The organizational structure of Procter & Gamble is predominantly product-type divisional. This means decision-making, strategy, and management are determined by product-based divisions headed by autonomous CEOs.
Procter & Gamble incorporates six geographic divisions that help it manage its vast global operations. Each division is headed by a company President with its own management team.
Procter & Gamble is ultimately led by a CEO, President, COO, and six divisional CEOs. Functional groups are operated by various Presidents and Chief Officers in areas such as Branding, Product Supply, Human Resources, and Sustainability.
Department
Type of Structure
Structure Details
Advantages
Drawbacks
Corporate Level
Matrix (Hybrid)
– P&G’s corporate structure combines elements of both functional and divisional structures. It has multiple global business units (GBUs) for product categories, such as Beauty, Health, and Fabric & Home Care.
– Adaptation to specific product categories and markets. – Efficient resource allocation. – Coordination between GBUs and support functions.
– Complex and potentially less agile due to the hybrid nature. – Potential for decision-making bottlenecks.
Global Business Units
Divisional
– P&G’s GBUs, such as Beauty and Health, operate with a divisional structure. Each GBU is responsible for its product category and has its own set of functional departments.
– Focused strategies for each product category. – Accountability for performance within each GBU. – Product and market specialization.
– Duplication of functions across GBUs. – Potential for competition between GBUs for resources and market share.
Functional Departments
Functional
– P&G’s functional departments, like Research & Development, Sales, Marketing, and Supply Chain, support the entire organization and are organized by expertise.
– Specialization in key functional areas. – Efficient management of corporate-level operations.
– Potential silos between functional departments, which can hinder cross-functional collaboration.
Geographic Segmentation
Geographic (Hybrid)
– P&G operates in various regions globally, and it employs a hybrid geographic structure to manage regional operations.
– Tailoring strategies and products to specific geographic markets. – Localized sales, marketing, and distribution.
– Potential challenges in maintaining consistent branding and product offerings across diverse geographic regions.
Procter & Gamble is a multinational consumer goods corporation that was founded in 1837 by William Procter and James Gamble.
Procter & Gamble has a vast portfolio of brands in personal care, beauty, fabric, baby, grooming, and home care, to name a few. While the company has sold off many of its brands and restructured to streamline operations in recent years, it remains a behemoth today.
With that said, let’s explain how this company structures itself in 2022.
Product-type divisions
The organizational structure of Procter & Gamble is predominantly product-type divisional. Decision-making, strategy, management, and the very composition of work teams are determined by product-based divisions that house each of the company’s 10 product categories.
The company operates five divisions which it calls sector business units (SBUs):
Baby, Feminine & Family Care.
Beauty.
Health Care.
Grooming, and
Fabric & Home Care.
Each SBU is led by a CEO who has complete autonomy and thus responsibility for any profit or loss that is incurred.
The most profitable SBUs that collectively account for 80% of sales and 90% of after-tax profit are called Focus Markets. Each works across the five SBUs on scaled market services and capabilities. This includes warehousing, logistics, customer teams, transportation, and even a requirement to represent the company externally.
The less profitable SBUs are organized into a separate unit called Enterprise Markets. In this case, each SBU works with the Enterprise Markets unit to deliver mutually agreed-upon business goals via innovation planning, supply planning, and operational frameworks.
Geographic divisions
As a vast company with global reach, geographic divisions help Procter & Gamble maintain a regional focus with distinct management teams for each division.
The company has six divisions, with each headed by a President:
North America.
Europe.
Asia Pacific.
Greater China.
India, Middle East and Africa (IMEA).
Latin America.
Leadership structure and functional groups
The company has a large team of executives with CEO David S. Taylor supported by President Jon R. Moeller and COO Shailesh G. Jejurikar. The next most senior level of management is the divisional, autonomous CEOs mentioned earlier in this article.
Functional groups allow Procter & Gamble to effectively support its diverse interests around the world. Various Presidents and Chief Officers head functional groups related to:
Research, Development and Innovation.
Human Resources.
Equality & Inclusion.
Product Supply.
Ethics & Compliance.
Analytics & Insight.
Global Walmart.
Branding.
Legal and Secretariat.
Sustainability.
Communications.
Finance.
Organizational Structure Overview
Global Business Units (GBUs): P&G’s portfolio is organized into several distinct business units, each focused on specific product categories:
Beauty
Grooming
Health Care
Fabric & Home Care
Baby, Feminine & Family Care
These GBUs are responsible for product innovation, brandstrategy, new product development, and overall business results. They operate globally, ensuring that P&G’s brands and products can compete effectively across different markets.
