Procter and Gamble is the world's largest consumer goods company. It was founded by William Procter and James Gamble in 1837. They started operations from Cincinnati, Ohio. However, they started expanding to other parts in US as their demand for products increased, mainly due to the military contracts. Gradually, the owners started to diversify its products and the company was producing goods ranging from toilet paper, pharmaceutical medicines, cosmetics and detergents. The company even started operations overseas and its dominance in consumer products in international markets (180 countries) led to the firm improving lives of about 4.4 billion people around the world (P&G Third Quarter Results). .
Key Issues .
In September 1998, P&G's CEO Durk Jager introduced a six year restructuring plan called Organization 2005. This new initiative was designed to accelerate sales and innovations. In the past, P&G's chain of command prioritized geography first, product second and function last. While, in the new organizational design, the company would be structured as three interdependent global organizations; one organized by product category, one by geography and one by business process. However, the new design led to terrible results as there were flat sales and negative earnings which enforced the company to issue four profit warnings. Moreover, employee morale was down and the new CEO, Lafley, contemplated whether the company could create more value by sticking to the new organizational structure or whether they should go back to the past design which worked very well for the company. .
Evaluation of Firm Strategy .
P&G's corporate and organizational management have ensured that they deliver results and this led to P&G becoming one of the most admired companies in the world. Ever since the firm was formed, its strategies have been quite successful and this can be reflected by its earnings. It catered different strategies for each country which mainly fell under two categories.
