1、IMPLEMENTING STRATEGY & CONTROL SYSTEMS AT P&G,Gerry KinghamFinance Mgr. P&G Nordic,Agenda,Re-cap of previous lectureFrom global to local strategy-makingStrategy example: Yes hand-dishManagement Control Systems,Choice Cascade to Define the Choices,What are our goals and Aspirations?,Where willwe Pla
2、y?,WhatCapabilitiesmust be inplace to win?,How will we Win inchosen market?,WhatManagementSystems arerequired?,Choice Cascade to Define the Choices,What are our goals and Aspirations?,Where willwe Play?,WhatCapabilitiesmust be inplace to win?,How will we Win inchosen market?,WhatManagementSystems ar
3、erequired?,Re-cap on lecture 1,Where will we play?Total Shareholder Return calculations by Global Business UnitHow will we win? Commercial StrategyFocus on core brandsConsumer Is BossWin with winning customers Competitive retail margins strong Tailor Investments By Customer Be Strong With Global Cus
4、tomersGet the value equation rightKnow the competitorsWhat capabilities must be in place?Global matrix structure: Global Business Units (GBUs) and Market Development Organizations (MDOs)Individual accountability, Work & Development Plans,HOMEWORK,What share of shelf does YES have ? What do you think
5、 it has in market share ? What do you learn from the pricing and sizing you see?Why might it be so ? What influences the shelf positioning ? What would your YES strategy be?,HOMEWORK,What share of shelf does YES have ?Ca. 60% What do you think it has in market share ?Same as shelf share (60-70%) Wha
6、t do you learn from the pricing and sizing you see? Why might it be so ?Smaller sizes offer “extra benefits, but are more expensive pr. ml What influences the shelf positioning ?Looks like the big bottles are at the bottom What would your YES strategy be?,Choice Cascade to Define the Choices,What ar
7、e our goals and Aspirations?,Where willwe Play?,WhatCapabilitiesmust be inplace to win?,How will we Win inchosen market?,WhatManagementSystems arerequired?,Implementing strategy First: Understanding the customer,HOW WILL WE WIN?,Retail is still fragmentedShare of top 50 public companies, 1998,Energy
8、,Automotive,Pharmaceuticals; diagnostics,Electronics,Telecom,Packaged goods,Financial industries,Chemicals,Retail,Source:Global Vantage; McKinsey,Energy,Financialinstitutions,Automotive,Retail,Packagedgoods,Electronics,Average number of countries of operation for largest companies (1998),Note:Larges
9、t companies defined by total revenueSource:Hoovers; McKinsey,Retailing is still local,HOW WILL WE WIN?,*Only disclosed deal considerations in excess of USD 25 millionSource:Amdata; Thomson Financial Securities; McKinsey analysis,Non-European cross-border,European cross-border,Domestic,Growing Europe
10、an M&A activities in RetailUSD b, deal volume*,2.9,9.3,12.0,0.7,1994,1995,1996,1997,1998,12.4,1999 to September,16.0,There is a war out there,Demand,Flat/falling share of walletFlat/falling pricesMore demanding and complex consumersShifting lifestyle and work patterns,Supply,OvercapacityNew entrants
11、 (e-tailers and retailers)Supplier consolidationLow availability/ rising cost of frontline labourIncreasing real estate costs,Power shifting to consumers,Internet is accelerating trends,Source:McKinsey,HOW WILL WE WIN?,Sweden,Most consolidated retail market in the world the BIG are already BIGICA ow
12、ned 50% by AholdAhold highly financially driven company EVAMore pressure on ICAmore pressure on suppliersWants higher profits, higher turnover, happier consumers (differentiate themselves vs. Competition),HOW WILL WE WIN?,Now we know the customercan we find a sweet spot?,How will we win?Consumer is
