Case Study 7: Gillette 27 July 2013

Case Analysis Prepared by Group #5:

Espinosa, Melissa Katherine Magtibay, Roxanne
Francisco, Marvin Nito, Orenz
Importante, Marlyn Rosapapan,Jennifer

I. Synthesis

Gillette manufactured and sold a product invented by its founder: the safety razor shaving
system. The company expanded its business over the years, particularly its international
sales operations. It also acquired the following: Toni (maker of womens hair home
permanent kits), Paper Mate, Liquid Paper, and Cricket lighters. Although these
acquisitions were eventually sold by Gillette, additional acquisitions were made in the
succeeding decades, such as Oral B, Braun, and Duracell. Razors and blades remained
its top earners.

Gillette experienced rapid growth from 1997-2000, largely due to the continuous increase
of its international markets share. However, the company suffered declining market
shares, stagnant sales, and reduced profits in the succeeding years. The plateauing
North American and European markets, as well as the recession that hit Asia and South
America worsened this. In trying to meet sales targets, Gillette resorted to trade loading,
which retailers took full advantage of. Unrealistic targets also contributed to the decline of
Gillette, since the company consistently failed to hit these goals. After a century of being
managed by CEOs who had no professional experiences outside Gillette, the board of
directors decided to hire Jim Kilts, an outsider responsible for Nabiscos successful
turnaround. Kilts was expected to break Gillettes non-receptive culture in order to steer
the company toward a much-needed organizational change.

II. Point of View

The case is analyzed from Jim Kilts point of view.

III. Statement of the Problem

How will Gillette effectively cope with organizational changes to turn around its financial
performance and increase its market share for all products?
IV. Statement of the Objectives

1. To reorganize the company structure that the whole organization will support and
adopt.
2. To improve sales revenue and market share globally and locally.
3. To plan and allocate resources and adjust expenditures accordingly to focus on the
companys growth.
4. To find means and ways wherein company leaders and employees can work
together in achieving their shared vision, new goals, and objectives for the
company.

V. Areas for Consideration and Assumption

Strengths Weaknesses
1. Historically a top player in the
consumer product market in
North America and Europe; it
also leading market shares in all
core products and high margins
compared to competitors.
2. Reputable in manufacturing high
quality and innovative products.
3. Possesses broad distribution
network all over the world.
4. Strong management foundation
built by leaders who have
worked for the company.

1. Stagnant sales that resulted to
declining profits, market shares
and stock price.
2. The practice of trade loading was
continued as a desperate
measure to meet sales targets
that lead to high sales only at the
end of each quarter.
3. Very conservative culture that
rejected change.
4. No observation done on
customers and competitors to
avoid giving service levels below
industry standards.
5. High SG & A due to
compensation given that was not
based on performance but on
tradition.

VI. Theoretical / Conceptual Framework

The Michael Beers Bottom-Up Change Model Approach is adapted for this case since
Gillette has a strong culture that has resisted several changes in the organization. This
framework is also relevant since it will help foster participation among employees, which
can create long-term organizational capability and economic value for stakeholders. Thus,
this can translate to the development of corporate culture and human capability through
individual and organizational learning. This is done through the process of obtaining
feedback, reflecting, and having a dynamic system.

On the other hand, John Kotters Top-Down Change Model Approach is also applicable
for Gillettes case. This approach focuses on maximizing the shareholders value and is
usually done with drastic restructuring. Jim Kilts recognized the need for change when
investigating on the companys performance. He ultimately must be able to establish
urgency for transformation to avoid sales and profit from declining even further.


Kotter (top-down) Beer (bottom-up)

VII. Alternative Courses of Action (ACA)

ACA 1: Retain the existing organizational structure, culture, and processes.

Pros Cons
No adjustments will be done in
the organization and employees
can continue with operations
without disruptions.
No extra effort on the part of the
management.
Continuous decline of the
company sales and market
share.
Changing internal systems of the
company such as culture, work
behavior, and structure are time
consuming and may divide Kilts
attention in turning around the
company financially.

ACA 2: Adapt Kotter (top-down)/Mainstream approach in instigating organizational
change.

Pros Cons
Defined and clear direction for
the company since the message
will come from the management.
Prompt implementation of
change needed.
Employees will possibly be
resistant to change.
Possible drastic restructuring.
Will likely lead to a number of
employees leaving the company.

ACA 3: Adapt Beer (bottom-up)/Multistream approach in bringing organizational change

Pros Cons
Employees will feel involved in
the whole process by building
trust and encouraging
participation, which could make
employees receptive to change.
Customer feedback and
competitors performance are
considered in adjustments that
will be made.
Slower implementation of
change.
Undefined and unclear direction
for the company.

ACA 4: Apply combined Kotter and Beer approaches for organizational change

Pros Cons
Focused both on the
organizations structure/system
and culture which can boost both
profit and productivity at the
same time.
Definite new direction will be set
while engaging the all the
employees.
Challenge to balance two
different approaches, as change
should come from both sides
Changes might confuse the
employees.

VIII. Recommendation and Implementation

The groups recommendation is to apply both change model approaches -- top-down and
bottom-up -- in order to maximize both stockholder value and organizational capabilities.
This will also ensure that while the management sets the final direction of the company,
the employees are involved in the process and their input are valued by the management.

For the structural change, a shift from Matrix structure to Divisional structure should be
done. The structure will work well in their new direction because it allows a team to focus
on a single product or service. This will also empower the employees by effectively
cultivating teamwork and communication, which would ultimately foster trust from and
obtain commitment from all stakeholders. It will lead both to higher morale and a better
knowledge of the division. It is an opportunity for employees to deeply understand their
customer and develop customer service activities.

Before joining the company, Kilts is already familiar with the companys background and
has identified the problems. On his day one, he should set a meeting with the heads and
VIPs of the company. They will discuss the changes and new strategic plan of the
company to increase its sale, to become a customer centric, manage the inventory and
to stop trade loading to help reduce the cost.

The new direction should be ready to be released on his first week, which will also be
filled with a series of meetings. Then, the second week will focus on polishing the new
objectives and goals, including the new and well-defined KRA of employees. The HR
department will organize a kick-off event in the third week to disseminate the changes to
all stakeholders. In addition, a new organizational chart, criteria for stakeholders
performance appraisal and incentive plans to reward deserving employees will also be
released.



Kilts can set up a new team to address the issue of declining market share and profits.
The initial planning will focus on evaluating existing product lines according to the
following aspects: Product, Price, Place, Promotion, People. Another agenda will be
revisiting and assessing current targets and goals, specifically if they are SMART.
Marketing and strategic assessments can be made using a Value Map, which explores
the way customer value and the price/benefit tradeoff work in real markets for a given
segment .


IX. Learning Insights

Organizational change involves substantial modification of existing trends, people,
technology, structures, and perspectives. In order for a company to survive, it must adapt
to external factors. This can be done through continuous improvement and holistic
development based on shared values, trust, and participation.

Another insight is that an organized structure will provide clear roles and KRA for the
employees and help avoid overlapping responsibilities. Appraisal also plays an important
role in eliciting full employee commitment. Managers can also offer performance-based
awards, which will motivate employees to work harder and think outside the box.

Change is inevitable, and in an organizational change, the role of the manager is vital. In
the Mainstream Approach, top managers make the crucial decisions, specifically in
planning and implementing a smooth transition. On the other hand, the Multistream
Approach is bottom-up, with emphasis given on the detailed process of change, as well
as a broader range of reorganization issues.