An Overview Of The Proctor And Gamble Business Commerce Essay


Procter & Gamble is a company with more than 100 years on business, and is a clear example of a successful company. Procter and Gamble was founded in 1837 and incorporated in Ohio on May 5, 1905. It began as a small family operated soap and Candle Company, and now provides products and services of greater quality and value to consumers in over 180 countries. Procter and Gamble, in conjunction with its subsidiaries provides branded consumer goods products.

Procter and Gamble also makes pet food, water filters, snacks and beverages. More than 20 of Procter & Gamble's brands are billion-dollar sellers. These include Actonel, Always/Whisper, Braun, Bounty, Charmin, Crest, Downy/Lenore, Folgers, Gillette, Aims, Olay, Pampers, Pantene, Pringles, Tide, and Walla, among others. In 2001 Procter & Gamble bought Clairol and in 2003 also bought the majority of Walla. Its purchase of Gillette in late 2005 was its biggest buy in company history.

Procter and Gamble's structure or operation matrix is divided in three main global business units:

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1. Beauty

2. Health & well being

3. Household Care

Procter & Gamble has seven reportable segments:

1. Beauty: Includes cosmetics, deodorants, fine fragrances, hair care, personal cleansing and skin care products, primarily under Head & Shoulders, Olay, Pantene, Cover Girl and Walla brands.

2. Health Care: Includes oral care, personal health care and pharmaceuticals.

3. Fabric Care and Home Care: Includes laundry detergents, fabric enhancers, dish care, surface care, air care and commercial products.

4. Snacks, Coffee and Pet care: Includes snacks, coffee and pet food.

5. Baby Care and Family Care: Includes diapers, baby wipes, bath tissue, and kitchen towels.

6. Blades and Razors: Includes men's and women's blades and razors.

7. Duracell and Braun: Includes batteries, electric razors and small appliances.

The household care segment accounts for twenty seven percent of Procter & Gamble's net earnings, the greatest...

2. P&G Change Process 2005:

A reliable change management plan is often required to overcome workplace resistance when employees are presented with a new way of doing things. Change management is a strategy .designed to transition from the status quo to some new ideal way of doing business. Crystals, a growing telecommunications company, finds itself in a very dynamic industry that along with frequent advances in technology will dictate that it adapt to rapid and persistent changes. Developing a successful change management plan for Crystals will have three distinct goals: optimize flexibility, promote innovation, and sustain change. Change management at Crystals will involve identifying the strengths and weaknesses of departments within the company and applying behavioral techniques that will aid in supporting the change. The change management plan will also need to consider the viewpoints of the leaders who are responsible for carrying out the change and the department workers who are being affected by the change. Finally, this plan will involve deliberate planning and implementation and above all else soliciting the involvement of those being most affected by the change and rallying their support.

There are very few working environments where change management is not important.

leader looks for change, knows how to find the right changes and knows how to make them effective both The word changes is generic, as Druker (1999) say, Change leader sees change as opportunity. A change inside and outside of organization.

Change management is a basic skill in which most leaders and managers need to be competent.

The basic principles of change management, and provides some tips on how those principles can be applied.

When leaders or managers are planning to manage change, there are five key principles that need to be kept in mind:

Different people react differently to change

Everyone has fundamental needs that have to be met

Change often involves a loss, and people go through the "loss curve"

Expectations need to be managed realistically

Fears have to be dealt with

2.1 Organizational performance improvement process:

Change management is not a stand-alone process for designing a business solution.Change management is the processes, tools and techniques for managing the people-side of change. Change management is not a process improvement method. Change management is a method for reducing and managing resistance to change when implementing process, technology or organizational change. Change management is not a stand-alone technique for improving organizational performance. It is important to note what change management is and what change management is not, as defined by the majority of research participants. Change management is a necessary component for any organizational performance improvement process to succeed, including programs like: Six Sigma, Business Process Reengineering, Total Quality Management, Organizational Development, Restructuring and continuous process improvement.

