Business & Marketing Assignment: P&G Globalization Strategy

P&G Globalization Strategy
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P&G Globalization Strategy
Proctor & Gamble Company globally reaps the greatest revenue from the personal care products and the company’s products reach approximately 4 billion people annually (Galbraith, 2008). The company aims to offer household consumables of superior quality and which improve people’s living standards. In the early 1990’s the company was experiencing serious challenges leading to declining in share value and loss of market capitalization (Galbraith, 2008). This situation forced the company to embark on a globalization strategy aimed to turn around the company’s culture, profit making ability and the way in which the subsidiaries in various countries are managed. Therefore, this paper examines the strategies pursued by P&G in the last 20 years as well as the key strengths and challenges that face P& G., besides, the paper examines how Unilever addresses the main questions raised in the book “Play to Win.” Finally, this paper evaluates how well P& G has been able to execute its global strategy.
P&G Global Strategy
The Global Matrix
P& G implemented the Global Matrix in 1989that reorganized the global product structure. In the new structure, each class of product was headed by a president who was directly answerable to the CEO. The business unit’s general managers retained functional activities such as human resource and profit and loss responsibilities. The brand presidents were given full control over research and development (Galbraith, 2008). The functions of manufacturing, purchasing, and engineering were also integrated into a single function headed by a senior vice president with an aim to facilitate the integration of the business units with the global supply chain (Ghemawat, 2013). The reorganization of sales in 1994 also aimed at strengthening global sales and resulted in improved global coordination and consolidation of cross-border operations
Strategic Decision Critical Analysis
During the 1990’s the then CEO Jager identified a problem of slow growth in sales. Therefore, Jager introduced Organization 2005 strategy that aimed to streamline the decision-making processes, promote innovation and embark on a cost-cutting strategy to lower the cost of operations and increase profitability (Ghemawat, 2013). In the Organization 2005, the profit responsibility was assigned to the global business units with duties to carry out product development, marketing and manufacturing within the business units (Galbraith, 2008). The strategy also aimed at promoting improved integration through greater integration of cross-border activities so that to achieve standardization in manufacturing and uniformity in operations.
P&G’s Levels of Strategy
The company aimed at implementing the strategic process at all levels of the organization so that the company could well implement the strategy. The corporate level strategy was in response to the increased globalization, and it would help P&G to maximize exposure in more countries to remain competitive in the international markets, to maximize profits and revenues and to increase the return on investment for the shareholders (Galbraith, 2008). The CEO implemented a Transitional Global strategy resulting in a hybrid organizational structure that took consideration of the various geographical conditions aimed at achieving economies of scale. The business unit strategy aimed at ensuring that each Global Business Unit was in charge of operations such as marketing and manufacturing while at the same time improving integration and standardization of the business units to achieve a global outlook (Lafley& Martin, 2013). The new organization of the business strategy was aimed at achieving increased operational efficiency and contribute to the corporate globalization strategy.
Strengths and Weaknesses of Unilever Globalization strategy
To analyze the strength and weaknesses of Unilever Globalization strategy, this paper will use the SWOT analysis to help in the understanding of the factors that surrounded P&G’s globalization strategy.
SWOT ANALYSIS
Strengths
1. The global strategy aimed at maximizing P&G’s excellent reputation for research and development (Cervantes et al., 2015). The research and development function remained centralized so that the headquarters could oversee how innovation was being implemented to avoid diversion.
2. The company’s good reputation as a leader in homecare products was a great point of strength in the globalization strategy.
3. The various P& G brands meant that such as Olay, Pantene and Gillette meant that the customer had the relevant product differentiation to serve various market segments in a customized manner.
4. The ability to attain the economies of scale and to reap the benefits that come with it such as lower costs of operations as well as a higher profit margin.
5. Ability to increase learning through data collected across various market segments which is critical in product designing and development.
Weaknesses
1. One of the greatest weaknesses was the challenge of integrating the various business units so that they stop seeing themselves as distinct business units but as parts of the same company (Galbraith, 2008). The global strategy presented challenges in the areas of decision making, knowledge transfer and a universal marketing strategy that is customize...