Strategic Plan for Procter and Gamble
Procter and Gamble strategic plan
Organizationsuse strategic planning to define their policies, decision-makingprocesses, and direction. As such, they use the strategic planningprocesses to define the approaches in meeting objectives as well asallocating resources to meet those objectives. Sekhar (2009) saysthat a company’s strategic plan is of no use if the company doesnot implement it as required. Organizations see the implementation ofa strategic plan as a requisite in the processes and systems ofplanning hence, organizations that progress the processes involvedmust include a procedure of relating it successfully. The definiteapplication can vary from one business to the other, based on thestrategic plan’s particulars and its workability. Given this, it isthe role of the organization’s leadership to evaluate the plan,create a vision for its implementation, select the team members forimplementation and execute the actual implementation in time. At thesame time, organizational leadership is key to effective strategyimplementation. Leadership has been defined as the process oftransforming organizations from what they are to what the leaderwould want them become. Leadership involves transformingorganizations thus, an organization must cultivate plans throughwhich to transform different processes across departments. As such,the discourse looks at Procter and Gamble’s strategicimplementation and organizational leadership, inclusive of thecorporate governance structure.
AnAmerican international corporation, Procter & Gamble deals inconsumer goods since its inception in 1837 by William Procter andJames Gamble. The company provides branded consumer packaged goods tomore than a billion consumers around the world. As of 2014, thecompany’s structure was divided into four major Global BusinessUnits (GBUs), which were cosmetics, baby care, home care and healthproducts. These products were sold to five selling and marketorganizations, almost all potential geographical regions (pg.com,2015a). As of June 2014, it was ranked as top 30 in the Fortune 500companies listing, with the main competitors being Johnson &Johnson, Kimberly-Clark Corporation, and Unilever. The organizationdefines its mission as the provision of provide trademarked andbranded services and goods of excellent quality and worth as well asthe promotion of shareholder’s prosperity.
Procter&Gamble’s strategic purpose
Procter& Gamble’s strategic purpose is to unify its operations into acommon cause, while focusing on growth in serving its consumers. Thecompany’s motivation or goal is found in its operation that is to“provide branded products and services of superior quality andvalue that improve the lives of the world’s consumers” (pg.com,2015c). Consequently, the corporation looks forward from rewards fromthe customers in terms of sales management, turnover and worthcreation. As such, this allows the organization’s employees,creditors, partners, stockholders and societies to flourish. Thestatement describes the company’s thrust and its ultimate goal,which can only be achieved if it carries out its business asstrategized. Procter & Gamble values its strategic purposes’role in its accomplishments towards realizing the goal of being theworld’s leading branded products company, as well as satisfying thecustomers’ needs.
Whilethe company’s vision describes its goals, it considers its strategyas the choice of how to achieve those goals. The corporation’s ideaof a good business is to be the paramount consumer goods and servicesprovider across the world. Definitely, the corporation’s productsand services have been well received across the world, and it hasbeen listed as one of the Fortune 500 companies. According to Sekhar(2009, good strategic objectives are those that are specific,measurable and have a workable deadline. This means that a companyhas to unify its activities and integrate all the operations. Procter & Gamble has consistently done this since its creation,and it is one of the reasons it has performed so well in the productsindustry. According to the company, its management measures theirprogress against company objectives, not only the achievements of thestrategic objectives.
Approachand generic strategy
Procter& Gamble looks forward to remaining competitive in theinternational market, to benefit from the economies of scale and tomaximize its profits. In order to do this, the company has beenaltering its business strategy to encompass the ever-growingcomplexity of the international business structure. The company’sleading management, in an effort to facilitate implementation oftheir global strategy, implemented a “transnational” strategy(Warren, 2012). This was an effort that took into consideration thegeographical segmentation of the international market, target marketfor selected products and economies of scale. By segmenting themarket, Procter & Gamble placed itself in a position where itcould simultaneously reduce the costs of operations and boostconsumer responsiveness, giving the company’s marketing andstrategizing team space to adapt to the local tastes of variousproducts.
