Welcome to A Case Study

On

Procter & Gamble is

a major U.S. manufacturer

of soaps, cleansers, and other household

products. 

Vision"Be, and be recognized as, the best consumer products and services in the world"Mission"Procter and Gamble will continue to serve consumers by continuously innovating products that will allow us to be leaders in household and personal care, health care, and food products. To produce products with the utmost care to give nothing but quality to our communities. And to continue to grow so that we can maximize our shareholder's wealth" (Procter & Gamble. 2010)

P&G- AN OVERVIEWFounded in Cincinnati, Ohio in 1837 by two relatives due to they married sisters

1) William Procter - Candlemaker2) James Gamble – Soapmaker

High quality products boosted the national reputation

Focus on innovation-

1879- Gamble's son -chemist- launched "Ivory“

1890- started the pay of dividends and R&D lab

1919- created /direct sales force department

1924- establish market research department

1931- institutionalized competitive brand management

1933- invented opera soup

1943- created product category division

1946- launched "Tide"

P&G have three main product lines:

•household and personal care,• food consumer •and health care

products.

Internal and External Analysis• Procter & Gamble has a strong internal and external

foundation.

• It has built its reputation on achieving the goals it sets forth

• The company has remained a front competitor in innovation by introducing new and improved products to consumers

• P&G realizes that in a competitive market speed of research and development is a key element.

SWOT analysis of your plan's focus areas

• Strengths:

– Profitable– Adaptability of Product Line to meet consumer needs.– One of Procter & Gamble's strengths is it remain

profitable in a struggling economy. 

• Weakness:

– Turnaround time for Research and Development products.

– Complexity of organization structure

• Threats:– Ecological Factors– Economic Factors– Sales are dependent on consumer

spending

• Opportunities:– Global marketing– New Products, improvement in existing

products, manufacturing and marketing techniques.

• Goals: – Eliminate the overlap in management– Initiate the "hub & spoke" structure for competitive intelligence

operations– Expand sales of product line globally– International expansion to markets with potential for growth

and limited competition exits– Decrease turnaround time for research and development

products– Customer responsiveness– Product development cycles– Product or service improvements– Speed in delivery or distribution– Develop open Innovation Strategy– Emphasis on process innovation that permits low-cost product

design, manufacturing methods and distribution– Product cost reduction

Long Term Objectives

• Support the business strategy, organizational principles and culture.

• Attract and retain required talent

• Accept financial responsibility to shareholders

• The goal of long term objectives is to support the business strategy as change is implemented.

Plan Goals and Implementation• should continue to monitor trends in the market

and consumer requests for products

• implement a corporate retrenchment strategy to enable them to expand their product line

• to make their product available to other international locations based on market research.

• This can be implemented by P&G conducting a stakeholder management survey.

Critical Success Factors• Critical success factors are the steps that the

business, both management and employees, must take to bring the strategies into a reality.

• The factors may vary from time to time, but they must be addressed in order for the company to operate at optimal efficiency.

• A critical factor for Procter & Gamble is quality and innovation.

• The company must aggressively market new products and bring research technologies to customers quicker. 

Controls and Evaluation• Controls must be in place to evaluation

success. • Financial statements will validate if sales are

increasing and profits are increasing. • Forecasting is a vital control. • A monthly and yearly projection should be

made by management to project the sales of products by area.

• The evaluation would be done monthly to compare the plan to the actual units sold.

P&G- TIMELINE

DIVERGING ORGANIZATIONAL

STRUCTURE

Europe- Heterogeneous

US- Homogeneous

P&G- GLOBAL MATRIXBetween 1987 to 1995

Between 1995 to 1998

P&G- US SHIFTING

Focus on differentiated market demand

Growth in the amount of brands and products

Change in market demand

Improve integration and decision efficiency

P&G- EUROPEAN STRUCTURE SHIFTING

•IssuesProfitability was directly related to country managers instead of to brand managers

The local managers, were very resistant to adopt global brands and make their own brands global

•Aim of the shiftCross border cooperation

Changing the focus from country management to product management

During 90’s

P&G- ORGANIZATION IN 2008Dismantling the Matrix structure, replacing by:

