Organization 2005 was a strategic initiative by Procter & Gamble to restructure the company and create new VRIN resources to drive growth. It aimed to accelerate innovation, decision-making and profit creation by shifting from regional to global business units focused on products. This was meant to eliminate bureaucracy, increase accountability and exploit opportunities through bolder product development and global rollouts. The initiative sought to change P&G's culture, processes and structure to encourage more risk-taking, innovation and speed in order to address losses and competitive challenges.

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FINAL CASE REPORT
Strategic Management
by
Lucia Veronica Denis Senwayo

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Q1. Why was it so difficult for Compaq to imitate the Direct Model of Dell
Computer?
Dell operated as a pioneer in the direct model approach, delivering individual customized
according to costumer specification. Selling direct to end costumer dell can keep a larger
slice of profit for itself, by experiencing historical sales record and anticipating costumer
demand. Additionally, Dell Applied Just-in –time, establishing close relationship with
suppliers, co-location close to them, and thus minimizing inventory cost.
Dell’s activity system diagram bellow describes the correlation between the activities

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On the other hand, Compaq sells through three distinct ways: 67% of its PCs through
44,000 distributors and resellers, 25% at retail, and 4% direct. Later, Compaq unveiled its
DirectPlus Program, intended to sell customized PCs directly to small and midsize
companies. Compaq target individual costumers and business companies.
While Compaq supplied machines based on orders from distributors, resellers, and
retailers and direct, Dell took orders directly from customers. Dell focused on large
companies (Businesses and government institutions accounted for 77% small office users
18%, and educational institutions 5% and single costumers less than 2% of Dell’s sales).
The table bellow summarizes the business model used by Dell and Compaq.
Dell Compaq
Distribution system Direct to end costumers Distributers, resellers and
direct model
Target costumer Largely Businesses and
government institutions
Largely individual and
small companies
Costumer support Hotline and on-site support Support services
Push/ pull approach Pull. Based on costumer
order
Push. Based on demand
forecast from retailers
Inventory Reduced inventory (low
cost)
High level inventory
To sum up, Compaq lied on imitating some features of Dell Business model, which leads
the company to loose focus. A combination of direct model with the use of
intermediary’s distributers is difficult to manage, as well as even using direct model the

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target segment were different. Dell has a unique activity system, where activities are
tightly linked and indeed to that the company established sustainable strategic position
rather than operational effectiveness. So, it was difficult for compact to imitate the whole
system.
Q.2 Assess the cross-border transferability of Google’s search engine business.
What should be its access form?
On Google’s statement mission aimed to organize world’s information and make it
universally accessible and useful, the company has established competitive advantage by
improving in search and advertising and establishment of strong corporate value. Because
search engine business is valuable and demanded worldwide, it would be transferable,
however cultural, political and legal factors might challenge Google’s ability to keep its
“Don't Evil” corporate value at cross-border.
Regarding to access form, it should be technology focus and firm based. Google
competitive advantage is its brand, strategic innovation and management capabilities, and
then as long as it can transfer its capabilities, Google can exploit foreign markets by
either by direct investment or licensing its technology for local company or establish joint
ventures with local companies. For example, on the point of view of Human Resources,
the ability of Google to transfer cross-border is high due low transnational cost needed,
but Google can either decide to exploit internal HR by outsourcing some services or

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licensing technology. So, Google’s search engine cross-border would transferable trough
explicit articulation.
Despite the transferability, as a result of Internet, the world has become flatter, thus
search business engine business should be able to cross borders and profitably easily.
However, cross-border search business might always be challenged by ethical issues,
authorities in some countries may have some hard rules regarding to Internet. They may
impose some restrictions the corruption of their nation’s youth and culture, restrict any
content that they judge as possibly threatening state security, disturbing social order, and
infringing on other’s legitimate rights. So, Google’s corporate value transferability might
be challenged and new versions of search might be necessary.
In conclusion, Google’s search business is somehow transferable.

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Q.3 What was the strategic intent behind the Organization 2005 initiative? What
VRIN resources did they want to create for what opportunities?
Organization 2005 was an aggressive restructuring program designed to development and
roll out of new products globally, and thus generating bolder innovations, boosting P&G
growth (sales and profit), expediting of management decision-making for the company's
global marketing initiatives and fixing the strategy-formulation and profit-creation
responsibilities on products rather than on regions. Basically, Organization 2005 strategy
intended several changes on P&G organizational culture, process and structure.
The need of cultural organizational changes results from P&G slow culture, conformist
and risk averse that has leaded to company’s losses, and a cultural revolution based on
stretch, innovation and speed would allow P&G to implement a global rollout of new
products. Complementary to organizational culture, changes in traditional systems and
processes that include performance-based component of compensation, extension of
stock option plan and budget system would result on flexible and integrated business
planning process. Finally, by changing the structure from the primary profit responsibility
of P&G four regional organizations to seven global business units responsible for product
development, manufacturing marketing, would eliminate bureaucracy and increase
accountability.
The table bellow describes P&G VRIN characteristics.

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Resource Value Rare Inimitability Non-
Substitutability
Competitive
advantage
offered
Research and
Development
Yes Yes P&G
exploits
technology
worldwide.
Yes.
Difficult to
imitate. P&G
combines global
and local R&D
teams
Yes Sustainable
competitive
Advantage
Brand
reputation
Yes Yes. Unique
brand awareness
achieved through
SK-II
Yes Yes
In specific case of
SK-II in Japan
Sustainable
competitive
Advantage
Human
Resources
Yes No Difficult to
imitate. Global
HR combination
No Depends on P&G
ability to keep
HR structure
Horizontal
integration
Yes.
Enhance
product
portfolio
No Imitable. But
might be
difficult for
competitors to
succeed by non
core business
products
No Sustainable
competitive
advantages (in
Japan)
Marketing Yes Yes. The use
beauty counselors
and celebrities.
No.
But depends on
competitors
capital
No Sustainable in
Japan
Organizational
Culture
Yes No No
stretch,
innovation and
speed can be
imitate by
competitors
No
Might change as
company age or
changes on team
management or
international
competitive
environment
It can bring either
short or long term
competitive
advantage