p& g restructuring
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Procter and Gamble
Organisational restructuring
Chetan GoenkaNikunj PassiPankaj Rai Ramya Vihan Srivastava
Evolving Organization Structure in US
Organization Structure in Europe
Expansion and adoption of Global Matrix Model
Attractive expansion opportunities in Japan
Anticipation of the new challenge of appealing to more diverse consumer tastes and income levels
Corporate functions in Brussels still lacked direct control of country functional activities
Therefore, P&G started migrating to a global matrix structure of categories and functions.
Global Matrix Structure of P & G
Improvements bought in by Global Matrix
Pooling of knowledge, transfer of best practices, elimination of intraregional redundancies, and standardization of activities
Integrated manufacturing, engineering and purchasing in to one global product supply function
Massive savings by consolidating country manufacturing plants and distribution centers into higher-scale regional facilities
Problems with Matrix structure
Not symmetrical
Strategic agenda and non cooperating functional units
Mgmt by functional conflict led to poor strategic alignment
Regional managers unable to address global functional conflicts
Not able to fully resolve the tension between regional and product category mgmt
Organization 2005
6 year re-structuring plan estimated to cost $1.9 billion
Voluntary separation of 15000 employees by 2001, with almost 10500 overseas
Reduced management layers from 13 to 7
Dismantling the Matrix organisation into :– GBU primary responsibility of product development, brand design, business
strategy and new business development– MDO with primary responsibility of market– GBS for managing internal businesses processes
The new org design was intended to improve speed with with P&G innovated and globalized its innovations
MDO’s and GBU’s
Operated autonomously
7 GBU’s each headed by a president who reported to the CEO directly and were part of the global leadership council
At GBU level, V.P’s of mktg, product supply, new business development reported to GBU president
The structure was intended to increase agility and reduce costs through accelerated global standardization.
Issues Identified of Organization 2005
Instead of increasing market share of existing products, they increased number of categories and brands
Decision power was transferred from committees to individuals.
Increase in performance linked pay for upper level employees
Clash of interests between GBU and MDU
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