Procter and Gamble Company is an American company engaged in the production of a range of various consumer goods. It is situated in America, making up as the American 25th largest company in terms of revenue. It is figured as the 18th largest company in profit marking within American industry and as the 10th most admirable company.
Its history is dated back to 1837 by the business partnership of William Procter and Gamble James. Its headquarters are in Cincinnati, Ohio in the U.S.A. The company is engaged in the production of a wide variety of personal consumption commodities. It currently has an employee amounting to 183000 with other subsidiary companies located in Australia, Asia, Europe, and the USA.
It has its product brands running to more than three hundred in number. Either, the company products (market) are segmented into three different segments since July 2007. This was done about the various earnings as depicted by such various brands. They include beauty, which is comprised of the beauty and grooming market segments, the house-care, which comprises of baby, and also broad family care business segment. Either, the home and fabric segment are part of it. Its brands can also be segmented in terms of health business segments. (Carpenter, 2004).
Throughout its activity, Procter and Gamble Company have used various adaptations, which relate to its strengths and weakness, which then lead to various market opportunities and threats. Among all these variables, their results affect the organizations differently either positively or negatively, which imply various competitive advantage and disadvantages of the company within the market.
Perhaps, the greatest attribute that can be recommended is its diversity in the strengths that make it competes well in the market, hence, therefore, having various competitive advantages. Such strengths are, however, including organization, structural capital efficiency, technological, strategic, market segments, and optimization in cost variables above others.
To the company, the organizational structure is comprised of a well-formulated scale of organizational leadership. It is headed by the Chief Executive Officer (CEO), with the board of directors, various managers, and group leaders, senior and junior workers, which forms the employee fraternity. With such a good organizational structure leadership, duties and roles are divided among the various leadership stakeholders within the organization. Therefore, the dissemination of orders, authorities, and regulations under a good organization, which helps to minimize any organizational conflict within the chambers of leadership. In all cases, good organizational leadership is important in securing the cordial performance of an organization. With such good leadership within an organization, it helps to build the organizational behavior, which on the other hand will determine the comparative authenticity of how the organizational activities will be performed. To Procter and Gamble Company, respect for good organizational behavior has even placed itself in a good scene where the worker’s productivity has been increased due to the good interrelationship between the workers themselves and between them and the management. (Schippman, 1999) Dissemination of duties has been an active one, where every party to the organization is made to perform a particular duty, which helps to minimize the possible conflicts.
With the broad segmentation of its business products, the company helps to produce a wide range of products, which helps to serve various consumer needs within the market. Its products consist of a business segmented into three distinct segments i.e. beauty, household, and health. With this diversity in products choice, the company can adequately serve the needs of the diversified consumer needs within the market. This will help to even expand into various market segments and regions, which could not have otherwise been the case if vulnerable to producing only a small number of products. Either, diversification of product choice helps to diversify the choice of risks and uncertainties that is now broadened to a wide choice of product sale activities. The company can therefore have fewer chances of loss with such a broad spell of products. Above all, the broad product range has been doubled by the high number of subsidiaries that the company has across many continents. With such many subsidiaries, the company, therefore, operates with a diversified range of business cultures, bringing with it various economies from these business subsidiaries. With such a culture therefore the company is able even to embrace the various advantages spread over its operating bases. (Maclean, 2006).
Technologically, the company operations are comprised of highly technical business activities that help to ensure optimization in the costing theory and production of high-quality products. Through the use of the various high technical methods of production, the company embraces the low cost of production at various economies of scale. Its system of production is composed of various technological tools at the manufacturing departments, computerized accounting technologies, business networking interrelationship, communication, high labor-saving technologies which are both efficient and fast above other compliments to technological efficiencies. High-quality products help to compete adequately within the market giving the company a good competitive advantage.
To the company, it has been able to secure a good market share and popularity in the market through its adequate, efficient, and active methods of business advertisement. The company uses various advertisement methods as strategies that help to increase the popularity of its products within the market. With such good advertisement protocols, it has been able to attract good sales volumes for its products. It uses various media advertisements product campaigns and the internet as means of advertisements.
With these strengths, therefore, the company is vulnerable to various market opportunities. Firstly, due to its intensity of activity, it’s able to have a highly competitive advantage within the market where it can get a good market share for its products. The company products consist of a wide range of output which serves many customers requirements. With such broad product lines, different customer needs within the market can be catered for.
