Proctor and Gamble (P&G) was incorporated in 1905 in Cincinnati, Ohio and is still headquartered there today. It is the twenty-fifth largest company in the United States by revenue, and employs 138,000 worldwide. P&G competes in the consumer goods industry, and boasts ownership of over 250 brands including Gillette, Bounty, Tide, IAMS, and Crest.
Its products can be found in more than 180 countries around the world. P&G first became an international company when it acquired Thomas Hedley Co. of England in 1930. Since then the company has innovated- and acquired- its way into the large Transnational Corporation it is today.
Primary Activities Research and Development – At P&G, the development of new products plays a vital role in the company’s success. As a result, P&G spends about spends about 4% of worldwide sales each year to fund 7500 researchers that it staffs in 71 countries.
It also holds collaboration agreements with many external partners. More than half of all product innovations come as a result of such agreements. Currently, the company holds about 25,000 active patents. 1
Operations – For its existing products, Proctor and Gamble’s value chain begins here with the acquisition of raw materials, packaging materials, and fuel. P&G uses suppliers to provide almost all inputs to the manufacturing process with the exception of a few chemicals that it produces in-house. Currently, the firm uses a network of over 30,000 suppliers.
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2 After obtaining the necessary inputs, saleable products are created in one of the company’s 131 manufacturing plants, located in 42 countries. In the past, the company has operated using a push-supply system requiring local teams to forecast regional sales and conduct production runs in that same location, but recently the company has implemented a digital-integration strategy that enables it connect with plants around the globe and select the optimal production location considering logistics, shipping costs, supply costs, and distribution costs.
With this system in place production activities have become a significant competitive advantage for the company. P&G has also recently introduced a third-party logistics company into the digital-integration network in order to improve the actual transport of needed input materials from suppliers.
Distribution – P&G has a very strong distribution infrastructure that consists mostly of exclusive-P&G-brand distributors. This enables it to deliver goods to market quickly and more cheaply than competitors. The company has about 5000 key retailers it distributes to around the world.
These retailers include mass merchandisers, grocery stores, membership club stores, drug stores, and high-frequency stores. No retailer, other than Wal-Mart, represents more than 10 percent of total sales. Also, as noted in the section above, P&G’s recently-implemented integration system gives the company access to real-time distributor data, which allows it to more accurately meet consumer demand.
Marketing – P&G relies heavily on marketing and advertising to sell its products. The company spends about $80 million dollars a year to maintain a large sales force, fund advertising campaigns, and execute marketing strategies. One executive at the company attributes 60 percent of yearly sales to “events,” which include product promotions, price cuts, and other incentives.
3 These events are planned by brand-strategy teams that develop overall strategies for each product. Brand-strategy execution has played a significant role in the success of P&G’s past marketing efforts, resulting in high levels of brand recognition and trust among consumers and a significant competitive advantage.
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Sales & Marketing department of any hotel is the lifeline of the hotel. It is the department which ensures that the hotel stays in the news (for positive activities), has near 100% occupancy at rates which add to the bottom line of the hotel Balance Sheet. In a nutshell, Sales & Marketing department is responsible for bringing the business to the respective hotel by way of – Occupancy ...
Secondary Activities Materials and Equipment – Purchasing Managers use a software called MatrixOne to calculate raw materials- and commodities- needs as well as capital equipment needs, and order from suppliers across the globe The software is connected to a collaborative industry network, and helps managers coordinate transportation logistics for the ordered goods, and determine the best holding location for them.
Because of its size and economies of scale, P&G can command significant buying power, which enables it to negotiate advantageous prices with suppliers.
Systems and Solutions –MatrixOne software is also used by P&G to manage and integrate all of the IT systems and work processes of the entire company. The software is specifically used to support product flow (as noted above) for the production and distribution activities as well as support the efforts of R&D and marketing.
InnovationNet – This software allows R&D employees at P&G to collaborate with fellow P&G researchers as well as outside researchers partners and entrepreneurs to generate new ideas and solve common problems. Since its adoption, the software has contributed to a significant increase in new product development.
Human Resources – P&G is known for having effective HR practices that support high employee performance and morale, and result in the effective execution of the company’s primary activities worldwide.
Normal policies include generous compensation, free training programs and flexibility. Also, compensation policies have recently been tied to overall company performance in order to encourage cooperation between international units and ultimately support the company’s transnational strategy.
HR policies have played a valuable role in relation to R&D employees as well, who are so vital to the company’s success. R&D employees are rewarded in the ways noted above, as well as other ways. P&G has been able to attract and retain talented researchers using these policies, which has helped the company to become an innovative industry leader.
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Profit is an important resulting index of companys activity. It is the main indicator of the effect received as a result of the companys operating at the market. Profit can be determined as the difference between incomes and expenses. From economical point of view, profit is the difference between receipts and disbursements, from administrative and accounting point of view profit means the ...
Infrastructure – Each function within P&G’s infrastructure supports at least one of the company’s primary activities, and the financial management function has been especially effective at supporting the distribution activity by helping it to operate more efficiently.
The department recently adopted agent-based modeling, a new analytical technique (and supporting software) that allows the analysts to test a significantly greater amount of “what-if” scenarios.
Using this method, financial management discovered that, even though shipping costs were higher, shipping goods to vendors in a less-than-full truck rather than a full truck was actually cheaper than losing potential sales to stock-outs. This discovery has saved $300 million for the company annually and increased its ability to create value through its primary activities.4
Market Development Organization – The (MDO) is an internal group responsible for understanding the consumer at the lowest local levels and creating go-to-market plans that minimize costs related to these demands. It supports the operations, distribution, and marketing activities by vetting suppliers, distributors, and vendors, and creating roll-out marketing plans.
Global Integration- v Local Responsiveness Procter and Gamble currently faces high global-integration pressure and local-responsiveness pressure, and has taken a balanced position to meeting the conflicting demands by adopting a transnational approach.
The company is seeking to meet global pressures by improving coordination of its already broadly-dispersed primary-value activities, and is seeking to minimize local pressures by consolidating local response teams as much as possible. It is also focusing marketing efforts on its global products rather than local.
The company is seeking to improve coordination of value-activities by increasing communication and knowledge transfer between its core functions – R&D, marketing, distribution, production.
This is being done by connecting each these functions (and external parties such as suppliers, logistics providers, and vendors) through a software network. Essentially, the company can cut costs and more effectively meet consumer demand by accessing real-time vendor- and distributor- data, incorporating it into production- and sourcing- decisions, and then sharing the data with marketing and R&D for the development of more effective marketing strategies and research direction.
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There are many Pressure Groups in the UK which campaign using a variety of methods to force the government to take a desired action. Both types of Pressure Groups (interest or promotional) intend to change the policies of the elected representatives of our country without using politics. It might be said that the actions of Pressure groups were a threat to democracy for many reasons however it ...
At the same time, the company is not ignoring local pressures, but has consolidated local teams into Market Development Organizations (MDO’s), which are responsible for understanding local consumer pressures within larger regions more accurately defined by consumer tastes (rather than national borders) and ensuring that they are accommodated on the minimal level necessary to not lose sales.
So far, P&G has been successful in balancing these pressures, and appears to have structured itself to be able to maintain this.
