Introduction
Procter and Gamble (P&G) is presently considered as one of the largest companies worldwide. Base on its 2003 company report, P&G markets nearly three hundred product brands. Whisper, Tide, Clairol, Downy, Pantene and Pampers are some of the world renowned brands marketed by the company. The success of P&G is not only evident by its wide product coverage but by the amount of its sales obtained from about a hundred and sixty nations. In addition, the company’s growth has also been made evident by its hundred and fifteen manufacturing plants scattered in eighty countries. The progress of the P&G is also attributable to its workforce, which is made up of more than ninety thousand employees (Procter and Gamble, 2003). One of the keys to the company’s present success is the business strategies it has implemented over the years. One of the strategic changes which are remarkable in the industry is its launch of Organisation 2005. Primarily, the goal of this paper is to analyse the launch of Organisation 2005 within the industry. The paper will discuss the factors that trigger the initiation of Organisation 2005 using SWOT analysis. In addition, this case study analysis also aims to relate the Organisation 2005 with the eight managerial Tasks for strategy execution, a model which has been formulated by Thompson and his colleagues.
Task 1 SWOT ANALYSIS
It is a common fact that competition in the business world is very tough. Hence, the management of different organisation are trying to find the best way in order to be successful and achieve their organisational goal. For example, business, nowadays, have to cut cost to the bone by downsizing, outsourcing, offshore IT development and management. The growth and success of an industry now depends on its ability to innovate to execute new business strategy effectively. Many organisations see that changing the business strategy must become a part of the core competency of every part of the organisation and its network of business partners (McKie 2004). It is noted that management adheres to different changes because of some factors. Like any other organisations or industries, Procter & Gamble has also been able to initiate change in their business strategy. In order to address the company’s problems due to the changes in the industry, P&G tried to develop a new strategy that will basically allow the company to have competitive advantage. The company also wanted a strategy that will improve its ordering and billing systems as well as quality of services for the consumers. This part of the paper provides insightful details regarding the organisational factors that drive or triggers them to initiate Organization 2005 strategy. The organisational factors will be analysed using SWOT (Strengths, weaknesses, market opportunities and threats.
The strengths and weaknesses actually characterize the internal analysis of the company. Issues such as the reputation of the company, the type and quality of its product, manufacturing costs, the effectiveness of their sales team, profitability, innovativeness on research and development, market share and other issues of the company’s capabilities are recognized as strengths and weaknesses (Martz Marketing Group, 2002).
Organisational Strengths
As mentioned, the main objective of P&G is to have a new business strategy that will enable them to sour growth in the mature market (Madapati, 2005). One of the organisational strengths that triggers the initiation of Organization 2005 is the ability of the management of P&G to develop a new strategy that will enable them to outgrow or compete with the emerging competitors and the ability of the management to identify the important aspects of the business to be changed. In addition, strength of the company that triggers them to pursue Organization 2005 is the ability to anticipate stakeholders needs which can be done by restructuring the organisational structure. Furthermore, P&G is also known as a company with much ambition when it comes to outgrowing their rival companies, in this regard, their strengths that triggers or generates the initiation of Organization 2005 is the perseverance of its personnel and staff to enhance the marketing strategy of P&G in the global market. The company possesses a strong brand name in the industry that represents both value and quality. This strength emphasizes P&G capability to still attract customers even after the initiation Organization 2005.
Organisational Weakness
Although, P&G has their organisational strengths that trigger the initiation of Organization 2005, which involved changes in their business strategy, the company also encompasses some weaknesses. One of the weaknesses that can be attributed with P&G is the inability to sustain business strategy change because of some management issues and problems. Based on the case, Jager has not been able to sustain effectiveness in his initiation of Organization 2005, which affects the whole strategy execution. Furthermore, the inability of the management to anticipate cross-cultural conflicts and issues because of employee transfers can also be considered as a weakness for the company.
While the internal side of the company represents its strings and weaknesses, the opportunities and threats on the other hand is external in nature. Opportunities may be recognized in rising markets, extending service networks, growing economies or capitalizing on the competitor’s flaws. Threats on the other hand, represents issues such as the introduction of new competitors, changing market trends, alliances formed by competitors as well as the transforming demographics. Both of these factors are interrelated with the company’s strengths and weaknesses. Opportunities may be used in the maximization of the company’s strengths. Though the company is already operating globally; however, the number of its international branches are only limited to a few countries. This then does not optimize the ability of the company to effectively operate internationally even with its Organization 2005 approach. In addition, as a diversified organisation, the strategy may affect the launch of Organization 2005, especially when the management have not been able to integrate the value of diversity with the new strategy.