Either its broad dimensional subsidiary network is perhaps an important tool that the company uses to diversify its activity across many world countries. With such broad operational phenomena, it enjoys the advantages of large-scale production and the consumer detail of various cultural states that could differently relate to the consumer requirements in these states.
It uses various advertising methods and facilities to popularize its products and activities in the world market. Perhaps, the extensive consumption condition within the company’s products could be attributed to the intensity of its advisement activities that have helped to bring awareness of its products to the global community. Elsewhere, this has been ensured by the use of highly attractive methods of advertisements reaching many customers at an efficient and how cost means.
To the company, its active penetration and competitiveness in the market have been a result of highly efficient and technical methods of production that produce high-quality products. These products, though of high quality are only sold at relatively low cost compared to the other competitor’s products, the company is, therefore, able to have a high competitive advantage within the market. However, these high-quality products are only a result of using highly technical methods and machinery in the production process.
Despite the continued performance of the company, its operational structure is compromised by several weaknesses, which are a threat to the future activity of the company.
Firstly, its extensive entrance into the foreign industrial system has involved activities that have not been geared towards studying the business culture in those foreign subsidiaries. In every foreign activity, an investor needs to study the business culture operating in those countries. Such a foreign business culture is comprised of various business regulations and requirements that could highly be a threat to any foreign investor who does not adequately understand the business requirements and expectations in the foreign environment. Doubled to this are the various risks within the external environment that would actively lead to losses in starting such businesses. This would include political and market risks. For any foreign investment, it’s advisable to have an adequate market scan about the possible causes of these risks that could affect their business activities. However, for Procter and Gambler, its extensive foreign investments are perhaps limited to adequate critique about the business culture in those countries (Bloodgood, Allan, 2002).
Either, to the company, the problem of managerialism is among the biggest weaknesses operating within the company. This has been observed in a case where the managers (top administration) have been the sole decision-maker in the company’s structure. This can highly lead to radical decisions made by the managers without regard to the resolutions and recommendations of the shareholders. This goes against the normal state of the company leadership where shareholders should make decisions together with the board of directors and the managers. Decisions made solely by the managers are a threat to the maintenance of the assets.
In all its activities, the company uses highly technical and productive methods, which are costly in terms of technological purchase, maintenance, and distribution. This is however done without proper dimensional tools of relating their costs and the relative productivity benefits of such technological purchases. The otherwise un-planned technological purchase could even be adding less profit benefit to the company revenue than the use of less technical methods of production.
With its operational activities, the company is faced with several threats. Firstly, its extensive foreign investment could even lead to business losses from those companies’ subsidiaries when foreign business culture works to bring various operational risks hence losses. This is because the diversity in this business culture has various political and economic risks that could be unknown to the company in the short run as it attempts to diffuse in these foreign markets. Unplanned foreign investment is a threat to making losses in such foreign investments.
Either, the organizational structure is comprised of many professional inconsistencies which is a threat to the organizational conflict that can even lead to low productivity by those workers hence the company is at a threat of operating perhaps at a loss.
It broads product output could be a threat to its future revenue in case of any consumption shocks that could lower the consumption-ability of the consumers. Hence, therefore, any external factors hindering the consumption of the products would lead to such high losses operating within the company.
Extensive technological advancement within the company would be a threat in the sense that the technological expenditure may not correspond to the benefits, which are got from the production activities.
The company faces a threat of high competition within the market where other companies producing the same kind of products can complete adequately with the company after studying the production system and adaptations of the company.
P & G Acquisition of Gillette
On the 28th January 2005, Procter and Gamble acquired Gillette at the cost of $57billion. The company had an estimated sales turnover of $10.3 billion. Although the company has been acquiring various companies as joint ventures its acquisition of Gillette in 2005 was the biggest acquisition down in its history.
Since the joining of its CEO in 2005 (James. M.Kilts), Gillette Company had been figured to have a continued profit turnover in its market activities.
With the magnitude in the production capacity of the two companies working as a joint venture, the companies could now operate in a stronger position that could be a unique opportunity in realizing its increasing benefits. With this acquisition, therefore, the Procter and Gamble Company could now provide for the products of the Gillette Company in its market, which consisted of shaving products, together with copper batteries that also formed the largest market share in the company. With this merger, the Procter and Gamble Company were to therefore diversify its products to include those produced by Gillette. This was perhaps the biggest venture that could be done by the P & G Company.
