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Procter and Gamble (P&G): Strategic Management

Introduction

Procter and Gamble (P&G) is a global company, which operates in 160 countries around the world. Most products of P&G became universally recognized brands such as itsHead & Shoulders, Pantene, Tide, Ariel, etc. Today, P&G is dynamically evolving corporation operating within a rapidly evolving global environment. Marketing around the world allows P&G to reach global target audience and increase sales. Founded in 1837 by William Proctor and James Gamble, Proctor & Gamble (P&G), is one of the top U.S. makers and developers of household goods. P&G has branded many common popular household products from Charmin toilet paper. With products in more then twenty categories, there isn’t a household across the world that does not have at least one product made by P&G. P&G’s mission statement states, “We will provide branded products and services of superior quality and value that improve the lives of the world’s consumers.” (P&G Home Page 2009) Their mission statement has contributed greatly to the success of their organization. P&G objectives and goals have been set to obtain their main purpose. By obtaining these goals they will be rewarded by increased consumer brand recognition and profits.

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Organizational Methods

P&G believes that they attract the finest people to work for them. Per P&G’s website, As previously mentioned above P&G focuses on five main values for their employees. The first one is leadership, they believe that are all leaders in our area of responsibility, with a deep commitment to delivering leadership results. Also, as an organization they can develop the capability to deliver strategies and eliminate organizational barriers Ownership is the next trait looked for in an employee, P&G wants an employee who will treat the company assets as their own and acting in the best interest of the company. Next, there is integrity, P&G looks for those individuals who are straightforward with others and always trying to do the right thing, A passion for winning is something P&G is known for they take pride in their accomplishments and want employees who are always working to improve themselves and the company.

And finally, there is trust (Daft, 2003). Trust plays a key factor in everyday roles at the organization, a level of respect to colleagues, customers, and consumers at all times needs to be upheld (P&G Home Page 2009) P&G is focused on being successful in every niche of their everyday business. From their manufacturing plants to their corporate offices and consumers, P&G demonstrates and upholds the same level of quality service. Many of P&G’s principles and values seem to be redundant in their use, which has caused them to come across as being overpowered but also boring due to repetition. As a company, they have clarified in a great deal what they are looking for from applicants and what they expect you to uphold as an employee (Dobson and Starkey 2004).

P&G could present their long-term goals and objectives more clearly and openly for knowledge. However, based on their rankings and profits for the past couple of years, they seem to be heading in the right path. Also, in regards to their values and principles wanting a mutual respect for all individuals, this seems as if it would cause a problem in respect with communication between management and fellow employees. As a company, you would want employees to be respectful of one another, however, hold management to a higher level of respect.

The business world of the past few decades has been more focused on the largest multinational corporations and their effects upon the international markets as well as upon consumers. Motivated by the desire to become among the strongest competitors, several medium-size companies have developed strategic plans to increase their customer numbers, profits, and revenues as well as commercial and competitive position. Procter and Gamble have always been the American leader regarding the manufacturing and selling of consumer products, anything from personal hygiene products to detergents. However, on the international scale, Proctor and Gamble were only the second-best, being outrun by the Anglo-Dutch company Unilever. Influenced by the international trend started by corporations wishing to become the best in their domain, P&G developed a strategic plan to gain its international leader position (Dobson and Starkey 2004).

Their plan to expand regarded a merger with another American leader manufacturer and seller of consumer goods, but highly specialized in a complementary field, Gillette. In 2005, the two major companies merged into the world’s number one leader organization specialized in consumer products, therefore, dethroning Unilever. Procter and Gamble were generally specialized in family and women’s care products, whereas Gillette was specialized in men’s care products. By combining the knowledge and information acquired by P&G and Gillette, the newly formed company added to their line of internationally acknowledged products (such as Ariel or Pampers) another set of renowned products such as Gillette razors, Duracell batteries, Oral-B dental hygiene products, and Braun (Daft, 2003).

Globalization involves contracting workforce from abroad and the reasons for doing so are various, the most eloquent being highly specialized personnel and lower costs. However, criticized for increasing the unemployment rate in the country of the outsourcer, off-shoring is an international trade that has influenced numerous companies. Like with several other large corporations, the possibility to reduce costs and motivated P&G to launch the outsourcing process. Moreover, in the particular case where Procter and Gamble deliver products to 160 countries, the necessity to collaborate with the abroad workforce could not be neglected (Daft, 2003).

