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P&G and Unilever


Organizational
Structure

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Lessons to Learn

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Presented by
GROUP 7 SECTION-B
Himanshu Dhamija
UM15081
Saif Hasan Rizvi UM15105
Rahul Kumar Jena UM15101
Sibasis Mohapatra
UM15111
5 Varanasi Arjun UM15121

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Procter and Gamble

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Introduction Proctor & Gamble

1837
Estd.

$83.06bn

180

No. of countries
-Global
Organizational StructurePresence
over the
Revenue

years

Then

300
No. of
Brands

Now
GBUs grouped into 4 Industry Based
Sectors Industry-wise and geographic
focus

Proposed by Jager, then CEO of P&G


Followed a Geographic Divisional Structure
To increase production , innovation &
technology support

Streamlining the resources by


concentrating on few brands

To decentralize power referring decision


making to lower level managers

Focus on common consumer benefits, share


common technologies, and face common
competitors

To encourage learning and sharing from


each other yielding innovation,
brainstorming & empowerment

P&Gs initial thought of Transactional


Change cascading to more Holistic
Transformational Change.

Results

Forced
Adaption

Decline in
Profit

Results

Wide Focus

Increased
revenue

TRENGTHS

Robust innovation capabilities


Global outreach to 180
countries
Brand value worth 24 bn $
Organizational structure
promoted
Speed , flexibility & agility
Very strong marketing channel
Invests close to 500 mn$ for
Understanding consumer
behavior

PPORTUNITIES

CAGR of 23% in 4 years from


emerging markets
Profensive strategic approach
Use of own website to sell
products
Ensure more employee
empowerment
Greater rural penetration in

W
T

EAKNESSES

Declining expenditure in
Innovation
Big product breakthrough fell
1 by
6%
14% decline in operating Income
Between 2011-2013
3 major organizational
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restructuring in 8 years
Low degree of Employee
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empowerment
Net earning from core products
HREATSfell by 6%

Lack of product line in the


economy end as compared to
competitors like HUL weakens its
positioning in emerging markets
Falling market share form411.75
to 11.25 % in three years
Presence of cheap substitutes
Lack of cross functional linkages
between GBUs & shared services
leading to lesser innovation

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Major Strategic Initiatives


P&G to sell of 43 brands
worth 12.5bn$
P&G cuts down the number of
agencies it works for by 40%
Focus on billion dollar brands
To cut costs
79/80 brands
contribute 90%
sales
Net income fell by
41.67% in FY 2015

Speed , flexibility &


agility are the three
prime requirements
to sustain in the
FMCG business
To gain the lost
market share by
introduction of
innovative products

P&G invests 2 bn $ in R&D in


2015
Includes sustainability into its
areas of core strength

Restructures Marketing
Organisation as Brand
Management
3 major organisational
restructuring

Single point
responsibility for
strategies, plans &
results of brands
To simplify structure
To increase
employee
empowerment

To cut down costs of


using marketing
channels

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P&G launches direct sell


website
P&G cuts down digital roster
Improving productivity

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PROBABLE STRATEGIES

Product differentiation
Price positioning in economy range
Emerging
Taping rural market of emerging economies

Economies

Parapharmacies/drugstores in markets like Brazil & China


Distribution Direct Internet retailing

Channel

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Consumer price at starting point of innovation

Inclusive
Innovation

8 premium brand segments have shown constant decline in margins

Economy
brands

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Strategic Approach

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Proactive

Defensive

Profensive

Type of strategy: Normative Re-educative

Two way communication - regular feedback & a conducive climate


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Greater degree of customization/localisation (in terms of schemes / products)

Type of typology: Prospective Typology

Aggressive Planning and implementation so as to get first mover advantage


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Greater empowerment to the lower level executives so as to make
them accountable

Type of approach:Adhocratic

Lean and mean so as to reduce costs and concentrate the resources on best selling
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brands

Focus on innovation and improvement


Type of Control: Implementation
Implementation-adding small elements of innovation into everyday P&G processes in order
to enact cultural change.

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Unilever

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Introduction- Unilever

1929
Estd.

Euro 53.3bn
Revenue

26

No.1 FMCG
brand country
wise

>400
No. of
Brands

Organizational Structure over the years


Now

Then
Jointly owned by two parent companies;
Unilever N.V. and Unilever PLC
Comprehensive restructuring of operations
and businesses
Focus on fewer, stronger brands to promote
faster growth. Acquisitions playing a big
role.
Profit Increased by 16%, Share price
recovered by 30%
Its Leading brands now accounted for 88%,
up from 75%.

