Osd section b group 7
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Transcript of Osd section b group 7
P&G and Unilever Organizational
StructureLessons to Learn Presented byGROUP 7 SECTION-BHimanshu Dhamija UM15081Saif Hasan Rizvi UM15105Rahul Kumar Jena UM15101Sibasis Mohapatra UM15111Varanasi Arjun UM15121Yasasvi Santosh UM15123
Procter and Gamble
Introduction – Proctor & Gamble
1837 $83.06bn 180 300RevenueEstd. No. of countries
-Global Presence
No. of BrandsOrganizational Structure over the
yearsThen Now
Proposed by Jager, then CEO of P&G
Followed a Geographic Divisional Structure
To increase production , innovation & technology support
To decentralize power referring decision making to lower level managersTo encourage learning and sharing from each other yielding innovation, brainstorming & empowerment
GBU’s grouped into 4 Industry Based Sectors – Industry-wise and geographic focus
Streamlining the resources by concentrating on few brands
Focus on common consumer benefits, share common technologies, and face common competitors P&G’s initial thought of Transactional Change cascading to more Holistic Transformational Change.
Results Forced Adaption
Decline in Profit Results Wide Focus Increased
revenue
STRENGTHS WEAKNESSES
OPPORTUNITIES THREATS
• Robust innovation capabilities• Global outreach to 180
countries• Brand value worth 24 bn $• Organizational structure
promoted Speed , flexibility & agility• Very strong marketing channel• Invests close to 500 mn$ for Understanding consumer behavior
• Declining expenditure in Innovation
• Big product breakthrough fell by 6%
• 14% decline in operating Income Between 2011-2013• 3 major organizational
restructuring in 8 years• Low degree of Employee
empowerment • Net earning from core products
fell by 6%
• CAGR of 23% in 4 years from emerging markets
• Profensive strategic approach• Use of own website to sell
products• Ensure more employee
empowerment • Greater rural penetration in
emerging• markets• Products to cater to regional
tastes
• Lack of product line in the economy end as compared to competitors like HUL weakens its positioning in emerging markets
• Falling market share form 11.75 to 11.25 % in three years
• Presence of cheap substitutes• Lack of cross functional linkages
between GBUs & shared services leading to lesser innovation
• Your text goes here• Your text goes here
Major Strategic Initiatives
• P&G launches direct sell website
•P&G cuts down digital roster
• Improving productivity
•P&G invests 2 bn $ in R&D in 2015
• Includes sustainability into its areas of core strength
•Restructures Marketing Organisation as “Brand Management”
•3 major organisational restructuring
•P&G to sell of 43 brands worth 12.5bn$
•P&G cuts down the number of agencies it works for by 40%
•Focus on billion dollar brandsTo cut costs
79/80 brands contribute 90%
salesNet income fell by 41.67% in FY 2015
Single point responsibility for
strategies, plans & results of brands
To simplify structure To increase employee
empowerment
To cut down costs of using marketing
channels
Speed , flexibility & agility are the three prime requirements
to sustain in the FMCG businessTo gain the lost market share by introduction of
innovative products
Emerging Economies
•Product differentiation•Price positioning in economy range•Taping rural market of emerging economies
Distribution Channel
•Parapharmacies/drugstores in markets like Brazil & China•Direct Internet retailing
Inclusive Innovation
•Consumer price at starting point of innovation
Economy brands
8 premium brand segments have shown constant decline in margins
PROBABLE STRATEGIES
Strategic Approach
⊸ Type of strategy: Normative Re-educative⊸ Two way communication - regular feedback & a conducive climate⊸ Greater degree of customization/localisation (in terms of schemes / products)
⊸ Type of typology: Prospective Typology⊸ Aggressive Planning and implementation so as to get first mover advantage⊸ Greater empowerment to the lower level executives so as to make them accountable
⊸ Type of approach:Adhocratic⊸ Lean and mean – so as to reduce costs and concentrate the resources on best selling
brands⊸ Focus on innovation and improvement ⊸ Type of Control: Implementation⊸ Implementation-adding small elements of innovation into everyday P&G processes in order
to enact cultural change.
Proactive Defensive Profensive
Unilever
Introduction- Unilever
1929 Euro 53.3bn 26 >400RevenueEstd. No.1 FMCG
brand country wise
No. of Brands
Organizational Structure over the yearsThen Now
Jointly owned by two parent companies; Unilever N.V. and Unilever PLCComprehensive restructuring of operations and businessesFocus on fewer, stronger brands to promote faster growth. Acquisitions playing a big role.Profit Increased by 16%, Share price recovered by 30%Its Leading brands now accounted for 88%, up from 75%.
Focus on big products, reduce stock keeping units (SKUs), improve working capital management, cut headcount.
