Procter and Gamble competitive advantage Essay Example

Gamble were looking to having a business structure where they stayed in a close relation with their customers (Bhatt et al, 2005). This would be made possible by the creation of a form of balance between bringing flexibility to the local geographies needs and delivery of business process that are globally aligned. The following were the main goals behind the implementation of a SAP project globally:

i. Fully deploy business processes which are harmonized for supply chain, HR and financial management so that scale can be leveraged globally.
ii. Make the company become internet based in order to enable a consumer driven and integrated supply chain.
iii. To create upfront flexibility for the future business plans of Procter and Gamble by enabling both large scale, robust operation of ERP and streamlined execution of business mergers, divestitures and acquisitions in future (Dodgson et al, 2006).

A transaction or finance system is one of the main information systems at Procter and Gamble. The system handles calculations of all operations of income and expenditure incurred in the company. The cost of production however is deployed at the level of a plant. The system of SAP Human Resource is used to handle data of all workers employed by Procter and Gamble. However, some payroll for the operations of a plant needs to be handled using the local systems. In paying staff from the 10 core countries, Procter and Gamble does this using its shared service centre via the payroll of SAP. There are plans of advancing this model to some other countries. The systems of SAP supply chain are the most important in the company.

The organization of these is made possible either by

geography or the business units (Bhatt et al, 2005). Approximately 80% management of order is made carried out by two very big mainframe applications that are in-house-developed. These applications are then connected with the main systems of SAP. A middleware of SAP Application Linking Enabling was chosen purposely for driving the synchronization of master data. The integration of master data takes place after every 1 day, 1 hour or 10 minutes depending on the needs of the business (Barney & Clark, 2007). SAP production systems work on a range of various service-level agreements depending on the requirements of the business unit. All hardware is kept in data center cubs which are three regional. Lastly, internet website is another very important information system in Procter and Gamble. This was initiated in order to ensure that customers were able to carry out their business transactions online. It serves as an interface linking a customer to the facilities provided by Procter and Gamble.

Role of information technology

Information technology has become one of the vital things in the management of a business. From big corporations that maintain databases and mainframe systems to small businesses, IT plays very key roles. In Procter and Gamble, Information Technology is very vital by the way it contributes towards the success of this organization (Barney & Clark, 2007). IT is very important in facilitating communication between various departments in Procter and Gamble. Email is one of the primary ways through which management staff, employees and customers communicate. Email was among the earliest internet drives offering cheap and simple means of communicating with each other. As time went, other tools of communications were incorporated into the

system. Some of these included video-conferencing systems, online meeting tools and chat systems. In addition, smart phones and VOIP (voice over internet protocol) telephones provided new means of communication between employees (Melville et al, 2004).

Incorporation of Internet Technology in Procter and Gamble has also played roles in the management of inventories. The systems of inventory management help in tracking the quantity of all items maintained by P & G. This triggers ordering of another when the stock of a certain item falls below the standard amount. The connection of an inventory management system with a point-of-sale system has helped a lot in improving the handling of items in P & G. This connection helps in that whenever an item is sold, the point-of-sale system makes sure that this item has been subtracted from the list of items contained in the inventory (Melville et al, 2004).

Information technology incorporation helps in the management of data. The era when an organization comprised of large rooms for storing files, filing cabinet rows and document mailing is coming to an end. This process used to be very tedious and therefore a lot of time was taken in storing data for future reference (Piccoli & Ives, 2005). In P & G, data is very important as it is in most cases used in the processing of planning. Upon introduction of data management means, documents could be accessed by any employee in the organization regardless of the place where they are located. By taking this approach, company documents were able to be stored for long periods of time as there was no physical interaction between data and the person accessing it (Piccoli

& Ives, 2005).