Results

Forced
Adoption

Decline in
Profit

Focus on big products, reduce stock keeping units


(SKUs), improve working capital management, cut
headcount.
Each level within the hierarchy serves a different
function allowing the other levels of the organisation
to concentrate on their core roles

Acquisitions will continue to play a big role


Resilience in challenging economic
conditions

Results

Organisation
flexibility

Cross sectional
representation

LEGAL STRUCTURE

Strategic Groups
1

5
NV Share Holders

PLC Share Holders

Equalisation & other


agreements

NV owned companies

DIRECTORS
NV

Home &
4Personal
Care

PLC

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Food &
Beverages

PLC owned companies

Jointly owned
companies

Innovation &
Sustainability

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TRENGTHS

EAKNESSES

Strong Parentage and


hence Strong Brand
Equity
Strong Brand Portfolio
Unmatched Distribution
Network
Excellent Research and
Development

PPORTUNITIES
Large Domestic Market
Large Untapped Market
available
Changing Lifestyle and
Rising Income Levels
Export Potentialexpansionist Policies
Opportunity in Food
Sector

Losing Market Share in


most categories due to
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competitors strong
Brands
High Advertising Costs
Declining Export Level
Mimic Brands
4

HREATS

Increasing cost of Raw


Material
Intense and increasing
competition from local as
well as MNC Players4
Competition from
unbranded Products
Competition from its own
brands

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Strategies Followed
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Profitable
volume
Growth &
Scalability

Building
Brand Equity
in both rural
& urban
markets

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Cost
Leverage
+Efficiency

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Path to
Growth

Innovation &
Marketing
Investment

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Current Issues with HUL


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Hindustan Unilever's aggressive advertising and 5discounts
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failed to lift sales(Sales fell by 2.7% in 2014)
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Absence of a funnel of new products in the pipeline( New8
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product success rate fell by 5%)

Weakening of emerging markets last year that made


Unilever's third quarter sales the weakest in fiveyears(Profit
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margin fell by 4.4%in 2014)

Sustainability challenges

Attempt to shrink the environmental footprint( Carbon foot


print reduction was 12 % in 2014-2015 compared to targeted

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Strategic Approach

Recommended Strategies

Accelerate
Premiumisation for
developed markets

TYPE

Normative Re-educative
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Improved dynamic in
pricing &
differentiation
strategies in
emerging markets

Improved SCM &


100% sustainable
sourcing of raw
materials

TYPLOLGY

Prospective-Operations
4 -Sustainability
Analyser

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APPROACH Adhocracy

Reduce usage of
fossil fuel in
operations

More focus on
Cause Marketing

CONTROL

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Implementation-Operations
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Premise- Sustainability

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+ HYBRID STRUCTURE
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+ Departmentalization
Product, geographic and Functional
+ Moving from Centralized to Decentralized structure
+ Moving from narrow span of control to wider span of control

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COMPARATIVE ANALYSIS
P&G

Over 50 brands
Vision of P&G is be, and be
recognized as, the best consumer
products and services company in
the world
P&G serves 650 million customers
in India directly through 1.3 million
outlets
P&G works on 5 specific
sustainable strategies i.e. Products,
Operations, Social Responsibility,
Employees and Stakeholders.
P&G doesnt have the strong supply
chain to reach out to all the
customers. In terms of emerging
market expansion, it suffers from
lack of brand coverage in economy
ranges where some of its rivals
have an edge.

HUL

Over 35 brands
Vision of HUL is primarily to
help people feel good and
develop new ways of doing
business that will allow it to
double its size while reducing
our environmental impact
It has robust supply chain and
distribution network covering
over 3400 distributors and 16
million outlets to reach out to
customers
HUL has Unilever Sustainable
Living Plan (USLP) that
comprises of 4 things i.e.
Winning with Brands &
Innovations, Winning in the
Marketplace, Winning through
Continuous Improvement and
Winning with People.

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RECOMMENDATIONS
Further decentralization of responsibilities to respond
flexibly to internal and external changes
Tannenbaum and Schmidt continuum-collaborative style of
leadership to continue growing
Motivate and engage employees to extract constructive
criticism and feed back for growth of Unilever
While organizational changes are not implementable
overnight, adaptation to newer technology is essential
Comparative advertising is there to stay. In real terms, it
must be used often as it makes it easy for consumers to
evaluate and chose the best among several available
options.
Increasing economies of Scale(Production Orientation)
Higher bottom lines which can be used in R&D( Think
globally, act locally) and M&A target Non Users and
New opportunities.
This leads to Blue Ocean Approach with High value low
cost

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CONCLUSION

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Thanks!

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