Organisational Opportunities
Because of the strategies that Procter & gamble has implemented throughout the years, the company has many opportunities ahead which can be considered as factors that triggers their initiation of Organization 2005. One of the organizational opportunities that P&G possess is in terms of the growing interest of the management with technological facilities. The new business strategy (Organization 2005) requires the use of information technology, especially in acquiring and managing data. This interest on technology will enable P&G to meet its goal as it implements Organization 2005. The integration of the business units of P&G can also be considered as an opportunity for the implementation of the new strategy. Furthermore, the company has the resources to support the business strategy, which includes technological support for better marketing activities are which is included in the business strategy (Organization 2005). Forming strategic alliances, merging or taking over other local and global industries is also another possible opportunity for the company to strengthen its operations, overcome competitors and support its future success through its Organization 2005.
Threats
Even if Procter & gamble have various strengths to pursue Organization 2005, the company has also some threats which may affect its implementation. This includes the experience of P&G when it comes to having low sales throughout the 1990s. In addition, it has been mentioned in the case the Procter & gamble are experiencing product decline because of the existence of rival companies which have faster innovative abilities and effective management strategy. As the company is starting to change the entire business strategy, other threats or conflicts may not be met even after its initiation of Organization 2005.
The organisational strengths, weakness, opportunities and threats that has been mentioned above, can be considered as essential factors on determining the needs of initiating Organization 2005 within Procter & gamble. The strengths that have been mentioned in the above analysis can be said to be good factors that will help the company have a successful implementation for Organization 2005. On the other hand, the weaknesses that has emphasized can be noted to be a major obstacle for Procter & Gamble to pursue it their change management approach through the Organization 2005.
The opportunities serves as a guiding forces for Procter & Gamble to continuously believe on the benefits of pursuing Organization 2005 in spite of their weaknesses in some aspects, while the threats can also be considered as a guiding aspects to be given attention by the management of Procter & gamble to ensure that their initiation of Organization 2005 will guarantee success and will be able to meet their organizational objective of being the number one industry in household and healthcare and hygiene products.
Task 2 : Eight Managerial Tasks
Organizational change is an important aspect of business establishments and companies as this concept allows operational improvement. By means of organizational change, companies are able to adapt new technologies and implement more effective strategies. In turn, this results to increased profitability, higher market share, better internal and external customer relations, enhanced operations and other significant advantages. Generally, the beneficial outcomes brought about by organizational change direct businesses to growth and progress. Moreover, this helps companies overcome major challenges. In considering a strategic change, the management must also consider the aspect of strategy implementation. Strategy implementation has been heralded as the key to corporate strategic success. It has been said that in order to strategically implement an organisational change, it is essential that the management should consider the eight managerial tasks for strategy implementation (See Appendix 1) formulated by Thompson, Strickland and Gamble (2005). Using this model, the Procter & Gamble initiation of Organization 2005 will be assessed.
Task 3
The competition in the business arena has been very stiff and complex. In this regard, the organization must be able to utilize a strategy and management system that will enhance the performance of the business so as to outgrow its rivals (Pearce & Robinson, 2000; Thompson & Strickland, 2003).
In today’s rapidly changing and improving companies and businesses, individuals at all levels are also increasingly called upon to demonstrate the ability think strategically. As the business wants to expand abroad, there are certain tasks that need to perform. Businesses grow in two distinct ways; by natural so called ‘organic’ means, or by acquisition and merger. The acquisition and merger route is appropriate when growth in traditional products and markets is restricted, due to market size or share, for instance, or when a higher level of growth in turnover is needed, for whatever reason. However, starting up or acquiring businesses outside of current markets and products diversification is an excellent way to strengthen a company.
According to Gieltson, Bing & Laroche (2003) there are reasons for acquisitions including different kinds of efficiency improvement such as replacement of inefficient management product, financial, and tax synergies. Other possible reasons are gain of monopoly power, valuation discrepancies caused by information asymmetry as well as a number of agency motives such as growth maximization, free cash flow, and employment risk reduction.
In addition, acquisition allows two previously unrelated companies to achieve economies of scale or synergies. Under the economic theory, two entities, when combined or been merged may be worth more than if they had remained independent. This is especially true where a merger allows the companies to either eliminate overlapping cost centres or may reduce transaction costs between two firms. As a result, the unified firm may reduce costs, improve quality, and boost output. Synergies also result where the combined enterprises is less risky than the constituent corporations.
The eight managerial tasks include (1) building a capable organization, (2) exercising strategic leadership, (3) shaping corporate culture to fit strategy, (4) tying rewards to achievement of key strategic targets, (5) installing support systems, (6) instituting best practices, (7) establishing strategy supportive policies, and (8) allocating resources.
