Procter and Gamble is one of the fastest moving consumer good companies in US, which has received a lot of fame in the global market since 1837 for its people centric policies. The company has been resistant to change over many years with a fixed conservative corporate culture and a strong bond within the company (Us.pg 2018). However, the company came under a stagnant situation with stagnant profit and revenues over the years. Thus, the company decided to bring change in the company to fight the stagnant position. Change was proposed in its management, Human Resource ad organizational culture in order to increase its global revenues. However, the changes were not enough and failed to form benefits in some way or the other. The company faced various issues after the changes took place in its human resources management, employee motivation and quality of product development.
The paper discusses about the leadership and organizational transformation that Procter and Gamble initiated in order to overcome the stagnant position of the company. Further, strategic recommendation has been given by which the company can overcome the challenge in the next five years.
Leadership is considered as the running head of the organization that manage a team and lead the fellow staffs of the company in the right path to achieve the target. Leadership is one of the crucial aspect of that a business holds within itself to help the, run their operations and plans smoothly (Northouse2015). They are the one that sets the vision of the company and plans the way by which it can be achieved successfully. Thus, they are considered as the inspiring vision of the future of the company.
Organizational transformation is considered as a change that an organization wants to implement in their operations and other sectors. Organizational transformation is considered as a process in which an organization uses various strategies it can use to modify their activities (Cha et al.2015). The transformation that a company makes can be complex or simple depending on the goals the company has planned to achieve over a period. A business takes three types of organizational transformation such as improving operation, strategic transformation and corporate self-renewal.
Procter and Gamble has beenin business since 1837 and has entered in the market as a candle maker. For many years,the company remained stable in is operations and strategies. The company initially started with a candle and soap shop, which was made by the leftover of swine fats. Soon in 1859, the company managed to become one of the largest companies in Cincinnati. Initially the company held strong values in its management, principles, purpose and has always aimed at developing and progress of their employees. Further, in1887, the company took up a profit sharing plan and various other plans and programs followed that (Us.pg 2018). The plans were mainly for the employee of the company and their benefits. The company also experienced a change in its CEO for two times over the years in order to maintain their position in the market. The hired CEOs of the company always focused at increasing company’s value resulting in an increase in its shares. It maintains a strong leadership in its business environment and lacked in bringing sufficient transformation.
The management process of the company was also done in an integrated and organized way in which all the employees of the company took part. The company mainly followed participative leadership style in which every member of the business was allowed to help each other. Employees were hired with new responsibilities and strong career path. There was no such hierarchical structure in the company as both seniors and juniors helped each other. Superiors were always encouraged to help their juniors and they were easily reachable by the new employees. All these happened due to the Work and Development Planning System that the company followed. Such type of leadership strategy of the company proved to be beneficial for the organization as the employees felt involved in the business and gave their best. However, on the other hand the company might lose the discipline that is kept in the organization due to hierarchical leadership (Hoch and Kozlowski 2014).
It is further seen that in some context the company also followed autocratic style leadership in which the authority or the company takes decision for everyone. The company decides a strict dress code for the employees which they are deemed to where whenever they are in office. Everybody in the organization needs to abide by the dress code. Moreover, the company has also vested some of the powers to the senior management only regarding announcements, few decisions and others. Such type of leadership system has a discouraging effect on the employees, as they feel unimportant in the company’s decision and policies. However, the company has gained a lot from such type of strategy as it reduced confusions and complexities (Chege, Wachira and Mwenda 2015).
The case study shows that the company also maintained a strong organizational transformation strategy at initial stages of its business. The first transformation was seen in the diversity it continued to apply in the HR Policies and aimed at helping their employees learn about various cultures. Such type of policy is beneficial for the company as they can cover a large market with their strategy and culturally diverse employees. However, it might lead to conflicts at certain points.
In 1990s, the company faced a strong back draw in its new product development strategy even though it has conquered a huge market share in a short period, yet it failed to develop new product. This was because it only focused at introducing new version of the same old product. This shows that the company did not follow a product diversification strategy for a long time. Such lack in product development and improved transformation will proved detrimental for the company as it might lose market share slowly with the growing competitors. However, some customers prefer product consistency that the company maintains in its environment. The company has failed to brig product development over years and has many age-old brands in various categories. Such lack in diversification is due to risk averse and cultural bound environment of the organization. It has been argued that in order to cope up with the growing competition Procter and Gamble needs to change their vision of growth towards new products and new countries. Due to the lack of organizational transformation, the company faced a lot of challenge with increased employee turnover and losing their employees to competitive firm. Such lack of effort in bringing transformation in the organization adversely affected their financial performance(Jacobs and Kushner2017).
From the above analysis it is seen that leadership style and organizational transformation strategy is crucial for the organization. Leadershipstyle determines the productivity and performance capacity of the company and on the other hand organizational change help the company to fight competition. The leadership style followed by Procter and Gamble has helped the form a good pool of employees and helped them maintain coordination among themselves. However, the lack of transformation and change bought in the organization has led to the downfall of the company in the rising competitive environment.