As a business strategy, therefore, an acquisition of a company by another company relates to a diversification of business strategies that the acquiring company wants to process within the operating structure of the other company. In all its aspects, to acquire another company could get benefits from making new business startup on their own in the foreign environment. An already existing business would have already adopted itself in the operating environment in the market of its products. It will be producing its products in line with the right quantity and quality that can enable the company to have the biggest content of comparative advantage in the market. Therefore, to acquire such a business purposely entails acquiring the market or industry system.
Therefore, acquisitions are better than a start-up regarding the various levels of risks that may be inclined to the business performance as a start-up. Firstly, a business start-up may be compounded by various political risks within the state’s market or industrial. As a business rule, political risks are comprised of various political costs, which may work to reduce the operational benefits of such businesses. However, acquisition of an already existing business would therefore help to minimize such operational costs that could even be attached to the existing political shocks and weaknesses within the state governance. Various government regulations within different states could work to hinder the possible business operating procedures. Either, various political shocks and ethics could adversely hinder a young growing company formed through a start-up. Other various forms of business regulations by the government could work to hinder the success of the new business start-up.
Within the market, are various market risks and uncertainties that can lead to losing operations if not under keen analysis and observation during a business startup. However, an already existing company/business entity would have used various methods in its operations as strategies to out way the existing shortcomings within the market system. In the market, therefore, competition is the biggest factor to consider in deciding/formulating a decision to join the market. The different market system implies the use of various tools that helps an entity in developing various strategic moralities aimed at achieving a success in the competition within the market. Depending on these market structures such as competitive, monopolistic, and duopolistic structures, the market risks are variedly stated due to the nature of the competition by the industries.
However, the acquisition of an already existing company/ entity would act to safeguard many of such risks within the market. This is because, within its operational parameters, the already existing company would have laid out various strategies that would adequately capture the competitive risks premium in such operational environments. It would therefore have to formulate various lines of production whose specifications, quality, and quantity would give them the greatest attraction within the market. Such a company would also have to develop other various forms of efficiencies that could adequately imply optimal forms of activities hence, therefore, minimizing the cost of production against a high scale of revenue for such activities.
Benefits of P & G in the acquisition of Gillette
In its view, the Procter and Gamble Company has had various benefits in its acquisition of the Gillette Company. Firstly, it had the benefit of technological development. In every aspect of production, technology is therefore passed to the new product as an output from the production process. The production process involves the use of various machinery and technological know-how in the production of the final product. Consequently, this technology is passed over to the final commodity as embodied technology. To P&G Company, Gillette possessed a mode of technology in which it was unable to have (deficient of). With its acquisition of the Gillette Company, such technology has therefore been carried forward to the P & G Company. To the company, therefore, it can now embrace product outputs that it originally did not have. Perhaps, to develop the technology would have been more costly than the much it has been purchased for by P & G Company from Gillette. Various cost elements would make such development even be expensive. Either, the establishment of such new technology would be compounded by various market risks and uncertainties whose cost would either be higher compared to the margin of prices at the existing state.
To the P & G Company, it has embraced various operational efficiencies in its acquisition of the Gillette Company. Business analysts have recommended joint ventures and acquisitions to be bound by various operational efficiencies compared to new business startups. In all aspects, business startups are compounded by various operational costs, which could even be highly costly compared to acquisitions. (Stapledon, 1996) During startup, investors are required to have a broad outlay of operational cost procedure that forms the initial start-up of such business ventures. Such requirements can highly be expensive in terms of machinery purchases and sourcing of raw materials above another startup cost such as the premium cost of operational risks and uncertainties. However, in a business acquisition, the acquisition cost could be relatively economical compared to the start-up cost. Such acquisition cost can only involve substantially reduced operational costs as an offer by the other company in its view to have operations benefits in the merger with the other company. (Barrese, Scoris, 2003).
