In today’s world, there are many organizations which have developed due to changes in political, economic and social scenes over the years. As such, there are many opportunities which continually present themselves within different economies. Individuals and organizations are identifying these opportunities and developing suitable products and services to meet the needs of these particular Proctor and Gamble is an American company that has been in existence since 1837. It was founded by William Proctor and James Gamble. Each has their own occupations, however, they joined forces in order to develop the multi-million dollar company that is now across 25 countries in the world. It is a company which specializes in Consumer goods comprising of cleaning, and personal care products. Over the years, the company has had to deal with different markets and had to implement variating strategies to guarantee profitability in all of its branches. It has had to employee effective Managerial economics to ensure it is utilizing its resources to the maximum, while at the same time reducing costs incurred and thus increasing the profits to be attained. Managerial Economics is a wide field, however, it requires the effective management of the approaches and control systems utilized within the organization. These approaches highly determine the kind of strategies that are implemented within the organization. These structures are also successful where the organization is presented with good leadership and corporate governance systems and organizational structures that not only ensure the success of a good system but also increase the performance of the organization to better improve the organizations competitive advantage, their market power and strengthen their presence within the market.
The Key Difference between “Traditional” and “Contemporary” Control Systems
In Previous years, P&G utilized the Traditional Approach of control. Top management came up with different strategies which aided in the measurement of the organizations performance. This system held a barrier between the management and the employees as they were only required to follow the instructions presented to them. However, with the introduction of Lasley, the system of control changed to allow for Contemporary Control systems. These systems did not only look at the performance of a department but also reviewed the behaviour of the organizations employees. In addition, the system also set out to control information from external sources. These control systems better allowed the management to understand the cause of different challenges they are facing and better analyse the various solutions which can aid the development of performance in all these areas Dess, Lumpkin, Eisner, & McNamara, 2013).
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The Three Key participants in Corporate Governance: Shareholders, Management (Led by the CEO), and the Board of Directors
In the management of any organization, it is vital to ensure that the management is accountable to a body. In this manner, the body guarantee’s the performance of the management and ensures the Organization is not left to destruction due to poor management personnel. This is done through Corporate Governance, where the Management is provided for a system or rules and regulations which govern their activities and ensure the interests of all the shareholders and stakeholders are maintained. At P&G, Jager was a CEO who, even though he had been elected by the board of Directors, did not maintain the interests of the shareholders or stock holders within the company. The strategies he presented were not successful and only led to the loss in profits of the organisation. During his governance, there was a lack of positive governance which ultimately led to the increase of performance, rather, there was a negative governance which led to the decrease in performance Dess et al., 2013). Lasley provided a positive corporate governance system that was not only in accordance with the interests of the Stakeholders but also the Shareholders. The role of the CEO and Board Of Directors is to ensure that at all times, there is a development in the management and governance of the organization to guarantee the safety of interests of the shareholders, and stakeholders Dess et al., 2013).
Importance of Implementing Strategies and Practices that Foster Innovation
P&G has remained one of the most prominent companies by ensuring that it constantly provides strategies which lead to new innovations in the provision of various products. One of the strategies P&G has constantly implemented is the use of well experienced and skilled personnel in management of its operations. For many organization, innovation cannot be achieved where the personnel are not well equipped to drive the plans and strategies put in p-lace. These strategies also have to be realistic and matching the environment of the organization. For instance, in 1999, when P&G required aid in developing its sales, it employed Durk I. Jager. Jager was an individual whose strategies and practices did not foster growth within the organization. His strategies and plans were not realistic and thus led to the decline of the company’s progress. However, on employing Alan G. Lafley in 2000 there were greater changes that were observed Dess et al., 2013). The strategies to which Lafley placed proved to be successful in developing practices. He broke down the walls between management and employees, a d provided a platform which led to the growth of P&G through the development of Human Resource and provision of un-equiveled ideas on how to better innovate products within the organization gradually leading the company to profitability. Through this, he was able to attain competitive advantage through innovation of in-house developed ideas and domination of the consumer market Lafley & Charan, 2010).
The growth patterns of major corporations and the relationship between a firm’s strategy and its structure.
In development of strategies and practices, it is vital to ensure that the structure within the organization better fits the intended purpose. For any organization, having a structure which does not support the activities or operations within the organization is subject to failure. At P&G, Lasley, implemented a complex matrix structure which allowed for communication within the organization while at the same time allowing for external communication and receipt of ideas Lafley & Charan, 2010). However, the structure, proceed to be cumbersome where the organization was failing and the accountability of different departments to each other was failing, thus, a new structure which better addressed this issue was to be implemented. The organization structure was becoming a burden to the growth and development of P&G as a company. The Structure was preventing the success of the Strategies put in place and thus required to be revised, a move which was done by McDonald in 2012 Lafley & Charan, 2010).
The Leader’s Role in establishing an Ethical Organization
A Leader is an individual who is able to influence other employees without having to order them around. For any organization, the role of a leader in ensuring that all the responsibilities are conducted in an ethical manner is important. In P&G, Leadership can be seen with both Lafley and McDonald. Each of these individual provided conditions which reduced the burden of managing but fostered leadership within the organization. More so, McDonald, was able to conduct leadership in an ethical manner. By acting as an example for all those employees who were below him, he was a Role Model. Through daily acts such as Associating, Questioning, Observing, Experimenting and developing his Network, both Lafley and McDonald were able to develop and expand the leadership role within the Organization to better develop and ethical organization which follows procedures, maintains and upholds moral values and practices Dess et al., 2013).
Several Key Elements an Organization must hold to become an Ethical Organization
In seeking to attain an Ethical Organization, it is vital that employees develop Autonomy within themselves. Having the capacity to target and aim the various visions related to the organization, whether self-developed or not is important. It is also important to ensure that all the employees are proactive in the implementation of practices and other procedures. In this manner, they are able to determine and communicate successes and failures in the in attaining ethical practices Lafley & Charan, 2010).
Another factor to consider is the development of an Ethical Code of Conduct which dictates the various do’s and don’ts expected of the employees. Having these regulations guarantee a certain standard of behaviour conduct. Further, it is important to ensure there are implementable consequences where these rules are broken Dess et al., 2013).
Conclusion
The success of any operation depends on the strategies that underlie. Where the strategies have no footing or foundation, they are bound to fail. It is thus important to ensure the success of the organization through secure and well developed strategies, approaches, practices and management and control systems which address the issues presented within the organization. Through the history of P&G, the success stories and failures of the company prove to be a key determinant of the perfect implementation of Managerial Economics for the success of the organization.
References
Dess, G., Lumpkin, G., Eisner, A., & McNamara, G. (2013). Strategic Management: Text and Cases (7th Edition). United States of America: McGraw-Hill. Retrieved from https://bookshelf.vitalsource.com/#/books/1259742318/
Lafley, A. G., & Charan, R. (2010). The Game Changer: How Every Leader Can Drive Everyday Innovation . London: Profile Books.