Incorporation of management information systems has helped in making this process become a bit easy. Such a system enables P & G organization track data on sales, productivity levels and expenses incurred. Through information management systems, the amounts of profit made by the company over a certain period of time can be traced. This helps identifying the weak areas as well as the areas where improvement measures need to be employed. These systems have made the daily tracking of the sales of a certain item (Bharadwaj, 2000). In P & G, this is followed by a slight reduction in price of that item in the cases where low sales had been recorded. Alternatively, a manager can advice employees to improve their productivity in order to ensure that production of high quality products that have a high demand in the market is achieved. Information Technology has made the management of relationships between a customer and the organization become possible. By using these systems, a conversation that was ranked well by a customer is ranked. The company will then strive to ensure that such conversations have been maintained.
How Information Technology creates competitive advantage.

The revolution of information affects competition in three main ways:

i. It changes the structure of an industry a process through which competition rules are altered.
ii. It helps in giving a company new ways through which it can outperform its main rivals.
iii. It generates new businesses, often from the existing operations of a company.

Information technology is altering the ways in which companies have been operating for a long time. It is changing the entire process through which products are being created. In addition, it

is playing a very great significance in the reshaping of the product (Piccoli & Ives, 2005). The “value chain” is a very important concept used to highlight the role played by information technology in a business. This company divides the activities of a company into economically and technologically distinct activities that it performs in order to do business. These are referred to as “value activities”. The value created by a company is determined by the value that buyers are buying a certain service or product. A company is said to be making profits in the case where the value of products it comes up with is more compared to the amount of money spend in creating the product (Bharadwaj, 2000). For a company to gain a higher competitive advantage over the other rival companies, it should conduct its activities in such a way that lower costs will be incurred.

Through advancements in technology, the price costs incurred in producing a certain product are lower than the costs incurred when no technological advancements have been employed. The scope of competition is a very strong tool in the creation of a competitive advantage. A scope which is broad gives a company the chance of exploiting the correlations between value chains that are serving different related industries, geographic areas or industry segments (Applegate et al, 2009). Two business units for example may coordinate common components procurement. Competing globally or nationally using this strategy of coordination, such companies will be able to attain a competitive advantage over domestic or local rivals. Through employment of vertical scope that is broad, a company will be able to exploit the benefits of performing

a lot of activities internally rather than using suppliers from outside.

Information technology is helping through the way it permeates value chain at all the points, hence transforming the way in which value activities are being carried out. It in addition transforms the linkages among these value activities. The technology used by P & G has helped it attain a competitive advantage over the other competing companies. Each of the value activities creates and then makes use of a value activity of certain kind (Applegate et al, 2009). A service activity for instance makes use of information about requests of service in order to order parts and schedule calls, and then generates information about the failures of a certain product. The company then uses such information in order to revise the designs of products as well as the methods used in the process of manufacturing. Technological progress made by a company affects its activities as well as the way it competes with rival companies. The fact that technology used by P & G is advanced makes it attain a competitive advantage over rival companies.

How information technology spawns new businesses

Information technology is of great importance in the generation of new businesses. Managers are supposed to look for opportunities through which they can generate new companies from the existing ones. As technology advances, new business opportunities emerge. Like take for instance the time when computers started emerging in the course of 20th century. New business opportunities that were dependent on computers ended up getting opened. Advancement in technology in one of the sectors comes along with some demands that have to be met for the new technology to

become helpful to the company. Most of the business is carried out through devices of communication or personal computers. Let’s take for instance that does not have data management systems (Wade & Hulland, 2004). The business opportunities that the company has are that in which data can be managed using computers or those in which computations can be handled manually using human brains. Upon introduction of database management systems, new opportunities that require a lot and complex data computation emerge. In such systems, data will only be fed to the system after which all the computations are done by the machine and then final results are given out. Computerized systems provide organizations with ways of managing personal schedules, dense databases and different forms of important communication (Wade & Hulland, 2004).

