Procter And Gamble: The Worlds Largest Company

Procter and Gamble (P and G) is the world’s largest company which is selling consumer goods in the market (Datamontior, 2009). This report will find out the innovation and information technology (IT) means for P&G. It will analyze how the Organization of P&G interacts with its organisational environment. In this organisational environment, P&G implemented some innovation and IT to surviving the market. When P&G apply the Innovation and IT, it will face difference kind of barriers and its used some way to overcome the barriers. This report will evaluate, compare and contrast the innovation and IT of the P&G with different cases.

1. Introduction

In 1837, Procter & Gamble Company was established. The P&G provide varies of branded for packaged consumer goods under its own brand name in worldwide. Its products are selling to over 180 countries. Primarily distributed through, mass purchasers and varies kinds of stores includes Wal-Mart Stores. (BloomBerg, 2010)

1.1 Innovation

Innovation is introduction and application of new ideas, procedures and products(Nonaka and Towards,1991)( West and Farr,1990), which is seen as increasingly important for organizations to ensure their adaptation to the rapidly changing market environment(West, 1989) and as a source of satisfaction to employees (Broadbent,1987) (Nicholson and West,1988).

Kuczmarski (1996) mentioned innovation is a mindset of CEOs which is a new way to develop business practice and strategies, that allow the company act beyond the present, create a clear future and sustainable vision. This mindset of innovation becomes a corporate culture. A lot of risk takers and creative thinkers will use innovation into every areas of their business. Innovation required company to invest a lot of resource and time develop, However, the company without continuing innovation which company cannot bloom. Increase revenue, grow of the stock price, customer and employee satisfaction, and competitiveness in global market that can be determined from a successful innovation.

Research on the determinants of an innovative climate has concentrated on factors that can be traced back to the classic motivation and Organisational behavior (Locke and Latham1990).

However, Many CEOs spend more time worrying about the financial community’s reaction to a quarterly earnings report than about how to support innovation. Instead, CEOs must serve as the catalysts for sparking (Kuczmarski, 1996)

Axel, J. (1999) advised Market innovation is concerned with improving the mix of target markets and how chosen markets are best served. Its purpose is to identify better or potential markets and better or new ways to serve target markets.

1.2 Technology

Galbreath (1998) Information technology is evolving faster than in any time in history – and this makes it even more difficult to make sound technology decisions. A chart provides information regarding key information technology enablers and trends, the time frames of market impact and the potential impacts to the business community.

For many years, information technology has been a major focus of businesses around the world to assist them in their quest for market success. Unfortunately, too much of the time, technology becomes a singular focus in driving business success. Technology becomes important for technology’s sake. This has led to four common categories of technology failure:

In many cases, companies have made significant investments in information technology only to realize little or no return on those investments. In fact, the U.S. Commerce Department recently completed a study on computer and telecommunications sales and found that from 1990-1996; sales grew 57 percent to $866 billion. Clearly, significant dollars are being spent on information technology.

2. P&G Organization

2.1 Corporate Structure

P&G’s organization structure is important for its capability to grow, that combines a $79 billion global company with a local focus. This can lead to win with customers in each P&G involved country.

Market Development Organizations (MDOs) are top of the P&G organization structure which is showing its important postion in P&G. MDOs are in charged with understanding consumers and retailers in each market in order to let P&G can integrate the innovations with the information provided from the GBUs. MDOs develop the business plans that work in each country. If have to make sure the research and development (R&D) in right market which can meet customer needs (P&G, 2010).

The company is organized into three global business units (GBUs), including Beauty and Grooming; Health and Well-Being, and Household Care. These Three GBUs are only focus on consumers, brands and competitors around the world. They are responsible for the innovation pipeline, profitability and shareholder returns within their business units (P&G, 2010).

Global Business Services (GBS) utilizes P&G talent and expert partners to provide best-in-class business support services at the lowest possible costs to leverage P&G’s scale for a winning advantage (P&G, 2010).

P&G ensure future functional innovation and capability improvement with lean the Corporate Functions. P&G is keep on utilizing its structure for over a decade, and go on with seeking any opportunity for faster global expansion of new innovations, better in-market execution and improve the savings from ite purchasing scale and outsourcing partnerships (P&G, 2010).

