- Strategy 1: PG attempts to save $10 billion in operating expenses.
- Strategy 1 did not show significant tangible results.
- New CEO, New Strategy.
- Brand Shedding!
Procter & Gamble (NYSE:PG), the world’s leading consumer product manufacturer, has been spending a lot of time lately on optimizing their corporate structure through appropriate capital allocation. As of right now they are selling consumer products in the following categories:
“Capital allocation is considered as the solution to an optimization problem whereby a quadratic deviation measure between individual losses (at both levels) and allocated capital amounts is minimized” (Zaks and Andreas 2014). If a corporation cannot allocate their capital appropriately, it will have a limited life-span relative to its industry peers. For a company such as PG, which gathers its sustenance from a wide-moat of products, variables affecting capital allocation must be carefully analyzed from numerous perspectives. In order to alleviate the analyses and operation results of these key performance indicators, P&G has developed a corporate structure which combines both selling and marketing operations (P&G 2014). Bringing together the two operations has allowed P&G to better cater to their world-wide consumer base. The more agile department works with P&G’s Global Business Services, which further enhances capital allocation in regions such as Asia, Europe, India, Middle East, Africa, Latin America, and North America (P&G 2014).
To read the rest of the article, please click here: PG
Disclaimer: Shawn Arshad is not certified to give financial advice. Although well researched, please do your own research prior to investing. Shawn is not responsible for any actions one makes based on the information he provides.