Proctor & Gamble has undergone several changes to its organizational structure over the years: 1) In the 1950s, P&G shifted from product groupings to a matrix structure in the 1980s to better coordinate functional activities and allow for dotted line reporting. 2) In Europe, P&G shifted from geographic groupings in the 1950s to category management in the 1980s to help innovations globalize faster and better connect corporate functions. 3) These two structures were integrated into a global cube in the 1990s to capitalize on expansion opportunities and drive innovation, top and bottom line improvements. 4) P&G's "Organization 2005" introduced a new leaner system with three

1. PROCTOR AND GAMBLE
ORGANIZATION 2005
Presented by- Group 3
Himanshu Talmale – 20DM084
Manish Jindal – 20DM114
Mihir Manchanda – 20DM120
Mohammad Sohail – 20DM122
Pallavi Goel – 20DM147
Piyush Hirwani – 20DM151

2. Organization History
 1837- Company was founded in Cincinnati
 1859- P&G sales reach $1 million
 1879- Ivory soap was introduced
 1924- P&G was the first one to create market research department
 1955- Crest, the first toothpaste with fluoride was introduced
 1980 - Sales reach $10 billion
 2005- High frequency stores, consisting nearly 20 million stores
across the world
 2021- P&G operates in more than 80 countries

3. Why did the US organization structure shift from
product groupings in the 1950s to matrix
organization in 1980s?
• Requirement of Differentiated Functional Activities
• Setting up matrix reporting structure
• Dotted line reporting

4. Why did the European organization structure shift
from geographic grouping in the 1950s to category
management in the 1980s?
• Resulted in innovations and brands taking unnecessarily long to globalize.
• For instance, Pampers, was launched in US in 1961, Germany in 1973 and France
not until 1978.
• Corporate functions were also completely disconnected from the US operation.
• Focus on product categories and brands was fragmented by country.
• Led to unstandardized and subscale manufacturing operations
• Products were tweaked unnecessarily, creating pack size with formulation variations

5. Why were the two structures integrated into a
global cube in 1990s?
• Attractive expansion opportunities in Japan and the developing markets
• Positive results in the area of innovation
• Tremendous top-line and bottom-line improvements
• a stronger global sales organization with regional leadership

6. What are the key distinguishing features of
Organization 2005?
• A new system with mixture of interdependent organization eliminating the old matrix system
• Focus on cost
• Formal and standardized processes
• Leaner organization with less employees and fewer management layers
• Some of the tasks/decisions were assigned to individuals, previously being decided upon by
the committee to reduce the time taken.
• Three major separate organizations:
 Global Business Unit focused on products
 Market Development Organization focused on Markets
 Global Business services focused on internal business processes

7. Why did P&G adopt matrix structure?
• The matrix structure had never been symmetrical
• The matrix structure had also not fully resolved the tension between regional and product
category management.
• Thirdly, competitors were catching up quickly
• Couldn’t fully manage functional strategy and resource allocation

8. Should Lafley make a strong commitment to
keeping Organization 2005 or should he plan to
dismantle the structure?
• It had slammed four profit warning into two quarters. (Earning had dropped by 18%)
• The stock prices had dropped by half in the last six months- losing 70$ billion market value.
• Lack of immediate results coupled with substantial job reductions and decrease in morale of
employee

9. Thank you