13、the BOSSCore BrandsWin with winning customers Competitive retail margins strong Tailor Investments By Customer Be Strong With Global CustomersHow will we win Sweet Spot?Launch a product, with unique consumer benefits, with higher customer margins, that drive total TSR for P&G,Having the right capabi
14、lities,P&G tries to mirror how the customer worksWe work in multifunctional teams, to address complex business issuesIn a matrix organisation individual accountability is KEY,Global Ahold Customer Team Overview,P&G,Ahold,Global TeamTeamleader (VP) & MultifunctionalBased in Rotterdam,Regional TeamsUS
15、A, Europe, Latin America, andAsia,Regional Customer HQ,Ahold Managementin Zaandam,Local Teams-ICA/Hakon (Ahold Nordic)-Teamleader & multifunctional team,Local CustomersICA/Hakon,Local Nordic Team,Sales: Teamleader, Key account managersFinanceMarketingLogisticsCustomer marketingOrder group, back offi
16、ce support,Everyone on the team knows their role in the GOAL & whatthey are MEASURED on to SUCCEED,Local Nordic Team - accountability,Sales: Teamleader, Key account managersVolume, Share, Cost to serveFinanceCustomer profit, effecient spendingMarketingShare, basket size, traffic, category shareLogis
17、ticsShelf availability, perfect orders, inventoriesOrder group, back office supportPerfect Orders, leadtimes, no overdues,Control Systems,FinancialSales FundamentalsIndividual PerformanceAction steps,Reminder: OGSM,What?,How?,P&G Measures: e.g.Yes Aroma Launch,Objective:Secure market leadership with
18、in hand-dish by offering consumers the best value and by being the preferred supplier of hand-dish to leading customersGoals (note: not actual numbers) :Grow volume by 5%Deliver $ 1,433 M of value contribution to the companyReach 90% distribution in 3 months on AromaReach 80% share of shelf,P&G Meas
19、ures: e.g.Yes Aroma Launch,Strategies launch flankers which:Match unmet consumer preferencesGrow total trade profitability on Yes brand increase consumer and customer marketing spend year 1 to secure trial use displays to get fast distribution early in year do not increase current level and depth of
20、 promotionsMeasurementsVolume: daily shipment reports by customerShares by product and customer: Weekly/Monthly Nielsen dataMarket prices by product and customer: Weekly/Monthly Nielsen data Budgets: actuals versus commitments; $/unitValue contribution (Brand/Product/Country): monthly Brand Profit E
21、stimates (BPEs),FINANCIAL FIRM,3.59,-,(10.0%),NORDIC CONTRIBUTION,1 503,15.03,40.3%,1 433,13.65,38.0%,Annual Growth rate,90,-10%,95,-5%,Yes Aroma Launch,MeasurementsVolume: daily shipment reports by customerShares by product and customer: Weekly /Monthly Nielsen dataSales Fundamentals by product and
22、 customer: Weekly /Monthly Nielsen data Budgets: actuals versus commitmentsValue contribution (Brand/Product/Country): monthly Brand Profit Estimates (BPEs),Volume Tracking,daily report by customer/brand on intranet look into database for shipments by product,Total Shipment days,23,Act shipments day
23、s gone,11,Act time gone (of month),48%,BRAND,vs. EST,Todays,Order,Avg Bal Ship,to FIRM,EST,ORDERED,Ariel,xx %,xx,Bold,xx %,xx,Total Fabric Care,xx %,xx,Febreze,xx %,xx,Swiffer,xx %,xx,Mr Proper,xx %,xx,Yes / Fairy HD,7.9,13.0,3.9,30%,0.3,Yes / Fairy ADW,xx %,xx,Total Home Care,xx %,xx,F&HC Total,xx
24、%,xx,NORDIC,Volume Tracking,0,0,.,0,0,0,0,.,0,e.g. Aroma displays are not selling as forecasted why?,Yes Aroma Launch,MeasurementsVolume: daily shipment reports by customerShares by product and customer: Weekly /Monthly Nielsen dataSales Fundamentals by product and customer: Weekly /Monthly Nielsen
