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INTRODUCTION.

 

Procter and
Gamble (P&G) is one of the fast-moving consumer goods companies in the
world. It has been known as a customer centric and a value based company, an
international corporation moving across countries. This description becomes
increasingly simple when one looks more into the size of P&G as well as the
scope of their operations. The company operates through five segments: Beauty;
Grooming; Healthcare; Fabric & home care, and baby, Feminine & Family
Care. P&G is a model for related product diversity, almost all of P&G’s
products benefit from the same distribution to their customers. Procter and
Gamble are also generally credited with having invented brand management (2008
Annual Report).

 

Through
this report we will try to understand and evaluate how due to intense
competition P had to start changing their strategies to create a
competitive advantage.

 

 

OVERVIEW

 

Procter and
Gamble Co. was formed by William Procter and James Gamble when they signed the
agreement on October 31, 1937. They started out as a small family- run business
selling candle and soap in Cincinnati, Ohio which was a busy center for
commerce and industry in the nineteenth century. As the consumer demands
increased, 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 new
products. Due to the intense competition, P&G had to start changing their
strategies to create a competitive advantage. P&G was initially following a
matrix and a transactional structure

 

In the late
1990s, P&G was facing the problem of stagnant revenues and profitability.

In order to accelerate growth, P&G’s CEO Durk Jager launched the
Organization 2005 Program in July 1999. This program was structured to expedite
growth in standardization of work processes, revamp the old traditional
organizational culture in order to embrace change, also reduce hierarchies to
enable faster decision making and retrenchment of employees to cut costs at
difficult times. Over the years, the “Organization 2005” program had made
P’s global marketing efforts more disciplined my making employees stretch
themselves and speed up innovation. Although, at the beginning of execution of
the program was a failure, however they had a dramatically turnaround with its
new CEO’s right strategies. From the “Organization 2005” program, P have
changed its geographic product structure to a matrix organization structure,
which combined production with structure. Later we will come across how Jager’s
and Lafley’s approach affected in changing the P’s culture.

 

P&G, is
an innovation-driven and values-based company, it values everyone’s opinion, so
there’s a good deal of discussion, even at the lowest level. It does things
from the bottom to top approach, while focusing on “the right thing to do” even
if sometimes if it is achieved by expensive means. P&G took this motto from
one of its core value integrity that says, “We always try to do the right
thing.” Since people come in young, move through P&G, and create organic
networks, there’s a strong sense of trust and unity. P promotes primarily
from within, which makes it easier to build a strong corporate culture since
most employees have a long tenure with the company.

 

 

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