P&g Case Study
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This report looks into the two Chief Executive Officer, Durk Jager and Alan Lafley different leadership and reform strategy to Procter and Gamble (P&G) Company at two periods. Under two different style of management, they show the relationship between leadership, job satisfaction, motivation and morale are how important to a companys success.
Procter and Gamble (P&G) Company was found in 1837 by William Procter and James Gamble as maker of soap and candle. P&G is the worlds top maker of household products boasts boatloads brands. The company has one of the strongest portfolios of trusted quality, leadership brands.
P&G has about 300 brands of products serve in more than 180 countries, also it includes approximately 127,000 employees working in about 80 countries worldwide.
Introduction of Durk Jager
Durk Jager is an American businessman, private investor and consultant. He joined Procter & Gamble in 1970 and became Vice President in 1987. In 1990, Jager became the Executive Vice President with responsibility for the Soap, Chemicals, Health Care and Beauty Care divisions.
Jager was promoted to CEO when P&G was in the midst of a corporate restructuring exercise in 1998. Jagers investment style is aggressive and he is lack of communication with employees. These management styles cause his fail of reform in P&G and he was fired in the mid of 2000.
Introduction of Alan Lafley
Alan Lafley joined P&G in 1977, his career path is similar to Durk Jager. Lafley became Vice President in 1992 and Executive Vice President in 1995. In the mid of 2000, he became the CEO in P&G until his retirement in 2010.
Lafley have a low-key management style, also he always focus on the employees training and the inter-communication. This type of management help P&G have the growth stably.
Findings – Stock value of P&G
Stock value in the period under Jager management had lost $70 billion. Since Lafley took over, P&G earnings regularly and beat expectations. The Stock price has risen 70 percent and profits are up 49 percent.
Reform strategy of two CEO
Due to the stock price of P&G in the period under two CEO have a great different, we are going to analyze the reform strategy between Jager and Lafley.
Jager led an ambitious six-year restructuring effort called “Organization 2005”, which intended to boost sales and profits via introduction of new products as well as elimination of unnecessary jobs. Jager focusing attention on new products and promote the localization, he hope these can raise the sale and achieve the target of profit. Jager tried to acquire drugmakers Warner-Lambert and American Home Products, this also parts of the planning on his strategy on focusing new products.
Jager was an avid reorganizer who moved no fewer than 110,000 workers into new jobs and layoff 400 workers in Asia, Europe, Middle East and Africa.
Lafley have change the direction of company after became the CEO. He allocate more resources to companys top 10 brands products, and most of the products are consumer oriented. He also have cut the brand that not profitable to reduce operating expenses.
Lafley encourage inter-communication, for example, managers have moved out of executive suites to work more closely with employees. Providing more training to staff was the main strategy under his leadership, he changed the penthouse floor to be a learning center, where top executives can conduct lessons and share knowledge with the workforce.
Result of two different reform
Jagers strategy focuses attention on new products rather than best-sellers, this cause the sale drop and increase the operation cost. He also liked the idea of putting American brand names on P&Gs global products, but shoppers in Germany and Hong Kong didnt recognize such brands and overseas sales plummeted.
A large number of employees jobs relocation caused many of them didnt familiar and satisfied with their new jobs. Jager didnt endear to P&G employees. Employees morale and motivation falling daily.