American FMCG stalwart Procter & Gamble (P&G) is decentralising its global operations to better enable its smaller markets to response to changing local conditions.
The Olay, Oral-B, Gillette, Vicks and Tide brand owner is separating its operational structure in markets it considers ‘end-to-end’, such as the US, China and the UK, from countries like Peru in a move that will see smaller markets be given the freedom to change operations without engaging with the broader company.
P&G CEO David Taylor told investors at a recent presentation that the ‘freedom within a framework’ plan will enable flexibility across its smaller markets, which represent 30 per cent of its total revenue.
“In smaller countries like Peru, or Ecuador, where it doesn’t make economic stance to organize this way, we’re implementing a new freedom within a framework approach enabling these markets to be faster and more agile,” he said.
“As long as one of these markets is executing within pre-defined strategies and is delivering the financial targets that have been set for them, they have complete freedom to make real time changes without the need for engagement with regional or global resources.”
P&G is backing the streamlined model to bolster its competitiveness in the dynamic global FMCG market, as players like Amazon begin to change the path to purchase for an increasing number of shoppers.
This latest move comes off the back of aggressive cost cutting across P&G’s global operation in the last twelve months, which Taylor believes has left the business in a fundamentally stronger position.
“We start this fiscal year as an entirely different company. We’re much stronger and more focused, we’re more profitable. As a result of portfolio transformation, massive productivity improvements and profound organization and culture changes, we’ve significantly enhanced our growth and value creation helmed for the future,” he said.
