Evolution of Strategy at Procter & Gamble

1. What strategy was Procter & Gamble pursuing when it first entered foreign markets? Why do you think
this strategy became less viable later on?
In the beginning the company pursued international strategy. International strategy refers to activities
that happen crosswise over multinational enterprises in the private sector. Although international strategy
refers to doing business across nation-state boundaries, it is based on home market resources. Similarly,
Procter and Gamble developed the new products in Cincinnati and after that depended on
semiautonomous foreign subsidiaries to make advertise and circulate those items in various countries. This
strategy started to fail, and P&G started to experience sluggish profits and sales in 1990.

2. What strategy does P&G appear to be moving toward?

The strategy became less viable because P&G's was facing high costs because of high duplication of
assembling, and marketing in various national subsidiaries. Duplication was the major cause of high costs.
Secondly, the barriers to low-cost trade were falling rapidly around the globe, and fragmented national
markets were converging into bigger international markets. Likewise, the retailers through which the
organization disseminated its items were becoming bigger and more global and were demanding price
discounts from Procter and Gamble.

3. Recommend a different strategy that you think is better suited for Procter & Gamble. Justify
The company appears to be moving toward transnational strategy. As it was an international
business structure where P"Gs business activities were composed by means of collaboration and
relationship between its head office, operational divisions and globally found backups or retail
outlets. The company now comprised of seven business units which were centralized.
Benefits: The major advantage a transnational strategy offers are the centralization advantages
given by global procedure alongside the nearby responsiveness normal for location methodologies.
Another benefit is that the transnational organization is adaptation to all environmental situations
and achieving flexibility by capitalizing on knowledge flows (which take the form of decisions and
value-added information) and two-way communication throughout the organization. In addition, a
transnational strategy is the differentiated contributions by all its units to integrated worldwide
operations.