Building a Capable Organisation
As noted in the case, it has been said that the main objective of implementing Organization 2005 is to accelerate the growth of the company. Organization 2005 includes comprehensive innovations in the structure of Procter & Gamble, work processes as well as culture to enable the employees to make themselves become more flexible and speed up the innovation. In addition, the company also aims to leverage the global presence of the company and become competitive in the global market. In terms of the first managerial tasks, it can be said that, based on the case study, the management o Procter & Gamble has been able to build a capable organisation. First, the management of P&G has been able select the most appropriate individual who will handle or managed the said organisational change. In this regard, as a CEO and as the main person who initiate the Organization 2005, Jager has been able to choose the most appropriate individual that will implement the changes. However, since the Organization 2005 has some flaw during its execution, it can be attributed to the inability of the chosen individuals to meet the real objective of the strategy. In terms of human resources the imperative tasks that has been implemented during the change process include the designing of the work environment and organization structure to move from present departmental structure to the new team based structure, develop new Human resources policies and programs to help employees make the transition and upgrade current employee skill sets and/or hire new employees with relevant skills.
In order to build a capable organisation, it is also essential that the management must ensure that they are able to dientify the core competency of the business to initate the changes. For all practical purposes, “core competencies” seem to be the same concept as “critical capabilities,” “resources,” and the other possible fads since they all advocate the building of competitive advantage based on “something” internal to the firm. Typically, a core competence is defined in relation to the competitive impact of its output; that is, a core competence provides the firm with (sustainable) competitive advantage via the way it is executed (Prahalad & Hamel, 1990; Grant, 1991) or via its attributes; for example, a core competence is firm-specific and hence difficult to imitate (Barney, 1991; Grant, 1991). However, even if these definitions are useful in terms of competition and strategy, they are not very operational (Leonard-Barton, 1995), which sometimes create some serious difficulties in identifying and developing the core competencies of a firm (Drejer & Riis, 2000). Hence, organization must be able to determine its core competencies in an operational manner. Once the company has identified its core competency, the next thing to do is to develop all other aspects which can be helpful for achieving the organizational goal, i.e. growth.
Core competencies of the company also represent its competitive advantages; these include features of the company that enable it to overcome business competition and other relevant challenges that they may encounter during the implementation of Organization 2005. In Procter & gamble’s case, one of these core competencies is its workforce or people. Talent and skills are among the most important factors a P&G must look for in its employees.
Based on the case study, upon the implementation of Organization 2005, the company also considered to have a support-team to make sure that the strategic change will meet its goal. In building capable organisations, the company have been able to think all the important aspects of selecting employees suitable for implementing Organization 2005. Although Jager has experienced problems which led to his resignation, Lafley, on the other hand, have taken over the position and have continued what Jager has started but with some changes.
Exercising strategic leadership
In managing strategic implementation, one must also consider how the management exercise strategic leadership. Accordingly, leadership is an important aspect of management. As stated by a few authors (Cohen & Brand, 1993; Hyde, 1992), managing strategic implementation requires full leader participation and involvement instead of designating individual groups who will shoulder all the responsibilities. The involvement of leaders serves a number of purposes. For instance, this helps in preventing the resistance of employees to changes brought about by the implementation of a new strategy. The enthusiasm and determination of the leaders to make the strategy work can positively influence other company staff. Furthermore, this also helps in creating a sense of commitment and loyalty (Hill, 1991).
The presence of leadership in strategic change is also one effective factor in addressing technical and non-technical issues. It is important however that the appropriate leadership style is used. In the case of the implementation of Organization 2005, it can be said that there are two leaders who have been responsible for the initiation of the new business strategy: Jager and Lafley. Based from the case study, Jager has become a good leader at the start of the implementation. However, the inability of Jager and his team to anticipate possible dilemma upon Organization 2005 implementation has impacted the whole change process which makes the strategy fail and have forced Jager to resign from his position. As said in the case, there are certain problems that have been encountered in the leadership of Jager. First, Jager had tried to put too much pressure on the Procter & Gambles managers into bringing their products to market faster. The inability of Jager as a leader to decide strategically is also an issue. This can be seen in the dual acquisition of Warner-Lambert and American Home Products, which were useless during that time. In addition, Jager has also become a leader who became reckless in all his action hoping that he will regain what they have lost.
The next leader who handled or managed Organization 2005 is Lafley, a veteran in the company. As Lafley saw the mistakes of the previous leader of Procter & gamble, he made it sure that he will lead P&G to achieve success. In addition, Lafley can also be noted to use a distinctive leadership style. Leadership style is the pattern of behavior used by a leader in attempting to influence group members and make decision regarding the mission, strategy, and operations of group activities (Scholl 2000). In this regard, it is said that Lafley has been able to apply the right leadership style in the right moment and situation to effectively implement Organization 2005. By acting as a responsible leader, Lafley has been able to inspire employees to put the good of the whole organization above self interest. In addition, upon the implementation of the Organization 2005 Lafley also stimulate employees to be more innovative, and he also take personal risks and are not afraid to use different types of methods in order to achieve the objective of implementing Organization 2005.
