Restructuring P&G

Procter & Gamble was established in 1837 by William Procter, a candle maker, and his brother-in-law, James Gamble, a soap maker, when they merged their small businesses. They set up a shop in Cincinnati and nicknamed it "porkopolis" because of its dependence on swine slaughterhouses. The shop made candles and soaps from the leftover fats of the swine. By 1859, P&G had become one of the largest companies in Cincinnati, with sales of $1 million. The company introduced Ivory, a floating soap in 1879 and Crisco, the first all-vegetable shortening in 1911. In the period between the 1940s and 1960s, P&G embarked on a series of acquisitions. The company acquired Spic and Span (1945), Duncan Hines (1956), Chairman Paper Mills (1957), Clorox (1957; sold in 1968) and Folgers Coffee (1963).

In 1988, the company started manufacturing products in China. P&G became one of the largest cosmetics companies in the US when it acquired Noxell (1989) and Max Factor (1991). After witnessing a period of significant organic and inorganic growth, P&G began to face several problems during the 1990s. In the early 1990s, a survey conducted by the consulting firm, Kurt Salmon Associates,⁴ had revealed that almost a quarter of P&G's products in a typical supermarket sold less than one unit a month and just 7.6% of the products accounted for 84.5% of sales. The remaining products went almost unnoticed by consumers. Complicated product lines and pricing were also causing problems to retailers who had to struggle with rebates and discounts...