P & G:Organisational structure

Organisational structure before 2005 THE MATRIX SYSTEM Advent of Matrix Categorization of Business Units Each unit with its Sales, Product Development, Manufacturing and Finance Functions Dotted Line Reporting system was followed

*US president is just an example of country president

P & G:Organisational structure

THE GLOBAL MATRIX Arrival of Global Matrix Structure Attractive expansion opportunities in Japan and developing markets led P&G question its globalization model. They wanted to cover more diverse consumer taste and income levels. Corporate functions still lacked direct control of country functional activities. Global Matrix Structure

P&G started migrating to a global matrix structure Europes country functions were consolidated into continental functions Characterized by dotted line Global functional SVPs managed functions across all regions;

P & G:Organisational structure

P&G created global category presidencies reporting directly to CEO; This structure allowed for the creation of global technical centers in different regions. Each with a core competency in a specific product category

Problems of The Global Matrix It was never symmetrical Management by functional conflicts led to poor strategic alignments throughout the company for e.g. product supply made global efforts to reduce the number of chemical suppliers whereas, R&D looked for high performance ingredients no matter where they came from. Due to which it was difficult for regional managers to focus on particular countries to address these global conflicts. There was tension between product category & regional management though regional managers had responsibility for financial result. R&D and global category leaders fought hard to globalize new technological and brand innovations quickly. Due to the internal conflicts the competitors were catching up quickly. The organizational structure was facing a big question mark whether it is going to sustain for long term or not.

P & G:Organisational structure

Organization 2005 In September 1998, P& G announced a six year restructuring plan, ORGANIZATION 2005 Developed by Mr. Durk Jager, former CEO Aimed to implement new technologies rather than incremental improvements of existing products. Several new categories and brands were introduced. The plan also called to eliminate six management layers. It entailed dismantling the matrix organizational structure and replacing it with an Amalgam of Interdependent organization: GBU: Global Business Unit MDO: Market Development Organization GBS: Global Business Service

P & G:Organisational structure

GLOBAL BUSINESS UNITS

Global Business Units (GBUs) focus solely on consumers, brands and competitors around the world. They are responsible for the innovation pipeline, profitability and shareholder returns from their businesses. Global Business Units were responsible for : Product Development Brand Design Business Strategy Business Development Each GBU was led by a president who reported directly to the CEO and was a member of Global Leadership Council that determined overall company strategy.

MARKET DEVELOPMENT ORGANISATIONS

Market Development Organizations (MDOs) are charged with knowing consumers and retailers in each market where P&G competes and integrating the innovations flowing from the GBUs into business plans that work in each country. MDO were designed to take the responsibility for : Tailoring the company global programs to local markets. Enhance their knowledge of local consumers and retailers. Develop market strategy to guide the entire business. Unlike the GBUs they did not have the complete profit responsibility, but were instead compensated on sales growth. Each MDO was lead by a President who directly reported to CEO.

GLOBAL BUSINESS SERVICES

Global Business Services (GBS) utilizes P&G talent and expert partners to provide best-in-class business support services at the lowest possible costs to leverage P&Gs scale for a winning advantage. GBS was designed to:

P & G:Organisational structure

Standardizing Plan of Execution. Consolidate Stream Line Ultimately strengthen business processes. Before GBS business services and IT systems for processes like A/c Transaction, Payroll Processes and Facilities management were duplicated and performed differently across regions. The task of GBS was to move entire company on to a single share, SAP software system in order to achieve critical mass in business process execution and to take the advantage of wage arbitrage.

P & G:Organisational structure