Term Paper on "Procter and Gamble Company Analysis"

Term Paper 5 pages (1710 words) Sources: 5

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Procter and Gamble Company Analysis

Company Analysis

Procter and Gamble

Procter and Gamble Company is a worldwide re-know producer of house hold products divided in to three broad categories. These categories are health and well-being, grooming and beauty and household care. Additional the firm undertakes to produce and market water filters, pet food and most recently produces a soap opera. Most of the brands the company trades in are leading in respective markets. This affords the company a substantial market share and higher volume of revenues and profits. The company operates under the mission to provide superior quality products that target to improve the lives of global consumer. It targets to strengthen its brand image in the market through aligning its structure to core objectives, undertaking to understand the markets and meet the needs, heavy innovative marketing, and efficiency in budgetary and financing of its ventures. This paper presents and analysis of Procter and Gamble looking at the various aspects that contribute to its performance and recognition as a fortune 100 company.

Structure of Procter and Gamble

Organization structure defines the formalities used in reporting, procedures in operations, controls, employee interactions, decision making and authority (Tushman & Anderson, 2005). An organization's structure is useful in supporting firm strategies, dealing with uncertainties and accommodating the diversity of employee and the markets. (Tushman & Anderson, 2005) terms an organization structure to be a component that is critical for effective implementation strategy devised to meet set objectives. Procter and gamble as a global corporation sells its products in more than 140 countries with operations in 50 countries. In the global market, the corporation serves in excess of five billion customers worldwide. The structure that sufficiently serves the needs of a corporation of this size is multidivisional structure (Levin & Levin, 2007). This is the structure that Procter and Gamble use to build an innovative culture. It enables the firm to meet its objectives in business and remain competitive with the dynamism observed in the global market.

Multidivisional structure (M-form) as was initially designed brings in three main benefits to a c operation. First, it facilitates comparison between divisions thereby improving allocation of resources. Secondly, enables corporate managers to monitor performance of individual unit more accurately thus, simplifying control. Thirdly, it stimulates innovation within the corporation in improving individual division performance in comparison to other divisions (Loosemore, 2003). The multidivisional structure at Procter and Gamble comprises of differentiated operating divisions representing profit centers or separate businesses. In this structure, the corporate directors and managers delegate day-to-day responsibilities to divisional mangers. The divisions have distinct functions with specific functioning hierarchy.

Initially Procter and Gamble structured in management was along geographic territories that resulted in more than 100 business units. This structure of management compromised the corporation performance through inefficiency in control and supervision of the business units. In the 2005 organization program, a change in the organization structure reflected five product-based business units globally. These units comprise of; Health Care; Fabric and Home Care; Food and Beverages; Baby, Feminine and Family Care products and Beauty care (Axson, 2010).

The management structure of 2005 was introduced to change the existing organization structure that inhibited diversity necessary for the corporation's growth. The employee mindset of life time employment and the conservative management structure hindered the smooth operation of a company with potential to explore wider base of operation. The program sought to incorporate performance-based employment relations with a decentralized management structure. In the 2005 organization structure, control and decision making was intended to fall under the divisional managers who would delegate obligations and responsibilities in accordance to the overall objective, mission and targets of the company. The decentralized management structure targets to incorporate dynamism from the market the corporation operates in a reduce bottle necks in decision making.

The program although, implemented with some challenges, brought the corporation to a higher level of diversity incorporating consumer needs and the concerns of its employees. The company was in a position to consider the different markets and their particular needs. With little effort to adapt to regional cultures in operations the company also incorporated different leadership style by recruiting employees locally. This ensured that the corporation was capable of bringing diversity of culture and breed a workforce that was reflective of the market needs. To avoid differing diversities in operations, the corporation has provided training to the employees. This provides them with a capacity to mainstream market diversity in to the corporations' core objective.

Decision making in the corporation is made at the divisions with little directive coming from the corporate directors through memos advising on the overall strategy of the corporation. Day-to-day decisions are undertaken by the division heads through their junior officer who are obligated to come up with a plan of action. This measure support innovation in the company as it affords freedom and responsibility in action by the mangers. The decentralized structure also brings in a sense of ownership that is seen among the employees of Procter and Gamble. The employees participate in the operations of the corporation in a way to reflect commitment that contributes to consumer loyalty (Hofstede & Hofstede, 2009).

Research and Development

Research and development entail the process of creating brands and innovative measures to keep up with the changes in the markets as well as meeting customer needs. Procter and Gamble has a detailed measure of attending to the needs of the market through collecting information about a market of interest and reflecting the characteristic of the specific market in their product. In as much as the corporation has standardized products for its market differentiations to reflect the regional differences of the market are incorporated. The corporation has created a diversified product range that reflects the different market needs and the cultures of different regions. The Employees at Procter and Gamble are encouraged to come up with recommendation measures to capture the different interest of their regions of operations. This is through the provision of market research funds and skill full utilization of funds by the employees.

The corporation also uses patent rights to capitalize on market capture and create a monopoly for product it produces and trades in. It has been observed that the corporation uses other products produced by companies willing to associate with their brand name to improve their profitability. This measure is seen to promote the business expansion interest by allowing for a wider market capture. Shareholders' interests are also increased as well as promoting the employee motivation by creating job security. Technology advancement in development of product is also encouraged thus, putting the company at the forefront to stamp their authority in market leadership.

Marketing

Effective marketing strategy at Procter and Gamble has enabled it to determine and meet customer needs, potential performance of a product in target markets and ideal location for their outlets and operation centers. Procter and Gamble undertake its marketing obligation with commitment geared towards attaining the maximum gain considering the consumer needs. The perspective of consumer needs puts the corporation at the forefront of capturing market needs and earning higher revenues in operations. Information gathering precedes any marketing venture. This is where information on target market needs and their cultures are used to determine the ideal products for a market and come up with a marketing venture for the product.

Marketing ventures undertaken for specific market are not necessarily global in perspective. Rather they are reflective of the market targeted and the cultures observed in the target market. Essentially the corporation is in a position to present to a particular market the products using position, price, promotion and place dependent on the characteristic of the market.

Low price accompanied with large scale promotions used by the company when introducing new products in the market. This type of marketing facilitates considerable knowledge in the market about products and the subsequent promotional activities create a sense of loyalty (Levin & Levin, 2007). The corporation constantly comes up with marketing strategies that are geared at attracting the attention of the consumers as well as promoting brand loyalty. Such a marketing strategy is seen when the corporation was introducing Gym wear products as an addition to their product range. This venture led to the corporation increasing their revenues at the end of the second year after the introduction of the new products.

Finance

Procter & Gamble uses six components that sum up financial accounting practice. These are: accounting policies, flexibility in accounting, disclosure, accounting strategy, accounting distortions, and potential red flags. The six components help stakeholders in the company finances determine financial performance and viability of the company. In its operation years the company has maintained a good history in payment of dividends. This aspect has promoted investor confidence and sufficiently serviced the company's performance in the financial market.

For its various business segment the company observes decentralization in key decision making thus allowing different divisions in business to practice flexibility in financial decisions. This aspect contributes to the development of markets and revenues… READ MORE

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