P&G Case Study
This took away the stress of research and development In foreign countries, thus took away unnecessary costs). In the early twentieth century, Procter & Gamble continued to grow. The company began to build factories in other locations in the united States, because the demand for products had outgrown the capacity of the Cincinnati facilities. The company’s leaders began to diversify its products as well and, in 1911, began producing Crisis, a shortening made of vegetable oils rather than animal fats. Throughout the twentieth century, Procter ; Gamble continued to prosper.
The company moved into other countries, both in terms of manufacturing and product sales, becoming an international corporation with its 1930 acquisition of the Newcastle upon Tone-based Thomas Hadley Co. Procter ; Gamble maintained a strong link to the North East of England after this acquisition. In addition, numerous new products and brand names were Introduced over time, and Procter ; Gamble began branching out into new areas. . In the pre- 1 biffs era P;G found their International expansion through the use of a localization strategy. They did develop many of their products in Cincinnati, but they relied on their semi- autonomous astrolabes to nutcracker, market Ana customize many AT tenet products for the local markets their served.
This model started to show signs of strain when many of the trade barriers that existed, specifically between European countries were lifted.
This created an increase in competition, and for P;G exposed their now unnecessary duplication of assets and processes. Also the creation of the “big box” retailers (such as Wall-Mart and Tests) were causing the competitive factors driven by purchasing power to put pressures on lowering P;G’s prices even further. Due to the increase in competition and the changing market conditions P&G closed some of their local plants and asked their subsidiaries to exploit as much economies of scale as possible in their production lines.
They also asked their local centers to create and use global brands whenever possible to try and reduce marketing costs. While these cost savings were effective, they were still not enough and P&G then reorganized the company to be a pure Transnational Strategy, with more control occurring in the regional centers than ever before and using as little local responsiveness as possible to reach their customers so they could compete on price as much as possible.
The benefits of the transnational strategy include: * Cost reduction * Reducing duplication of assets * Creating global brands * Manufacturing in places that have a comparative advantage in the production of that product * Increase market share by beating your competitors prices Risks * Very difficult to implement & manage * Organizational Structures have to be very complex and it can lead to Performance ambiguity * Confusion over corporate goals * Culture issues * High coordination needs that are both formal and informal