Procter & Gamble : Organization 2005 and Beyond



Authors: Ravi Madapati,
Faculty Member,
ICMR (IBS Center for Management Research).

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Corporate Background

P&G was one of the most well-known consumer goods companies in the world. For the year ended June 30, 2002, P&G reported revenues of $40.2 bn. The company was in the Fortune Global 50 list. It owned several well-known brands that were sold in over 140 countries to nearly five billion consumers . P&G has operations in North America, Europe, Middle East, Africa, Asia and Latin America. P&G has five main business segments: Fabric and Home Care; Baby, Feminine and Family Care; Beauty Care; Healthcare; and Food and Beverage. Fabric and Home Care was the most important segment, accounting for nearly a third of P&G's total sales. The division dealt with cleaning products for clothes, surfaces, and dishes. Key brands included Bold and Tide laundry detergents, and Cascade dishwasher powder.

Baby, Feminine and Family Care segment produced tissues and paper towels, feminine protection products, nappies (diapers) and baby wipes. Well-known brands in this category were Bounty paper towels and Tampax tampons. Beauty Care products included deodorants such as Old Spice, Sure and Cover Girl, and Max Factor cosmetics.

The segment also produced fragrances, shaving products, and shampoos such as Head & Shoulders and Pantene brands. Healthcare products ranged from prescription drugs to toothpastes such as Crest, as well as Pepto-Bismol and pet foods. Food and Beverage produced cooking oil, Pringles snacks and peanut butter. It also offered drinks like Sunny Delight and Folgers coffee.

Corporate History

William Procter and James Gamble founded P&G as a partnership in 1837 in Cincinnati, Ohio by merging Procter's candle making company with Gamble's soap business.

The company grew to $1 mn in sales by 1859. P&G's initial foray into branding was The Moon and Stars, a trademark that appeared on all company products starting in the early 1860s. In 1887, P&G became one of the first companies in US to offer a profit-sharing program for its employees. In 1924, P&G was one of the first companies to create a market research department to study consumer preferences and behavior. The company's marketing organization and brand management system began to evolve in the early 1930s. In 1933, P&G's Oxydol soap powder sponsored a radio serial program.

P&G had been a late globalizer. But after World War II, P&G began its international expansion in right earnest. In 1948, it established an overseas division while opening its first Latin American subsidiary in Mexico. P&G entered Europe in 1954, Saudi Arabia in 1961 and Japan in 1973. By 1980, P&G was operating in 23 countries and reporting over $10 bn in annual sales. By the mid-90s, over half of its sales came from outside US. As its global expansion progressed, P&G continued to modify its structure and internal processes to maximize global leverage. Various initiatives were launched to facilitate exchange of knowledge and best practices across the company.

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