The initiative, dubbed Organization 2005, also aims to reshape P&G's corporate culture; encourage speed, flexibility and personal leadership; and develop "corporate centers of excellence" in disciplines that may include marketing. Changes will start phasing in by fiscal 2000, which begins July 1, 1999.
Details remain to be worked out, a P&G spokesman said, including the number of Strategic Business Units and whether they will replace the current four-way geographic management structure.
CURRENTLY 4 REGIONS
Currently, P&G is organized into four regions -- North America, Latin America, Asia and Europe/Middle East/Africa -- and has category managers that function within each region.
Global strategic teams at P&G already have a strong role in such areas as new-product development and marketing strategy, such as reapplying successful ad copy from one market to the next. But the reorganization will create senior executive posts with direct responsibility for global categories.
A P&G spokesman said the goal is not to downsize or dismantle the company's country-based brand management or sales organizations.
But Burt Flickinger, consultant with Reach Marketing, said he expects the reorganization ultimately could lead to naming global brand managers for such key brands as Pampers and Pringles.
The P&G spokesman wouldn't comment on whether any marketing functions would be consolidated into a global unit.
The reorganization would further centralize an organization already more centralized than its peers, such as Philip Morris Cos., Unilever, Colgate-Palmolive Co. and Nestle. But P&G paints the reorganization as a way of making its organization faster and less complex, too.
"We're talking about a cultural evolution in addition to an organizational one," the spokesman said, with the cultural change involving "basically ways to increase personal leadership and strengthen flexibility and speed, and really lessen that load of complexity on individuals."
Based on discussions with P&G executives, Mr. Flickinger said he believes one way that will be achieved is reworking performance bonuses, placing more emphasis on individual and small-team performance.
He said the restructuring is largely motivated by growth of global retailers.
"If I were sitting in the headquarters of P&G's key competitors around the world, this would make me very nervous. It's going to be very difficult for disaggregated competitors . . . to compete as effectively against them as they do today."
The move could also pressure P&G's roster agencies to improve their international networks so they can handle brands globally, Mr. Flickinger said, adding that P&G's shops are still well behind Omnicom Group's DDB Needham Worldwide and BBDO Worldwide and Interpublic Group's McCann-Erickson Worldwide in developing strong global networks.