Primary research have been done for a basic analysis of the organization design of P&G HK in several aspects

1. Evaluating the Organization Design of
Procter & Gamble HK

2. Duty Location
• Global brand
Strategy
• Product
development
Singapore/ US
• Regional market
strategy
• Commercial
development
Countries/ Region
• Great China
• India
• South Asia
• North America
• Europe
• …
• Implementation Countries/
Key Market
Business
Franchising
Organization
Global
Business
Units
Market
Development
Organization

3. Organization chart
for P&G HK

4. Beauty & Grooming
Product
Supply
Customer &
Market Knowledge
HR
FA
Customer
Business
Development
Information &
Decision Solution
=manager

5. Customer Business Development

6. •Matrix Organization
•Departmentalization
•Centralization
•Formalization

7. Dual reporting relationships that used to
balance two or more dimensions in an
organization
What is matrix organization?

8. +) Positive effect on P&G HK
• Efficient use of resources
 Interconnected
 Specialize work done by one unit
• Flexible to change and uncertainty
 Interaction between brand line and functional
department
 Gather all information that channeled vertically and
horizontally
 Quicker response to changes/ competitive conditions

9. • Increase motivation and commitment
 Individuals are specialized with knowledge/
information (Function+Brand)
 Important to decision-making
 More participative ☻
+) Positive effect on P&G HK

10. • Lack unity of Command
*Each individual reports to one boss
CEO
Sales &
Marketing
Manager
Accounting
Manager
Product
Development
Information
Technology
Administration
Manager
-) What problem does it cause?

12. Problems of not having
unity of command
Create confusion for subordinates
 Direction given by two different managers may differ/
conflicting e.g.
 Two managers are of equal priority
Brand A
Increase inventory
for larger demand/
longer supply
Product Supply
Keep inventory right
in volume to save
cost for warehouse
VS
 Create stress
 Longer decision-making time
 Efficiency↓

13. Why not to have unity of command?
Keep benefits resulted from matrix structure
• Efficient use of resources
• Flexible to change and uncertainty
• Increase motivation and commitment
Matrix organization is VALUABLE to operation of P&G,
despite its negative effects from unity of command

15. Why to have unity of command?
• Function of CBD, FA, PS, IT department
 no need to use BRAND to divide work
• Too many subordinates in P&G
 easier to control
• Clear authority and responsibility (avoid
confusion)
 higher efficiency

16. •Matrix Organization
•Departmentalization
•Span of Control
•Centralization
•Formalization
*Specifics how employees and their activities are
grouped together
 Function, Products, Customers, Geographic

17. Product Structure

18. Advantage ☺
• Focus on particular needs of product lines
 different target customers  differentiated strategies
e.g. various solutions towards loss of market share of brands
• Large product portfolio capture large amount of customers
 Different brand characteristics under one category
e.g. Hair VS (style) – Patene (repair) – Head & Shoulder (anti-
scaling)
• Employees expertise brands’ development, production, and
distribution
Nature of P&G
Product-oriented company different types of product
(skin care, bodywash, hair…)
Why adopt product structure?

19. Customer structure
Retailers
• Mannings
• Pharmacy
• Supermarkets
• E-commerce
• etc..

20. Why adopt customer structure?
☺ Meet customers’ needs
according to their types
• Pharmacy daily necessity (lower-
grade product)
e.g. shampoo, conditioner (Patene/
Rejoice…)
• Mannings/ supermarket daily
necessity (variety↑)
e.g. electronic toothbrush(Oral-B),
shampoo, conditioner (Patene/ VS/ Clairol
Herbal Essence/ Clinicare)
 Better customer service
☺ Close customer
relationship
 know the market trend
from customer
 help set strategies
(more accurate and
targeting)

21. Functional Structure

22. Why adopt functional structure?
☺ Efficiency  same work type
☺ Share expertise  benefit personal ability
☺ Offer professional specialization simplify
vocational training save time and cost

23. Departmentalization Advantages
• Work specialization↑
• Growth and expansion
• Fixing responsibility
• Performance appraisal
• Management development
• Optimum utilization of resources
• Better control of facilities

24. •Matrix Organization
•Departmentalization
•Centralization
•Formalization

25. Centralization and Decentralization
Centralization
• decision making concentrated in a few hands
• all the important decision and actions at the
lower level are subject to the approval of top
management
Decentralization
• systematic delegation of authority at all levels
of management

26. Absolute Centralization or Decentralization is not possible
Ways to determine the level of Centralization
High Low
Delegation of Authority
Span of Control
Narrow WideNumber of Function department
Less More
Work Specialization
Low High
Decentralization
Centralization

27. Is P&G inclining to
Centralization or
Decentralization?
 Balance

28. Why?
1. Work specialization is relatively high
• Matrix organizational structure
 Employees are just responsible for dealing with
one function and one brand of the whole
business
 Do not require much discretion of authority
since job is specialized and scope is narrow
CE

29. Why?
2. Delegation of authority is relatively high
• Few subordinates under one manager
 managers delegate authority to their
subordinates,
 making important decision at first-line
management
CE

30. 3. P&G has many functional department
e.g. Human resources,
Information & Decision Solution
Product Supply
Customer Business Development
 Retained authority in coordinating smaller units
Why?
CE

31. 4. Span of control is relatively narrow
many managers for different brands and
different functional departments
Therefore, the duties of them are specialized
CE
Why?

32. The advantages of P&G balance between
centralization and decentralization
• More efficient
• Quick respond to rapid change of
the markets
• The great sense of belonging of first-line labors
• First-line labors can deal with the unexpected
situations immediately
• Guarantee the performance of first-line labors
in long term

33. •Matrix Organization
•Departmentalization
•Centralization
•Formalization

34. Formalization
The extent to which …
• work roles are structured in an organization
(Standardization)
• activities of employees are governed by rules and
procedures (employee freedom)

35. Is P&G HK formalized?
High specialization
High delegation of authority
Functional department
Narrow span of control

36. +) Positive effects on P&G HK
1. Ensure unity of objectives within a department
e.g. Product Supply Department
 Ensure stable and quality supply
 Maintain normal inventory turnover
2. Reduces ambiguity and provides clear direction
through regulations/ guildlines
e.g. accountability, authority
3. Better discipline of employees

37. -) Problem caused?
Less freedom
 Reduce the job satisfaction
 Stress (to follow regulations)
 May increase employee
turnover rate

38. Conclusion &
Recommendation

39. Conclusion
Matrix organization
 X Unity of Command
confusion
 Operational need
(integration between
brands and functions)
Departmentalization
 Utilize different forms
of department
Span of Control (Narrow)
 Low responsiveness
 Communication
barriers
 Costly
Centralization
 Balanced
Formalization
 X major problems

40. Major Problem: Too many management level
 Have a wider span of control, by reducing
level of management
Minor Problem: Not enough management skill
 Manager less capable, face commanding/
communication problems
 Provide more advanced training
(management capability) to middle mangers
Develop more aspect skills
Recommendation