Each level within the hierarchy serves a different function allowing the other levels of the organisation to concentrate on their core roles
Acquisitions will continue to play a big role
Resilience in challenging economic conditions
Results Forced Adoption
Decline in Profit Results Organisation
flexibilityCross sectional representation
NV Share Holders PLC Share Holders
DIRECTORS
NV PLCEqualisation & other agreements
NV owned companies PLC owned companiesJointly owned companies
LEGAL STRUCTURE Strategic Groups
Home & Personal Care
Food & Beverages
Innovation & Sustainability
STRENGTHS WEAKNESSES
OPPORTUNITIES THREATS
• Strong Parentage and hence Strong Brand Equity
• Strong Brand Portfolio• Unmatched Distribution
Network• Excellent Research and
Development
• Losing Market Share in most categories due to competitors strong Brands
• High Advertising Costs• Declining Export Level• Mimic Brands
• Large Domestic Market• Large Untapped Market
available• Changing Lifestyle and
Rising Income Levels• Export Potential-
expansionist Policies• Opportunity in Food
Sector
• Increasing cost of Raw Material
• Intense and increasing competition from local as well as MNC Players
• Competition from unbranded Products
• Competition from its own brands
Profitable volume
Growth & Scalability
Cost Leverage
+Efficiency
Innovation & Marketing
Investment
Path to Growth
Building Brand Equity in both rural
& urban markets
Strategies Followed
Current Issues with HUL• Hindustan Unilever's aggressive advertising and discounts
failed to lift sales(Sales fell by 2.7% in 2014)
• Absence of a funnel of new products in the pipeline( New product success rate fell by 5%)
• Weakening of emerging markets last year that made Unilever's third quarter sales the weakest in five years(Profit margin fell by 4.4%in 2014)
• Sustainability challenges
• Attempt to shrink the environmental footprint( Carbon foot print reduction was 12 % in 2014-2015 compared to targeted 32%)
Accelerate Premiumisation for developed markets
Improved SCM & 100% sustainable sourcing of raw
materials
More focus on “Cause Marketing”
Reduce usage of fossil fuel in operations
Improved dynamic in pricing &
differentiation strategies in
emerging markets
•Normative Re-educative
TYPE
•Prospective-Operations•Analyser -SustainabilityTYPLOLGY
APPROACH Adhocracy
CONTROLImplementation-OperationsPremise- Sustainability
Recommended Strategies Strategic Approach
+ HYBRID STRUCTURE+ Departmentalization
Product, geographic and Functional+ Moving from Centralized to Decentralized structure+ Moving from narrow span of control to wider span of control
COMPARATIVE ANALYSISP&G⊸ Over 50 brands⊸ Vision of P&G is be, and be
recognized as, the best consumer products and services company in the world
⊸ P&G serves 650 million customers in India directly through 1.3 million outlets
⊸ P&G works on 5 specific sustainable strategies i.e. Products, Operations, Social Responsibility, Employees and Stakeholders.
⊸ P&G doesn’t have the strong supply chain to reach out to all the customers. In terms of emerging market expansion, it suffers from lack of brand coverage in economy ranges where some of its rivals have an edge.
HUL⊸ Over 35 brands⊸ Vision of HUL is primarily to
help people feel good and develop new ways of doing business that will allow it to double its size while reducing our environmental impact
⊸ It has robust supply chain and distribution network covering over 3400 distributors and 16 million outlets to reach out to customers
⊸ HUL has Unilever Sustainable Living Plan (USLP) that comprises of 4 things i.e. Winning with Brands & Innovations, Winning in the Marketplace, Winning through Continuous Improvement and Winning with People.
⊸ HUL is over dependent on Indian market and depends on it for majority of revenue generation
RECOMMENDATIONS⊸ Further decentralization of responsibilities to respond
flexibly to internal and external changes⊸ Tannenbaum and Schmidt continuum-collaborative style of
leadership to continue growing⊸ Motivate and engage employees to extract constructive
criticism and feed back for growth of Unilever⊸ While organizational changes are not implementable
overnight, adaptation to newer technology is essential⊸ Comparative advertising is there to stay. In real terms, it
must be used often as it makes it easy for consumers to evaluate and chose the best among several available options.
⊸ Increasing economies of Scale(Production Orientation)⊸ Higher bottom lines which can be used in R&D(“ Think
globally, act locally”) and M&A target Non Users and ⊸ New opportunities.⊸ This leads to Blue Ocean Approach with High value low
cost⊸ Cross-departmental task force⊸ High concentration on Emerging market.⊸ Sustainability: Keeping ecological footprint low(Recycle, bio
degradable) Social positioning
CONCLUSION
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