FRITO-LAY (LAYS)

EVALUATION OF INTERNATIONAL MARKETING STRATEGIES UNDERTAKEN

IN TANZANIA AND SLOVAKIA

Abstract

The focus of this evaluation is to show the marketing efforts undertaken by an SME who

wants to gain entry into international markets. Two culturally different countries will be

selected and the report will analyze using theories and discuss the mode of entry

adopted by the SME, the market differentiation strategy including the marketing mix

decisions.

1
 Table of Contents

1.0 Introduction.............................................................................................................3
1.1 Overview of Frito-Lay……………………………………………………………3
1.2 Overview of the Foreign Countries…………………………………………….5
2.0 Analysis of Macro and Micro Environment……………………………………………6
2.1 PESTLE Analysis………………………………………………………………..6
2.2 Porter’s Five Forces Model……………………………………………………..9
2.3 Competitor Analysis……………………………………………………………..9
2.4 Market Analysis………………………………………………………………….10
3.0 Market Entry Strategy……………………………………………………………………11
4.0 Market Segmentation…………………………………………………………………….12
5.0 Marketing Mix……………………………………………………………………………..13
5.1 Product……………………………………………………………………………..13
5.2 Price………………………………………………………………………………...14
5.3 Place………………………………………………………………………………..16
5.4 Promotion………………………………………………………………………….18
6.0 Conclusion ..............................................................................................................21
7.0 References ..............................................................................................................22
8.0 Appendix .................................................................................................................26

2
1.0 Introduction

International Marketing is the execution of business undertakings aimed at planning,

costing, promoting and directing the movement of commodities and services to

consumers in different countries for gains (Cateora, P et al. 2019; Ghauri P and

Cateora, P 2021). They suggest that a company’s presence in different countries is the

only difference between global and local marketing, the principles, concepts and

processes are the same worldwide with profitability the main goal of the marketer..

This report aims to identify the strategies adopted by Frito-Lay in introducing the Lays

product into two culturally diverse countries namely Tanzania and Slovakia, the macro

and micro environment of both countries will be evaluated using the Pestle and Porters

5 forces theories, the entry mode, segmentation and marketing mix decisions of Frito-

Lay in both countries will also be discussed.

1.1) Overview of Frito-Lay

Frito-Lay a snack food company with its origin in United States of America was created

from a merger between the Frito Company and H.W. Lays & Company in September

1961. It became a subsidiary of PepsiCo. in 1965 and its products include potato chips,

corn chips, cheese flavored snacks, Doritos and tortilla chips. 33% of PepsiCo’s

operating income is attributed to Frito-Lay North America (CHCOMPANIES

HISTORY.COM). According to Forbes the brand is valued at $16.3billion with sales up

to $12.2billion as at June 2020 and also ranked 34 on world’s most valuable brand. In

3
2021 44% of PepsiCo’s operating profit and 25% of its Net Revenue was generated by

Frito-Lay North America (PepsiCo Annual Report 2021).

The dominant competitive strategy of Frito-Lay is highlighted in the Figure below

Figure 1 Frito-Lay Strategies for global customers (Richard, L. 2014).

According to Referenceforbusiness.com (2021), Frito-Lay controls more above 35% of

the global snack chips market, with dominant presence in several countries around the

world. Its presence in the global market grew through direct acquisitions or joint

ventures with snack companies in these countries (COMPANIESHISTORY.COM,

2022).

Verified Market Research (2021) suggests that the Global potatoes chips market is

forecasted to rise to $42.54Billion by 2028 from about $30.34billion in 2020 at a

compound annual growth rate from 2021 to 2028 of 4.30%. This means that there is

room for growth and expansion in emerging nations around globe. The critical factors

boosting the potato chips market worldwide are the increasing need for already

prepared foods due to busy work schedules and inactive lifestyles (imarc, 2022).

4
Although Frito-Lay is a major player in the global potatoes chip industry through its

parent company PepsiCo., other key players include Kraft Foods, Kellogs, General

mills, Diamond, Nestle and Procter and Gamble (Imarc. 2022).

1.2 Overview of the Foreign Countries

Slovakia is a country in central Europe, it is regarded as an advanced economy with

high income earners. According to U.S.News, the largest sector of the economy is

services but mining and agriculture also play a major role in the employment of labor

and ranks 62 among the best countries in the world. Statista, (2021) snack food report

on Slovakia suggests that cookies and crackers market exceeded the potato chips

market in revenue, sales channels, volume and price with cookies and crackers

generating revenue of $578million while potato chips generated revenue of $105million

in 2021. This suggests that there is room for growth in the potato snack industry in

Slovakia.

Tanzania is situated in East Africa, due to a reduction in life expectancy in the over two-

thirds of its population is under 15years of age (Ingrham, K. et al. 2021).The economy is

dependent agrarian activities with about two-fifths of its population involved in

Agriculture, forestry and fishing. Potato is one of the major crops grown in the country.

