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Name: VINAY DIXIT Session No: 1 & 2

Roll No: MPE 080123 Theme No: 1
Subject: Understanding Management and Organization
Assignment: Evolution of Procter & Gamble
Company Brief & Role Description: NA

Procter & Gamble

Procter & Gamble (P&G) is one of the biggest brands of the 21st century. Looking into the future, P&G is
always customer focused and maintains its integrity, leadership, ownership, and its passion for winning and
trust. It looks up to competitors to assess self-effectiveness and efficiency and supersedes many top notch
companies in being sensitive towards its employees, their needs, culture and diversity.

It believes in doing in-depth research before coming out with a product or changing it. It was one of the early
adopters of technology in the industry. It not only realized the power of media in the right time but also made
good use of it to attract more consumers to its products, retain them, and to showcase its strong presence in
the market.

Serving millions of consumers in over 180 countries, P&G is indeed one of the biggest giants in the industry
and there’s no looking back.

Business Purpose
P&G provides branded products and services of superior quality and value that improve the lives
of the world's consumers, now and for generations to come. As a result, P&G expects to be
rewarded with leadership sales, profit and value creation, allowing P&G staff, shareholders and
the communities to prosper.

Values & Principles

P&G recruits the finest people in the world. It builds its organization from within, promoting and
rewarding people without regard to any difference unrelated to performance. Integrity,
leadership, ownership, passion for winning and trust are P&G’s top value buckets.

Respect for all Individuals, inseparable interest for company and individuals, strategy work,
innovation, external focus, value for personal mastery, be the best and mutual interdependency
are their core principles.

Brief History

A candle maker William Procter and soap maker James Gamble incepted two distinct companies in
Cincinnati, Ohio, USA. The two men, immigrants from England and Ireland respectively, became rivals in
business for using similar resources. But later also became brothers-in-law by marrying sisters in the same
family. During the US recession in 1837, they joined hands to fight the recession together and a new
enterprise was formed: Proctor and Gamble. P&G first operated out of a storeroom. Procter ran the store
while Gamble ran the manufacturing operation. Candles were P&G’s most important product at that time.
Now the P&G community consists of over 138,000 employees working in over 80 countries
worldwide. What began as a small, family-operated soap and candle company now provides
products and services of superior quality and value to consumers in over 180 countries.

The Growth: Looking Towards Future

• In its early years, P&G was in competition with at least 14 manufacturers, but the enterprising
partners soon expanded their operations throughout neighbouring Hamilton and Butler counties in
Ohio. In 1848, Cincinnati was also linked to the major cities of the East via rail, and therefore
Procter & Gamble grew.
• In 20 years of its inception, P&G reached its 1 million mark in 1857 with 80 employees. As the
demand for P&G product grew, company began to expand itself first out of Cincinnati and later out
of United States. P&G built factories in various other locations in the US. New location gave the
company better access to shipping routes and stockyards.
• P&G announced its first overseas subsidiary in England in 1930 and later moved into the
Philippines in 1935. In 1988, P&G announced its largest joint venture to manufacture products in
• In the mid-1950s, P&G began acquiring smaller companies aggressively. In 1955 it bought the
Lexington, Kentucky-based nut company W.T. Young Foods, and Nebraska Consolidated Mills
Company, owner of the Duncan Hines product line.
• In 1957, P&G acquired the Charmin Paper Company and the Clorox Chemical Company. In 1991,
it bought the worldwide Max Factor and Betrix lines from Revlon, Inc. for $1.03 billion and in 1994
entered the European tissue and towel market through acquisition of Vereinigte Papierwerke
Schickedanz AG's European tissue unit and the prestige fragrance business of Giorgio Beverly
Hills, Inc.
• P&G reentered the South African market following the lifting of US sanctions.
• P&G divided its operations into US and International, but later organized around four regions 
North America, Latin America, Asia, and Europe/Middle East/Africa.
• In 1996, P&G purchased the Eagle Snacks brand line from Anheuser-Busch, the US baby wipes
brand Baby Fresh, and Latin American brands Lavan San household cleaner and Magia Blanca
bleach. In July 1997, P&G spent $1.84 billion to acquire Tambrands, Inc. and the Tampax line of
tampons, thereby solidifying its No. 1 position worldwide in feminine products.
• P&G again restructured its operations into seven global business units based on product lines:
Baby Care, Beauty Care, Fabric & Home Care, Feminine Protection, Food & Beverage, Health
Care & Corporate New Ventures, and Tissues & Towels.
• In 1999, in its biggest deal P&G laid out $2.22 billion for the Iams Company, one of the leading
makers of premium pet food in the US with annual global sales of approximately $800 million.
• Last but not the least in January 2005, P&G announced an acquisition of Gillette.

Employee Focus @ P&G

P&G is operating in more than 80 countries and remains very sensitive towards cultural diversity.
P&G runs cultural diversity training program for its employees across all business geographies.
The company has demonstrated significant representation of African Americans and other ethnic
minorities in the area of corporate procurement, corporate board participation, senior
management representation, and total workforce.

The company’s significant growth required better strategic decisions to be made by the business. Many
American companies, including P&G, saw labour unrest in the 1880s. P&G experienced a number of strikes
and demonstrations. The management introduced Saturday afternoons off for all workers but the company
still faced 14 strikes in two years. Later in 1987, P&G management introduced a profit sharing program for
its workforce to avoid them going on strikes and rather work hard to earn greater profit.