To the P& G Company, its acquisition of the Gillette Company is perhaps the first and the biggest attempt in the diversification of the market for its products. In every business acquisition, merger, and joint venture the intercept of markets diversification is embraced as a benefit. Since in such mergers, business partners will help to diversify the market frontiers of the other partner through the sale promotions of its product. To P & G, it will enjoy the sale of its products in the markets of the Gillette Company. This is a way out for diversification in the market areas of the P & G Company. To the company, it would therefore benefit from the marketing economies got from such marketing campaigns, which are done for its products by the Gillette Company. In all cases, the P & G would have experienced high expenditure costs if it were to establish marketing outlets at the marketing zones of the Gillette Company. The biggest of these costs would be the formulation of a market research plan. For a company, the entrance to new markets involves market analysis and research into the suitability, competition and the economies borne in its starting or extending its boundaries into other markets. These research projects are normally highly costly and calling for high expenditure by the company. Other related marketing costs savings would be legal requirements that can be attributed to entering new markets, technological and equipment expenditure above that of the warehousing and transport costs.
However, to the P & G Company, its merger with the Gillette Company is a concise attribute leading to economic cost savings of a varied nature. (Hollingsworth, White, 1999).
Survival and adaptability against market risks and uncertainties; one of the biggest detriments to any foreign business operations are the cost related to the market risks and uncertainties. At the foreign marketplace are various disequilibria, imperfections, and inequalities that work to destabilize the equilibrium state of the market structures and systems that would have been determined by the force of market supply and demand. Such an equilibrium state is what determines the stability in the supply side of products and services and the demand function of the consumers to such product supplies to produce an equilibrium price adaptable for both supply and demand function. However, the state of such stability is compromised with the interactive forces of the market demand and supply, which only work to lower the stable state of market equilibrium. The stability is determined by the state of the market competition. Due to the state of competition, various legal frameworks are drawn as adjustments to the resulting consequences following the unstable equilibrium state. Within the competitive framework of the market, sceneries are various risks and uncertainties that could be as a result of various market activities developing as an adaptation to these market inefficiencies. (Kay, 1995) Due to the existing state of competition in the market, the requirement of commodity production to successfully compete within the market would call for highly increased production efficiencies which would thus increase the state of production quality to have output successfully competing in the market. This would mean an improved state of technological advancement, which would imply higher costs of production. Either, high market competition can lead to low sales turnover by the company in which the competitors would be producing products of a higher quality than the P & G Company. However, the acquisition of the Gillette Company would work to minimize/reduce the probable risks that could be attached to a new startup by the P & G Company. (Sundem, Stratton, 2006).
Either, acquisition of the Gillette Company is a hidden method/strategy for survival or an escape to various political risks and uncertainties. The concept of foreign business culture is an important tool in understanding the foreign political risks that could be attached to foreign entrances of the business undertaking. Various foreign governments have various regulations that affect the concept of undertaking business in such foreign country environments. To P & G Company, its acquisition of the Gillette Company is perhaps one of the biggest benefits in its business performance to form business start-up in the foreign environments, it would call the company to embrace and understand the diverse and stringent government regulations working within the states governments of these countries. (Hoffman, 2007).
With various regulations by the government, therefore, this can only work to act as an operations loss to such entities. By its nature, political risks are cost disadvantages accruing to the company. Such risks could therefore work to out way the nature of the company’s benefits only to decline their revenue benefits. (Fleet, Wright, 2001) However, with the P & G acquiring Gillette, it has thus done away with such instances as resulting in political risks. With the long trade of Gillette within its operating environment, it has been able to adequately learn the political systems and the possible resulting consequences that may arise from such government regulations. Since it has therefore paid for the government regulation fees for its operations, the Gillette Company will adequately take this advantage across to the P&G Company where it will therefore embrace the results of such legal regulations achievement. Political risks are caused by various government regulations that work to hinder the health performance of business entities. (Liou, 2000) Various government regulations such as tax regulations and lack of pay to subsidy allowances can highly work to hinder the growth status of business entities. Unfavorable government regulation activities can result in a high cost of operations to the business entities. Either, various political instabilities or government involvement in the business can result in high business risks. Political instabilities are thereat to the business organization, which may result in various risks and related costs to the business. To P & G acquiring Gillette is however a way out to inhibiting the decrease of the risks.
To the P & G Company, it embraces the benefits attached to the Gillette Company of high products advertising modalities and company campaigns. Originally, Gillette was composed of an international scale company with outstanding market campaign strategies for its products. With such campaigns, the company has been able to popularize its product within a market full of competition. For the P & G joining it, it would therefore mean an indirect embracing of the marketing and advertising economies operating within its operating system. This is perhaps one of the biggest cost-saving activities for the company. In business involving foreign entrances, huge marketing and advertising campaigns are important tools if the company is to thrive well in such markets. However, such campaigns are basically of high-cost variables, which could be uneconomical in the long run for the business entities. To the P & G, it has however been able to embrace the economies attached to the market campaigns done by Gillette.