Businesses nowadays are moving globally in order to take up huge market share in the world market(Peng2016).This helps the company to fight and survive in the competitive environment and earn them a place in the market. Similar, initiative was taken by Procter and Gamble in 2005 in which the company was reorganized to other five global business units. From the case study it can be seen that this reorganization happened based on product differentiation. In the extension process, a new IT catalyst was used to speed up changing process in the company. This was done to allow innovation and manufacturing new products. The change was aimed in the company to bring new working capabilities and improve on the existing capabilities. Various other developments were aimed at in the global business environment such as work culture, eliminating bureaucracy, reducing cost and others. However, the major development that the company aimed through this program was mainly to improve its innovative capability. This was done with the view that the best way the company can succeed and overcome its monotonous working condition is to increase sales, growth and product volume of the company. Through the program, Procter and Gamble also changed its view of employee appraisals and altered their goal-setting plan from conservative to a stretch goal. For the first time the employees got the chance to decide about the dress code, they wanted in the workplace. This reduced the conservative nature of the company even further.
According to the case study it is seen that in global expansion, the company also introduces online collaboration and knowledge sharing. Most of the employees of the IT department of the company were decentralized. The company planned to incorporate the new online collaboration in its new sectors and expanded market. The new sector undertook about 97 percent of the IT employees to work with them. The transformation in the industry was seen as when it shifted from the “one page memo company” to a virtual collaboration intranet. The internal culture of the company also experienced a shift from a traditional one to an aggressive and out-spoken one. The company bought these developments in its global environment after its market expansion.
Other changes took place in the restructuring program in global market is in the HR department. The company started the new Open Job Posting through which they can select desired candidates based on their abilities. The company also made changes in its operations unit in which the company reduced the product development time for all its new products. The company gained this new strategy with the view of increasing supply for the company and expanding its business in the market. There was also certain development seen on the financial ground in which the company took up certain steps for the employees so that they can contribute well in earning higher revenues for the company.
There were certain cultural changes brought about by Lafley, the CEO of the company in order to improve their position in profitability and operations. The CEO of the company put effort to increase the rate of competition among its employees so that they perform their tasks efficiently. He was focused to make the company outward oriented and flexible in its operations. Thus, under both the CEO of the company, that is Jager and Lafley the company underwent various cultural changes.
Along with the development made by the company in global sphere there are various challenges faced in the coming years. After analyzing the case study, the potential challenges that the company will face in the next five years will have a positive or negative effect on the company and its growth.
Thus, it can be seen that the huge effect that the company will face in the end due to the change in organizational structure will be losing its valuable employees and huge HR problems. This in turn will put an impact on the production and growth of the company.
Strategic planning is important for the company as it helps them to alter and plan various strategies to expand their business and gain from it. Most of the organization spends time in planning strategies for it in order to anticipate company’s need and improvement. This helps the company to save itself from unplanned or sudden changes that it faces in its daily operations. Moreover, the risk that they might face due to changes in its operations can also be easily anticipated through strategic planning (Cassidy 2016).
The recommendation that will be followed for Procter and Gamble will focus on the operational, human resource, marketing, research and development aspects of the company. An improvement in these spheres will be beneficial for the company in the end and in expansion strategy.
The first strategic planning that the company can conduct is to carry out a research to know the products that the company wants to allow globally and the products that will only be available in the local market. This will help them form an idea about the product and the market in which it will get better gains. Moreover, this will also require the company to form strategic market plan and a budget plan according to its global expansion capabilities. It helps the company to realize the marketing strategy that it requires to reach the global market such as marketing campaign, social media, global PR and others.
Second strategic recommendation will be to analyze the strength and weakness of the company. For the purpose, a SWOT analysis can be conducted to know the weakness, strength, threat and opportunity of the company (Bull et al. 2016). Through these factors, the company will know the areas they are lacking in and use their strength to meet the opportunities. Proctor and Gamble will be able to capture wide market area and maintain their name as one of the largest FMGC Company.
In its leadership and human resource strategy, as well the company should maintain close collaboration with its employees. Moreover, retrenchment of the employees should be reduced in order to gain the trust of the employees and reduce the fear of job loss in them. This will motivate the employees to give their best for the company and see them grow in the same organization. Thus, this will help the company to reduce employee turnover over the period.
For the success in the global market, the company needs to focus on diversity and flexible workforce (Garnero et al.2014). Maintaining a diverse work culture will help Procter and Gamble to expand easily in other regions with diverse product development with the help of the team. Culturally diverse workforce is beneficial for the company and allows them to maintain its values and goals. Culturally diverse workforce makes the company gain from the differences. Moreover, the company should focus on women empowerment as they are trying to hire more and more women employees in the company. Diverse workforce will allow the company to create new ideas and use different pool of talents to produce superior kinds of goods and service.