Corporate Culture
Many definitions have been used to characterize corporate culture. Probably, the most common was the one based on Schein’s point of view in which his fundamental assumptions comprise the core and most important aspect of corporate culture. He defined corporate culture as the pattern of creating shared common assumptions that the organization learned as it resolves problems of outer adaptation and inner integration that has been considered valid making it possible for others to pass it down to new members as the appropriate way to think, perceive and feel organizational concerns (Schein, 1992, p.12). In this perspective, Schein appears to emphasize on having a common goal or unified direction among organizational members which is based on the past challenges and experiences the business had successfully overcame. These common goals are then achieved through past practices and strategies that are guaranteed to work. Schein develops a definition which stressed on the importance of having a standard that is consistently applied by the members of an organization.
In common terms, corporate culture is defined as the manner in which things are accomplished. The definition given by Schein was supported by other researchers such as Cummings and Worley (2001). According to these authors, corporate culture involves the sharing of learning. Sharing of thoughts and experiences with others implies that corporate culture promotes a certain level of stability among the members of the organization.
In comparison to earlier times, corporate culture is more in demand and recognized at present (Schein, 1992) due to competition, increased globalization, diversified workforce and formation of business coalitions. This in turn led to product and strategy innovation; integration among organizational units to improve efficiency, quality, speed in manufacturing and distribution of services; introduction of new technologies; international transactions; facilitation of teamwork; and management of the diverse human resource. However, it should be noted that the application of corporate culture would have to less insidious in terms of implementing certain standards and behavioral patterns that were applied in the past (Collins and Porras, 1994).
Corporate culture is founded by certain elements. In this case, values within the corporation are the main foundation of corporate culture. Similar to how corporate culture differs from one organization to another, the values within the corporation vary as well. The value of the organization serves as its defining elements where symbols, practices, standards and other related matters are derived. Values can be defined as a consistent belief that a certain mode of personal or sociable conduct is preferable against a contradictory mode of conduct. In general, values are considered internalized beliefs which guide individual behavior (Deal and Kennedy, 1982). Through this element of corporate culture, employees are able to establish a social identity which in turn generates meaning and connectedness. Through underlying values, people are able to manage their lives in a way that aid them to choose fitting roles, occupations and organizations. Thus, there are author who have suggested that some people find organizations appealing primarily because both share the same values and principles (O’Reilly, Chatman and Caldwell, 1991)
The elements of corporate culture may include known and unknown values; customs and rituals; stories and myths about the history of the organization; explicit and implied expectations of behavior from each member; typical language used within the group; the climate or the feelings suggested by the manner members interact with each other or with outsiders; and metaphors and symbols.
Tying Rewards to Achievement of Key Strategic targets
Installing Support systems
Instituting Best Practices for Continuous Improvement
The conception of best practice conceives the subsistence of collection of highly commendable performance of work practice which enhances the overall performance of the organisation that implements its notion (Arthur, 1994; Huselid, 1995). Best practices may include but not limited to different management approaches such as knowledge management, strategic management, supply chain management, performance management, information technology management and others. Having been able to realise the importance of having a management system adhering to best practices, international best practice management have emerged. At a high level, best practice may refer to those documented strategies which are accessible in any means. Furthermore, best practice are those strategic aspects which are noted be effective, appropriate and universally accepted approaches, tactics, business practices, plans, activities developed by authorities and carried out by a well-trained staffs in accordance with existing provisions and regulations. It is noted that different organisation must be able to comply with best practices to ensure business success and competitive advantage.
Best practice is the process of specifying an organisation’s objectives, developing policies and plans to achieve these objectives, and allocating resources so as to implement the plans. It provides overall direction to the whole enterprise. It can be viewed as a set of theories, frameworks designed to explain the factors underlying the performance of organisations and to assist managers in thinking, planning and acting strategically. The use of this in an organisation may be considered as a key foundation for having a competitive organisation. Hence, it is recommended that an organisation must choose the most appropriate best practice management to be imposed in the company.
Successful strategy requires the firm to choose the markets in which its
distinctive capabilities yield competitive advantage. But the adaptive,
incremental nature of strategy means that the starting-point is where the
firm is now, specifically in terms of best practice management approach. Strategy is the direction and scope of an organisation over the long term: which achieves advantage for the organisation through its organization of resources within a changing market environment, to meet and satisfy the needs of the markets and fulfil the expectation of stakeholder expectations. Best Practice helps an organisations to answers both the questions “where do you want to go?” and “how do you want to get there?” but the first question is answered when each industry set the goals and the second is answered when such industries plan the strategies. The traditional approach basically focused on the first question but the traditional approach gives equal importance to both of them. While developing a corporate strategy that adheres to best practice for any profit organisation, the management have to keep in mind the demand of the customers and the marketability of the products and services offer
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