Restructuring P&G
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Case Details:
Case Code : BSTR068
Case Length : 20 Pages
Period : 2003
Organization : Procter & Gamble
Pub Date : 2003
Teaching Note : Not Available
Countries : USA
Industry : FMCG
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This case study was compiled from published sources, and is intended to be used as a basis for class discussion. It is not intended to illustrate either effective or ineffective handling of a management situation. Nor is it a primary information source.
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Introduction Contd...
However, analysts expressed doubts, whether the measures taken by Lafley would sustain P&G's growth in the long term. They felt that with a dominant market position in developed markets the scope for generating more growth there would be difficult for P&G.
Background Note
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Procter & Gamble was established in 1837 by William Procter, a candle maker, and his brother-in-law, James Gamble, a soap maker, when they merged their small businesses. They set up a shop in Cincinnati and nicknamed it "porkopolis" because of its dependence on swine slaughterhouses. The shop made candles and soaps from the leftover fats of the swine. By 1859, P&G had become one of the largest companies in Cincinnati, with sales of $1 million. The company introduced Ivory, a floating soap in 1879 and Crisco, the first all-vegetable shortening in 1911. In the period between the 1940s and 1960s, P&G embarked on a series of acquisitions. The company acquired Spic and Span (1945), Duncan Hines (1956), Chairman Paper Mills (1957), Clorox (1957; sold in 1968) and Folgers Coffee (1963).
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In 1973, P&G began manufacturing and selling its products in Japan through the acquisition of Nippon Sunhome Company. The new company was named "Procter & Gamble Sunhome Co. Ltd." In 1985, P&G announced several major organizational changes relating to category management,3 purchasing, manufacturing, engineering and distribution.
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In 1988,
the company started manufacturing products in China. P&G became one of
the largest cosmetics companies in the US when it acquired Noxell (1989)
and Max Factor (1991). After witnessing a period of significant organic
and inorganic growth, P&G began to face several problems during the
1990s. In the early 1990s, a survey conducted by the consulting firm,
Kurt Salmon Associates,4 had revealed that almost a quarter of P&G's
products in a typical supermarket sold less than one unit a month and
just 7.6% of the products accounted for 84.5% of sales. The remaining
products went almost unnoticed by consumers. Complicated product lines
and pricing were also causing problems to retailers who had to struggle
with rebates and discounts... |
Excerpts >>
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