Db4b-bloomberg business article | Business & Finance homework help

Please read and answer question at the end. Doesn’t have to be long.

Don't use plagiarized sources. Get Your Custom Essay on
Db4b-bloomberg business article | Business & Finance homework help
Just from $13/Page
Order Essay

At Procter & Gamble, the Innovation WellRuns Dry


P&G is reported here to befalling behind its competition in introducing new products. Reasons giveninclude:

1. A reduced percentage of salesspent on research and development.

2. Decentralization of R&D tobusiness units. This has caused a concentration on short-term profitability.

3. Unwillingness of customers to payP&G’s premium prices for marginally-enhanced new products.

Admitting its deficiencies, thecompany has recently recentralized some of its R&D.

Formuch of its history, Procter& Gamble (PG) didn’tjust launch new products, it created new product categories, from the firstmass-produced disposable diapers to Crest teeth-whitening kits. That’s onereason P&G has more than 1,000 Ph.D.’s among the 8,000 employees at its 26innovation facilities around the world. “P&G is largely a branded sciencecompany,” says Larry Huston, former innovation officer at P&G who’s nowmanaging director of 4inno, a consulting firm.

Lately, though, there’s been a dearth of pioneering brands emerging from theworld’s largest consumer-products company. Spending on research and developmentin fiscal 2012 ended June 30 was $2.03 billion, or 2.4 percentof sales, the same as the prior year and down from 3 percent of sales in2006. P&G’s most recent homegrown blockbusters—Swiffer cleaning devices,Crest Whitestrips, and Febreze odor fresheners—were all launchedat least a decade ago. Says Peter Golder, a professor at the Tuck School ofBusiness at Dartmouth College: “P&G is built on creating new categories,and innovation is in its DNA, but they need to rediscover it.”

Regaining its new-product mojo is crucial because P&G’s businessstrategy has long been to charge premium prices for cutting-edge products. A150-oz. container of liquid Tide detergent is $18 at Target(TGT), forinstance, 20 percent more than the retailer’s house brand. As risingcommodity prices have increased the cost of most basic household products,cash-strapped customers may still be willing to pay more for true innovationsbut not necessarily for the kind of product extensions and embellishmentsP&G has turned to.

That’s created a challenge for Chief Executive Officer Bob McDonald, who haslowered profit forecasts three times since Jan. 1. He’s trying to cut$10 billion in costs by 2016 and reverse market-share declines in such keycategories as U.S. detergents. McDonald is under pressure from activistinvestor William Ackman, who in July took a $1.8 billion stake in P&Gand may seek management changes. Blockbusters have “dried up a bit,” acknowledgesBruce Brown, P&G’s chief technology officer. “We want to get back to moreof that.”

McDonald earlier this year assembled a team of researchers, marketingmanagers, and senior executives from across the company to chart a bolderinnovation course. The group spent 10 weeks analyzing P&G’snew-product pipeline and selecting the most promising ideas for development.But most won’t be ready for at least another year.

P&G’s 175-year history is filled with such consumer-product innovationsas the first synthetic detergent (Dreft, in 1933), the first fluoridetoothpaste (Crest, in 1955), and the first stackablepotato chip (Pringle’s, which later dropped theapostrophe, in 1968). Researchers typically have leveraged technologies alreadyused in P&G products to come up with entirely new ideas. For CrestWhitestrips, launched in 2002, they adapted bleaching methods from P&G’slaundry business, film technology from the food wrap business, and glue techniquesfrom the paper business.

In recent years, however, the company’s product pipeline has been mainlyfocused on “reformulating, not inventing, products,” says Victoria Collin, ananalyst at Atlantic Equities in London. Among these are new scents of Tide forEastern European markets and Secret deodorant’s Natural Mineral line. As aresult, analysts say P&G has lost customers in the U.S. and other developedcountries, who’ve switched to cheaper products made by such rivals as Unilever,as well as store brands.

When former CEO A.G. Lafley took charge in 2000, he sought to increase therate of product development by collaborating with outside partners who couldhelp with everything from packaging to product design. Working with outsidershas enabled P&G to gain access to some important technologies, such as awrinkle-reducing ingredient made by a French company,Sederma(CRDA), that’sused in its best-selling Olay Regenerist skin cream.

But Lafley also decentralized R&D, making business-unit headsresponsible for developing new items. R&D chief Brown says thatinadvertently slowed innovation by more closely tying research spending toimmediate profit concerns. Between 2003 and 2008, the sales of new launchesshrank by half. By the time McDonald became CEO in 2009, the number of what thecompany considered to be big product breakthroughs had fallen to an average offewer than six per year as unit heads focused on short-term results and smallerinventions, says Brown.

McDonald,who has acknowledged that the company’s R&D has been “inadequate” in someproduct categories and regions, has now centralized 20 percent to30 percent of P&G’s research efforts. He also named Jorge Mesquita,already chief of its pet care and snacks businesses, as head of P&G’s newbusiness creation and innovation unit and given him responsibility forcoordinating product launches.

