How Procter & Gamble Organizes Their Strategic Business Units (SBU)

Procter & Gamble (P&G) is a multinational consumer goods company known for its diverse product portfolio, which includes brands such as Tide, Pampers, and Gillette. The company has successfully organized its business units to cater to various market segments and ensure a seamless global operation. This article delves into the intricacies of how P&G structures its strategic business units (SBU) and the strategies behind their organization.

1. Segmentation by Product Categories

P&G has segmented its SBUs based on product categories, which allows the company to focus on specific markets and tailor its strategies accordingly. This segmentation enables P&G to manage its vast portfolio of products effectively and efficiently.

a. Beauty and Grooming: This SBU encompasses brands such as Head & Shoulders, Old Spice, and Herbal Essences. P&G has dedicated teams and resources to cater to the beauty and grooming needs of consumers worldwide.

b. Fabric and Home Care: P&G's fabric and home care SBU includes brands like Tide, Gain, and Bounce. This segment focuses on providing laundry detergents, fabric softeners, and other home care products.

c. Baby and Family Care: Brands such as Pampers, Whisper, and Luvs fall under this SBU. P&G has tailored its products to cater to the specific needs of babies and families, ensuring they remain a leader in this market segment.

d. Health Care: This SBU includes brands like Crest, Oral-B, and Always. P&G has focused on providing oral care, feminine hygiene, and other health care products to consumers across the globe.

e. Foods: P&G's food SBU includes brands such as Iams, Purina, and Folgers. The company has segmented this SBU to focus on pet care and coffee products, among others.

2. Global and Local Focus

P&G has adopted a global and local approach to organize its SBUs. This approach allows the company to leverage its global presence while also catering to the specific needs of local markets.

a. Global Focus: P&G's global SBUs operate on a global scale, ensuring that the company can capitalize on economies of scale and share resources across markets. This approach allows P&G to maintain consistency in its product offerings and brand image worldwide.

b. Local Focus: P&G's local SBUs focus on adapting its products and strategies to cater to the unique needs of each market. This approach enables the company to tap into local trends, preferences, and regulations, ensuring its success in diverse regions.

3. Innovation and R&D

P&G understands the importance of innovation and research and development (R&D) in maintaining its competitive edge. The company has dedicated R&D teams within each SBU, ensuring that new products and improvements are developed to meet the ever-changing needs of consumers.

4. Collaborative Approach

P&G fosters a collaborative approach among its SBUs to share best practices, resources, and ideas. This collaboration allows the company to enhance its overall performance and create a culture of innovation and continuous improvement.

5. Acquisition and Partnerships

P&G has a history of acquiring and partnering with other companies to expand its product portfolio and market presence. This approach allows the company to leverage the strengths of acquired companies while also enhancing its existing SBUs.

Q1: How does P&G's segmentation by product categories benefit the company?

Answer: Segmentation by product categories allows P&G to focus on specific markets, enabling the company to tailor its strategies and products to meet the unique needs of each market segment. This focus helps P&G maintain its competitive edge and drive growth.

Q2: What is the significance of P&G's global and local focus in organizing its SBUs?

Answer: The global and local focus allows P&G to leverage its global presence while also catering to the unique needs of local markets. This approach ensures that the company remains relevant and successful across diverse regions.

Q3: How does P&G foster innovation and R&D within its SBUs?

Answer: P&G has dedicated R&D teams within each SBU to focus on developing new products and improvements. This approach ensures that innovation and R&D are integrated into the core of each SBU, allowing P&G to remain competitive in the ever-evolving consumer goods industry.

Q4: What is the role of collaboration among P&G's SBUs?

Answer: Collaboration among P&G's SBUs allows the company to share best practices, resources, and ideas. This approach enhances overall performance and fosters a culture of innovation and continuous improvement.

Q5: How do P&G's acquisitions and partnerships contribute to the organization of its SBUs?

Answer: Acquisitions and partnerships allow P&G to expand its product portfolio and market presence. By leveraging the strengths of acquired companies, P&G can enhance its existing SBUs and create new opportunities for growth.