The company can focus to expand its products in developing countries (Scott2015). As the company already produces products according to the consumers in the developed countries, thus, it would be beneficial for them to cover a different set of market such as the developing countries and produce products that the consumers need in those countries. This will be beneficial as they will be able to cover a wide market share and be competitively stronger compared to other competitors.
Management is yet another strategic planning that the company will take, will be in the management side (Sniukaset al.2016). This is because management is a crucial area for making new product development programs a successful one. Management is that area of production that looks after the production, packaging, and marketing activity of the new products that they want to launch.
Acquisition is another strategy that the company can follow to make their position strong in the market. By acquiring a well know company and its products Procter and Gamble will be able to gain relationship with the customers of that company as well. It is a great way of increasing customers reach and cover up wide area of market. Moreover, joining hands with the company that already has good brand value in the market will make it easy for the company to attract customers for the new product.
Further, Procter and Gamble can take up strategic innovation n which the company will not only break through a product; it breakthrough a strategy (McFarlinand Sweeney2014). Strategic innovation will include both product and service innovation. In services, the company should modify its sales and customer services in its new outlets and market. This will create a motivation among the customer to visit them and take their service. Bringing innovation in various strategies will help the company to gain a strong hold in the market.
Lastly, innovating and planning marketing strategy is yet another important recommendation that is crucial for the company (Tiddand Bessant2014). Marketing strategy like social networking will be beneficial for the company. In the age of social advancement,it is necessary that the company form connection with the customers and float in the market as one of the known brands (Tutenand Solomon2017). Using social media strategy in this modern world will be beneficial for the company in order to connect to the customers.
Thus, these are the strategic recommendation that will be beneficial for the company in initiating an expansion and enter a different market. Strategic recommendation mainly focuses on the management, human resource, marketing and market research. All these activities is the best way to expand in the potential market and capture wide range of market.
Conclusion
From the above analysis, it can be deduced that Procter and Gamble has been successful in its business with minimum changes in its daily activities. The organization carry out changes in its hiring process by introducing online hiring process and selecting the deserving candidates. Some of the changeswere brought in the job posting methods such as open job posting method. Moreover, the CEO of the company gave their best in creating a competitive environment for the employees so that they perform their best. However, recently it has received various criticisms for its rigid organizational structure and incapability of bringing innovation according to the development of the company. The company failed in manufacturing differentiated product for its customers keeping in mind about the changing needs of the customers. in product development strategy the company only modified the existing type of product in a new one without bringing any new product. Similarly, it received criticism while bringing change in the human resource sector by retrenching existing employees. This led to trust lost on behalf of the workers. These entire situations caused a great loss to the company as it failed to cope up with the competitive nature of the industry.
Thus, various strategic recommendations have been suggested for the company to make its development a successful one. Strategic recommendations such as social media marketing, strategic innovation, acquisition, management handling, entering developing countries and others have been suggested for the company. The suggested recommendation if followed efficiently will help the company to grow effectively in the industry. Product and service innovation is the most important strategy that the company should adopt as it is through new and developed product Procter and Gamble can carry out successful development and expansion strategy. Moreover, efficient product development along with proper marketing activity will add to the success of the company. Acquisition on the other hand is essential, as it will help the company to capture the different zone of customers that the acquired company is holding in the market. Thus, these are some of the strategiesthat the company can follow in order to be successful in the operating industry. This will place the company as one of the largest FMCG Company.
References
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Cassidy, A., 2016. A practical guide to information systems strategic planning. CRC press.
Cha, K.J., Hwang, T. and Gregor, S., 2015. An integrative model of IT-enabled organizational transformation: A multiple case study. Management Decision, 53(8), pp.1755-1770.
Chege, A.N., Wachira, A. and Mwenda, L., 2015. Effects of leadership styles on implementation of organization strategic plans in small and medium enterprises in Nairobi. Management and Administrative Sciences Review, 4(3), pp.593-600.
Garnero, A., Kampelmann, S. and Rycx, F., 2014. The heterogeneous effects of workforce diversity on productivity, wages, and profits. Industrial Relations: A Journal of Economy and Society, 53(3), pp.430-477.
Hoch, J.E. and Kozlowski, S.W., 2014. Leading virtual teams: Hierarchical leadership, structural supports, and shared team leadership. Journal of applied psychology, 99(3), p.390.
Jacobs, S.M.A. and Kushner, S.R., 2017. How Can You Become the Boss?: From Personal Mastery to Organizational Transformation. Rowman & Littlefield.
McFarlin, D. and Sweeney, P.D., 2014. International management: strategic opportunities & cultural challenges. Routledge.
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Peng, M.W., 2016. Global business. Cengage learning.
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Scott, D.M., 2015. The new rules of marketing and PR: How to use social media, online video, mobile applications, blogs, news releases, and viral marketing to reach buyers directly. John Wiley & Sons.
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