One area of focus is beauty, where “we lost our way for a couple of years,”says Brown. That business, which includes deodorants, cosmetics, and hair careand made up 24 percent of P&G’s $83.7 billion in sales in fiscal2012, has been lagging competitors such as L’Oréal (OR) inproduct launches. (L’Oréal says it rolls out about 500 a year.)

McDonald has said he hopes cost-cutting will free up more money for productdevelopment. Yet the squeeze has forced P&G to make tough choices even whenit does introduce appealing products. One example: Spending to support apopular new Olay hair removal product last year pulled money from otherproducts, “so the base business lost more than this new thing gained,” Brownsays.

Meanwhile, Unilever says it can roll out 10 new products in 60 countries inthe same time it once took to introduce them in just 10 countries. Recent newproducts include Clear anti-dandruff shampoo and a Rexona deodorant that usesproprietary Motionsense technology to activate the product as the wearer moves.

Kimberly-Clark (KMB), makerof Huggies diapers and Kleenex tissue, has opened research centers in South Koreaand Colombia and increased R&D spending in the first half of this year bydouble-digits from the year before. “Our international business is growing sorapidly that the demand for innovation has increased,” Chief Financial OfficerMark Buthman says.

P&G still brings plenty of new products to market. SymphonyIRI’s NewProduct Pacesetters report, which tracks the top-selling non-food innovations,showed P&G with one-third of the top 25 last year. And the company over theyears has acquired big brands, including the Olay and SK-II skin care lines andGillette. Yet homegrown products remain the challenge. Says 4inno’s Huston:“You’ve got to be constantly creating innovation.”

Thebottom line: P&G, with $84 billion in annual sales, made itsname as a new-product whiz. But its biggest homegrown hits are at least adecade old.

Discussion Questions:

1. What are the basic socio-economicreasons behind the concern over lack of product innovation at Procter &Gamble?

2. How can product and/or processinnovation be good for operations management? Can it be bad for operationsmanagement? If so, how?

3. How can or should U.S. innovationbe encouraged? What is government’s role? How shall this role, if any, be paidfor?

Place Order
Grab 16% Discount On This Paper
Pages (550 words)
Approximate price: -

Why Choose Us

Quality Papers

We value our clients. For this reason, we ensure that each paper is written carefully as per the instructions provided by the client. Our editing team also checks all the papers to ensure that they have been completed as per the expectations.

Professional Academic Writers

Over the years, MyEssay.Help has managed to secure the most qualified, reliable and experienced team of writers. The company has also ensured continued training and development of the team members to ensure that it keep up with the rising Academic Trends.

Affordable Prices

Our prices are fairly priced in such a way that ensures affordability. Additionally, you can get a free price quotation by clicking on the "Place Order" button.

On-Time delivery

We pay strict attention on deadlines. For this reason, we ensure that all papers are submitted earlier, even before the deadline indicated by the customer. For this reason, the client can go through the work and review everything.

100% Originality

At MyEssay.help, all papers are plagiarism-free as they are written from scratch. We have taken strict measures to ensure that there is no similarity on all papers and that citations are included as per the standards set.

Customer Support 24/7

Our support team is readily available to provide any guidance/help on our platform at any time of the day/night. Feel free to contact us via the Chat window or support email: support@myessay.help.

Try it now!

Grab 16% Discount On This Paper

We'll send you the first draft for approval by at
Total price:

How it works?

Follow these simple steps to get your paper done

Place your order

Fill in the order form and provide all details of your assignment.

Proceed with the payment

Choose the payment system that suits you most.

Receive the final file

Once your paper is ready, we will email it to you.

Our Services

MyEssay.help has stood as the world’s leading custom essay writing services providers. Once you enter all the details in the order form under the place order button, the rest is up to us.


Essay Writing Services

At MyEssay.help, we prioritize on all aspects that bring about a good grade such as impeccable grammar, proper structure, zero-plagiarism and conformance to guidelines. Our experienced team of writers will help you completed your essays and other assignments.


Admission and Business Papers

Be assured that you’ll definitely get accepted to the Master’s level program at any university once you enter all the details in the order form. We won’t leave you here; we will also help you secure a good position in your aspired workplace by creating an outstanding resume or portfolio once you place an order.


Editing and Proofreading

Our skilled editing and writing team will help you restructure you paper, paraphrase, correct grammar and replace plagiarized sections on your paper just on time. The service is geared toward eliminating any mistakes and rather enhancing better quality.


Technical papers

We have writers in almost all fields including the most technical fields. You don’t have to worry about the complexity of your paper. Simply enter as much details as possible in the place order section.

                                                                                     Place Order macbook tamir - mersin escort - casino-masino.com - bahis