U1A1: Executive Memo
The following paper will be executive memo to the Vice President of strategy, Terri Bell. The memo will outline the communications between the findings of Proctor and Gamble’s (P&G) strategy. We will identify and analyze the firm’s business and corporate strategies, and how they are currently competing within their markets. We will go in depth to expand on both the business and corporate strategies to understand P&G more and have a better understanding why they chose to pursue the ways they did.
TO: Terri Bell, Vice President of Strategy
FROM: Lindsay Peek, MBA 6026 Student
DATE: February 28, 2016
SUBJECT: Proctor and Gamble Strategies
Proctor and Gamble (P&G) has been through several trails and tests over the past couple of years, but they have been able to pull through. The company has changed their business models several times over the past 2 decades due to several step backs that has made them reevaluate each strategy. With new leadership change a new strategy came about, which helped the company regain some of their losses and helped them look forward.
Proctor and Gambles business model was set up with great intentions but unfortunately ended in disaster due to the overwhelming structure of the model. The model was set up to where the country managers and their regional bosses retained profit-and-loses responsibilities, human resource and career management. Then the new global executives presidents were given control over the R&D. Tis could allow them manage the product category worldwide and result towards a more product-category platform that would help out in a global structure. This structure helped with gaining new markets all over Asia, Eastern Europe, Europe, and Latin America, During the 1990’s the company expanded greatly in the Asia Pacific regions, which lead to the this business model being put in place. The business model was put in place to help with Japans regions to break down the departments since there was numerous departments. This eventually lead to little growth and lead to the company not performing to the expected standard, the leadership had thought. According to Proctor’s Gamble article [VD1] “Few companies have suffered as much from price competition as Procter & Gamble. Unwilling to lower its prices and unable to distinguish itself as an innovator, the firm has failed to increase its volumes in the past three quarters and has lost around 10% of its market share in the past five years . . . P&G’s problems reflect its risk-averse culture; its willingness to allow individual country managers a veto over R&D, sales and marketing decisions; and its mish-mash of different manufacturing platforms”.
In 2005 the leadership of the company decided to change for the better or face complications all over. The company decided that it would be best to restructure the organizational structure to better fit where the company was currently and where they were heading in the future. According to the article Procter & Gamble’s Organization 2005 project the new “Primary profit responsibility shifted from P&G’s four regional organizations to seven global business units (GBUs). The GBUs were given worldwide responsibility for product development, manufacturing and marketing of the products within their categories. The regional organizations were transformed into seven market development organizations whose responsibility was the local implementation of the GBUs’ global strategies. Functional services, including accounting, human resources, payroll and IT, were organized into a new global business service unit (GBS)”. With this new structure this would allow for the company to have better flow and gave responsibility where it was needed for the management globally. It was intended to standardize manufacturing processes, and help simplify brand portfolios.
By reviewing over the analyze? we see that the company helped improve a situation that could have been worse for the company, but instead was turned around for the better by new leadership. The new leadership helped create a new organizational structure that better fit the company and help bring the company back to where it needed to be.
Where is the rest of the strategic frame?
Procter’s gamble. (1999, June 12). Retrieved February 26, 2016, from http://www.economist.com/node/322509
Proctor & Gamble’s Organization 2005 Project. (n.d.). Retrieved February 25, 2016 from https://courserooma.capella.edu/bbcswebdav/institution/MBA/MBA6024/151001/Course_Files/cf_Case_Study-Wiley_Proctor-Gamble.pdf