India merged: P&G rationalizes its regions to cut costs

30-Apr-2014 - Last updated on 30-Apr-2014 at 14:55 GMT

In a move which will streamline operations and cut costs, Procter & Gamble has merged its India operations with those in the Middle East and Africa, to form one IMEA region.

“We're aggregating the sales and marketing operations to be more logically focused on the consumers, channels, customers and markets we serve,” confirmed CFO Jon Moeller, speaking as part of a management discussion on their recent third quarter results.

The company will also combine its Western European unit with that of Eastern and Central Europe, creating a single group for the continent, and more fully incorporate China into a better-defined Asia region.

It all forms part of CEO Alan Lafley’s focus on rationalizing the enterprise, which has been his aim since returning to the role last year.

‘Significant’ changes

The changes, notes Moeller, are significant. "They will reduce interfaces and transaction costs, clarify who is accountable for what, de-duplicate effort and simplify operations.”

The move to rationalise geographically follows a restructure last year which focused on the company’s business units, with their reduction from five to four.

Coming on the back of that, P&G hopes a new, tighter regional presence across the globe will continue the recent momentum which saw its core profit increase by 5% for its third fiscal quarter of 2014.

“These changes will enable us to operate with more agility and speed, to operate with clear accountability and effectiveness, and to operate at a lower cost that will also enable further enrollment reduction,” Moeller said.

India in focus

The company hopes India’s reassignment into the fold of the IMEA region will allow them to make better headway in the emerging market, where they currently trail behind Unilever.

"We expect this change to help us further accelerate our growth and improve the productivity of our operations," a P&G spokesperson told The Economic Times of India.

Unilever is currently the market leader in all categories in which both companies compete, enjoying sales nearly five times greater, the paper reports: the new strategy for P&G will involve a stronger emphasis on selling and marketing to boost sales.

“This new selling and market operations organisation reinforces P&G's focus on India,” the company spokesperson said.