion, Ghost, Gillette, Gucci Fragrances, HUGO BOSS Fragrances, Head & Shoulders, Herbal Essences, Ivory, Lacoste Fragrances, MACH3, Naomi Campbell, Natural Instincts, Nice 'n Easy, Nioxin, Olay, Old Spice, Oral-B, Pantene, Pert, Prestobarba/Blue, Puma, Rejoice, SK-II, Safeguard, Scope, Sebastian Professional, Secret, 7 Tampax, Venus, Vidal Sassoon, Wella 8 9 10 11 Household Care 12 Ace, Align, Ariel, Bold, BounceBounty, Cascade, Charmin, Cheer, Comet, Dash, Dawn, Downy, Dreft Laundry, Duracell, Era, Eukanuba, Febreze, Gain, lams, Joy. 1. Metamucil, Mr. Clean, Pampers, Pepto-Bismol, Prilosec 13 OTC, Pringles, Puffs, Swiffer, Tide, Vicks 14 15 16 17 18 19 2 Exhibit 2 THE PROCTER AND GAMBLE COMPANY: CREST WHITESTRIPS ADVANCED SEAL Value of $1 Invested in P&G Stock or the S&P500 Index beginning January 2001 4 5 $2.5 G 7 8 9 10 11 12 $2.0 13 14 15 16 17 18 19 20 $1.5 21 22 23 24 25 26 27 $ 1.0 28 29 30 31 32 33 34 35 SO. 36 37 38 39 40 41 42 $0.0 43 namh Jan-08 Apr-03 Oct- Ju- Jan-2 Apr-02 Jul-01 Oct-01 Jan-01 Apr-01 Vertical (Value) Axis Major G Jul-04 Apr-04 Jan-05 Apr-05 Jul-06 Oct-05 Jan-06 Apr-06 Jan-07 Oct-03 Jan-04 Oct-04 Oct-06 45 46 47 48 Apr-07 Jul-07 Oct-07 Jan-08 -PG ... S&P500 Jul-04 54.56 55.97 51.5 52.15 5607300 42.72 95.1 50.8 B D E G H Exhibit 3 TAE PROCTER AND GAMBLE COMPANY: CREST WHITESTRIPS ADVANCED SEAL Crest White strips' Revenue and After-tax Profit Since 2001 Launch (in millions) 4 5 6 2001 2002 2003 2004 7 Revenue 2005 2006 $281 $322 2007 $276 8 After-tax po $245 5231 $233 5241 $31 $48 $40 $39 9 $38 $36 $34 10 $350 12 13 $300 14 15 16 17 $250 18 19 20 $200 21 22 23 $150 25 26 27 5100 550 - - 28 29 30 31 32 33 34 35 36 37 SO 2001 2002 2003 2004 2005 -Revenue --Aller-tax profit 2006 2007 39 40 41 42 G H 1 2 3 4 Exhibit 4 THE PROCTER AND GAMBLE COMPANY: CREST WHITESTRIPS ADVANCED SEAL Crest White strips Advanced Seal Packaging 5 6 NEW Crest Whitestrips Advanced SEAL Form fit. No slip. Clean removal 7 8 9 10 11 12 13 14 15 16 12 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 38 Molds and Adheres to Teeth Removes Clearly Start Seeing Results After 3 Days Once A Day BUMESAFE.DENTAL WHITENING FORMA 14 POUCHES: EACH WITH TUPPER AND LOWER STRP 8 TOOL SIRIPS) D E F G H EXION THE PROCTER AND GAMBLE COMPANY: CREST WHITESTRIPS ADVANCED SEAL Whitening Category History 4 5 Nm 009 6 May 2001 Apr 2003 Sep 2003 Jan 2004 Apr 2005 May 2005 Jan 2007 Jul 2007 7 WIN REMBRANDT Whitestrips Wiers LISTERINE Wouleng 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 Sept 2002 May 2003 Oct 2003 Sep 2004 Apr 2005 Jan 2006 Mar 2007 Mar 2008 | mely While C Private Label NIGHT EFFECTS newal 23 24 25 26 27 Title Page Exh 1 Exh 2 Exh 3 Exh 4 Exh 5 Exha i D F B C E Exhibit 6 THE PROCTER AND GAMBLE COMPANY: CREST WHITESTRIPS ADVANCED SEAL Crest Whitestrip Products: Gross Profit Comparison Advanced Seal Premium Product Basic Product Per unit revenue and costs Revenue Cost of goods sold expenses Gross profit $22 $12 $10 $18 $7 $11 $13 $6 $7 0 1 Note: The cost of goods sold figures exclude depreciation expense. 2 L3 14 15 16 17 18 19 20 21 22 23 24 25 THE PROCTER AND GAMBLE COMPANY: CREST WHITESTRIPS ADVANCED SEAL Base Case Valuation ssumtions Advanced Seal Premium Product Basic Product Per unit revenue and costs Revenue COGS Gross profit Cannibalization rate $22 S12 $10 S18 S7 SII 50% $13 $6 $7 15% Year 1 Year 2 Year 3 Year 4 2,000 - 1,000 -300 700 1,000 6,000 4,000 20.0% 9.0 Year 0 Volume Adv Seal Premium Basic 3 Incremental 9 O SG&A expenses 21 Advertising (Adv Seal) 22 Foregone advertising (Prem + Basic) 23 24 Capital investment 4,000 25 Startup costs 1,500 26 Depreciation schedule 27 Networking capital turnover 28 Tax rate 40% 29 Discount rate 8% 30 31 Rece 32 Adv Seal 33 Premium+ Base 34 Incremental revenue 36 GB 37 Adv Seal 38 Premium+Basic 39 Incremental gross profit 40 41 Incremental advertising exp 42 SG&A expenses 1,500 43 Depreciation 44 Incremental EBIT -1,500 45 Taxes 46 NOPAT -900 44,000 -21.900 22,100 33 20,000 6,900 2.000 1,000 800 3,100 1240 1,860 2.456 2,456 3,200 48 Networking capital 49 Net PAE SO 51 Eree Cash Flow 52 NOPAT 53 Depreciation 54 - Capital expenditures Investimenti NWC 56 Free cash flow -900 1.860 2,660 58 NPV 59 TRR NP with meble (3045)