Essay about Management Focus

655 Words Nov 1st, 2012 3 Pages
Week 5 Case Study “Management Focus, “Evolution of Strategy at Procter & Gamble,” August 11, 2012 Summary
In the early twentieth century, Procter & Gamble continued to grow. The company began to build factories in other locations in the United States, because the demand for products had outgrown the capacity of the Cincinnati facilities. The Procter & Gamble Company (P&G) is a global force of nature. William Procter and James Gamble formed Procter & Gamble, a partnership in Cincinnati, Ohio, to manufacture and sell candles and soap. The partnership began October 31, 1837, with paid-in capital of $7, 192.24. It has grown to be the leading maker of household products in the United States. According to the
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In the pre-1990’s era P&G found their international expansion through the use of a localization strategy. They did develop many of their products in Cincinnati, but they relied on their semi-autonomous subsidiaries to manufacture market and customize many of their products for the local markets their served. This model started to show signs of strain when many of the trade barriers that existed, specifically between European countries were lifted. This created an increase in competition, and for P&G exposed their now unnecessary duplication of assets and processes. Also the creation of the “big box” retailers such as Wal-Mart and Tesco were causing the competitive factors driven by purchasing power to put pressures on lowering P&G’s prices even further.

c) What strategy does P&G appear to be moving toward? What are the benefits of this strategy? What are the potential risks associated with it?
Due to the increase in competition and the changing market conditions P&G closed some of their local plants and asked their subsidiaries to exploit as much economies of scale as possible in their production lines. They also asked their local centers to create and use global brands whenever possible to try and reduce marketing costs. While these cost savings were effective, they were still not enough and P&G then reorganized the company to be a pure Transnational Strategy, with more control

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