Procter & Gamble’s Global Strategy

Procter & Gamble’s Global Strategy

The Strategic Development of Procter and Gambles into a Global Giant

Procter and Gamble also known as P and G refers to one of the biggest producer and distributors of various consumer products all over the world. According to .., P&G has over three hundred brands in one hundred and eighty countries. In the late 1990’s era the P&G introduced some substantial adjustments to its cooperated strategy. The company did this because its objective was to reduce the structure of its cost and focus on the differentiated strategy of the business level in order to capitalize on profits and revenues. The expansion to worldwide marketplaces and globalization also necessitated a corporate boost. To add on that, a decrease of trade blockades and tariffs clearly exhibited that in order to maintain a competitive advantage internationally, the P&G was obliged to come up with a more appropriate global strategy to benefit from economies of scale. Therefore, this made the innovation factor to increasingly become a cooperate strategy also a cross-functional issue of study, globally.

The study will elucidate on about the main strategic development that occurred thereby facilitating procter and gamble turn into being a successive capital.  When you compare the similarities between the strategy and the structure of the company are very hectic.  The company’s structure usually aligns it with the strategies that it is willing to persue.  Despite that, company’s control systems and culture usually utilizes the value chain competence and proficiencies. This also encourages competency, productivity and higher returns on investments.

Procter and Gamble acknowledged the aggregating globalization of business. As a result of globalization, the company interfered with their structure and strategy to increase exposure to more nations to make sure that it remains competitive in different nations or countries. Also it benefited from the economies of scale, to maximize revenues and profits, share prices and return on amendment of their international strategy under the leadership of chief executive officer (CEO).  Due to this, Lafley, therefore decided to change the current structure from a ‘Global Product Structure ‘that is habitually allied with the strategy of  standardization, and replaced it with a ‘ transnational ‘worldwide’ strategy. Such strategies employed are as illustrated:

Additionally, the CEO also implemented structure that considers a hybrid organizational structure, which regarded the geographical diffusion of various marketplaces, and specialized specific brands. The firm also also practiced economies of scale in specific values creating functions. Ronald Jean Degen has considered this as a front back. Hybrid. matrix. Organization.. /structure..

The strategy necessitated Procter and Gamble to simultaneously merge cost cutbacks in the company and hold efficient customer responsiveness. This made it different in different nations since it was hard to adapt it at the same time in different nations because of the local tastes. The major characteristic of this strategy include various roles that become centralized while other functions are decentralized. This has been spotted out because it backed up the liberation of the different management levels in the P&G’s business units. Lafley proposed quick local response and efficient decisions. Despite the undertaking, the firm’s major role was local customization.

Innovation, R, and D were the spearhead of Procter and Gamble corporate strategy, so their function remained centralized. To enable control exerted over it. The world matrix structure, that lafley acquired to back up the transnational strategy is a complex structure that requires significant cohesion from all members of the workforce. Contrary to his predecessor,   laflely discovered the importance of morale of workers and came up with a culture that would support the structure.  He also implemented the issue of payment, which motivated   employees’  performance in the company. Lafley strategic leadership ensured that cross-functional co-ordination created a significant advantage over competitors. Distribution channel s were well coordinated  across nations just as manufacturing  channel was therefore this enhanced  Procter  and Gamble  to lower the costs.

The complementation of this culture and the global matrix enhanced corporate strategy and developed their international merit of competing.  However,   there were very sensitive issues   that facilitated coordination that lafley realized that encouraged the use of technology.  The company even went ahead and set up the partnership with the Cisco system to take advantage of their complex systems. Procter and Gamble therefore spread their system globally to minimize the cost of information technology through the process of information technology.

In 2000, lafley reported a tremendous progress in terms of finance. There are three progresses that were noted during this year and this includes; Gillette, wella and Clairol and the pace of the business was tripled through this period. This made lafley to restructure business units to accommodate these strategic acquisition and increased competition. These global business units were reduced from five to three of them. These include the following; global health baby and family care, global beauty care and finally the global household care. The aim of   this whole issue was to provide target to serious consumers. To add on that,   decentralization of functional managers, was given support by effectiveness of cross-functional coordination and interlinking of complex information technology system.

The   Use of Integrating Mechanisms in General and Use of Knowledge Management In Particular to Gain a Competitive Advantage

A transnational global strategy needs a close coordination with key areas of the business for increased efficiency and competition. Procter and Gamble allows them to use their resources to the maximum is at the cross functional coordination.  When the demands are calculated, the results should   actually match the results that are found after calculating supply. And that is what is also done in the supply chain. Distribution of goods can actually coordinate to ensure there is either increase or decrease in demand. However, control system can be implemented   to cut off costs.  To add on that, the mechanisms tend to support the transnational global strategy employed by the firm as local managers can quickly relay changes in tastes in their specific regions and products can be changed.  Or inventory level can be changed. Appropriately.

Moreover,  since lafley has identified the research and development and innovation of products, is the way of leading to competition, integration mechanisms allows  easy communication between the marketing and R and D  easy communication also facilitates  propensity between the producer and the market.  Also, inter function    coordination is crucial therefore the managers within the same institution should be easy to communicate. So as to avoid issue of information being distorted especially where information is spread in different nations.

Procter and Gamble facilitates direct contact with one another when they implemented integration mechanism. They realized that this is the simplest way of communicating their problems and ensured that their concerns and opinions were taken care of. That frequent conversation between them ensures that there is cohesion of products.  Due to this, problems are somehow reduced or otherwise the problems are not forwarded as  from one person to another. Also, this can increase beaurocracy since it is not easy for people in different nations of the world sit and converse since it only needs advance in technology for instance tele conferencing may help.

References

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