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Change management is about managing change to realize business results Recognize that both the engineering and psychological aspects must be considered for successful business change. While many techniques can be employed to design the solution to a business problem or opportunity (i.e., the business change), change management is the process, tools and techniques to manage the people-side of that business change to achieve the most successful business outcome, and to realize that change effectively within the social infrastructure of the workplace. Change management is a required competency in business today. The shift in the core values of employees to empowerment, ownership, and accountability has created a work force that will embrace change as long as they are part of the process. With the introduction of today's new business values, employee resistance should be expected. In the absence of change management, this resistance can cripple a business...Different people have different preferences for where they like to be on this spectrum. Some people like to be at the STABILITY end of the spectrum, they like things to be the way they have always been. Other people like to be at the CHANGE end of the spectrum and they are always looking for something different and new. A manager's responsibilities need to be revised to account for what employees need most during tough economic times. Now let's have a look on Procter & Gamble workshop which aligned with what the organization had already learned in the context of plant closures. We found the closures did much less damage when:

* Managers announced the date of closure and key milestones far in advance and also detailed how employees and members of the community would be affected.

* Managers fully explained to employees and the community the business reasons for the closure.

Change process:

An early model of change developed by Lewis described change as a three-stage process. The first stage he called "unfreezing". It involved overcoming inertia and dismantling the existing "mind set". Defense mechanisms have to be bypassed. In the second stage the change occurs. This is typically a period of confusion and transition. We are aware that the old ways are being challenged but we do not have a clear picture as to what we are replacing them with yet. The third and final stage he called "freezing". The new mindset is crystallizing and one's comfort level is returning to previous levels. This is often misquoted as "refreezing" (see Lewis K (1947) Frontiers in Group Dynamics).

Levin's equation:

The Levin's Equation, B=Æ’(P,E), is a equation of developed by Kurt Lewis. It states that behavior is a function of the person and their environment.

The equation is the psychologist's most well known formula in social psychology of which Lewis was a modern pioneer. When first presented in Levin's book Principles of Topological Psychology, published in 1936, it contradicted most popular theories in that it gave importance to a person's momentary situation in understanding his or her behavior, rather than relying entirely on the past.

* Managers gave the employees affected the chance to find other jobs within the company or help them with resources for finding a job outside the organisation.

* Managers expressed their human concern, both publicly and privately, to affected employees and officials of the community.

In this way, the key attributes of predictability, understanding, control and compassion were demonstrated.

2.2 major implication of change and intersect

The major implications of change are at Intersect Investments, as well as how the employees are reacting to the change. It will discuss the different reasons why Intersects employees are being resistant to this change and provide options to move them from being resistant to being committed to the change. This paper will describe in detail how Levin's Model of Change will help Intersect Investments make the transition to a customer intimacy model. It will also address the leadership styles, including transformational leadership and charismatic leadership, which will lead to the success of the change implementation, as well as measures to monitor the progress of the change. Lastly, it will discuss several future leadership challenges that Intersect Investments might face in the next several years.

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Major Implications of Change at Intersect Investments

Intersect Investments' CEO, Frank Jeffers, recently identified a new vision for the company. He stated that Intersect Investments will "provide a broad set of products and services to consumer and small business customers using a model of customer intimacy that will build long-term relationships based on trust and value to the customer" (Scenario: Intersect Investments, p. 1). This type of a change is going to alter the current organizational culture at Intersect Investments. According to McCone and Von Glow (2005), organizational culture is "the basic pattern of shared assumptions, values, and beliefs governing the way employees within an organization think about and act on problems" (Chap. 16, p. 2). In order for Jeffers' vision to become a success, the organization's culture must change, and the employees attitudes and beliefs must change with it .Intersect Investments'

Management team is currently facing a great deal of resistance from employees. They have had several meetings in which they have given reasons why they do not believe the switch to...By describing the landscape of unmet customer needs and analyzing where new offering have worked before, you can chart a path that will produce successful innovations time after time Anthony (2006).  Understanding customer needs and building lasting relationships are important in helping an organization innovate. Businesses innovate through unmet customer needs. Customers express their needs that have not been met and organizations innovate to meet those needs.  This is why P&G is still leading the domestic product industry because, it listens to customers unmet needs and innovates aggressively to meet those needs.  For instance, when babies were wearing cloths diapers, they were very leaky and labor intensive to wash; at that time, mothers needed an innovative product on the market to help fix the labor intensive part of washing the cloth diapers as well as the leakage. P&G answered this innovative call by introducing a revolutionary product called "Pampers" into the market. 

