Analysis Of P & G Us

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In the 1950s, P&G US was organized by product (Diagram 1) • Advantages of organizing by product are: o Faster decision making on the products o Decision making can be effectively done by Brand managers instead of escalating it to executives o Product development & life cycle can be improved o Faster product modifications based on the customer response o Performance of each divisional products are can be evaluated easily based on the income statements. As each product division is independent, we can easily close a division which is not profitable without any impact on the entire organization. • Disadvantages of organizing by product are: o As each product division run independently, high chances of misalignment between the corporate goals…show more content…
This will result in high operating costs o As it is each to compare the performance between product divisions, it will result in unhealthy competition and less support across different divisions 2. In 1987, the US was reorganized into a matrix organization. (Diagram 2) • P&G introduced Category Business Units (CBUs): o Product categories required more differentiated functional activities o Better balance between product and functional influence in management decision process • Advantages of a matrix organization: o Improved interdivision communication and Quicken decision making process o Transfer of resources and best practices and standardization of activities o Increased employee motivation as managers seek their inputs before taking decisions • Disadvantages of a matrix organization: o Lack of cross functional coordination and commitment to goals o High operating costs due to double management o No clear supervisor for some employees create confusion and dissatisfaction 3. The European Operations were originally organized by geography (Diagram 3) • It was organized by geography instead of product: o Market is heterogeneous with different languages, culture and laws therefore a geographical based model was adopted o To cater products and processes as per local people requirements • P&G reorganize Europe into categories in 1987 (Diagram 4): o Innovation & brand took more time to globalize (“Pampers” took almost 14 years) o Development done at each regions on the
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