An Empowered, Agile and Accountable Organization We strive for an empowered, agile and accountable organization with little overlap or redundancy — flowing to new demands and seamlessly supporting each other, through a culture of equality and inclusion, to de liver against our priorities around the world. P&G is organized around five industry-based sector business units (SBUs). These five sectors manage our 10 product categories, with full sales, profit, cash and value creation responsibility for our largest and most profitable markets — called Focus Markets — accounting for about 80% of Company sales and about 90% of after-tax profit. Enterprise Markets, which represent the rest of the world, are a separate unit with sales, profit and value creation responsibility. Over the last several years, we have been growing both top and bottom line in nearly all of these markets, which are important to the future of P&G. The best proof that this organization design is working is the growth of our largest and most profitable market, North America, whose growth has accelerated since we put this design in place. Organic sales in North America have increased from an average of +2% the three years prior to the design change to +8% in the three years since. This structure, and its resulting organizational speed and focus, has also allowed us to manage through the challenges and headwinds we are experiencing. We continue to believe that this structure — with the SBUs squarely concentrated on Focus Markets and managing Enterprise Markets as a separate operating unit — is the best way to navigate successfully through the increasingly dynamic world in which we live. Operating through five industry- based Sector Business Units Prov iding greater clarity on responsibilities and reporting lines Strengthening leadership accountability Enabling P&G people to accelerate growth and value creation Strengthening Our Strategy One of the most important things about our strategy — portfolio, superiority, productivity, constructive disruption, and an empowered, agile and accountable organization — is that it is inherently dynamic, not static. It requires being responsive to changing consumer needs and habits. It demands we serve evolving customer needs in rapidly transforming channels. Going forward, we have identified four areas to be even more deliberate and intentional about pursuing to further strengthen the execution of our strategy. The first is Supply. We are improving our supply chain capacity, agility, cost efficiency and resilience for a new reality and a new age. The capability investments we made prior to COVID-19 to improve our manufacturing and distribution networks in the U.S. and Europe helped us to manage through the last few years with relatively few prolonged issues. We are already making the next round of investments needed to ensure we have multiple qualified suppliers for key inputs, sufficient manufacturing capacity to satisfy growing demand and flexibility to meet the changing needs of all types of retailers. The second area is Environmental Sustainability. We are integrating sustainability into our product, packaging and supply chain innovation work to develop irresistibly superior offerings for consumers that are better for the environment. For example, our new cardboard packaging on Gillette razors reduces plastic packaging and offers a noticeably superior experience for consumers at the first and second moments of truth. Another example is our new fully recyclable paper packaging on our premium Always Cotton Protection pads recently launched in Germany. One more example is cold-water washing with Tide and Ariel. When people turn their wash cycles to cold, they can save up to 90% of the energy used on every load of laundry, while saving money. They also get greater satisfaction because their colors look brighter, and their clothes look newer longer. Better for the consumer, better for our planet. Third, we are increasing our Digital Acumen to drive consumer and customer preference, reduce cost and enable rapid and efficient decision making. Increased vi • The Procter & Gamble Company
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