25、data Budgets: actuals versus commitmentsValue contribution (Brand/Product/Country): monthly Brand Profit Estimates (BPEs),Shares Tracking,3.1,2.8,NOPA.,3.3,3.7,3.3,3.0,3.3,3.2,3.0,2.9L,e.g. Aroma is cannibalizing as expected.,Yes Aroma Launch,MeasurementsVolume: daily shipment reports by customerSha
26、res by product and customer: Weekly /Monthly Nielsen dataSales Fundamentals by product and customer: Weekly /Monthly Nielsen data Budgets: actuals versus commitmentsValue contribution (Brand/Product/Country): monthly Brand Profit Estimates (BPEs),Sales Fundamentals Tracking,and also display WD, feat
27、ure share, shelf share, etc.,YES AROMA - APPLE,Price Per Unit Without Promo (SFT),P12M,P6M,nov,dec,jan,vs NGLAMARK,TOTAL SWEDEN,35.1,34.9,34.5,34.7,34.9,102%,AXFOOD TOTAL,35.6,34.4,34.3,33.5,33.9,98%,AXFOOD FRANCHISE,37.6,37.5,37.6,36.3,36.2,99%,D&D DISCOUNT,31.8,30.9,30.5,30.8,30.7,99%,VIVO STOCKHO
28、LM,40.7,40.1,41.0,36.2,41.2,97%,BERGENDAHL DETALJIST,32.7,32.7,32.3,31.2,33.4,105%,YES AROMA - APPLE,Weighted distribution (SFT),P12M,P6M,nov,dec,jan,vs NGLAMARK,TOTAL SWEDEN,95.9,98.2,97.0,98.0,98.0,AXFOOD TOTAL,87.7,97.8,98.0,98.0,100.0,100%,AXFOOD FRANCHISE,72.0,95.7,93.0,90.0,99.0,97%,D&D DISCOU
29、NT,81.7,97.2,100.0,100.0,100.0,99%,VIVO STOCKHOLM,75.0,100.0,100.0,100.0,100.0,102%,BERGENDAHL DETALJIST,100.0,100.0,100.0,100.0,100.0,102%,e.g. Aroma has high shares where displayed,A note on competition,Competitive Response ModelingExpected competitive responseSequence of actions + their NPVs dete
30、rmine optimal strategyWhich games will we play?E.g. always match competitions promotion depthE.g. never do in-store coupons,Possible Explanations,Consumer value equation? Is price premium too high? Did we overestimate demand for Aroma products? most likely OK; off-take high where distributed + repur
31、chase rate highOrganizational capability Do we have enough sales rep coverage? Does Yes have priority in sales cycle? yes, but many store owners are rejecting Commercial strategy is trade margin recommended too low? Is value for customer not clearly defined?,Possible explanation: store owners not cl
32、ear on added value do not wish to replace products, do not have more space in store for more products, and do not want complexity of more codes in system,Yes Aroma Launch,MeasurementsVolume: daily shipment reports by customerShares by product and customer: Weekly /Monthly Nielsen dataSales Fundament
33、als by product and customer: Weekly /Monthly Nielsen data Budgets: actuals versus commitmentsValue contribution (Brand/Product/Country): monthly Brand Profit Estimates (BPEs) how do we reflect new forecast and what do we do?,Budget Tracking,PROCTER & GAMBLE NORDIC,Budget Control,Total MDA*,SPENT,BUD
34、,ACT,COM,SPENT,vs BUD,(MUSD),(MUSD),(MUSD),(MUSD),(%),Yes/Fairy HD,100,18,18,35,35%,Yes/Fairy ADW,100,28,28,55,55%,Febreze,100,46,46,93,93%,Swiffer,100,64,64,128,128%,Total HOME,400,156,156,311,45%,Pringles,100,23,23,46,46%,Critical part in decision whether to continue strategy Launch based on tight
35、 economics ($/ml) do we cut budgets or increase them if volumes are not coming in? how sensitive is the NPV? Expect front spending during launch, but possibilities of cutting Q4 support,FINANCIAL TRACKING Brand Profit Estimates & Reconciliations,explain difference vs. estimate by volume, mix effect,
36、 budgets, exchange rates, and trade terms available by product and country consolidated across GBUs and MDOs in SAP R/3 to make our quarterly report to Wall Street,$M,$ / ml,Delta %,4 000,40.00,Mix effect,10,0.3%,0.10,0.3%,Volume effect,100,2.5%,Exchange Rate effect,-10,-0.3%,-0.10,-0.2%,4 100,2.5%,