Figure 1, P&G Corporate Structure (Source: P&G, 2010, http://www.pg.com/en_US/_images/content/company/company_img_corp_struct.gif)

2.2 Five cores of P&G

In P&G, there are five cores to be focused by P&G. it believed that the company is required to win in the consumer products industry and interacts with its Organisational Environment that five cores are affecting the P&G innovation and IT change. The designed to lead in each of below areas:

Figure 2, Five Core strengths of P&G (Source: P&G, 2010, http://www.pg.com/en_US/company/core_strengths.shtml)

2.2.1 Consumer Understanding

P&G invested a lot of resources in consumer and market research. Each year, its interact with more than five million consumers with different kind of marketing research. Around the world, P&G already doing the marketing research in almost 60 countries. Every year P&G launched over 15,000 research studies and invested more than $350 million each year for getting consumer understanding. The marketing research results that let P&G know where are the opportunities for innovation; how to make better communication with consumers and what ways they want to be served.

2.2.2 Innovation

P&G is the innovation leader in its industry. Virtually all the organic sales growth P&G have delivered in the past nine years has come from new brands and new or improved product innovation. We continually strengthen our innovation capability and pipeline by investing two times more, on average, than our major competitors. In addition, we multiply our internal innovation capability with a global network of innovation partners outside P&G.

More than half of all product innovation coming from P&G today includes at least one major component from an external partner. The IRI New Product Pacesetter Report ranks the best-selling new products in its industry in the U.S. every year. Over the past 14 years, P&G had 114 products place at top 25 pacemaker that is more than combined of its six largest competitors. In the 2009, P&G had five of the top 10 new product launches in the U.S.

Nussbaum,B.(2008) mentioned Procter & Gamble is one of the 25 companies that make up the Standard and Pool and Business Week Global Innovation Index in 2008. The P&G strong fiscal showing in sales and profits reflect by its dedication to innovation. P&G CEO A.G. Lafley said innovation, both incremental and major, helped P&G to raise prices. Consumers resist price rising, but they are willing to pay a bit more if they can receive more. Innovation is part of that strategy.

P&G is leading innovations across the brand portfolio, building value for consumers and customers which is critical to delivering good results in a difficult economic environment. The strength of the portfolio and our focus on innovation and productivity give us confidence that we will continue to deliver sustained growth in the coming year and beyond.”

Innovation for Sustainability

P&G have a new direction of innovation in order to corporate sustainability criteria in the market. There are number of ways to change P&G products, such as, reduce the packaging. The sustainability Innovation product or process will not have any Trade-off of the performance or value. The customer can enjoy the same performance from the product which can deliver sustainability the their live significantly

2.2.3 Brand-Building

P&G is the brand-building leader of its industry. They have built the strongest portfolio of brands in the industry. P&G have eleven of brands recorded the top market share in global.

2.2.4 Go-to-Market Capabilities

P&G established industry-leading go-to-market capabilities. P&G is always ranked by leading retailers in industry surveys as a preferred supplier and as the industry leader in a wide range of capabilities including clearest company strategy, brands most important to retailers, strong business fundamentals and innovative marketing programs.

2.2.5 Scale

P&G also established significant scale advantages as a total company and in individual categories, countries and retail channels. P&G scale advantage is driven as much by knowledge-sharing, common systems and processes, and best practices as it is by size and scope. These scale benefits enable P&G to deliver consistently superior consumer and shareholder value.

2.3 Suppliers

P&G launched the Web site that provide easy access to Procter & Gamble information. P&G not only can show its value and prospective to its t suppliers and agencies via this channel, but also can increase the opportunities to touch with the supplier which can meet P&G requirement, whatever services, equipment and goods, even the sponsorship request. (P&G 2010).

The basic requirements of the P&G’s suppliers was listed on this site and showing the ways for P&G conducts business with its suppliers. This Supplier website generally introduces P&G views of supplier relationships. It gives brief information to its potential supplier which can let them to knowing the P&G purchases requirement and offers an path to them. It also provides information to current P&G suppliers who want to enhance their understanding and actively connect with P&G. (P&G 2010).