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In this order of ideas, by 1999, P&G had already opened headquarters in 81 different states. To cope with the immense demand for P&G products all over the world, it becomes more efficient to produce some of the products in the countries they were being sold, instead of producing them within the United States then exporting them abroad. Moreover, in 2003, the website news.com announced that Procter and Gamble had sealed an outsourcing deal with Hewlett-Packard. Since most of the production, finance, and accounting processes had already been distributed worldwide to the 81 headquarters, P&G needed HP to “outsource transactional accounts payable in regions across the globe.” In other words, HP’s main objective was to maintain and improve the quality of P&G services across the globe through developing and sustaining a viable information network. It’s generally accepted that technology has drastically changed humanity’s existence by introducing new concepts, ideas, information, and gadgets to sustain a certain kind of lifestyle. Technology has also had major influences upon the domain of business and economics by resizing consumers’ demands and obliging companies to develop at a rapid pace (Drejer, 2002).

From the economic perspective, P&G’s current position is marked by stable development and growth. It is one of the most important industry requirements, which is essential for the expansion of opportunities and plays an important role in making or breaking the competitive positioning. It allows P&G to receive input from those who are involved in this business, giving a “real world” perspective. This essential input often gives us insider accounts of a contemporary world which companies are not normally privileged to see. Strategic alliances include Clairol in 2001 and German haircare giant Wella in 2003. This brought P&G US$100 million includes Axion and Gama in France, Dinamo in Italy, Ajax in Sweden, and Dynamo in Denmark. P&G has several joint ventures in China, primarily domestic firms. P&G has also realized rapid expansion through capital injections. To protect themselves, local and international companies are constantly against international acquisitions policy. This year, P&G was claimed in anti-competitive action. This strategy helped to save about $25 million for P & G and maintained more close relations with national partners and customers. In recent years, P & G has shifted its global focus to core brands and price reduction measures. This strategy has helped P&G to maintain high-speed growth through optimization of its facilities and constant technological innovation. Changes to one area of the value chain have knock-on effects in other parts of the business (Dobson and Starkey 2004).

Mergers and acquisitions have a substantial impact on P & G market performance. The process of globalization and mergers has a major impact upon the future structure of the consumer goods retail industry, but many regulatory and ownership barriers remain in force worldwide. Organizational ‘type’ has been dramatically influenced by the rise of globalization, and in this changing environment, P is seeking to maximize its ‘global reach, in the belief that those that offer a global service and products will be in the strongest competitive position. The nature of competition can be characterized through the structure of competition namely the number and types of competitors and the action of competitors (Kotler and Armstrong 2005).

For P&G, outsourcing is as much an attempt to regain some sense of corporate focus, as it is a means to reduce costs. The market is so large that specialists have arisen at all stages of computer design, manufacture, operation, and maintenance. Many companies are choosing to outsource the set-up, operation, and maintenance of their computer systems and networks, accessing the equipment and expertise of a specialist provider. Also, globalization affects the business itself opening new opportunities for growth and expansion. P&G contracts out workforce from abroad to avoid cultural and national differences (Kotler and Armstrong 2005).

Strategic Change Management

Strategic change is important for every company as it helps it to improve market position and respond effectively to new environmental conditions and competition. In P & G, the need for strategic change is caused by an economic crisis and a crucial need to introduce new and innovative technology into practice. The retail industry needs an effective change management strategy to save costs and time on implementation and void failure. Although plans for programs can be developed fully, the description of the change will be less prescriptive than those in project plans. The change management was introduced in production facilities: new methods of transfusions and absorption. These proposals for change stated the general objective as it was conceptualized at present, establish the criteria of both the final change and the decision-making process leading to it, recommended the types of sources to be used in gathering information, and put into place a date-specific procedure for activating the program. Many activities lend themselves to this kind of planning: for instance, employee benefits programs, public relations, and customer service. Change systems used this kind of improvement in matters about curriculum, safety, and staff development. In short, any undertaking that is intended to generate a continuing change –that is, it was not subject to completion– naturally took the form of this kind of proposal for change (Jouve, 2002).

The change will take place in production facilities and will be based on new technological improvements and the introduction of environmentally friendly technologies. The change model selected for implementation is Lewin’s change model. This model is the most appropriate one because it stipulated the main steps of change and meets the organizational objectives and structure of the pharmaceutical industry. This model will help P & G to solve problems and new environmental demands imposed on the pharmaceutical industry. To some extent, this model is simple and is easily applied by the company’s management team.

Also, it covers all important areas of change allowing the pharmaceutical industry to prepare the ground for change, introduce change, and level resistance to change. The complexity of the model does not often lead to better outcomes and results: a simple model allowed P & G to develop state-of-the-art solutions to its current problems and weaknesses. The intent is to follow some of Lewin’s approaches on (1) unfreezing and (2) refreezing. The industry staff is motivated to formulate what the differences were (unfreezing) and try to replace irrational assumptions with a more rational understanding of differences with the help of a trained facilitator (refreezing). When one initiates such training in an indigenous organization, it is across the board instead of with isolated groups within the organization (Jouve, 2002).

