INTRODUCTION. Procter andGamble (P&G) is one of the fast-moving consumer goods companies in theworld.
It has been known as a customer centric and a value based company, aninternational corporation moving across countries. This description becomesincreasingly simple when one looks more into the size of P&G as well as thescope of their operations. The company operates through five segments: Beauty;Grooming; Healthcare; Fabric & home care, and baby, Feminine & FamilyCare. P&G is a model for related product diversity, almost all of P&G’sproducts benefit from the same distribution to their customers. Procter andGamble are also generally credited with having invented brand management (2008Annual Report). Throughthis report we will try to understand and evaluate how due to intensecompetition P had to start changing their strategies to create acompetitive advantage.
OVERVIEW Procter andGamble Co. was formed by William Procter and James Gamble when they signed theagreement on October 31, 1937. They started out as a small family- run businessselling candle and soap in Cincinnati, Ohio which was a busy center forcommerce and industry in the nineteenth century. As the consumer demandsincreased, P expanded its operations across the nation (Kansas City,Kansas and Ontario, Canada).
P’s in-depth understanding of customers’needs and expensive market- research, fueled P’s progress to develop newproducts. Due to the intense competition, P&G had to start changing theirstrategies to create a competitive advantage. P&G was initially following amatrix and a transactional structure In the late1990s, P&G was facing the problem of stagnant revenues and profitability.In order to accelerate growth, P&G’s CEO Durk Jager launched theOrganization 2005 Program in July 1999. This program was structured to expeditegrowth in standardization of work processes, revamp the old traditionalorganizational culture in order to embrace change, also reduce hierarchies toenable faster decision making and retrenchment of employees to cut costs atdifficult times. Over the years, the “Organization 2005” program had madeP’s global marketing efforts more disciplined my making employees stretchthemselves and speed up innovation. Although, at the beginning of execution ofthe program was a failure, however they had a dramatically turnaround with itsnew CEO’s right strategies. From the “Organization 2005” program, P havechanged its geographic product structure to a matrix organization structure,which combined production with structure.
Later we will come across how Jager’sand Lafley’s approach affected in changing the P’s culture. P&G, isan innovation-driven and values-based company, it values everyone’s opinion, sothere’s a good deal of discussion, even at the lowest level. It does thingsfrom the bottom to top approach, while focusing on “the right thing to do” evenif sometimes if it is achieved by expensive means. P&G took this motto fromone of its core value integrity that says, “We always try to do the rightthing.” Since people come in young, move through P&G, and create organicnetworks, there’s a strong sense of trust and unity. P promotes primarilyfrom within, which makes it easier to build a strong corporate culture sincemost employees have a long tenure with the company.