2.4 Online Store

2.5 Employee

Any projects implementation also needs the employee to execute and cooperation (Bingi, Sharma and Godla, 1999). P&G thinking its employee as a company asset and care about their feeling. ‘We hire the person, Not the position’ in the P&G web site(P&G, 2010, http://www.pg.com/en_US/ careers/index.shtml), that statement reflect P&G is respect its employees knowledge and talented. P&G will help employee develop their career and knowing about the company value and culture.

For showing they are focus of the employee feeling and development, it launched a web site (ExperiencePg, 2010) especially for any potential employees to know its company culture and the future direction of the employee development. It can attract the some talent people stay or join P&G.

2.5.1 Engagement

The P&G have almost 140,000 employees in 80 countries in the world. P&G have to put efforts to keep all P&G employees mind under same company direction, P&G implemented continues efforts to educate employees for any behaviors in workplace. For example, P&G pushing ‘Sustainability’ as the company future company devolvement direction. Its put it on top of mind for all P&G employees, P&G not only would like its employees to keep their responsibility at Office and product, but also at home. (P&G, 2010)

P&G will gather the employee suggestion for improvement and implement the best practice or suggestion in the real working environment. It is encouraging from lower to higher level employees to contribute their thought in the company and treat the employee opinions in an important place. (P&G, 2010) This action can make its employees feel them is a part of P&G. if P&G have any action required to interact with the environment, It can get its employee support.

2.6 The operation system in P&G

3. Evaluate the Various Means

In this section, the report will evaluate the various means of the P&G with other cases

Targeting of the Market

As mentioned in Point 2.2.1, the P&G, invented a lot of resource to get marketing information. Below will take about the P&G and other cases how to getting the marketing information. The Information can help P&G research and development department invest the right market.

3.1.1 Communicate with cusomter

For interacts with the 21century environment, P&G interconnecting with customer with the popular website. First, Facebook which can allow customer and any one to view videos of P&G, set up a conversation with customer and P&G, customer can leave comments to P&G product and suggest any development plan. Second, You Tube (the P&G set up a channel ‘experiencePGnow’ on You Tube. P&G can promote their product and commulacate to customer by videos), Linkedin (Find P&G professionals, P&G networks, P&G news which is a free online tool for career networking) and Twitter (a free social micro-blogging service that lets customer send and get updates. It can allow customer to know the updated news for the P&G brands and Company)

3.2 Evaluate the online store

3.3 Organisational change

In addition to reducing costs, we’ve also focused on increasing productivity in everything we do. Sales per employee has grown from $363,000 in 2000 to $585,000 in 2009, and profit per employee has increased from $32,000 to $84,000. We have doubled the productivity of our R&D organization since 2000 even as we’ve become more innovative. This means that P&G can now support an additional $44 billion in sales with virtually the same number of R&D employees we had nearly a decade ago. We’ve become so much more productive because we continually innovate how we innovate and because we are working with such a large and diverse global network of external innovation partners. This productivity discipline ensures that P&G has the flexibility and the resources to invest in growth even in the most challenging environments.

3.4 Evaluate the ERP system

4. Organisational/ Supply chain barriers

4.1 The Barriers of Organisational change

4.2 Combining the system into SAP

Problem in P&G

Consolidating hundreds of spreadsheets and data from multiple systems

Thousands of users in the budgeting process

Aggregating information from SAP and collaboration system

Reducing non-value-added work

Improving quality of budgeting information

Problem in the other case

4.3 Identify market information

In P&G, they are gathering a lot of market information from the marketing research, customer comment from the internet.

5. Overcome the Barriers

5.1 Culture of the company

5.2 Solve the problem when combining system

5.2.1 P&G’s Solution

Create a single budgeting model and seamlessly consolidate global inputs from 3,000+ users

Tap into SAP and collaboration software information needed for accurate budget

5.2.2 Advantages

Users can access their “Excel-like” budget templates from a Web browser

Non-value-add work has been eliminated

Increased transparency of activities

Speedier forecast adjustments