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The main benefits of the proposed change approach are that it helps P & G management to prepare employees for change and overcome possible difficulties in communication and performance. In general, all employees are motivated and very enthusiastic about new changes and their positive impact on the company’s production. The four frames are not only sustained an organization of the company, the frames provide the capacity for growth and change. The strategic changes in P & G have the obligation both to ensure the adequacy of resources for achieving the stated purpose and to appropriate the resources within the system for optimal results. In P & G, resources are typically categorized as financial, physical, human, and intellectual, almost everything begins and ends with economics. Possible difficulties posed by the change are a lack of skills and knowledge among workers. So P & G while managers invest in physical capability–if for no other reasons than to qualify for a tax break or to remain competitive–are reluctant to reduce the bottom line by direct expenditure for acquiring or, even more crucial, developing human or intellectual capacity. And change systems, which live by probation and priority, seldom can fund the last few items in the financial plan. The average investment in human capacity is less than 1 percent of the total revenues.

The use and implementation of the Balanced Scorecard will help P&G to evaluate resources and make a complex analysis of current needs and demands. Most modern organizations, therefore, are seriously incapacitated; even the routine business operations are marginal. And, worse still, there is no capacity for expansion. Quite often the impetus comes to form misguided management practices. An overemphasis on efficiency, a term borrowed from manufacturing, not only prevents current effectiveness but also forecloses any hope of future development. In extreme instances, the depletion of capacity is equivalent to self-cannibalization (Levy and Merry, 1986).

Top-down and bottom-up designs will help P&G to develop the information processing and knowledge structure required by the change management. Focusing their activity on the latest innovations in the fields of care products as well as technological innovations, P&G realized the magnitude of the technological involvement in the business actions and made continuous efforts to sustain the development of technology and particularly information technology. For instance, when acquiring Gillette in 2005, P & G declared that the merger of the two leaders would dramatically change the industry, especially the manufacturers of IT. IT specialists expect P&G actions to influence other multination corporations and aid them to realize that “new tech initiatives contribute to product, service, and process innovation” driving them towards investing in the field of IT (Levy and Merry, 1986).

The strategy followed by Procter and Gamble to support technology and technological innovations is that of making available within the company jobs in careers in technology. Moreover, Procter and Gamble organize Research and Technical Careers in Industry Conference where they inform the public about the latest technological innovations and their importance. The corporation also emphasizes the “science behind the brands” and encourages the audience to apply to the technical positions available within the corporation.

Conclusion

The case of P&G shows that successful and effective marketing depends upon efficient organizational methods and management tools that meet the needs of the time. The business strategy of P&G is “value pricing strategy” during which it boosted advertising and performance. The stronger each of these forces is, the more P&G is free in its ability to earn greater profits. This strategy is successful because the bargaining power of buyers had a strong influence upon the business. P&G, producing differentiated products, is brand loyal, and potential new entrants encounter resistance in trying to enter the industry. This strategy is also an important factor in increasing the costs for customers of switching the products of new competitors. The opportunity of this strategy is further growth and competitive position; Technological forces including support technology and technological innovations, which has changed the nature of business relations and interaction with customers. Technological change also affects production methods, requiring the implementation of new processes for companies to stay competitive.

Bibliography

Dobson, P., Starkey, K. 2004, The Strategic Management: Issues and Cases. Blackwell Publishing.

Daft, R. L. 2003, Organizational Theory and Design. 9th Edition. South-Western College Pub; 8 edition.

Drejer, A. 2002, Strategic Management and Core Competencies: Theory and Application. Quorum Books.

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Jouve, B. 2002. Innovation without Change? German Policy Studies, 2 (1), 1-4.

Kotler, Ph., Armstrong, G. 2005, Principles of Marketing. Prentice Hall; 11th edition.

Levy, A., Merry, U. (1986). Organizational Transformation: Approaches, Strategies, Theories. Praeger Publishers.

Proctor and Gambler Home Page. 2009. Web.

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StudyCorgi. (2021, October 26). Procter and Gamble (P&G): Strategic Management. Retrieved from https://studycorgi.com/procter-and-gamble-p-and-ampg-strategic-management/

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StudyCorgi. (2021, October 26). Procter and Gamble (P&G): Strategic Management. https://studycorgi.com/procter-and-gamble-p-and-ampg-strategic-management/

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"Procter and Gamble (P&G): Strategic Management." StudyCorgi, 26 Oct. 2021, studycorgi.com/procter-and-gamble-p-and-ampg-strategic-management/.

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