37、40.00,0.0%,$M,$ / ml,Delta %,3 725,37.25,Mix Effect,10,0.3%,0.10,0.3%,Volume effect,100,2.7%,Exchange Rate effect,-10,-0.3%,-0.10,-0.3%,Customer budget effect,-50,-1.3%,-0.05,0.1%,Consumer budget effect,-5,-0.1%,-0.01,0.0%,3 770,1.2%,37.31,0.2%,Net Real Reconciliation,NOS Reconciliation,ACTION STEPS
38、: E.g. September BPE,We are below volume target.Sales fundamentals show that we are low on distribution (price and share where in store on target).Repurchase rate is high among consumer the product works.Only 175 of estimated 300 displays of Aroma have been sold store owners reluctant to take in new
39、 product.Brand team meets with Sales teams to discuss possible actions.,ACTION STEPS: E.g. September BPE,We take back budget commitments wholly based on volume, this money can be made available for re-investment.Decision: distribution and year-1 volume is vital. We need to re-deploy funds for a disp
40、lay-drive.Try one-time irresistible offer with new trade leaflet specifying rationale behind Yes Aroma.Effect on contribution: higher customer marketing budgets % NOS, but reach critical volume and trial in year 1.New financials are communicated to GBU via Brand Profit Estimate. Full reconciliations
41、 are sent by Finance.,PERFORMANCE TRACKINGAccountability,Accountability examples: country GM value contribution and flow; external relations, organization GBU GM P/L (incl. Production + logistics costs, all overheads), inventory market planner forecast accuracy, % availability brand team leader cont
42、ribution, volume, shares, organization customer team leader volume, sales fundamentals, organization,PERFORMANCE TRACKINGWork & Development Plans,once per year feedback from managers, direct reports, colleaguesHow has work plan been delivered? How has person developed organization?Strengths + weakne
43、sses set development plan with managerBasis for promotion timings + salary level,PERFORMANCE TRACKING,FIRM,FY 99/00,FY 00/01,FY 01/02,FY 02/03,Consumer Satisfaction & Reach,SEK:US$ Exchange Rate,0.1172,0.1025,0.0954,0.0943,Net Sales P&L,($MM),XX,XX,XX,XX,(Index vs. Year Ago P/L),xx,xx,xx,xx,(Index v
44、s. Year Ago Constant Rate),xx,xx,xx,xx,Volume,(MMSU),XX,XX,XX,XX,(Index vs. Year Ago),xx,xx,xx,xx,MDO Value Flow P&L Rate,%,%,%,MDO Value Flow Constant Rate,%,%,%,% Volume in Tier 1 Customers,%,%,Top 4 Categories Value Share,(%),Diapers,%,%,%,Laundry,%,%,%,Haircare,%,%,%,Fempro,%,%,%,Top 4 Categorie
45、s Business Gaining Share L12M,(%),%,%,%,Local S&A,(% of NOS),%,1),%,%,%,Productivity,(NOS $MM/head),%,%,%,%,MDA,(% of NOS),%,2),%,%,%,MSA,(% of NOS),%,%,%,%,1-month Sales Plan Performance,(mean absolute % error),%,%,%,%,6-months Sales Plan Commitment,(mean absolute % error),%,%,%,%,Missed Cases,%,%,
46、%,%,Receivables,(days outstanding),xx,xx,xx,xx,Did it work? YES CASE,Do you think you can recognize our strategy in the store?Have we succeeded in your opinion?What can be done better?Results,SUMMARY:STRATEGY & CONTROL SYSTEMS AT P&G,Lecture 1: Making Winning Strategies in a Large Company both Globa
47、lly and Locally Process To Make Right Choices (Choice Cascade)Financial Framework For Valuation (Portfolio Analysis, TSR)Organisation Working together effectively: Matrix StructureA System of individual accountability,SUMMARY:STRATEGY & CONTROL SYSTEMS AT P&G,Lecture 2:Applying global strategies suc
48、cesfully at local level requires customization to consumer (preferences, shopping behavior, etc.) and customer (trade consolidation, profitability, collaborrative mode, etc.).Management control systems must track all aspects of a deployed strategy, and output of systems must be actionable.,QUESTIONS?,Thank you & good luck,