Procter & Gamble is not left in these technological advancements. Revolution of technology in the business is making it appear as if it is a new company. New business units are getting opened from time to time as technology advances. Radio Frequency Identification technology for instance is getting infiltrated into new companies where it significantly changes some of the processes in a number of ways. New businesses have been opened as a result of this new technology. Existing companies have been altered in such a way that everything appears as if it is new (Rivard et al, 2006). Microchips that can be attached to some of the important products in the company are getting incorporated in many companies today. These chips have the capability of storing information about the product they are attached on. When attached to a certain product, the chips are helpful in the

way the product can be tracked and hence companies can track their inventories.
Some business opportunities require some heavy technologies for them to be pursued. The only problem with that is that such kinds of technologies are expensive and it becomes expensive for a new business to venture in that area. Once the technology has been introduced, opening of new businesses will then follow. Security is one of the reasons as to why some of the companies fail to venture into some business opportunities. Security systems such a very large number of CCTVs are required for such a business to be done (Rivard et al, 2006). Once CCTVs have been incorporated into the system, the company will then be able to start such a business. These types of business are the ones in which the products to be sold are very expensive and thus good tracking of each of the product sold is required.

A plan for gaining an advantage from information technology

A plan for taking an advantage from information technology has four core areas in which strategic focus need to be directed to. These include: the building and sustenance of relationships, service/infrastructure development, strategic investment and lastly the delivery of services. In a business environment, no activity is carried out in isolation. Each activity needs to be linked with another one in order to minimize the expenses incurred in the process of production (Narayanan, 2000). As a result of this fact, all activities done in a certain business need to have a good relation with one another. Relationships between people working in different departments are not left out and also need to be built up. By

collaborating with each other, members of an organization can help equip others with technological information that they were not having. People who are better in one of the areas can teach others in the areas where they are not well informed.

In development of the plan, service and infrastructure is the other area being targeted. The same way like electricity, technology is noticeable mostly when it occurs. Access to an internet is one of the most important aspects in any advancing business. It leads to the exploitation of other business opportunities. A business has to first ensure that it invests in internet after which other technological advancements follow (Narayanan, 2000). For technological advancements, new infrastructure that is capable of sustaining this technology needs to be developed. Technological advancements come along with provision of other services such as electricity. All machines make use of power in order to carry out their activities. In the case where there is a failure in electricity, alternative means of supplying power need to be implemented. Some of these include automatic stand by generators. Management staff has to care a lot for the components or complexities that are interconnected with the delivery of a service or production of a certain product (Melville et al, 2004).

Implementation of investments in a business requires a strategic view. In this, negative possibilities need to be dealt with. For competitive advantage to be attained, people should first identify the resources required, and then decide on the areas where such resources need to be applied. This is what is referred to as taking a strategic approach. Lastly, delivery of a service is the last process in the plan

development. All the above three steps were aimed to the delivery of an excellent service. This is the last process in which a product is formed or the service aimed at is delivered (Bharadwaj, 2000). Information technology hence plays a very important role in the delivery of service of production of a product aimed at.

Conclusion

As illustrated above, P & G Company has invested a lot in the sector of technology. By taking this approach, the company has been able to achieve a competitive advantage over rival companies. In addition, new business opportunities have been exploited. In order to ensure that it remains competitive enough, P & G Company should ensure that it advances with advancements in technology.

References

1. Applegate, L. M., Austin, R. D., & McFarlan, F. W. (2009). Corporate information strategy and management: text and cases. New York: McGraw-Hill.
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5. Dodgson, M., Gann, D., & Salter, A. (2006). The role of technology in the shift towards open innovation: the case of Procter & Gamble. R&D Management, 36(3), 333-346.
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7. Narayanan, V. K. (2000). Managing technology and innovation for competitive advantage.
8. Piccoli, G., &
   

Ives, B. (2005). Review: IT-dependent strategic initiatives and sustained competitive advantage: a review and synthesis of the literature. Mis Quarterly, 29(4), 747-776.