Procter & Gamble (P&G) is an American multinational corporation founded in 1837 headquartered in downtown Cincinnati, Ohio and manufactures a wide range of consumer goods. P&G’s annual sales are $50 billion and it has about 54 percent of consumer product business in United States. P&G sells more than 300 brands including soap, pet food, Tide, Pampers, Crisco, and Folgers. They exist in 160 countries. 2.
When they started to open up to the world, their business strategy was localization, which is the process of adapting a product or service to a particular language, culture, and desired local "look-and-feel." Ideally, a product or service is developed so that localization is relatively easy to achieve. In contrary, after 1990’s profit growth at P&G was slowing because of high costs such as extensive duplication of manufacturing, marketing, and administrative facilities in different national subsidiaries, high tariffs and global retailer’s demanding price discounts. After 1999, P&G has changed his business strategy and turned into transnational business strategy that involves self-contained global business unit. Each business unit is responsible for generating profits from its product, manufacturing, marketing, and product development. “Each business unit was told to rationalize production, concentrating it in fewer larger facilities; try to build global brands wherever possible, thereby eliminating marketing difference between countries; and to accelerate the development and launch of new products” (McGraw, p. 423)
The Organizational Problems of Implementing Transnational Business Strategy Changing and implementing a new organizational structure to company is complex and a challenging task. Because of existing distribution of affect and power, the culture, manager’s approaches about the proper business criteria of model, it can be difficult to change. Also implementing transnational strategy, firms might face with some...
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