Case Analysis of Frito-Lay Inc.

: A Strategic transition, 1980-1986

The setting is a food manufacturing company that stumbled in terms of its historic growth and profit
achievement. In trying to recapture its momentum, the president has used information technology as
one element in his program of transition. The case focuses on the strategic problem and setting, the use
of information technology for organizational change and the associated implementation problems.

Case scenario

A strategic Transition, 1980-86, details the competitive challenges that faced the company in the early
1980s and company president Willard Korn vision for transforming the organization. Information
Technology, HHC was a key element of his vision.

Case ends with Korn’s abrupt departure as profit plummet by 14.5%.

Problem

> Resignation of former CEO Willard Korn

> Micromarketing strategy down to lowest level which led to communication breakdown and misaligned
marketing strategy.

> Promotions were not released on time which led to product no selling and sitting warehouses.

Overhauling the IT and Communication strategy.

> Information sharing

> Reorganizing the management structure

> Leave paper-based system that were costing time and did not allow for flexibility

> Management processes, organization, and information system were not in place to support new
micromarketing strategy.

> Shifted effort toward integrating, streamlining, and time synchronizing operating across the functional
areas.

Executive Analysis

> Frito-Lay was highly profitable in the 1980s and 1970s (50%)

> Growth rate of 15-20% per year

. geographic expansion and product/market initiatives

. promotions, well planned and product mix.

 Late 1970s, its growth began to evaporate.

  Change is inevitable
 Micromarketing strategy.

Marketing strategy from Korn

 Through IT enablers (HHC, Network) organization pan to plant business process. Product pricing
and mix for sales are key enablers to make the organization profitable with the increase in
Market shares.
 Organization require skilled people with expertise in their related field. Also, they should have
well related knowledge of their field.
 Korn implicate 80/20 rule with creating a new position in the market ‘Key Account Manager’.
KAM is responsible to grow assigned high share costumer. He/She limits the micromarketing
strategy to key accounts.

Reccomendation

 Instead of just restructuring the organization they should train employee to handle a changing
environment
 Efficient networking process
 Identify and keep update with the new technology innovations.

1. Business Strategy
 HHC ( Hand Hold Computer ) was develop to find information more quickly.
 Increase Market Share of Frito-Lay by Growth, and also increase in revenue.

2. Operational Strategy
 Decision making through a decentralized system was not efficient.
 Hierarchical system was outdated. Segmentation of the market with aligned team.
 To make ideal sales organization. Reengineering for the organization is required.

3. Finance Strategy
 Profit reporting system.
 > Changing the role of finance from giving profit summaries to providing information on profit
trade – off decision.

4. Information technology
 Investment on IT infrastructure with increase in HHC devices.
 Backlog of information or data processing means no clear transformation of data from central to
field.