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Table of Contents:
About Procter & Gamble
Problems
Business Analysis
Recommendation
Organizational
Structure:
(1948-1987)
Two different models for
US and Europe were
adopted, as US market
was more homogenous, a
nationwide brand and
product division
management was
adopted.
Western Europe is a
heterogeneous market
with different languages,
culture and laws therefore
a decentralized model was
adopted.
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United States
The organizational model was developed
on two key dimensions: functions and
brand.
In 1987 structure was changed and
functional units were centralized.
Europe
P&G organizational model developed
along three key dimensions:
Geography , function , brand. In 1963 ,
the European Technical Center (ETC) in
Brussels was establish to act as
centralized R&D and processengineering unit.
Problems in Europe: Corporate R&D were completely disconnected from US operations.
European functional organizations were also in isolation from US counterparts. Un
standardized , sub-scale production was expensive and unreliable. Country R&D were
expensive to maintain.
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Global Matrix
In late 1980s, expansion opportunities
in Japan and other parts of world led
P&G to develop globalization model.
Corporate functions in Brussels still
lacked direct control of country
functional activities. P&G started
migrating to a global matrix structure,
country functions were consolidated
into continental functions reporting
through functional leadership and
direct reporting through the regional
business manager.
In 1995 this structure was extended to
rest of the world through creation of
four regions North America , Latin
America , Europe /Middle East/Africa
and Asia.
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Organization 2005
Introduced by Durk Jager as an aggressive restructuring program
Designed to generate bolder innovations and accelerate their global rollout in
order to double P&G sales to 70billion in 2005 and achieve annual earning
growth of 13-15%
P&G chain of formal command was based on Geographical, Product, Function.
It changed to : product, geography, business process
The Plan also called to eliminate 6 management layers, reducing from 13 to 7
Focus was more on rolling out new products at faster rate. Implementation of
3M concept i.e product launched in last 3 year should make up certain
percentage of total turnover.
Previously organization was more decentralized and centralization coupled
with separations and negative growth rate has weaken moral of employees
Jager decided that P&G would sell its products under the same name all
around the world. So in Germany, the name of its dishwashing liquid suddenly
changed from Fairy to Dawn
Large level of transfers (2000 from Europe to Geneva ) and relocation led to
moral and behavioral changes.
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Situation (2)
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modern, quick-moving
and internet-savvy
organization.
Play video
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Problems
Problems
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Problems
Problems
Missed Earnings in 2000
In the fourth-quarter profits were flat against the expectation 15-17%
increase
P&G lowered its future quarterly sales growth estimates to 2-3%
P&G Stock lost 7%, falling to $57 after the announcement
Loss of US market share in 16 out of 30 categories
Lack of immediate results, job reductions, reduced employee morale led to
reduced profits and stock price reduced to half in last six months.
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Business Analysis
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Strength
Weakness
SWOT Matrix
Opportunities
integration of information
technology
the strategic arrangement of
organizational structure into
business units with five key
elements
expand its operations and even
potential business cooperation
Threats
Strength Opportunity
Expand the business to
another country
The product could be globally
standardize, but it must
contains local taste in their
products development
Weakness Opportunity
Campaign about the new CEO.
Build Leadership Strategy
Campaign about value of the
P&G product
Strength Threats
Innovation in technology for
efficiency
Create a good customer
service and communication to
their customers
Weakness Threats
Must create a good corporate
culture phase by phase
Corporate must have a good
communication and the
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executives must support all
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employees
Recommendations
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