Managerial tasks for strategy execution. The biggest acquisition by the P & G Company on Gillette was done in 2005. However, since 1999, the company had a series of other acquisitions, which could however not be of big value as the one for Gillette. In all its attempts in acquisitions, the company was using various tools to ensure an increasing competitive advantage within the markets place activity and elsewhere to increase its operational volume. It involved various studies regarding the foreign market system, which the company could then work towards ensuring their adaptations.
With its move for resuming growth, the company chose to acquire various brands through the acquisition of other companies from 1999. With such acquisitions, the company could therefore be able to compete successfully with the other big retailing companies and hence have a competitive advantage due to its extensive operating nature. With the big magnitude in its activities, the company could then have better economies of scale regarding its extensively big activities.
In the execution of these strategies, the company used various managerial tasks that help to ensure the realization of its goals. The company structure is comprised of a good organizational structure, which perhaps has helped to even realize good organizational behavior.
In any organization, strategic management is an important tool when a firm or an organization wants to achieve its goals through various strategies. Such strategies are only achievable through a sound organizational structure, which permits good organizational behavior. Within this structure are the organization management and the workers who work cordially with one another to achieve the growth and development goals and strategies of the organization. The workers achieve organization strategies through various strategic management tools in which managers use various organization efficiency tactics in assistance.
Due to the various requirements for the execution of the strategies, the managers have various tasks, which act as the guiding formula in ensuring that the organization’s activities are achieved without conflicts. Such tasks can be defined as the rules or models through which managers employ in achieving strategy execution. However, their intensity and applicability vary from one organization to other due to the intensity of activities goals and motives, competition, and operational advantages that may differ from one organization to the other. To the P & G Company, these tasks have been greatly applied throughout its resumption goal of growth and expansion since 1999. They are applied variedly about the need and the environmental relations of the operating state of the company.
Perhaps the greatest of these tasks is the aspect of planning. Planning is the aspect of formulating procedures, methods, and tools to achieve a certain objective with the constrain of the available resources. The company in the execution of its strategies since 1999 adequately observes this concept. About its resources and complement with various goals and objectives, the company has used planning as an important implement of achieving its goals.
Its main goal and objective have been to foster an expanded horizon in its activities by expanding the manufacturing and market choice of commodities for its consumers globally. However, this is a recommendable goal though faced with many challenges both operational and structural. To fight against these challenges, it has used various planning implements and methods that help it to thus achieve its goals. Its main goal is a fostered expansion in the foreign environment. Within this foreign environment are various risks and uncertainties above the challenges of resource inputs.
To prosper well within this environment, it has exercised a great deal of planning methodologies. By itself, the establishment of business in foreign countries is itself one of the results of its planning tools. Within it, the company has a clear study of the business culture dictated by such foreign environments. With a clear understanding of this aspect therefore it uses the tool of business acquisition throughout since 1999 as a remedy of the problems and risks that could be allied to startups in the foreign countries. This attribute is a clear analysis of the good planning structure by the company to overcome the possible risks allied to a start-up. In avoiding such, it has taken the choice of acquisition in which case, through this acquisition, a lot of operational efficiencies will be attained for business entities, their operations are constrained by the aspect of limited resources. Limitation in resources is an aspect that may make an organization not successfully meet its goals if such resources are not properly planned for. To the P& G Company, it is not an exception to this rule. Therefore it has various resource constraints that hinder its operational system. However, to the company, its motive for foreign acquisition is a plan to remove the problem of resource constraints. Foreign business startups involve a huge requirement in terms of establishment costs and expenses. Generally, the acquisition is voiced as been cheaper in terms of expenditure costs than startups. This is because, in the acquisition, the already existing political and market risks will have been captured by the business. It will therefore have formulated various strategic adaptations that help it prosper well in such an environment. For a startup, the possible costs of such risks and uncertainties will have not been known and hence the new business ventures could even trade at a loss due to such cost of risks.
The planning aspect of the company is also captured in the good outlay of its technological and human resource variable. Although the company has adequately planned on the limited technological and human resource management, the planning of the company is to adequately compete well in the global market. For adequate quality assurance in the global market that would compete adequately in the global market the company has therefore used optimal allocation of its technological and human resources in all its ventures. With such good allocation plans, it has then been able to have such good product output that can adequately compete in the market. (Stankard, 2002).
