Question

Expain what effected Procter & Gamble to change its business strategy?

Answer 1

In the 1990s, Procter & Gamble shifted its strategy wherein the company closed many foreign locations and moving to a more regional approach to global markets. In 1999, the Procter & Gamble implemented “Organization 2005”, a business unit strategy whereby different units were held responsible individually for generating profits for a product group. The initial reorganization of the company was a reaction to a changing global marketplace and sluggish profits, but when it became apparent that the reorganization attempt was not really fixing the issues that existed, Procter & Gamble embarked on a new business strategy. This time, instead of simply trying to adjust the existing strategy as the company had done in 1993, the company completely dismantled the organisational structure that had been in place for a quarter of a century and reorganized as a business ready to operate in an international marketplace.

There were several factors that prompted Procter & Gamble to change its business strategy. Due to the country-by-country approach to the market, Procter & Gamble had extensive duplication of manufacturing, marketing, and administrative facilities that increased the costs. Furthermore, the retailers that the company relied on were operating internationally and demanding deeper discounts from the company. With its new strategy, Procter & Gamble has eliminated these problems