Head and Shoulders: Inputs, Factors, and Decisions
Inputs
One fixed input for P&G's Head and Shoulders would be the machines and CAD used to create the packaging of the product and the computer-aided-design (CAD) used to generate the packaging features. Both are aspects of the same fixed cost because the machines and the designs used to steer them in production do not change with rises and falls in production (neither more nor fewer machines are needed -- it is only their use that might change). Furthermore, as for CAD, for a global company like P&G, a generic label or design may need "minor modifications on a country-by-country basis" but for the most part this does not alter, nor does it change with alterations in production levels (Czinkota, Ronkainen, 2006, p. 477).
Two variable inputs would be commodities and distribution. Commodities, such as palm oil and linear alkyl benzene, which are "key inputs for making soaps, shampoo and detergents" (Bhushan, Malviya, 2012), fluctuate as needed in terms of supply and demand levels related to production. Distribution is also a variable input that depends upon production levels: if a product is not yet global but only domestic, obviously distribution costs will alter when it goes global, as has Head and Shoulders over the...
Breaking into new markets will add to distribution costs; thus it is a variable input for the product.
Factors
The factors that impact the choice of inputs to produce Head and Shoulders are the price of commodities, culture, and inflation. The price of commodities is always fluctuating, so it would be naive to think that this should not be a factor in choosing which inputs to examine. Commodities prices change all around the world with futures contracts, etc., and so it is essential to take stock of this action.
Culture is another factor that is a must when evaluating inputs. Different cultures approach the product in their own way. For example, in America, it is common practice to buy bottles of shampoo, sometimes even big bottles (to both save on costs and to eliminate the need to go out and purchase again when the smaller bottle runs out). Yet, in a country like India, the reverse is true. Here the bottle costs more than the little packets or sachets of shampoo that are sold in stalls and in grocery stores. Indians are accustomed to paying rupees for their shampoo packets and even buying dozens of them at a time instead of springing for the more expensive (but more accommodating) bottles. The reason is that this is just part of the culture which may…