The analysis is an important aspect used by a company as a managerial task in its activities. The analysis involves a scan of an investment situation relating it to the operational environment to yield a conclusion or decision about the authenticity of an investment decision. The analysis takes a broad outlook such as environmental, competition, technological, human capital, and strategic and financial analysis above other facets involved in a normal business situation. (Mossi, 2000).
With this analysis, the management is, therefore, able to relate to the possibility of thriving in such a market industry with the constraints of the various business operating requirements. The greatest aspect of the analysis is the study of the effectiveness of the market/industry competition, which is a key determinant in the success of any business. With such analysis, the management can then draw various decisions regarding whether to join such an industry and the various transactional requirements for such a decision. For the P & G Company, a great deal of such analysis has been the major tool of formulating decisions regarding expanding its business setup. Its analysis has involved all the operational structures related to the strengths, weakness, market opportunity, and threats that may affect it in the activity of indulging in foreign business entrances. Firstly, strengths and market opportunities are only realized through an extensive study of the competition state in the market and industry. In all its results a great deal of competition is however facing this industry. Through this market/industry analysis, the company can know the state of its competitors in terms of their scale of activity and the relative quality of products within the market. This has been highly important for the company in its final decision of making various goods/production that adequately helps it to compete well with the market. With the analysis of the market competition, the company has therefore structured various production processes and activities that can adequately help to produce the best quality at the lowest cost possible. This is in its attempt for optimal costing goal order to secure the largest revenue at the least cost possible.
The technological aspect is an important aspect to the company in its activities. The company has employed the use of high technological methods of business operations that helps to improve quality in products, efficiency, and fewer costs of operations. In its overseas expansions, technological analysis for adequacy and availability has been a complementary tool, which it has seen as an important aspect to deal with in its overseas business activity. In its analysis, therefore, the company has been able to evaluate the suitability of suitably help to produce goods that can be of high quality for competition in the market. Such analysis in all its technical analysis aspects, the company intends to optimize the use of its scarce technological resources for the most optimal results and benefits. (Detomasi, 2002).
Analysis by the company since 1999, has involved an evaluation of the suitability and sustainability of its fundamental factors of production as a whole. Such analysis aims to form various evaluations as control tools about the ability of the company to prosper adequately within its goal of expansion. This analysis, therefore, involves a measurement of the likelihood of the factors of production to adequately serve well in the situation, which could adequately help the company to formulate various strategies that can be used to overcome the various inequalities in the marketplace.
In its activities, the aspect of resource allocation is well pronounced throughout 1999 with its goal of business growth and expansion. This is yet another important managerial task that managers should adequately employ in their strategy execution. This is an important tool for the company resources falling under the factors of production i.e. entrepreneurship, labor, capital, and aspects of the land. Without proper allocation, the company would not have embraced the current state of growth and development. However, a clear allocation is mentioned by the nature of the organizational structure, which ensures that all the activities are performed and operated at the most maximum capacity. With the various positions for the company and its subsidiaries, different personnel is given the authority to perform various activities about professional competencies. Resources are allocated with aim of producing the best quality and quantity products through optimization characteristics. For the P & G Company, resource allocation in its acquisition goal for business expansion throughout 1999 has been a key factor. Depending therefore on the varying requirements of its activities in different sites, the company uses a varied level of allocating resources so that various subsidiaries, departments, and activities get such resources allocation depending on the productive nature of such resource allocations.
The basic concept underlying such allocation is the essence of optimal benefits from such resources through optimal production at a relatively high volume of production. Through optimal production activities, the company has been able to secure low costs in its production at a relatively high volume of production.
Optimal resource allocation is also a key component of ensuring efficiency in the company/s production activities. Across its subsidiary acquired since 2003, the company has been able to embrace efficiency in its activities. An efficiency is an important tool in its activities. This is the guiding factor towards lower cost at a high quality in output.
Corporate governance forms a basic component of control into the activities performed by various components of the company. Firstly, the company has been overwhelmed conventionally with an increasing scale of production since 1999. To achieve its goal of expansion and growth through the acquisition of other companies, the tool of control has not been overlooked as an important managerial task. By its definition, control is the application of rules and regulations regarding certain phenomena to yield the required benefits from activity in response to the set of these rules and regulations used for the P & G Company. Its diversified activities perhaps would have not been a success where it is not for the adequate tool of managerial control.
