Research And Analysis On Proctor &Amp; Gamble (P&Amp;G)

Executive Summary

Procter & Gamble (P&G) is a multinational consumer-product company which operates in nearly 80 countries with more than 300 brands. With its core competency in development and commercialization of products and brands such as Pampers, Tide, and Wella which are part of P&GпÑ--Ð...s 22 billion-dollar brands, P&G has been highly successful in the market with sales of $68 billion and a net profit of $8 billion in 2006. Its aggressive international expansion and innovation-driven strategy enable the company to achieve economies of scale as well as to differentiate itself from strong competitors like Unilever, and Kimberly-Clark. Due to its large size and complexity, the organizational structure tends to be centralized. The standardization process in the early 2000s, resulted in significant cost-saving and speedy new product roll-outs. Given the nature of the consumer-product industry, however, local responsiveness and flexibility are the key to survive and stand out. Therefore, P&G coordinated a new matrix structure in which market development divisions complement product sectors, and added a supporting service unit to enhance horizontal linkages.

While the efficiency-oriented organization design has thrived resulting a record of 25 percent net profit growth throughout last three years, P&G faced a serious organizational challenge in expanding its market to developing countries. Effective international operation must apply its successful brand management techniques, while at the same time adapting itself to the multiplicity of national cultures, many requiring different sales approaches. However, P&GпÑ--Ð...s approach to local markets showed fundamental pitfalls. In China, which is emerging as one of the most potential markets with low-cost labors and huge population, at least seven brands of the company, including Zest and Ascend, have failed and exited the market since