Introduction

Procter & Gamble is one of the most successful companies in the industry
today. It is one of the largest fast moving consumer goods companies in the world. I t
manufactures and produces a variety of products that features not only high
standard of quality, but practicality and value for money as well. The global
household and personal products industry consists of the global household products
and personal product markets. Manufacturers in this industry focus on selling
products that meet the needs of everyday consumers in areas such as personal
hygiene, beauty and health, and other household products. They also produce and
manufacture different fragrances, hair care, make-up and oral hygiene, dishwashing
products, furniture polish, general purpose cleaners, insecticides, textile washing
products and toilet care products.
P&G started out with the mergence of the two businesses, William Procter, a
candle maker, and James Gamble, a soap maker in 1873. By 1879, they have
developed Ivory, an inexpensive white soap, thus, enabling them to establish their
own laboratory, being the first in the United States. From a small business that
focused on the production of soaps and candles from the leftover fats of swine, it
became a large company through embarking series of acquisitions of other
companies. From its base in Cincinnati, it then reached other countries in Asia
where it also manufactured and sold its products.
However, the increasing number of competitor companies forced Procter &
Gamble to implement far-reaching initiatives that aim to produce changes in terms
of the companys organizational culture, work processes, culture, production, and
operations. This lead to the launching of the Organization 2005 program that aimed

to strengthen the companys global presence and increase the companys global
revenue from $38 billion to $70 billion by 2005.
In this paper, I will discuss the organizational goals that P&G adopted, the
problems it faced, and the policies it implemented, and its effect on the company.
Analysis
I. Organizational Goals Adopted by the Company in the Late 1990s that Support Its
Restructuring Program and the Problems These Address
P&G adopted goals in order to support its restructuring program, the
Organization 2005. It is in the late 1990s that the company adopted goals. These
were to increase global revenues, generate annual savings through the
retrenchment of employees, and reorganization of organization structure from four
geographically based business units into five product based global units. One of this
is to increase global revenues. But problems still arise with this goal. One of the
weakness of the company involves the leadership and management skills of Jager,
who puts too much pressure on the managers of Procter and Gable for marketing
their products. This means that the leadership and management style of the
companys past CEO does not fit the corporate culture of the company. It has been
reported that leadership is regarded as the most important element of directing the
function of management, and a supportive function to other managerial functions,
thus, in this regard, good leadership is important to effective management. The lack
of good leadership on the part of Jager has contributed to the weaknesses of the
company, as his strategic decisions are out of timing, leading to more problems for
the company. In addition, his decisions for employee transfers and relocations
resulted to employee behavioral problems. As such, these weaknesses further

contribute to the problems of the company in terms of lower sales and profits and
lower market recognition during the period from 1995 to 1999. Another is the
retrenchment of its workers in order for the company to generate more savings, and
the increase of its business units. The problem with this is that this weakened the
company, thus, affecting the morale of employees. Due to cost cutting, an
organization may have the option to retrench, relocate or even fire their employees
to be able to cope with the needed changes being faced by the company. However,
because of such actions, many employees would be threatened, not only in terms of
their performance in the company, but in their individual skills and abilities as well.

II. Values and Strategies Adopted in Pursuit of Those Organizational Goals and Why
These Are Important
Organizational goals of the company would not be achieved if not for the
values and strategies that it will adopt. It is important for a company to implement
and execute strategy of managerial tasks. The components include Allocating
Resources, Building a Capable Organization, Exercising Strategic Leadership,
Shaping Corporate Culture to Fit Strategy, Establishing Strategy-Supportive Policies
and Trying Rewards to Achievement of Key Strategic Targets. Such components are
important to take note off, as they enable the organization to achieve their goals
and objectives through effective planning and organizing, based on such
components. Specifically, using such components, the organization would be able to
fit how the organization conducts its operations to the requirements of the strategy,
generate commitment, so an enthusiastic crusade emerges to carry out strategy,
see that the activities are done in a manner tightly matching first-rate strategy
execution, and unite the whole organization behind the chosen strategies. In this

