Organizational Strategy MBA-FP6024
March 4, 2018
By: Alexandra Pyke
P&G resources and capabilities to execute the business strategy
Procter & Gamble created its own unique capability which it is called Products Research. In higher strategic levels product research integrates knowledge about 3 primary areas first is shopper/ end user insights, then there are business models, brand identity& business needs and lastly is product/ package technologies and design. The intersection between the three is the key. Consumer needs, business needs, and what is technically possible-all combined in one thinking process. This process is the key because it recognizes that product is a holistic integration of the formula or technology, the package that in combination focus on solving the business or product problem (Thoughtleadership.yourencore.com, 2018).
P&G’S structure and management system design
Proctor and Gamble has a product-type divisional organizational structure and it considers product-based grouping as the basis for developing and maintaining management teams. Also this structural characteristic determines the basic workforce units that support the consumer good business. Procter and Gamble’s organizational structure has 3 major characteristics which are Product-type division, Geographical division and Functional group.
The product-type division helps to group the products into the 5 categories of beauty, grooming, health care, fabric & home care and baby/ feminine & family care. In this setting each division addresses business concerns specific to its own group of product lines.
While the geographical division is concerned with managing regional operations in the current 6 geographical division which are North America, Europe, Asia Pacific, Grater China, IMEA (India, Middle East and Africa) each area has its own management team that focuses on the regional market condition which helps with internal operations in the consumer goods industry.
Lastly there’s the Functional group which ensures that its organizational structure satisfies fundamental business functions such as establishing support for the company’s CEO and his staff. Also functional groups provide P&G a way to integrate its global consumer goods operations because it creates a corporate hierarchy that reflects levels of management and decision-making in the business. P&G has an organizational structure of 20 areas which each has its own executive heading.
The advantages of this organizational structure is its support for product innovation, as well as being able to effectively address regional market differences through its corporate structure. These things help the success and growth of the business based on the appropriateness of this structure. However the disadvantage is that it is mainly based on consumer goods, market penetration and acquisition which leave product innovation as an area for improvement (Smithson, 2018).
P&G ethical dilemmas and governance issues
Palm oil is a common substance found in P&G’s line of beauty and household care products. In being one of P&G’s major suppliers of palm oil, BW Plantations is said to operate in the region of Kalimatan, located in Indonesia (GeenPeace pdf). However, BW Plantation and its subsidiaries are among the top companies known for their unethical practices of deforestation in the global business world(Izzo, 2018).
In supporting the unethical practices of its major palm oil supplier, BW Plantations, Procter and Gamble have extended those affected by the unethical situation. There are various stakeholders to be considered when analyzing this case. Internally, P&G’s A.G. Lafley who serves as Chairman of the Board, President and Chief Executive Officer and Werner Geissler who serves as vice chairman and advisor to the CEO are stakeholders within the upper level management of the company (P&G executive team) (Izzo, 2018).
With the deforestation and the effects that BW Plantations are having there are a few different ways to look at the situation ethically:
Each of these are different ways to look at the situation in an ethical manner and each of them say that this situation with BW Plantation directly effects various groups such as customers, the community and the environment all seem to depict a negative out look for P&G.
- Individualism is the ethical theory that values the business, the owner’s choices, and business profits (Izzo, 2018).
- Utilitarianism is the ethical theory that values the happiness of all conscious beings, often interpreted hedonistically as pleasure and the absence of pain, but also sometimes interpreted as the satisfaction of desires (Izzo, 2018).
- Kantianiam is the ethical theory that values rational decision-making, autonomy of individuals, honesty and freedom (Izzo, 2018).
- Virtue theory is the ethical theory that values character traits that promote wellness or flourishing of individuals within a society (Izzo, 2018).
Izzo, M. (2018). P&G: Unethical Scandal (2014). [online] Businessethicscases.blogspot.com. Available at: http://businessethicscases.blogspot.com/2014/11/p-unethical-scandal.html
Smithson, N. (2018). Procter & Gamble’s Organizational Structure for Managing Products – Panmore Institute. [online] Panmore Institute. Available at: http://panmore.com/procter-gamble-organizational-structure-managing-products
Thoughtleadership.yourencore.com. (2018). Cite a Website – Cite This For Me. [online] Available at: https://thoughtleadership.yourencore.com/your-encore-consumer-goods-blog/p-g-s-unique-competitive-advantage-in-innovation-2