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Procter & Gamble HBS Case Study

Frankfurt School of Finance and Management
by

SilvIa Torrado Duran

on 9 April 2016

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Transcript of Procter & Gamble HBS Case Study

Procter & Gamble: Organization 2005 (A)
Founded in Cincinnati, Ohio in 1837 by two relatives due to they married sisters
William Procter - Candlemaker
James Gamble - Soapmaker
Aggressive factory investment in 1850's
High quality products boosted the national reputation

Focus on innovation
1879, Gamble's son -chemist- launched "Ivory"
1890, started the pay of dividends and R&D lab
1919, created direct sales force department
1924, establish market research department
1931, institutionalized competitive brand management
1933, invented opera soup
1943, created product category division
1946, launched "Tide"
P&G Overview
Focus on differentiated market demand
Growth in the amount of brands and products
Change in market demand
Improve integration and decision efficiency
Shifting of the US organizational Structure from Product Group in 50's to Matrix in 80's
Issues
Profitability was directly related to country managers instead of to brand managers
The local managers, were very resistant to adopt global brands and make their own brands global

Aim of the shift
Cross border cooperation
Changing the focus from country management to product management
European structure shifting from geographic grouping to categoty management in 80's
Structures
Case Study
Joao Dias
Rodolpho Frohlich
Silvia Torrado
Weidong Wang
Structures Integration into a global cube in 90's
Anticipate needs for expansion opportunities in Japan and developing markets
Creation of powerful and
independent

global functions
Contributed to economies of scale and cost saving
To improve coordination of category and branding strategies worldwide
Promoted pooling of knowledge
Transfer of best practices
Elimination of intraregional redundancies
Standardization of activities
Dismantling the Matrix structure, replacing by:
7 Global Business Units (Profit responsible)
7 Market Development Organizations (Market responsible and sales growth)
Global Business Services (Internal business processes)
Objective: Improve the speed to innovate
High growth expectations
Sales Growth: 6-8%
Profit Growth: 13-15%
Looking for "Standarization & Globalization"
P&G
Organization 2008
1948
1987
1995
1998
Diverging Organizational Structures
1948-1987
Global Matrix
Matrix runs into a problems
Organization 2005
US - homogeneous
Europe - heterogeneous
1980's Category Management
Initial geographic management
1987, Matrix
1954, product division management
Why did P&G adopt this structure?
The necessity to ensure a
long-term scalability
across the innovation
The prevention of a future failure acting as a
risk-adverse
business
The cost and performance dilemma
To improve the
alignment
and cut costs through
The exchange of ideas
The technological connection and fast transfer of technology from one to another business

Keep the structure
Centralization is important, improve the resource efficiency
Don’t come back to complete Matrix structure
Reduction of the layers – Improve the process efficiency -
Long-term view focus on investing in innovation
The structure needs more time to succeed
Implement a committee conformed by personal from different parts of the structure forecasting the cost cutting
The statements were overestimated
Alignment all employee to the change – engage people
Keep or change the structure?
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