2.3 Change often involves a loss, and people go through the "loss curve"

The relevance of the "loss curve" to a change management programmed depends on the nature and extent of the loss. If someone is promoted to a more senior position, the 'loss' of the former position is rarely an issue because it has been replaced by something better. But if someone is made prospect of getting a new job, there are many losses (income, security, and working relationships) that can have a devastating effect.

The aforementioned are the primary features of change and P&G management has recognized that. Sometimes, what employees do not understand is the impact of change on their professional and family lives; and it is the responsibility of management to communicate this impact to employees both positive and negative; but mostly, management overemphasizes on the positives and pays little attention on the negative impact.  Kinaki (2007) mentioned. Managerial changes viewed as good and necessary can be seen by employees as intimidating and even terrifying. But when companies don't take this into account, and force changes that employees aren't prepared to handle, those companies risk alienating their workers, losing money and, in the end, seeing those great strategic changes fall flat.

This is a communication strategy that P&G has been successful in implementing corporate wide. The company ensures that the length and breath of all its units understand the impact of any change mostly at the professional level.  Management ensures that everyone involved is interested in the change process.  The more employees are interested in the change process the greater the success of the change or innovation. The most important element here is motivation. 

2.4 Expectations need to be managed and marketing strategy:

The relationship between expectations and reality is very important. You can see this in customer relations - if a supplier fails to meet expectations then the customer is unhappy; if the supplier exceeds expectations then the customer is happy.

All aspects of the marketing process with modules for marketing strategy development and deployment, concept development and testing, pricing strategy, package design, advertising development, media planning, direct marketing, interactive marketing, and sophisticated new know-how and tools for Internet-enabled product development and testing, among others.

Hunter Hastings, chairman and chief executive (formerly CEO of Magnify), who has an extensive background in brand marketing and corporate marketing services; Dan Maurer, president and chief operating officer (formerly general manager of P&G i-Ventures), who has extensive international marketing and management experience in P&G European and U.S. operations; Wade Miquelon, chief financial officer (formerly finance manager for P&G e-commerce area, general partner for P&G Internet venture fund and CFO for its Thailand operations), who brings experience in M&A, corporate treasury, new business development, and strategy development; Pete Farmer, vice president corporate development, (formerly Magnify senior vice president sales and business development) who is an experienced and successful development executive in established and start-up businesses.

2.5An open system approach to organizational analysis

Strategic management in organization is continually striving to find better tools of analysis .the open system approach is slowly gaining more and more enthusiastic organizational managers develop in their appreciation and understanding organization as living system ,they recognize that the best way to understand them is to treat them as such.

An open systems approach to organizational analysis is based on three major assumptions:

The only meaningful way to study an organization is to study as a system.

Organizations are open system that exchange with the environment.

Organization exists in tension with manifold stakeholder who have many competing values and interest .adaptation requires finding a dynamic point of equilibrium between these changing and new realities in the environment.

` 2.6 Organizational culture and structure

Good Sport is a company that seen a large amount of success within their first 15 years of existence. The organization was founded by former professional basketball player Jason Poole who has now become an icon for physical fitness and wellness (2004). His popularity along with image, have been instrumental in the marketing and success of the various products manufactured and sold by Good Sport. Jason Poole, along with his senior executive team, have reached a pivotal stage where increasing there portion of the physical fitness market share is a goal that is well within reach.

With the success in sales along with an increased popularity in the organizations home state of Florida, senior management has developed a strategic plan that will allow them to expand to the neighboring states of Georgia and the Carolinas. In order to accomplish this task in a timely and efficient manner, the executive staff must ensure that the proper leadership is in place allowing all levels of corporate structure to be led in the desired direction.When looking at the structure of Good Sport one will find that the managerial hierarchy has a direct effect on the culture of each department. In a company that has a CEO, followed by an effective managerial team that ranges from Vice Presidents to team managers, each department will have their own specific culture and understanding this will allow leadership to maximize the production of the employees in which they are charged to lead. As a company, Good Sport has a culture that consists of competitiveness, innovation and commitment, all characteristics and values that are a reflection of the personality of Jason Poole and have become a key factor in his success.

In times of significant change rational thought goes out of the window. This means that people often fear the worst - in fact, they fear far more than the worst, because their subconscious minds suddenly become illogical and see irrational consequences. Egg:

Our company is reducing staff, which means...

They will make people redundant, and...

I'll be the first to be kicked out, and...

I'll have no hope of getting another job, and...

I won't be able to pay the mortgage, so...

