1) Should Paolo recommend to the beauty-care GBU that SK-II become a global brand?

the implementation of O2005 provided an open door for the development of SK-II,
however, did not equate the cost for marketing the new product. We also found that
the markets ideal for the production of SK-II are in its home market of Japan, then to
globalize it through producing in China and Europe
the company experienced a decrease in market capitalization and how many executive
employees were dissatisfied

This was a brand-new operation that would require a huge structural change within

P&G, primarily by reorganizing from Regional Business Units to Global Business Units. As most

significant shifts involve, P&G experienced an initial job loss. However, by making this switch,

P&G opened the door for opportunity to take its valuable products and sell them on a global

market.

2) Does Jager’s shift from national responsiveness to worldwide innovation and learning
make sense?

When the Chief Operating Officer, Mr. Jager, succeeded Pepper as CEO in January 1999,

he continued his mission on bringing a major strategic change to the company, which will also

cause a loss of thousands jobs. However, these changes will result in $900 million in annual

savings starting from 2004. This implementation will have three dramatic changes in the

company’s history based on culture, processes, and structure.

First, the change in their work culture would create an organization reform. Many

employees were wasting their time on ”non-value-added work.” Jager wanted to built a cultural

revolution with risk taking and speed that would decrease the non-value-added work. It works
well for P&G because only 18 months later, they were able to enter other market and sale in

the United States, Europe, Latin America, and Asia.

Then, the changing in process involved a performance based on pay component. This

implementation would extend the reach of the stock option plan. Jager also integrated a

process where all operating plans could be evaluated and authorized together.

Finally, the change in structure included full responsibility of the market’s budget. Many

team responsibilities were shifted to individuals and regional organizations to global business

units (GBU). This change would give each GBU the power to manage product development,

manufacturing, and marketing.

The implementation of Jager’s major strategic change was a failure. The company’s

market capitalization decreased by $40 billion. In such a large company, changes should be

made more gradually and GBU should not have such a large responsibility on the market’s

budget. Those changes were more focused on increasing sales volume than profit, which put

the business under meaningful pressure.

3) Which of the three market options should Paolo recommend to the Global Leadership
team? What are the benefits/risks involved (include implementation issues in your
response)?
Although Jager’s plan to create GBU’s was what P&G needed to gain an open door in

globalizing their products, the structure he initiated was inadequate to carry the

company through their serious decline in market capitalization. In order to increase the

company’s profitability and income through globalizing SK-II, P&G should continue to
develop sales in Japan. Utilizing the sales from Japan, the company should first sustain a

new venture to bring SK-II to the Chinese market and then to the European market.