Market Development Organizations (MDOs): These are geographic divisions responsible for local market adaptation, sales, and distribution in over 180 countries where P&G products are sold. MDOs work closely with GBUs to tailor marketing strategies and operations to local consumer needs and preferences.
Global Shared Services (GSS): This includes centralized functions that support both GBUs and MDOs, such as:
Corporate Functions: Finance, Human Resources, Legal, and Information Technology
Global Business Services (GBS): Provides standardized services across functions, including customer service, employee services, and business process optimization.
Comparison with Other Multinational Companies
When compared to other multinational companies like Unilever and Johnson & Johnson, P&G’s structure shares similarities but also has distinct differences:
Unilever: Also operates with a similar structure, dividing operations between product-based global divisions and geographic units. However, Unilever places a stronger emphasis on sustainability and corporate social responsibility integrated directly into its business units and regional strategies.
Johnson & Johnson: Organizes its operations into three broad segments: Consumer Health, Pharmaceutical, and Medical Devices, each with more autonomy than P&G’s GBUs. This allows for more focused strategic decisions within each segment but might lead to less integration compared to P&G’s model.
Key Advantages and Challenges
Advantages:
Specialization and Focus: Each GBU can focus intensively on its category, driving innovation and maintaining P&G’s leadership in various consumer goods markets.
Local Adaptation: MDOs enable P&G to adapt its global strategies to fit local markets effectively, which is crucial for consumer goods that vary widely in preference across regions.
Efficiency and Cost Savings: GSS maximizes efficiency and cost savings through centralized services that eliminate redundancy and streamline operations across the globe.
Challenges:
Complexity in Coordination: Managing the interplay between GBUs, MDOs, and GSS can be complex and may lead to coordination challenges.
Balancing Global and Local Needs: While MDOs help localize strategies, aligning these with global brand strategies without diluting brand integrity or efficiency can be challenging.
Innovation vs. Standardization: Balancing the need for rapid innovation in GBUs with the standardization provided by GSS is a continuous challenge, as too much standardization might stifle creative processes and market responsiveness.
Strategic Implications
P&G’s organizational structure supports its strategy of combining strong global brands with local execution to maintain market leadership in the highly competitive consumer goods industry. To stay ahead, P&G may need to continually adapt its structure to respond to global market trends, such as increasing digitalization, the rise of e-commerce, and changing consumer preferences towards sustainability. This might involve further integrating digital capabilities across GBUs and MDOs or enhancing cross-functional teams to foster innovation while maintaining efficiency.
Key Highlights:
Product-Type Divisions: Procter & Gamble’s organizational structure is primarily product-type divisional. Autonomous CEOs lead product-based divisions responsible for decision-making, strategy, and management.
Sector Business Units (SBUs): The company operates five sector business units, including Baby, Feminine & Family Care; Beauty; Health Care; Grooming; and Fabric & Home Care. Each SBU is headed by a CEO who has complete autonomy and profit/loss responsibility.
Focus Markets: The most profitable SBUs, known as Focus Markets, collectively contribute significantly to sales and after-tax profit. They work across the five SBUs on various market services and capabilities.
Enterprise Markets: Less profitable SBUs are grouped into the Enterprise Markets unit, collaborating to achieve agreed-upon business goals through innovation and operational frameworks.
Geographic Divisions: Procter & Gamble employs six geographic divisions, each led by a President. These divisions maintain a regional focus with distinct management teams for each region.
Leadership Structure: The top leadership includes CEO David S. Taylor, President Jon R. Moeller, and COO Shailesh G. Jejurikar. Autonomous CEOs of the product-based divisions form the next senior management tier.
Functional Groups: Functional groups are responsible for diverse aspects of the company’s operations. These groups, led by various Presidents and Chief Officers, include Research, Development and Innovation; Human Resources; Equality & Inclusion; Product Supply; Ethics & Compliance; Analytics & Insight; Global Walmart; Branding; Legal and Secretariat; Sustainability; Communications; and Finance.
Global Reach: With a vast portfolio of consumer goods, Procter & Gamble’s organizational structure supports its global reach, enabling effective management, decision-making, and coordination across product categories and regions.
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Gennaro is the creator of FourWeekMBA, which reached about four million business people, comprising C-level executives, investors, analysts, product managers, and aspiring digital entrepreneurs in 2022 alone | He is also Director of Sales for a high-tech scaleup in the AI Industry | In 2012, Gennaro earned an International MBA with emphasis on Corporate Finance and Business Strategy.
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