According to Statista, Tanzania snack food market is forecasted to rise yearly by 7.74%

with expected revenue of $2,071million. However the outlook suggests that cookies and

crackers market value exceeded the potato chips in terms of revenue, sales channels

and volume with potato chips market generating revenue of $231million out of

5
$1927million revenue generated by the snack food industry in 2021. This indicates that

Tanzania’s potato snack industry has opportunity for growth.

The cultural dimensions of both countries according to Hofstede Insights can be seen

below

Figure 2: Hofstede Cultural Dimension

2.0 Analysis of Macro and Micro Environment

The Macro marketing environment of both countries will be evaluated using the

PESTLE analysis while the Micro environment will be analyzed using Porter’s Five

Forces Theory.

2.1 PESTLE Analysis

According to Hill, A. (2020), PESTLE analysis is a strategic tool used by companies or

marketing teams to evaluate the macro environmental factors that critically affect the

progress of its business units in a country. Corporate Finance Institute indicates that

PESTEL Analysis involves the evaluation of the external environment of a company

through Political, Economic, Social, Technological, Environmental and Legal elements

see table 1 below.

6
PESTLE ANALYSIS SLOVAKIA TANZANIA

Political •Political stability •Political unrest

•Employment and operational •Political changes

laws
•Terrorism

•Export Tariffs and regulations

•Trade barriers

•Trade restrictions or reforms

•Corruption

•Prevention of corruption

Economic •Gross domestic product •Exchange rate fluctuations

•Attractive to FDI •Disposable Income of consumers

•Disposable income •Urbanization

•Inflation rate • Inflation

•Interest rate • Rising interest rates

Social •Age Distribution •Age Distribution

•Level of employment •Career attitudes

•Consumer behavior •Cultural beliefs

• Health Consciousness • Health Consciousness

•Family size and structure •Population growth rate

7
Technology •Technological awareness •Technological awareness

• Rate of technological change • Rate of technological change

• Adequate ICT personnel • Inadequate ICT personnel

• Intellectual property • Cyber insecurity

• R and D activities • R and D activities

Legal • Fraud Laws • Consumer Protection Laws

• Legislation changes • Health and Safety Laws

• Trading Policies • Copy right and patent Laws

• Environmental legislation • Regulatory bodies

• Discrimination Laws • Employment Laws

Environmental • Environmental policies • Poor Infrastructures

• Attitude to the environment • Poor land management

• Climate change • Climate change

• Pollution • Pollution

• Corporate Sustainability • Sustainability

Responsibility

Table 1: PESTLE ANALYSIS (Explanations in Appendix 1)

8
A company’s microenvironment are internal factors that prevents it from having

competitive advantage over customers. Porters Five Forces will be used to evaluate the

microenvironment of Slovakia and Tanzania.

2.2 Porter’s Five Forces Model

Figure 5: Michael Porter’s Five Forces Model 2022 (Biznewske.com, 2022).

(Explanation on Appendix 4)

This is an analytical structure that aids in the evaluation of competitiveness within a

given industry. It is a useful tool for a new start up or new business entrant. The

attractiveness and profit of a business depends on the collective strength of the forces.

2.3 Competitor Analysis

In Future, the potato chips market is forecasted to be largely competitive, due to

increase in demand for savory snack goods. Although Europe and North America
9
currently dominates the market, China, India and other developing countries are quickly

catching up to the new trend according to an article provided by ResearchandMarkets,

(2020, on CISION PR Newswire, 2020). The impact of Covid-19 on the potato snack

industry has been very positive, an article by Bloomberg wire, (2020) indicated that

Frito-Lay snacks were purchased in large quantities and emerged as a winner.

The competitors in Slovakia are Slovakia Chips who is also the market leader (Market

Resarch.com. 2017) a wholly owned subsidiary of Intersnack Group with head office in

Germany and Slov Chips S.R.O of Slovakia Origin. The competitive analysis of the

companies Slovakia is detailed in the table 2 on Appendix 2.

Although Tanzania is one of the largest producers of potatoes in East Africa, the

Competitive analysis for locally manufactured potato snacks is almost non-existent. This

is due to lack of processing facilities and technological knowhow, limited storage and

consistent wastage of potato produce (Potato Chips Manchinery.COM, (2022). A table

indicating the competitive analysis of the potato snack market in Tanzania is shown in

Appendix 3.

2.4 Market Analysis

The critical growth drivers of the market for potato chips in Slovakia is the busy work

schedules of the working population and rising spending income. Since becoming a

member of the Organisation for Economic Co-operation and Development (OECD),

Slovakia has been acknowledged as one of the fastest growing economies, with low

inequality, improved standard of living and performance of the labor market (OECD,

10
2022). Slovakia strongly depends on foreign markets and its skilled workers, low labor

cost, rapid growth in infrastructure, solid industrial background and real growth makes it

the preferred country for trading (Credit Agricole Group, (2022).

Tanzania has enormous potential and is expected to expand at an impressive rate,

according to the China-Africa Trade Research Center, (2022), the demand for potato

snacks had been rising consistently in Tanzania, it suggests that this increment is

evident by the growth in retail outlets for potato snacks by 47%.

