Procter and Gamble (P&G): Strategic Management

Topic: Management Words: 2759 Pages: 9 Updated: Oct 26th, 2021

Table of Contents

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.

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).

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).

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.

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.