I'll lose the house, so...

My family won't have anywhere to live, and...

My wife won't be able to cope, so...

She'll leave me, and...

I'll be so disgraced the children won't speak to me ever again.

Such fears need to be addressed, e.g. by helping people to recognize that most people who are made redundant find a better job with better pay and have a huge lump sum in their pocket! Or, where appropriate, by explaining how the reductions in staff numbers are going to be achieved (by natural wastage or voluntary redundancy).

3.0 Environmental Risk Analyses of Procter & Gamble:

Companies and organizations must assess, mitigate, and monitor certain risks involved with their daily operations. A specific area of risk that must be identified is that on the local and global environment. Accidents, natural events, and deliberate assaults are all possible ways for an enterprise to cause pollution or other environmental risks. In order to limit, and hopefully prevent these situations, environmental risk management places a strong emphasis on targeting the problems that could arise and implements a system of metrics that help with prevention. According to Environmental Risk Assessments (ERA), which Procter & Gamble (P&G) typically calls "human and environmental safety assessments," for all products, is key to building P&G reputation as a good corporate citizen and maintaining a high level of public trust? This commitment stems from a long-held philosophical commitment that marketing safe products is a core business responsibility, both morally and in a business sense. Given these values, and the importance of ERA to P&G's future market access, the tool was well accepted by management and employees. Despite the company's success integrating ERA into core business practices, it still faces a number of practical challenges. These include balancing the time and resources spent on complex ERA with the speed at which the company can bring new products to market, balancing a desire for public transparency with the potentially negative business consequences of releasing too much competitive information, and overcoming external perceptions related to the use of "risk assessment" as a methodology to evaluate consumer products. Innovation is an extremely important driver for P&G and drives the number of environmental risk assessments carried out by the company. As the company is continually developing innovative new products, P&G submits more "new substance notifications" to the US Environmental Protection Agency, and its counterparts around the world than most, if not all, other consumer product manufacturers. Thus, the company must conduct more risk assessments to support these new substance notifications than companies that use existing substances in the manufacture of products .P&G feels its risk-based approach and tiered ERA feeds more comprehensive information into R&D, which ensures products are safe, without unnecessarily delaying innovation and delivery of products to market. This in turn, reduces operating costs for the company. In this way, P&G directs more of its resources toward product improvements and key product safety issues. This avoids investing in product development only to have that product sent back to the drawing board based on risk assessment results, or investing resources in unnecessary product testing that may have no real relevance to safety.

4.0 Implementation of change organizational P&G:

Countless change agents and other organizational interventionists fail to achieve desired results because they ignore or are unaware of the need to closely align change strategy with organizational personality. Durk I. Jager, former CEO of Procter & Gamble Co., was clear about his goals when he took office in 1999: shore up overseas operation and grow top brands. These measures would remedy sagging sales and redeem P&G image as the leading global marketer of consumer products. However, Jager's strategy for achieving these goals was perceived as being so abrasive, so discordant with P&G personality, which his management team rebelled against him. He was forced to resign in less than two years. Alan G. Lafley, a longtime executive who understood and respected the company's culture, took office in 2000. Through a combination of wisdom, humility, personal engagement, and a careful alignment of change strategy to corporate personality, Lafley has turned P&G into one of the great corporate success stories of the twenty-first century. According to P&G Chief Information and Global Services Officer, Filippo Passerini, the company envisioned itself "fundamentally transforming the operation through the use of innovative technologies that will help the entire P&G to work smarter, faster and more efficiently." In line with implementing a service-oriented architecture (SOA) system to improve data and files accessibility, P&G adopted a new system - the online workspace system. Online workspace systems are to build up an inventory of applications to deliver information for its global business units making them available as services through the portal. This process allows employees and managers to reuse systems and codes from other parts of the business (purchasing, marketing, logistics, manufacturing, etc). This new system includes a security module to protect information and a service platform to allow date from a variety of sources that could be accessed on demand. P&G aims to improve and support decision-making while also increasing internal and external people's access to knowledge and information (Mari, 2008). There is no particular person who drives the change but the impetus for implementation of online workspace systems lies on the necessity to tap virtual working opportunities while also reducing workload due to web-based space and chargeback reports. P&G realizes that to accommodate smarter working practices, there is the need for a fully integrated web-based facilities management environment. SOA underpins an online portal that will aggregate business information for P&G 32, 000 managers. Dry Paul Hersey, who is closely associated with the development of situational leadership theory, suggested in a fairly recent presentation that: "... a situational leader is anyone, anywhere who recognises that influencing behaviour is not an event but a process. The process entails assessing followers' performance in relation to what the leader wants to accomplish and providing the appropriate amounts of guidance and support .According to change management guru John Kotter "'s organizations need heroes at every level. To truly succeed in a turbulent world, more than half the workforce needs to step up to the plate in some arena and provide change leadership." To my mind, the idea that effective leaders change their leadership styles to fit the situation is an expansion of Robert Blake and Jane Mouton's "Managerial Grid" theory, which suggest that the effective leader "moves appropriately" along the spectrum of task versus retaliation. According to a recent study [Baker, Brown], successful use of situational leadership relies on effectiveness in four communication components:

