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Organizational structure refers to a framework around which group is organized with clearly defined set of duties and responsibilities. With an organizational structure, everyone knows what to do, and who is responsible for which specific task. Organizational structure helps to work in a better way. (Muscarella & Vetsuypens, 2012)More formally, organizational structure is hierarchy of people and positions within organization. It is also represented as character or organization, its values and beliefs. there are many types of organizational structures and an organization follow one of these structures at one time, (Muscarella & Vetsuypens, 2012) but is any exceptional case there may exists a structure different from that is adopted by that organization as whole. In this paper we will analyze different organizational structure in general and structure of Procter & Gamble in particular in order has better understanding.
Proctor & Gamble is an American multinational. The headquarters of company are in down town Cincinnati, Ohio. The company offers a great range to consumer goods around the globe. Due to its expanded operations, P&G is greatest producer of America in household products. It has almost 250 brands in categories including, beauty care, paper goods, laundry cleaning, food and beverages, health care and feminine care etc. Head& Shoulder, Ariel and Pantene are most famous brands around the globe. Almost half of total revenues of P7G come from its top and well known brands. P&G strive to achieve its mission to provide every day better life to its worthy customers around the globe through supply of high quality products and services.
P&G has 127,000 employees in almost 80 countries worldwide. P&Gââ‚¬â„¢s products are sold primarily through grocery stores drug stores, membership club stores and mass merchandise. P&G is a publically owned company, listed on Paris and New York exchanges.
Organizational Structure of P&G:
Organizational structure of Procter & Gamble comprises of two Global Business Units, beauty and glooming and household care. These two Global Business Units are responsible for developing strategies for brands of P&G. the main focus of these GBUs is common customer. Needs of common customers are identified through these global business units to develop, and upgrade products and services, and include innovative features in brands of P&G. Initially P&G had seven business units, there was a president to leads each Global business unit(Muscarella & Vetsuypens, 2012) and each Business unit was completely responsible for profitability of related products and performance was measured and benchmarked against competitors of focused product category. The current structure of P&G is four dimensions, front back hybrid matrix structure. There is a top leader, a
coordination council, which is responsible for defining priorities and solve disputes, subordinates and matrix leaders, with need to balance and coordinate four influences structure.
Global operations of Procter & Gamble comprised of its MDO (Market Development organization). It is responsible of develop market entry programs for P&G at local level. (Dodgson et al. 2006)Market development programs include country specific programs, trade channels and retail customers. Procter & Gamble has organized MDOs along five organizational units that are situated in Latin America, North America, Western Europe, Eastern and central Europe and Asia. Procter & Gamble defines North America, Western Europe and Japan as developed markets and Latin America, CEEMA, Greater china and AAIK as developing markets.
Global business services part of Procter & Gambleââ‚¬â„¢s structure assists the working of global business units in an effective manner. it provides processes, technology, standard data tools, make MDO and GBUs enable to understand business in better way and to better serve customers. Global business services organization of Procter & Gamble has responsibility of providing world class solutions at lower cost, and minimum investment.
The last component of organizational structure of P&G is corporate function. This function is responsible for providing portfolio analysis, (Dodgson et al. 2006) company level strategy, human resources, external relations, treasurer, and corporate accounts, legal and centralized functional report.
Analysis of organizations structure of P&G reveals that it offers global scale benefits to P&G, it makes it possible the local focus to be relevant to its customers in different countries, probably 180 countries around the globe. Organizational structure is present at P&G as its better capability to grow; corporate structure of P&G is based on a framework that enables it to strike the benefits of an international organization with efficiency and speed. P&Gââ‚¬â„¢s global operations always keep it in touch with its local communities. Moreover, efficient governance practices (Child,1972)help to ensure that P&G conducts its operations with high standards and consistent quality improvements. P&G has been utilizing this structure for more than on decade, the structure has been very helpful as it has doubled the capacity to innovate and more than $900 million for company have developed a unique partnership model allowing us to combine our best with the industryââ‚¬â„¢s best.
Other types of organizational structures:
An organization with functional structure, divides its business operations and activities into different functions. There are different departments that are specifically deal with these specific functions such as marketing, production, sales and promotion, finance, Research and development etc. In functional structure, there are well defined responsibilities and guideline to follow that helps these departments to carry their functions efficiently and effectively. Career path of organization is also Cleary defined. (Muscarella & Vetsuypens, 2012)As in functional structure, tasks are segregated on the basis of specialization; there is great opportunity for individuals to excel in their respective field. For instance, if any person has specialization in Marketing, he will be part of marketing department, where he will get chance to excel in hid marketing skills while bringing improved marketing efforts for the company and contributing in its profits.
In such type of organizational structure, there is chance of conflict between departments. for instance, if sales ratio is not going good, marketing and sales department may blame production department for inefficient design of product that customer do not want to purchase despite of efforts of marketing department.
Divisional structure also called product structure. An organization that adopts divisional structure, divides it basic functions such as marketing, finance, sales, R&D, production and design into distinct, self contained units that are efficient enough to perform all basic functions(Child,1972) related to given task. Organizations with divisional structure are autonomous in nature and self contained. These organizations are more responsive as compare to other organizational structures (Muscarella & Vetsuypens, 2012)as they can quickly respond to changing business environment. General Motors Company has also adopted the divisional structure. GM has separate divisions of its different products such as locomotives, SUVs and Sedans etc. each division is can perfectly perform all basic and advanced activities relating to its function.
Different organizations adopt different organizational structures. Every organization selects structure that suits its scale and type of business. Procter & Gamble has adopted hybrid matrix structure that suits its global nature best. It has applied this structure so successfully that it is able to have it as its competitive advantage. As P&G is an international fortune with its business operations worldwide, unique organizational structure offers it benefits on global scale. The structure also provides local focus to be relevant for its customers in more than 180 countries around the globe. The structure of P&G is also easy to understand and carry no ambiguities; it defines role and responsibilities clearly and in precise manner and encourages innovation and creativity.