P & G Organizational Structure

Organization structure of P&G

In 1948-1987, two different models for US and Europe were adopted, as US market was more homogenous, a nationwide brand and product division management was adopted. Western Europe is a heterogeneous market with different languages, culture and laws therefore a decentralized model was adopted.

United States The organizational model was developed on two key dimensions: functions and brand. Brand manager had access to divisional function and also accountable for company strategy with product and profitability. In 1987, structure was changed and functional units were centralized. Brands would be managed as components of category portfolios by category general manager, to whom both brand and functional managers would

In 1999, Durk Jager taking charge of CEO at that time when P&G was in the midst of a corporate restructuring exercise that started in September 1998.

In 1998 , P&G started a 6 years restructuring program – organization 2005.in this program Voluntary separations of 15000 employees by 2001.45% job separations from global product-supply consolidation.25% from exploitation of scale benefits arising from standardized business process. Eliminate 6 management layers, reducing the total from 13 to 7. Dismantling matrix organization and replacing with interdependent organizations: Global Business Units, Market Development, and a Global Business Services managing internal business process.

Focus was more on rolling out new products at faster rate. Implementation of 3M concept i.e product launched in last 3 year should make up certain percentage of total turnover. Previously organization was more decentralized and centralization coupled with separations and negative growth rate has weaken moral of employees. Jager decided that P&G would sell its products under the same name all around the world. So in Germany, the name of its dishwashing liquid suddenly changed from Fairy to

External changes: from its product division structure P&G become more dynamic and it creates a new market.

Current structure:

Procter & Gamble follows divisional structure because they have various products for different customers segments and also when an organization had a vast variety of product then a flow of communication should be smooth and that can only be achieved by a divisional structure in a large organization like P&G. Each division represents a distinct, self-contained business with its own functional hierarchy. Each division acts as a small company to achieve efficiency and effectiveness.

Benefits of divisional structure:

1. It helps in monitor the performance of each business unit which simplify the problem of control.

2. It resolved the Resource allocation problem by comparing different division of a company.

3. It provides information to managers while taking strategic decisions. 1. Global Business Units (GBUs): GBUs are divided into industry based sector which share common technologies, competitors and consumer benefits. GBUs are mainly focus on brand strategy, innovation and marketing plans. GBUs are mainly divided into 4