- Communicating expectations

- Listening

- Delegating

- Providing feedback

The Hersey and Blanchard Leadership Model takes this all a bit further and introduces the notion that the level of development or maturity of the followers is also something that the leader takes into account.

"Maturity" in this context to do with the preparedness and ability of a person to take responsibility for directing his or her own behavior in relation to a specific task in a specific situation.

4.0 Distinct Leadership Styles:

Clearly the appropriate leadership style to use in a given situation is going to be determined by the leader's assessment of the maturity level of the followers in that specific situation. The leader will move appropriately long the task-directive versus relationship-supportive spectrum.Four distinct leadership styles are identified in the Hershey and Blanchard Leadership Model - each reflecting the evolving levels of maturity of the followers:

(1) Directing - the leader is very directive providing clear, specific instructions

(2) Coaching - whilst the leader retains control of decision making, he/she encourages two-way communication and helps build confidence and motivation on the part of his/her people

(3) Supporting - the people no longer need the leader to tell them what to do or to make the decision so decision making is shared

(4) Delegating - when the people are ready, willing and able the leader delegates full responsibility to them

Whilst I agree with this style of flexible leadership, I have to say that, in a change management context, extending leadership throughout an organization in the manner suggested is asking a lot of most organization's as it requires a complete and total change of culture Also, all of this is dependent on the supporting framework of change management processes that are derived from adopting a programme-based approach to leading and managing the change.

5.0 Conclusions and Recommendations:

A need for growth in any organization to stay a viable entity must occur. Organizational change is inevitable.   Just like anything in life, markets and cultures change which require constant attention and preparation. In order to be successful in any market, an organization has to be able transform itself to the needs for the market. Crystals is no stranger to change. Crystals is a telecommunication company with over 2500 employees and a gross income of approximately $200 million a year. Products included in there list of services include data cables, wireless solutions, and network development. The product profile is data cables, wireless solutions and network development. Because of the nature of business, Crystals is likely to make technology and administrative changes on a regular basis. In a very competitive market like communications, there is always a necessity for change. Challenges in reorganization deal mainly with the Sales/Delivery and Marketing sections. Change is never an easy task, especially within organizations because so many people are affected. Resistance to change and lack of flexibility endanger the progress of an organization, limiting its powers. This may lead to stagnation and even decline. An organization forced to change due to internal or external circumstances, and the inherent flexibility of the organization could determine its future.As a consumer goods manufacturer, P&G seize every opportunity that came their way most especially in placing emphasis on the role of technology is further brand building, innovations and process advancements. Expanding technical capacity lessened the duplication and inefficiency though IT is considered to be a cost. In optimizing the business, P&G shift its culture from a technology-based to solutions-based company. The paradox though is on using IT systems and processes and arriving at the solutions. In realigning the P&G approach, the company run as business whereby the changes is experienced on being a cost center where the focus is only on cost reduction to (cost, service levels, value creation and service management. Virtualization, personalization and real-time decision-making through corporate portal, ECM and online workspace systems are the main strategies. Strategic analysis has allowed us to understand the underlying objectives of change were much necessary on time. The Implementation of change is took time but P&G took the competitive advantage which he has reward. The assumptions depend on the learning about the firm accounting practices, about its strategic choices and from the ratio analysis.

Some key factors needed for the forecast of P&G:

Sales' growth

EBITDA margin

Interest rate on beginning debt

Tax rate

Operating working capital to the sales

Operating long term assets to the sales

Debt to capital