In 1890, P&G was incorporated, with William Alexander Procter as its first president. Two years later the
company implemented an employee stock-purchase program, which in 1903 was tied to the profit-sharing
plan. By 1915 61 percent of the company's employees started participating. The company introduced a
revolutionary sickness-disability program for its workers in 1915, and implemented an eight-hour workday in
1918. P&G has been recognized as a leader in employee-benefit programs ever since.

Product Innovation through Research

In 2004-05 P&G invested $1.8 billion (3.5% of Net Outside Sales) in research and
development (R&D). Since then P&G's R&D team has revolutionized home care
with products ranging from Dryel®, the novel way to care for dry-clean-only
clothes in home, to Febreze®, the spray that actually cleans away odor.

P&G’s success is based on a deep understanding of consumers, their habits and product
needs, and also on the company’s ability to attract and support the best innovators in the world,
to acquire, develop and apply technology across its broad array of product categories and to
collaborate with external innovation partners.

In 1890s electricity became common in almost all places in the United States and there was a limited market
left for candles. Finally, the company decided to stop producing candles in 1920. P&G started focusing
aggressively on soap market and began producing more than 30 varieties of soaps. And then one of the
biggest hit of all times in the history of soap industry, “Ivory” soap was introduced in the market.

In 1900, P&G established its R&D division to diversify its products and produce more innovative products.
P&G first identified use of vegetable oils for producing soap instead of animal fat. It began experimenting
with a hydrogenation process which combined liquid cottonseed oil with solid cottonseed oil. After several
years of research, P&G patented the procedure, and in 1911 ‘Crisco’ was introduced to the public. During
the 1920s the flurry of new products continued. Ivory Flakes came out in 1919. Chipso soap flakes for
industrial laundry machines were introduced in 1921. In 1926, Camay was introduced and three years later
Oxydol joined the P&G line of cleaning products. In1930, synthetic soap products hit the market. In 1933,
Dreft, the first synthetic detergent for home use was introduced, followed by the first synthetic hair shampoo,
Drene, in 1934. Further improvements in synthetics resulted in a host of new products years later.

Then Tide came as a miracle. It’s a synthetic detergent that, together with home automatic washing
machines, revolutionized the way people washed their clothes. Tide remains No. 1 laundry detergent in the
21st century.

After five years of research, in 1955, researchers at P&G and at Indiana University developed a toothpaste
using stannous fluoride that could substantially reduce cavities. In 1960, the American Dental Association
endorsed Crest and the product became the No. 1 toothpaste, nudging past Colgate in 1962.

Understanding Markets and Customers

External collaboration plays a key role in nearly 50 percent of P&G's products. It
has collaborated with outside partners for generations.

Its vision is simple:

We want P&G to be known as the company that collaborates — inside and out —
better than any other company in the world.
 A.G. Lafley, CEO,
P&G also invested significantly in market research, investigating consumer needs and product appeal. The
company's market research became more sophisticated when P&G chemist F.W. Blair began a six-month
tour of US kitchens and laundry rooms to assess the effectiveness of P&G products in practical use and to
recommend improvements.

In 1931, Neil McElroy, a former promotions manager who had an up-close view of P&G's rival Unilever,
suggested a system of "one manone brand." Meaning, in effect, each brand operates as a separate
business, competing with the products of other firms as well as those of P&G. The system would include a
brand assistant who would execute the policies of the brand manager and would be primed for the top job.
Henceforth, brand management became a fixture at P&G and was widely copied by other companies.
Procter, committed to the excellence of the company's products, had them analyzed and improved even
before they went to market. This practice was the origin of P&G's superior product development.

Advertising and Branding Initiatives

Advertising was risky at the time; most advertisements were placed by disreputable manufacturers.
Nevertheless, in 1882, P&G approved a $11,000 annual advertising budget. The slogan was "99% pure".
Radio took P&G message into more homes than ever. In 1933, P&G became a key sponsor of radio's
daytime serials. By 1937, P&G was spending $4.5 million on radio advertising. In 1939, the company had 21
programs on air and spent $9 million in it. P&G realized the power of television in its 5th month of inception
and started its creative ad campaign on television which made a bigger impact on overall sales.

During 1985 P&G failed to respond to important changes in consumer shopping patterns. Downfall in
broadcast television viewership (92% to 67%) hit P&G hard. It was forced to rethink its marketing strategy. In
the late 1980s, the company decided to diversify its advertising, reducing dependency on network television.
Computerized market research including point-of-sale scanning also provided the most up-to-date
information on consumer buying trends. In 1987, the company restructured its brand-management system
into a "matrix system” under which category managers became responsible for several brands, thereby
becoming sensitive to the profits of other P&G products in their areas. P&G brands continued to compete
against one another, but far less actively. The restructuring also eliminated certain layers of management,
quickening the decision-making process.

Social Responsibility
P&G’s environment and science department determines where a product goes in the
environment after use and how much of it goes there. Another question determined is what will
be the impact. The department has been analyzing the effects that ingredients in products have
on the environment. P&G is one of the first companies in the world to actively study the
environmental impact of high-volume ingredients in consumer products, packaging and
operations around the world.

An example of this is P&G’s

Children’s Safe Drinking Water Program which is focused on reducing sickness and death resulting from drinking contam