1. 7 Global Business Units (Profit responsible)

2. 7 Market Development Organizations (Market responsible and sales growth)

3. Global Business Services (Internal business processes)

Objective: Improve the speed to innovate

Looking for "Standarization & Globalization"

High growth expectations• Sales Growth: 6-8%• Profit Growth: 13-15%

Implement a committee conformed by personal from different parts of the structure forecasting the cost cutting

The statements were overestimated 

Alignment all employee to the change – engage people

1.Why did P & G US organizational structure shift from product grouping in 1950’s to a matrix structure in 1980’s?

 2.Why did the European organizational structure shift from geographic grouping in the 1950’s to a category management in the 1980’s?

3.Why were the two structures integrated into a global cube in the 1990’s?

 4.What are the key distinguishing features of the organization 2005? Why did P & G adopt this structure?

5.Should Lafely make a strong commitment to keeping the organization 2005 or should he plan to dismantle the structure?

NOW LET US ANSWER FEW QUESTIONS:-

1.Why did P & G US organizational structure shift from product grouping in 1950’s to a matrix structure in 1980’s?Technological developments in transportation and communication enabled mass production and distribution

Such organizational forms enabled integrated and appropriately managed mass production and distribution by a single form.

In1954, in order to appropriately manage the growing lines of products, P&G created individual operating divisions with their line and staff organisation

 2.Why did the European organizational structure shift from geographic grouping in the 1950’s to a category management in the 1980’s? The reason as stated by P & G first president of over sees operations, Walter Lingle, was in order to appropriately respond to local tastes and norms

As per this model of the organisational structure country managers not brand managers, had the responsibility for bottom lines and marketing strategies.

In addition, the focus on product categories and brands was fragmented by country, virtually precluding region – wide category or branding strategies.

3.Why were the two structures integrated into a global cube in the 1990’s?Its central concept- that simultaneous decisions can routinely be made along multiple dimension with fragmented accountability

As the number of teams increased then comes the problem of responsibility & authority which led to the creation of teams that pursue only their ways. To solve the problem the second phase was identified by the introduction of matrix by few large &advanced companies.

The problems with the matrix and the poor sales performance prompted P&G to announce in 1998 a six-year restructuring plan named Organization 2005

 4.What are the key distinguishing features of the organization 2005? Why did P & G adopt this structure? It aims at avoiding the matrix &changing it by an amalgam of interdependent organizations.

In doing so, three units namely, global business units responsible for products, Market development organization with the responsibility for marketing and Global Business Services with responsibility for business process have been established.

On top of that routine & policies were changed to speed up the decision process, streamlined & integrate business- planning and overhaul the promotion & incentive system. 

The necessity to ensure a long-term scalability across the innovation

The prevention of a future failure acting as a risk-adverse business

The cost and performance dilemma

To improve the alignment and cut costs through  1) The exchange of ideas

2) The technological connection and fast transfer of technology from one to another business 

5.Should Lafely make a strong commitment to keeping the organization 2005 or should he plan to dismantle the structure?

Amid the crisis what drew Lafley’s attention was not this biggest loss of market capitalization, rather the missing link  –  the company’s loss of leadership confidence.

Lafley thus understood the company’s situation in down to earth practicality.

He thus managed to set up a strong and cohesive team accordingly, the company managed to be closer to customers, build a strong partnership with retail customers and most of all living up to a leading innovation, which paid of dearly.

From this one can infer that if all elements of the strategy alignment issues can be appropriately made organizational structures like the organization 2005 of the P & G can be appropriately implemented.

Keep the structure

Centralization is important, improve the resource efficiency

Don’t come back to complete Matrix structure

Reduction of the layers – Improve the process efficiency

Long-term view focus on investing in innovation

The structure needs more time to succeed 

DISCLAIMERCreated by Reeva Mishra, IIIT Bhubaneswar

Purpose of presentation: For Internship in Marketing

Guide:Prof. Sameer Mathur, IIM Lucknow

THANK YOU