Within its governance, are various departments and various persons with different roles to play. Above this, within its subsidiaries are various production activities leading to various product output. Due to diversity in the personnel (employees and activities within its operation) then various control measures have been taken to ensure that such activities and personnel are performed adequately without conflict with one another.
To cater for this, the company has therefore employed the upright nature of its corporate governance.
Good corporate governance has been the chief tool to control the activities and performance of the company. With such governance, business leadership has been adequately catered for with different persons playing various roles within the organization. This has been the source of minimizing conflicts within the company’s administration system.
Either the corporate governance is comprised of a hierarchy of personnel administration, which helps the channeling of administrative duties to flow from one person to another. This helps to reduce conflict between them.
Either, control is exercised into the physical process of producing its output. As a rule, the production costs element forms an important aspect of an organization’s cost variable. Various techniques are used by different organizations in their administration of production costs. If not properly accounted for, various production systems may be highly uneconomical to an organization. For the P & G Company, adequately understands this factor upon which control factor and methods will be used to ensure efficiency and optimal costing systems. Control will involve proper sourcing of materials, which should be of high quality and of the best quality that can help the organization achieve the most optimal scale of production.
Elsewhere, all production activities are under the control of various supervisory personnel who ensure that activities are done in an orderly manner, with the most maximum exploitation of the resources at the production department.
Broadly, all the management accounting activities within the company’s operating system since 1999 have been compliments of great managerial control ethics. In all aspects, the control in the financial department, human resource, costing, strategic, marketing, and other areas of management accounting therapies. Such control in its activities has also helped the company to adequately have a good corporate governance structuring and performance of its activities.
To the company, budgeting is an important managerial task, which it has used to achieve its expansion goal through acquisitions. Through budgeting, it has been able to successfully fund its new acquisition subsidiaries in overseas countries. Through budgeting, for example, it has successfully been able to acquire the Gillette Company for the$57million, which could perhaps be difficult if adequate budgeting was not done.
The company uses proper budgeting to overcome the constraints of limited resources. With the limited factors of production, it is therefore using budgeting so that activities can be adequately financed for such few resources.
Budgeting will normally involve the financial allocation of activities in the most optimal manner so that the greatest benefit can be got. Depending on the relative importance of different activities, therefore, various amounts of financial allocations are done to these projects. Due to the high volume of activities within the company’s operational structure, it has used budgeting as an important tool to ensure a good and adequate position in the activities. It involves the use of budgetary control measures and activities aimed at allocating various resources to the correct financial authorities. For the company, budgeting has been used as an important implement in all its operational activities since 1999. With the intensity of its activities, this has been an important concept in which it has been able to finance its various activities in its expansion goal through acquisition. Its good corporate governance has been a key contribution towards this success. Budgeting has been the role of well-trained professionals working under different capacities within its finance and budgeting departments. To the company, budgeting has been an implementation of control in which the resources of the company have been properly planned for to ensure availability for such adequate allocation of its resources between its activities.
In its activities, motivation is an important feature in the company’s activities to achieve its goal. Perhaps, its good performance since 1999 can be attributed to the good mode of motivation attributes which has thus been used. Performance in activities by the company workers in the different subsidiaries has been a result of the active implementation of motivational attributes. The employee fraternity has been in harmony with one another, with fewer cases of conflicts within them. This has been through the tool of corporate governance. With such good corporate governance, therefore, employee motivational tools have successfully been applied to yield high employee relations and hence fewer conflicts. (Detomasi, 2002) The concept of good organizational behavior has been a subject of observation in all its business procedures throughout its operations. Organizational behavior has been the result of good corporate governance. With the realization of the roles played by the employees, the company has since 1999 throughout today used various employee motivational activities to ensure increased productivity in the performance.
It has employed the use of varying motivational incentives like leisure service, exchange programs, improvement of working conditions, and other varied motivational tools. With these attributes, employees have been having positive attitudes towards their work that has helped to increase their productivity.
However, with the increasing state of expansion and activities, company employee services and work performance has no longer been a problem. Their activities within various subsidiaries have adequately been done. Motivational activities have helped to increase efficiency at the worksites by the workers. The company has therefore experienced a higher scale of production with such increased employee efficiency. Realizing this, other various motivational standards and techniques have been still the company’s efforts since 1999; the company has evolved through various employees’ development schemes that have led to the current state of activity. With the management realization of the importance and role played by employees in an organization, it has therefore embarked on motivational schemes from one period to another throughout its operational period since 1999. Various employee motivational services have been the tribute of this attention. (Rutledge, Karim, 2004).