Differentiationstrategy is one of the company’s main generic strategies. Sekhar(2009) says that the policies employed in managing differentiationapproaches comprise brand creation, greater goods range, improvementand higher customer experiences. In the branded product industry,many of the products offered are almost of the same quality andprice. Procter & Gamble has successfully managed to differentiateits products by generating variety names and mottoes that customerscan identify. Some of the products that the company hasdifferentiated include Duracell and Crest, amongst a number ofseveral other consumer products (Hooper, Yenzer, Yosten &Brradford, 2007). According to the analysis, the organization’scapacity to attain a competitive advantage demonstrates that it hasremained competent and expects to remain so, given that the thecompany stays in the primary position in terms of research anddevelopment. This helps them to maintain a good relationship with theconsumers.
Assessmentof organizational strategy
Oneof Procter & Gamble’s strategic actions that have helped toprovide organizational and competitive value is R&D andInnovation. This strategic action is at the forefront of thecompany’s corporate strategy. The two are tantamount to pioneeringcompetitiveness of the company’s corporate strategy, as theyintegrate mechanism that paves the way for swift communicationbetween the marketing team and the R&D. Furthermore, thecompany’s inter-business communication strategy allows it to createvalue in manufacturing and marketing. Inter-business function is veryimportant corporate management, and it helps the company to initiateswift communication, by reducing distortion of information.
Accordingto the company, they have invested heavily on supplier diversity,which they consider as a fundamental business strategy (pg.com,2015a). The company’s customers and suppliers become more diversewith each passing day, and the company maintains that its successdepends on their ability to understand their new customers’ needs,so as to work with the suppliers effectively. In culture andbusiness, diversity is unique to everyone, running from suppliers toemployees to corporate officers. P&G thus invests in theirsupplier’s diversity to fulfill their purpose, values andprinciples.
Overthe past several decades of operation, the company’s strategieshave been largely consistent. They have progressively focused ongrowing their core business and brands by categorizing their nichemarket and investing in maximizing its presence. Additionally, bymaintaining consistency in areas such as maintaining and wideningtheir presence in the market, the company has been able to extend itsdistribution systems and to reach out to more consumers every day.
In2014, P&G announced that it was dramatically shrinking its brandportfolio (Calkins, 2014). The company said that it was looking todrop almost 100 brands from its portfolio, focusing on less than 80brands. The company considered this as a significant change, which,however, according to the market dynamics, could prove risky. On thesurface of this move, it makes perfect sense. This is because thecompany looks to keep brands that make up over 90% of its profit andrevenue. After the cuts, the company will still have a number ofbrands to invest time and resources. However, the main issue is thatfocusing on fewer brands means that it will definitely loose a goodnumber of its customers to rival companies. In theory, when a companydrops one of its products, the customers will choose from one of itsother products. However, in reality, consumers will choose to buyother products, which may be made by another company. The other majorproblem with dropping a brand is not as simple as it sounds. Whenevera company drops a trademark, another company can easily start usingit, at no cost.
Accordingto A.G Lafley, CEO of Procter & Gamble, one of the company’srecent worst strategic errors was to take main competitors, forexample, Hindustan Unilever head on, when the corporation firstopened doors in India (Banga, 2013). Lafley said that one of thebiggest mistakes that companies make is attacking their strongestcompetitors first or attacking all of their competitors at a go.Initially, the company thought that it would take them a decade or soto improve their position in the new markets, India, and Brazil. TheCEO believes that there is no single winning strategy for emergingmarkets and that every market and consumer segment needs a uniquestrategy to be successful.
Strategicanalysis and discussion
Procterand Gamble leadership structure
Thecorporation has an exceptional administrative organization thatprovides the international measure welfares of a global corporationof its standing (pg.com, 2015b). According to its official website,the company’s leadership is structured to guide the corporation’sprocesses in over 180 nations in which it markets its brands. Theorganization’s corporate configuration offers the context thatpermits it to tap the welfares of a worldwide business with rapidityand competence. As such, the corporation has made its businessarrangement an imperative fragment of its ability to develop in thevigorous industry. Skilled personnel that help the corporation to winretail customers and corporate customers in all the nations where itfunctions head various segments.
Inorder to execute its strategy, the corporation has fourindustry-based segments that are concentrated on shared consumerwelfares, face shared rivals as well as share the same technology.These segments include Family Care, Home Care and Health Care,Beauty, Hair & Individual Care, and Grooming Care, as shown inthe image below.