regard, it can be perceived that such elements or components are crucial in

determining and executing the different strategies of organizations in order to help
them attain and achieve all their goals and objectives.
The first component is allocation of resources. Allocation of resources refers
to the effective, budgeted, and proper distribution of resources in an organization,
and involves the effective and efficient skills of a manager. In terms resource
allocation, it can be perceived that Procter & Gamble was able to improve on this
first component through determination of the fact that the development of their
company lies on proper allocation of time and effort on human assets, financial
assets, and marketing assets of the company. Resource allocation was improved
and developed through the implementation of the strategy, as Lafley focused on the
improvement of the companys operations and profitability, and in rebuilding the
management team of the company.
Building a capable organization serves to be one of the top priorities of
managers. This is because a capable organization is characterized as having all the
necessary elements that would enable the employees of the organization and its
market to coexist effectively.
The third component of strategy execution is exercising strategic leadership,
which was achieved by Procter & Gamble with the modification and improvement of
its management. Leadership is a key issue in the development of groups,
organizations, and nations. Leadership is the ability of a specific individual to direct
and guide a group of individuals in order to achieve goals and objectives.
The corporate culture of an organization determines much of the way that
things get done, and encompasses the companys values, goals, and dominant

ideologies. The organizations strategy must be the one be adjusted to fit the
corporate culture of the organization.
Another component of the strategy execution is establishing strategysupportive policies, which further supports and reinforces the chosen strategy or
strategies of organizations. Establishing policies in the organization would enable
employees and the top management to execute actions and processes based on the
protocol and regulations set by the organization, thus, promoting discipline and
compliance on the part of the employees.
Also, rewards and compensations are integrative and essential elements in
the workplace environment, as it aims to motivate individuals to get a job done.
Organization 2005 aims to improve the companys competitive position and
generate operating efficiencies through more ambitious goals, nurturing greater
innovation, and reducing time-to-market, and such goals were to be accomplished
by substantially redesigning Procter & Gambles organizational structure, work
processes, culture, and pay structures. In general, without the implementation of
this strategy, Procter & Gamble would not be regarded as one of the most
successful companies in the market in the world, which manufactures the best
among the best brands.

III. Why Organizational Culture Had Become an Obstacle to Goal Achievement

P&Gs culture was too conservative, lethargic and bureaucratic. It was too
formal. People were so used to lifetime employment and management style. The
employees worked not because they wanted their organization to grow and be
better. They only had in mind the compensation that they would receive for their
labor. People were like robots that did the same thing over and over again. Such a

slow, lifeless organization culture where people always do the same boring routine
everyday will never make employees feel lively and inspired to work. Aside from
this, because of the bureaucratic culture that P&G had, the company was rigid and
inflexible. This made it hard for the company to resist to change and adaptation.
This is the reason as to why it was hard for the company to reach its goals.

IV.

Structural

Changes

and

Human

Resource

Policies

Made

to

Achieve

Organizational Goals and Its Benefits to the Company.

Structural changes made by the P&G were the reorganizing of its
organizational structure from four geographically-based business units into five
product-based business units. It also changed its strategy formulation and profitcreation responsibilities on products rather than on regions. This led to an increase
in its sales and profits because its potential customers all over the globe. Through
this restructuring where they focused more on their products, they are able to sell
the goods that they provide to a wide variety of customers regardless the
nationality because what they offer are everyones primary needs and wants, and
every one would want to purchase it.

With this also, it is a lot easier for the

company to do innovations and make decisions.

Under the leadership of Alan George Lafley, women were given senior roles
and trust was also institutionalized. Because of these efforts to eradicate
discrimination in the company, the workers were more motivated to work. Thus, this
led employees to be more productive and loyal since the company made them feel
that they are of importance. The trust that the company has given them made its
employees more confident in what they do, thus they are able to work better. The

change that Lafley has brought to the company may have helped in a way to break
the walls between the employees. With women being given the chance to be in
higher positions of the company, and with the trust that is given and being felt to all
the employees, they are able to work with ease without being worried that
everything they do may be wrong. Employees learn to trust themselves and make
decisions that could help them in their work unit and the organization as a whole.
Thus it is easier for them to interact and work with their co-employees. This is an
advantage, since the more people who work together for a goal, and the more
cohesive they are, and the more confident they are and motivated with what they
do, the better. The focus shifted away from authority and unity of command to the
motivation of the individual and group, delegation of authority, employee
autonomy, and so on.

Case Analysis
Procter & Gamble

Submitted to:
Professor Anna Arroyo

Submitted by:
Cazzandhra Mae N. Bullecer
BSM 2
MTh 2:30-4:00