Supervision is an important managerial task within an organization. Supervision is a tool for improving productivity and efficiency above minimizing conflicts within the employees. To the P&G Company supervision has been an implement in its organizational control and administration. For the P&G Company, supervision has been explicitly an important method of achieving its goals of expansion through business acquisition. Firstly, the management structure comprises various personnel hierarchies that run from the CEO down to normal employees. (Olander, 2004) The company’s operating system is comprised of a set of activities that are operated within various departments and points done by various persons of different professional and experience competencies. Within the various activities and departments are employees working under the capacity of managers, senior workers, and junior staff. Different managers or senior staff workers are normally allocated the work of supervision of the activities and processes done by the junior staff. To the company, it has maintained a good human resource management department since 1999, with various amendments taking place throughout the period to ensure a better state of workers. Supervision of employees and activities has been seen as an internal control tool for the company to increase productivity within the production frontiers. Perhaps, the current state of good experience into the growth and expansion achievement within the company can be attributed to the concept of supervision, which is highly pronounced. It has implemented protocols and regulations which supervisors follow in the supervisory and guidance activity to the company’s processes. Either, proper guidelines and rules have been an important tool in which case the workers are supposed to follow them in their activities.
Through the act of supervision, the company has embraced the benefits of high quality, quantity, and efficiency in its production output. Supervision, in general, has helped to improve the company’s attempt in achieving an optimal state in the performance of source of reduced costs of operations for the company. With supervision, material sourcing and usage and other various production activities have had a development. In all its department and subsidiaries, supervision has been the core implement for minimizing conflicts in the undertaking of jobs. (Waring, 1998).
Closely to supervision is the monitoring aspect. However, on its monitoring has been a managerial task adequately pronounced and applied within the operational activities of the company. To the company, monitoring has been through the use of various control measure result analysis, which helps to evaluate whether the planned activities and goals have been achieved.
This has been through the effort of monitoring and evaluation departments. With the intensity of its activities throughout since 1999, monitoring and evaluation have been key concepts that the company cannot do without. For its diversity in investment projects through acquisition, importance has been attached in a monitoring and study activity aimed at studying the viability of and profitability states of such projects. (Razaee, et al, 2002).
With this aspect, the department has been using investment indices to study the probable suitability and productivity of its acquisition goals for business expansion. Various investment ratios have therefore been used by this department such as Internal Rate of Returns (IRR), Cost-Benefit Analysis (CBA), and Benefit-Cost Ratio (CBR) above other ratios. This has been aimed at studying the various profitability states for various investment projects. Since 1999, a close developmental standard has hitherto been achieved with the company’s diverse expansion to the departments to even involve high technological devices for such performance analysis above the employment of highly qualified evaluation and monitoring persons. Monitoring has also been done to check the production activities of the company. Their intensity monitoring has helped to make sure that the activities and processes go as required with very little conflicting results from such activities.
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- CBA – Cost Benefit Ratio.
- IRR – Internal Rate of Returns.
- BCR – Benefit Cost Ration.
- In 2005, P & G acquires Gillette.
- SWOT – Strengths, Weaknesses, Opportunities and Threats.
- P & G – Procter and Gillette.
- Managerial tasks T principles and guidelines by a manager towards execution of a strategy.
- Planning – Aspect of formulating procedures, methods and tools to achieve a certain objective with the constraint of available resources.
- Business Culture – The restrictions that define the business activities.
- Analysis – The overview of the situation likelihood.
- Optimal allocation – The most economical allocation using the least cost to achieve the greatest benefit.
- Corporate governance – The structure of personnel administration in a corporation.
- 1837 – The starting period of P & G company.
- Organization strength – Adaptive advantage of an organization.
- 2007 – The Procter and Gamble is segmented into 3 product market.
- Weaknesses – Operational disadvantages to a company organization.
- Threats – External influences which may be a loss factor to the organization.
- 2005 – Procter and Gamble acquired Gillette at a cost of $57 billion.
- Business strategies – Tools/adaptation used by an organization to achieve it goals.
- Budgeting – The act of drawing a plan of expenditure for an organization finances.
- Motivation- Incentive culture of making a worker to admire his/her role move.