INTRODUCTION
Have you ever thought about how MacDonald’s became the largest fast food chain in the entire world? Everything started in the small city of San Bernardino in 1955 and now it has more than 36000 restaurants in 119 countries with approximately 70 million customers per day. But how did they achieve these numbers? The secret behind it, is Global Strategy. Global strategy helps companies grow from being an international company, to a multinational and finally to a global company. This is how only after 28 years MacDonald’s became a global company.
By using a similar approach to MacDonald’s, the global corporation Procter & Gamble (P&G) serves nearly 5 billion people around the world with its brands. Only by following a global strategy P&G was able to achieve economies of scope, economies of scale, global brand recognition, global customer satisfaction, lower labour and other input costs and emergence of new markets. Undoubtedly, this strategy involves a high degree of risk and uncertainty, nevertheless the business rewards can be much greater for a global strategy rather than to a more locally focused strategy. The history and the strategies designed that enabled P&G to achieve its objective of international expansion will be explained and analysed more in depth in the following sections:
P&G history timeline
“Playing to Win: How Strategy Really Works” P&G Global Strategy
What is the strategy about?
Playing to win at P&G
How to win
How to win: Porter’s Value Chain Model
How to win: Value Disciplines Model
Recommendations
I. P&G HISTORY TIMELINE
“PLAYING TO WIN: HOW STRATEGY REALLY WORKS” P&G GLOBAL STRATEGY
A corporation that achieves twenty-two brands of it’s total portfolio to have more than a billion dollars in annual sales should be definitely considered as a role model to follow. This is the case of P&G strategy “Playing to Win” established by A.G. Lafley and Roger L. Martin. In 2000, Leafley was nominated CEO of P&G and critics promptly started making negative comments against him: “The day Lafley got the keys, no one had high hopes” (Fortune, September 2002), although in a couple of years he was acclaimed as one of America’s Best Leaders. But how did Lafley became one of the most widely acclaimed CEO’s of American history?
What is the strategy about?
The mantra of the strategy is: what really matters is winning. With the belief that great strategy is critical to the success of every organisation A.G Lafley and Roger L. Martin designed a global strategic approach which involves a set of tactics and decisive choices that managers should aim for in order to win. The pillars of the strategy are a cascade of interrelated and powerful choices that bring competitive advantage and pivot the organisation towards the winning strategic plan.
What is our winning aspiration?
Where will we play?
How will we win?
What capabilities must be in place to win?
What management systems are required to ensure the capabilities are in place?
The authors argue that strategy is not a long planning document, but is a set of well thought and planned choices that lead the organisation to win. Their concept of strategy is equal to choice. In other words, they believe that “who has the D” or who makes the decisions has a crucial role in a corporation. Indeed, in every success, every calamity, every taken or missed opportunity, it is going to be the result of a decision that someone made or failed to make, as stated by Paul Rogers and Marcia W. Blenko in the Harvard Business Review. Finally, both authors state that making the way through the choice cascade isn’t only a one way linear process. As a matter of fact, they believe that strategy is an interactive process in which all of the components influence one another and should be considered always together.
Playing to win at P&G
When Lafley took over the role of Durk Jager, former CEO, the company’s market capitalisation was about $60 billion. Indicating that the corporations as a whole had a healthy business state. Nonetheless, with the introduction of his global strategy “Playing to win”, Lafley was able to leave the