Since becoming chief executive of Procter & Gamble in 2000, A.G. Lafley has never had it tougher. Shares of the world’s biggest consumer-products company have lost a third of their value since last fall. U.S. shoppers are trading down to private-label products from premium-priced brands such as P&G’s Tide, Gillette, and Pampers. And the economic downturn is spilling into developing nations where P&G has notched its best growth. Lafley, nonetheless, seems undaunted. The 61-year-old sat down in his Cincinnati office with BusinessWeek’s Roger O. Crockett to talk about managing through the recession. Here are edited excerpts: We continue to invest in our core strengths. First, we don’t skimp in understanding the consumer. Second is innovation. Our capital spending will go up in 2009 for new engineering and manufacturing technology. And third is branding. Although we actually are spending fewer dollars on advertising because the price of media has gone down, we’re delivering more messages to our consumers. 

Questions

1. What kind of business-level strategy is Procter & Gamble pursuing?

2. What kind of competences does it possess that allow it to pursue this strategy?

3. In what ways is it using other kinds of strategies, such as acquisitions and business partnerships, to build its competitive advantage?