1. Procter and Gamble
Organisational restructuring
Chetan Goenka
Nikunj Passi
Pankaj Rai
Ramya
Vihan Srivastava

2. Overview

3. Evolving Organization Structure in US

4. Organization Structure in Europe

5. Expansion and adoption of Global Matrix Model
 Attractive expansion opportunities in Japan
 Anticipation of the new challenge of appealing to more diverse
consumer tastes and income levels
 Corporate functions in Brussels still lacked direct control of
country functional activities
 Therefore, P&G started migrating to a global matrix structure of
categories and functions.

6. Global Matrix Structure of P & G

7. Improvements bought in by Global Matrix
 Pooling of knowledge, transfer of best practices, elimination of
intraregional redundancies, and standardization of activities
 Integrated manufacturing, engineering and purchasing in to one
global product supply function
 Massive savings by consolidating country manufacturing plants
and distribution centers into higher-scale regional facilities

8. Problems with Matrix structure
 Not symmetrical
 Strategic agenda and non cooperating functional units
 Mgmt by functional conflict led to poor strategic alignment
 Regional managers unable to address global functional conflicts
 Not able to fully resolve the tension between regional and
product category mgmt

9. Organization 2005
 6 year re-structuring plan estimated to cost $1.9 billion
 Voluntary separation of 15000 employees by 2001, with almost
10500 overseas
 Reduced management layers from 13 to 7
 Dismantling the Matrix organisation into :
– GBU primary responsibility of product development, brand design,
business strategy and new business development
– MDO with primary responsibility of market
– GBS for managing internal businesses processes
 The new org design was intended to improve speed with with
P&G innovated and globalized its innovations

10. MDO’s and GBU’s
 Operated autonomously
 7 GBU’s each headed by a president who reported to the CEO
directly and were part of the global leadership council
 At GBU level, V.P’s of mktg, product supply, new business
development reported to GBU president
 The structure was intended to increase agility and reduce costs
through accelerated global standardization.

12. Issues Identified of Organization 2005
 Instead of increasing market share of existing products, they
increased number of categories and brands
 Decision power was transferred from committees to individuals.
 Increase in performance linked pay for upper level employees
 Clash of interests between GBU and MDU

13. Thank You !!!