Managerial Functions: Planning, Organizing, Leading, and Controlling

Case Study: Procter & Gamble

Introduction
Procter & Gamble (P&G) is America’s leading manufacturer of household products (Degen, 2012). It was
instituted by William Procter, an Irish candle manufacturer, who launched Procter & Gamble’s operations
in 1837 in Cincinnati, Ohio. The general emphasis of the firm is innovation in product development. It is
the first manufacture to conduct direct sales in 1919 and is currently the largest product advertisers. It
has over 250 brands of products in the world market. The firm’s core values include leadership, people,
ownership, integrity, trust, and passion for winning. Procter & Gamble has 24 products with more than $
1 billion dollars in net sales. The purpose of this paper is to define and describe managerial functions and
provides a brief summary of the activities in reference to the four managerial functions at Procter &
Gamble.

Planning Function
Strategic planning is the process by which organizations make plans and decisions that are focused on the
long-range performance (Lewis, Goodman, Fanot & Mitchlitsch, 2007). Organizations perform this function
through the use of a comprehensive strategic plan which is basically the general direction of the
organization. Strategic planning is management process that is done in four phases strategic analysis,
strategic formulation, implementation of strategy, and evaluation and control. These phases are linked so
that there are avenues for feedback between any two phases. Strategic analysis involves the assessment
of the organization’s mission in relation to both the internal and external environments (SWOT analysis).
Strategic formulation is the design of strategy and tactics; implementation is the daily routine operations
while evaluation and control is the assessment of the routine operations to ensure that they are in line
with the mission of the organization.

Fast development at P&G is enhanced through strategies that promote vitality in business and increases
the pace of innovations. The company developed global business units whose purpose is to focus on
utilization of technology to develop plans and products. Each new business unit within the global business
units are tasked with developing new product brands in specific categories. The company has clearly
defined strategies with predetermined room for development in each strategy focus area. Strategy
strength and structure leads to opportunity and capacity to expand.

Organizing Function
Organizing is the process of establishing what tasks need to be done, persons responsible for each task
and the process of management and coordination of the tasks (Lewis, Goodman, Fanot & Mitchlitsch,
2007). Organizing links organizational mission and goals and objectives through the development of the
foundation (tasks and work relationships) and organizational design (focus of decision making,
organization of members and integration system). The work relationships that exist between the various
components of organizational function determined how activities are coordinated and accomplished. The
relationships are defined by the chain of command, span of control, line and employee roles, and
delegation.

Organizational design is an important aspect of the organizing function. Organizational design is a plan for
the arrangement and coordination of activities for the purpose of realizing its mission through
achievement of goals and objectives. General design of an organization is determined by three
dimensions: organizational structure, integrating mechanism and locus of decision making. Functional
structure, divisional structure, matrix structure and network structure are the four forms of structure.

P&G’s Organizational Structure

Procter & Gamble is international company with presence in several countries the overall management is
led by the Chief Executive Officer with regional president representing each region. The chart given below

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refers to the organizational structure of the US unit of Procter & Gamble which is a matrix type of
organizational structure (Mntzberg, 2007).

Leadership Function
Leadership is the social influence of processes in an organization. It is a process and a responsibility and
not a title, position or privilege (Lewis, Goodman, Fanot & Mitchlitsch, 2007). It is an observable,
learnable and understandable skills and practices accessible to anyone, everywhere in the organization
(Procter & Gamble, 2012). It is the indirect ability to influence people and inspire them to pursue activities
that contribute to the achievement of the mission of the organization. Leadership process involves
formulating organizational vision, designing strategies for achieving vision and communicating strategies
at all levels of organization so that it is clearly understood and adopted.

Leadership can be leader-centered (power-focused leadership), follower-centered (self-leadership), or

interactive whereby it is transformational, situational and empowering. Good leadership is defined by the
drive, motivation, self confidence, conceptual ability, honesty and integrity, and business knowledge.
Communication, motivation and goal setting are the major defining factors of leadership. To be effective a
leader must focus on the best practices in the three areas.

Leadership is vital for the success of the matrix structure of organization operational at P&G. The CEO
does not have the final say on matters (Degen, 2009). The CEOI creates a collaborative corporate culture,
build lateral teams to perform functions and provide adequate training and resources to aid processes of
decision making. Decision making is based on top-down approach and relies on motivation of individual
employee and groups, and delegation of duties.

At Procter & Gamble, leadership is the principle focus the company’s most important asset are people.
They are the company’s source of competitive edge. The company develops leadership by nurturing talent
through a system popular termed “the talent pipeline”. Leadership is developed from within and
management is a disciplined function lead by the Chief Executive Officer. Leadership development is done
at every region, business and level of organization structure. The purpose, principles, and values are the
basis on which leadership is developed at P&G. The hiring process ensures that only the best are recruited
into the employee base from among the thousands of applicants who apply for opportunities at P&G.

Controlling Function
Controlling is a management function aimed at measuring whether organization’s objectives were
achieved or not, and if they weren’t, this function provides the means for achieving them (Lewis,
Goodman, Fanot & Mitchlitsch, 2007). Controlling is process that can be performed in two different types
i.e. organization control system and strategic control types. Components of organization control system
comprise the following tools strategic plan, long-term financial plan, operating budget, performance
appraisals, statistical reports and policies and procedures.

Strategic control systems on the other hand utilize the following methods financial analysis and financial
ration analysis. Control philosophies for leadership takes two forms bureaucratic and organic control.
Bureaucratic control is the form that uses formal processes in affecting behavior, assessment of
performance and correction of unacceptable deviations from the organizational norms. Organic control
philosophy relies upon traditions, social values, beliefs, trust and authority in the assessment of
performance and correction of unacceptable deviations.

Proctor and Gamble holds annual general meetings at which annual income reports, budgets are
presented leading to evaluation of progress. During the general meeting motivation of stakeholders is
done through rewards.

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 Conclusion
Strategic planning is the process through which a corporation makes decisions and implements activities
that influence favorably its future long-term performance (Lewis, Goodman, Fanot & Mitchlitsch, 2007).
Organizations do this through the development of a strategic plan whose central concept is the idea of
gaining competitive advantage over other organizations operating in the same market. Competitive
advantage can only be sustained if an organization progressively and constantly innovate new processes,
services and products that outperform other market competitors. Organizations work to achieve
competitive advantage through improvements in its management functions. Strategic planning can take
two approaches top-down and bottom-up approaches whereby planning is initiated by top executives, and
customers and suppliers drive the development of new strategies respectively. Strategic planning can be
done in three levels corporate, operational and functional levels.

Procter & Gamble’s success is built around strategy, people, structure, processes and motivational
rewards (Degen, 2009). The success of the modern “front- back organizational matrix structured devised
and implemented by top executives at Procter & Gamble is a clear proof that the chief executive officer
defines the strategic plan and corporate culture of an organization.

References
Degen, R. J. (2009). “Designing matrix organizations that work: lessons from Procter &
Gamble” Paris: International School of Management
Lewis, P., Goodman, S., Fanot, P. & Mitchlitsch, J. (2007). “Management: challenges for tomorrow’s
leaders”. Mason, OH: Thomson/ South-Western
Mntzberg. (2007). “The structuring of organization”. New York: Prentice-Hall, Inc
Procter & Gamble. (2012). “ Leadership Development”. PG.com. Company, 2012. Web. Jun 27, 2012