Scribd
Upload
82 views1 page

P&G's Organization 2005 Restructuring Plan

Procter & Gamble was founded in 1837 by British and Irish businessmen to originally sell candles. It is now America's largest household products company with over 250 brands across six categories. In the late 1990s and early 2000s, P&G struggled with slowing sales growth and missed profit targets, causing its stock price to drop sharply. In response, P&G launched its Organization 2005 restructuring program to standardize processes, change culture, flatten hierarchies, cut costs, and transition to a structure based on global product categories rather than geography. The program aimed to improve competitiveness and efficiency through innovation and reduced time to market. It reorganized P&G into global business units, regional market organizations, and centralized shared services while

Uploaded by

Hershid Panchal
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
82 views1 page

P&G's Organization 2005 Restructuring Plan

Procter & Gamble was founded in 1837 by British and Irish businessmen to originally sell candles. It is now America's largest household products company with over 250 brands across six categories. In the late 1990s and early 2000s, P&G struggled with slowing sales growth and missed profit targets, causing its stock price to drop sharply. In response, P&G launched its Organization 2005 restructuring program to standardize processes, change culture, flatten hierarchies, cut costs, and transition to a structure based on global product categories rather than geography. The program aimed to improve competitiveness and efficiency through innovation and reduced time to market. It reorganized P&G into global business units, regional market organizations, and centralized shared services while

Uploaded by

Hershid Panchal
Copyright
© Attribution Non-Commercial (BY-NC)
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd

Proctor & Gamble : Organization 2005 Program

Founded in 1837 by William Procter, a British citizen and James Gamble, a US-based Irish soap maker
and industrialist. The company first sold candles.
Today Procter & Gamble (P&G) is America’s biggest maker of household products, with at least 250
brands in six main categories: laundry and cleaning (detergents), paper goods (toilet paper), beauty care
(cosmetics, shampoos), food and beverages (coffee, snacks), feminine care (sanitary towels) and health
care (toothpaste, medicine).
However, P&G had not been very successful with some major crisis in 2000. ‘Annual sales growth had
been slowing over the last few years & company stumbled badly in 2000 missing analysts’ profit
expectations and causing its famously reliable stock to plummet from $103 in January 2000 to $64 in
June 2001.
In order to accelerate growth, P&G's President and CEO, Durk Jager (Jager) officially launched
the Organization 2005 program in July 1999. Organization 2005 was a six-year long organizational
restructuring exercise which included the standardization of
-work processes to expedite growth
-revamping the organizational culture in order to embrace change
-reduction in hierarchies to enable faster decision-making
-retrenchment of employees to cut costs.

Analysts believed that Jager concentrated more on developing new products rather than on P&G's well-
established brands he did too many things in too short a time. After a brief stint of 17 months, Jager had
to quit his post &In June 2000, Alan George Lafley (Lafley) took over as the new President & CEO of
P&G. Lafley announced he would improve operations and profitability and rebuild the management
team & the program was then carried out under his leadership.
The goal of the program was to improve P&G's competitive position and generate operating efficiencies
through more ambitious goals, nurturing greater innovation and reducing time-to-market. This was to
be accomplished by substantially redesigning the company's organizational structure, work processes,
culture and pay structures. Organization 2005 envisaged the transformation of P&G from a
geographically based organizational structure to one based on global product lines. The program had
five key elements:

1) Global Business Units (GBU): P&G moved from four business units based on geographical
regions to seven GBUs based on global product lines.
2) Market Development Organizations (MDO): established eight MDO regions to tailor global
marketing programs to local markets
3) Global Business Services (GBS): Overhead functions such as HR, Accounting, Order
Management, and Information Technology were merged to one corporate organization
4) Corporate Functions: Most of the corporate staff was transferred to one of the new business
units.
5) Company Culture: Redesigned reward systems and training programs to improve result
orientation amongst employees.
 
http://www.freebert.com/Products/PHPFunctions/DetermineAgeFunction.php

You might also like