Ceo A.G. Lafley and Procter and Gamble - Effective Leadership
Once America’s most innovative consumer products company, Procter and Gamble (P&G) started by selling soaps and candles in a small Cincinnati storefront in 1837 (Procter and Gamble, 2008). After a hundred and seventy-one years P&G has grown to over one hundred household brands in over eighty countries (Markels 2006). Their products range from air fresheners to prescription drugs. However, as P&G headed into the twenty-first century they announced that they would not be meeting their 1st quarter earnings forecast [Lafley, 2003]. Revenue margins were dropping and P&G was quickly losing market share to Kimberly Clark and Johnson & Johnson. After missed earnings P&G’s stock price fell from $59.18 to $26.50 between January 2000 and March 2000 (PG). Upset, the board of directors pressured then CEO Durk Jager to resign after a lack luster attempt at turning P&G around and replaced him A.G Lafley, an unproven CEO, whom analysts felt lacked the experience to give P&G a much needed clean up (Lafley, 2003).
Before Lafley took over for Jager, P&G was stretched to the max, haplessly wasting away resources and opportunities with an overcomplicated business strategy. P&G was raising prices on their best selling brands to cover for missed sales and high production costs for new brands that failed to be a successful [Lafley, 2003]. They had hired too many employees and were involved in several investments that were unprofitable. P&G had not had a hit product since the launch of ALWAYS feminine products in the 1980’s and each additional product flop only stretched their recourses thinner and thinner. Costs were high and moral low with employees not afraid to voice their lacking confidence with P&G’s leadership and direction. Subsidiaries were blaming corporate for their missed earnings and visa versa [Lafley, 2003]. Strategies between the brands at P&G clashed and each were out to safe guard their own interests. The prices of their consumer products were too high while the company
Before Lafley took over for Jager, P&G was stretched to the max, haplessly wasting away resources and opportunities with an overcomplicated business strategy. P&G was raising prices on their best selling brands to cover for missed sales and high production costs for new brands that failed to be a successful [Lafley, 2003]. They had hired too many employees and were involved in several investments that were unprofitable. P&G had not had a hit product since the launch of ALWAYS feminine products in the 1980’s and each additional product flop only stretched their recourses thinner and thinner. Costs were high and moral low with employees not afraid to voice their lacking confidence with P&G’s leadership and direction. Subsidiaries were blaming corporate for their missed earnings and visa versa [Lafley, 2003]. Strategies between the brands at P&G clashed and each were out to safe guard their own interests. The prices of their consumer products were too high while the company
Cited: Charles W. L. Hills & Steven McShane (2006, December 28). Principles Of Management (1st Edition), McGraw Hill/Irwin, USA. Lafley, A.G. (2003, April 21st). Getting Proctor and Gamble Back on Track. Retrieved from www.pg.com. Markels Alex (2006, October 22). Turning The Tide At P&G. U.S. News & World Report. Retrieved from: http://www.usnews.com/usnews/news/articles/061022/30lafley.htm. Proctor Gamble (PG). Retrieved May 10, 2008, from http://moneycentral.msn.com/investor/charts/charting.asp?Symbol=pg#Big Proctor And Gamble. (2008) Company Who We Are Our History, Retrieved May 10, 2008, from http://www.pg.com/company/who_we_are/ourhistory.jhtml Proctor And Gamble. (2008) Product Site Map, Retrieved May 10, 2008, from http://www.pg.com/common/product_sitemap.jhtml