Abstract

In 1998, Procter and Gamble's (P&G's) earnings per share fell below what Wall Street had got used to. Revenue growth, which had varied between 1.4 percent and 5.5 percent between 1995 and 1999, was also well below P&G's internal target of 7 percent. Revenue growth was slowing down particularly in developed markets due to the maturity of established brands. In an effort to reinvigorate growth, P&G announced a corporate restructuring programme, named 'Organisation 2005', in September 1998. The goal of the programme was to improve P&G's competitive position and generate operating efficiencies through more ambitious goals, nurturing greater innovation and reducing time to market. But as the programme was launched, a series of problems cropped up. CEO Durk Jager resigned and the company lost almost one-third of its market capitalisation in a single day. The case gives an in depth analysis of what went wrong with the programme and how it was revived by the incumbent CEO Alan Lafley.

Learning Objectives

The case is structured to achieve the following Learning Objectives:

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Keywords

Procter & Gamble, Organisation 2005, Corporate restructuring, Global business environment, P&G, Consumer non durables, Durk Jager, Alan George Lafley, Fast moving consumer goods, Old Spice, Camay, HLL-Hindustan Lever Ltd, Cost cutting, P&G CEO quits, Marketing