Introduction:

Success is a factor that all organizations aim to. The goal of achievement, also, exists

in many forms such as; success in increasing profits, reducing costs, and customer

satisfaction. For achieving the goal, organizations plan and improve different procedures,

policies, and strategies within. The necessity of planning and improvements to the

industry has encouraged researchers and scholars to develop different managerial

techniques and systems. One of the main approaches developed is strategic planning.

Strategic planning is defined as: how the organization defines its strategy and make

decisions to allocate its resources to follow this strategy (1). Strategic planning has been

applied by many organizations nowadays due to its success. The fortune 500 companies

often improve their strategic plans based on the profits/loss generated and market flow of

their products and services. Procter and Gamble (P&G), which is one of the biggest

manufacturers of household products worldwide, has successfully applied strategic

planning on their production, marketing, and sales strategies.

Figure 1. Sample of Procter and Gamble Products

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P&G and strategic planning elements:

In brief, P&G owns over 100 diverse brands worldwide. The company’s

headquarter is located in Cincinnati, Ohio and has multiple branches worldwide (3). P&G

has achieved business success by analyzing the market and building its strategies based

on the market flow. Also, identifying the elements of strategic planning has simplified the

application of the technique. The elements of strategic planning are as follows:

Vision: the vision is a realistic statement that represents the future goals any

business seeks. it characterizes a whole organization, a single product line, or a project

(2). The vision statement of P&G is “be, and be recognized as, the best consumer

products and services company in the world.”(4).

Mission: the mission is a clear, easy, and applicable statement that addresses the

nature, purpose, and activities of the business (2). For instance, the mission statement of

P&G is “We will provide branded products and services of superior quality and value that

improve the lives of the world’s consumers.”(4).

Values: the values of an organization represent how does a company controls its

operations and business. Also, it states the relations of the company with its customers,

suppliers, and the community (2). For example, the values of P&G are leadership,

ownership, integrity, passion of winning, and trust (4).

Objectives: the objectives of an organization demonstrate the results the company,

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its shareholders/investors, and its employees need to attain in medium or long term (2).

For example, P&G objectives are “Two billion times a day, P&G brands touch the lives

of people around the world. P&G people work to make sure those brands live up to their

promise to make everyday life just a little bit better” (4).

Strategies: the strategies of a business are the guidelines and procedures

organizations follow to achieve its mission, values, and objectives (2). For instance, P&G

has developed many strategies to expand their business such as respect to all individuals,

innovation, and mutual independency (4).

Goals: goals are the objectives an organization aims to achieve within the long-

term or short-term periods (2). For P&G, the goal of the business is “consumers will

reward us with leadership sales, profit, and value creation, allowing our people, our

shareholders, and the communities in which we live and work to prosper” (4).

Figure 2. Strategic planning elements

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P&G applications of strategic planning:

Because of the size of the organization, P&G has adopted strategic planning on all

its business activities. A successful application for the process has been done on their

products prices. In the 90’s, households products companies have faced pricing

competition within the international market. As the competition increased, P&G started

to develop different strategic plans for marketing the products. The main plan applied is

to find other resources of production that has a lower price with the same current quality

level. The application of the plan has successfully benefit P&G in the market by

increasing its profit margin from 6.4% to 11.6% without changing the quality of the

products (5).

The application of strategic planning does, also, apply on different business

activities. Moreover, strategic planning can be used on both long-term and short-term

goals. For P&G, the company has set a short goal plan to reduce its inventory due to the

storage costs. One of the solutions provided was to reduce the safety stock by developing

a management model. P&G started to develop a model by using existing statistical and

supply chain tools. The main tools used were enterprise resource planning (ERP) and

spreadsheet programs to measure the commodity of products in stock. The programs

monitor the production and shipments and provide accurate information of the market

demand. Based on the outputs, P&G lowered their inventory to achieve the reduction of

their safety stock (6).

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 As for long-term goals, P&G had established business cooperation with Terra

Technology to study the market and to monitor the ERP system for maintenance and

improvements. This forecasted project would gain more that $100 million in cash flow.

The strategy plan used for attaining the long-term goal is to analyze the market rapidly to

view the current demand and supply of the market. The goal will be achieved by

benchmarking production based on the demand of the market to avoid production

overflow. As production stabilize based on the market, P&G’s production costs will

decrease that will increase cash flow that will result in increasing capital and profits (6).

Conclusion:

In conclusion, P&G has been a pioneer in applying strategy planning into its

business activities. The organization’s endorsement of the technique has benefit P&G

from a cost/time manner. Also, setting the strategic planning elements has simplified

current and future improvements because of the accurate forecasts generated. Moreover,

strategic planning elements are flexible to edit, change, and modify based on the business

needs and demands.

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