Figure1: P&G SMO. Source (pg.com, 2015c)
Thecompany altered the label of its “go-to-market” organization from“Market Development Organization” to “Selling and MarketOperations” (SMOs) (pg.com, 2015). The change helped the company toachieve superiority, effectiveness and efficiency in marketing andselling. The organization’s SMOs focus on the networks, customers,and markets that the company serves in across the world.
The company defines its corporate domination as the collaboration ofthe administration, stockholders and the board of managements in abid to assist and defend all the venture capitalist againstexecutives who are perform exclusively in their individualegotistical interests (pg.com, 2015b). Across the departments of thecompany, corporate governance entails of processes, laws, andpolicies that safeguard the interests, assets, and well-being and ofthe company. All the policies, procedures and practices are welloutlined in the company’s portfolio, and they help to demonstratethat the company’s intentions.
The company regards its employees as its long-term investors. Beforethe company was listed as a publicly traded company, William CooperProcter, one of its founding members, presented a return-sharingpackage for its workers. The company later reviewed the program tohave the turnover sharing be bestowed in the form of stock. P&Galso has major non-market stakeholders, who are for profit socialinterest groups, communities, regional and global makeup. On theother hand, P&G’s “Global Business Services” (GBS)Association has allowed the company to implement the best practicesand processes in order to provide business competences that createvalue for numerous business units. In addition, GBS has allowed theorganization to support its more than 170 facilities across the worldby engaging employees, government agencies, and investors. Theplatform permits the company to deliver employee services such ascommunication, people management, travel facilities, facilities, and,meeting services as well as business services such as supplynetworks, product innovation, and financial solutions and services.
Accordingto the company, the board of directors is to be made up of between 10and 15 members (Procter & Gamble, 2015). If the chairperson ofthe panel is self-regulating, the company’s rules assert that atslightest a bulk of independent associates should make up the board,which means that members are free of any substantial association withthe corporation or its administration. If the chairperson is notsovereign, the Panel should be comprised of at least two thirdindependent members. According to the company’s corporategovernance structure guidelines, independence of a board member isdetermined in accordance to separate guidelines established by theboard. Today, P&G has one of the exceptional boards in the worldwith chief executive from six other corporations regarded as some ofthe best, among its 12 associates, comprising three from corporationsin the Dow Jones manufacturing average. These chief executives comefrom Boeing, Hewlett-Packard, Macy Inc, Frontier Communications, andAmerican Express Co. In fact, P&G has consistently described theboard as exceedingly qualified and each Director conveys amultiplicity of services, capacities, skills, and experiences – whoqualify as holding amazing leadership potentials as well as manage torecognize and advance leadership potentials in others. In addition,the company has collaborated with major corporations such asBerkshire Hathaway and Pershing Square Capital Management
Procter & Gamble’s strength relative to its main competitorsis its diverse product portfolio, which is made up of goods of someof the domain’s most renowned products. The company’s diverseproduct categories and its far-reaching geographical access provideit with more than $80 billion of annual revenue (Mauzy, 2014). Inaddition, the company maintains focus on product innovation as one ofits strategies to contribute fresh additions to the brand productsmarket. However, the greatest risk that the company faces is exposureto rising costs of commodities. The phenomenon has the potential ofaltering profit margins in major ways. In addition, the corporation’sdevelopment prospects are restricted by maturity of stocks in theNorthern American Market and weakness of stocks and currencies in theEuropean economy. This slows growth rates, which may hinder itsprogress. For any given company, sales in emerging markets are verycrucial for a future of increasing profits. Finally, failure of thecompany’s new products to gain popularity in the new market maypresent a challenge to the company’s future profitability.
Inconclusion, Procter & Gamble has over time managed its strategicimplementation program to maintain its market position in the brandedproducts industry. The paper has shown that with the high industryconcentration, price competition, expansive scales of economies andfierce rivalry, a company’s organizational structures and strategyimplementation policies are crucial to its market relevance. Thecompany has done exceptionally well in differentiation strategy,which has helped it to reach out to more consumers in extensivegeographical locations. Given this, Procter & Gamble has gained apositive competitive positioning in the branded products industry andhas been able to stand up to the fierce market competition from itsarch rivals.
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Warren, S. (29 April 2012). The strategic development of Procter &Gamble into a global giant. Retrieved on 7 February 2015 from:http://wearedevelopment.net/2012/04/29/the-strategic-development-of-Procter-and-gamble-into-a-global-giant/