3.0 Market Entry Strategy

This is the means through which a company enters a new market and the plans to carry

out their marketing activities. According to various sources there is no ideal entry

marketing strategy, the strategic goal of the organization must be taken into

consideration (Schlegelmilch, B. p. 43. (2016). Types of entry mode include Non-Equity

modes in form of Exports and Contractual Agreements and Equity modes through joint

ventures or wholly owned subsidiaries (Schlegelmilch, B. p.44-45. (2016).

The strategy adopted by Frito-Lay in Slovakia is through exports specifically direct

representation through its parent company PepsiCo. distributor in the Czech Republic.

The justification for this mode of entry is that it provides Frito-Lay with more efficient

control and presence in the market.

Frito-Lay also entered the Tanzania market through direct exports, on acquisition of

Pioneer Foods in South Africa in 2020 (PepsiCo, (2022). The acquisition of the South

African company was the Key to its strategic growth across Africa. The justification for

11
this mode to entry is to enable Frito-Lay enter into the market quickly, have access to

channels for distribution, and a customer base that already exist (Hollensen, S.

p.394.2019), as well as promote its sustainability goals in Africa (PepsiCo, 2019).

4.0 Market Segmentation

Market Segmentation, Targeting and Positioning is the focal point in any business

strategy, mistakes are usually costly and may lead to failure, for any corporate body to

succeed getting it right is essential (Schlegelmilch, B. p.63. 2016). Market segmentation

involves identifying groups of customers with identical behaviors in the market ( Ghauri,

P. and Cateora, P. p. 228.2021). Targeting involves evaluating the selected segments

that have great potential to respond to the product or service provided, while positioning

involves creating an image of what a company is offering in the mind of the customer

(p.228. 2021). Frito-Lay Lay’s product international marketing strategy is homogeneous

in some countries. Its marketing team segments the market by age, behavior, income

and location. Heavy consumers of its products are its primary target market such as the

young and the youthful. The brand also targets older customers by creating products

that meet their needs including products for calories counters. Lay’s positioning strategy

was to make the various flavors of its potato chips easily assessable and it used popular

brand ambassadors and supporters for advertising the brand (Racoma, B. 2019). The

Lay’s brand also developed flavors to suit Slovakian’s tastes.

However in Tanzania since the Lays brand is still being handled by importers through

independent Market representation, the brands sold are the generic brands sold in the

U.S which is the accepted in the market (Authors Findings).

12
5.0 Marketing Mix

5.1 Product: The aim of a product is to ultimately provide customer satisfaction and

solutions. In international marketing an organization may deliver homogeneous products

globally but may change the name of the brand, design and support service levels may

differ. According to Schlegelmilch, B. (p.86. 2016), in international marketing, managers

find it difficult to decide whether to go with a standardized or an adapted product. He

indicated that in making this decision choice must be made among 5 basic alternatives

which includes unmodified domestic product sold internationally, domestic product with

minor adaptation sold internationally, a standardized worldwide product is developed for

both national and international markets, a worldwide product is developed to target

foreign segments with some adaptation to meet local tastes or an entirely new product

is developed for international market. Although these alternatives are can be adopted in

a market, the resources of a company, the goods and the targeted market are the main

determinants of what type of strategy to use in a specific market (Ghauri, P. and

Cateora P. p.309. 2021). Furthermore every international market must be critically

evaluated to ensure that products are adequately conceived and markets correctly

defined with appropriate marketing skills (p.309).

The benefits of standardization includes cost reduction, it promotes control and planning

which reduces the difficulties of handling product portfolios worldwide, it saves time,

quick return on investment and global image (Schlegelmilch, B.p.88. 2016). The

disadvantage of standardization includes customer dissatisfaction, reduction in sales

and it is costly in terms of loss of profits. Adaptation on the other hand is not a choice

13
rather an obligation. One major advantage of adaptation is increase in revenue but its

disadvantages are many including rise in initial costs, marketing, transportation and

administrative costs.

The strategy used by Frito-Lay for its lays product in Slovakia is adaptation, the brands

are made to suit the local flavors loved by the people in that region which includes

bacon, peppers, salt, vegetables and other strong and natural spices. The reasons for

this strategy is to enable them compete with other potato snack manufacturers in

Slovakia as well as appeal to the consumers, encourage brand loyalty, develop brand

identity and recognition. In Tanzania however the product marketing mix adopted is

standardization this is because the needs and taste of the consumers are

homogeneous with the country of origin. This similarity in tastes has affected the

attitude of the consumers towards the quality of the product and no branding is required

because the origin of the product is more exigent than the brand name (Hollensen. S.p

472-473.p476-477.2019).

5.2 Pricing Mix

Pricing is the biggest determinant of profits and earnings (Philips, 2005. Cited by

Schlegemlilch, B. 2016) and usually a very hard decision to make in international

marketing. There are several strategies used for global pricing which include:

i) Mark-up Pricing strategy also known as cost plus strategy is a pricing strategy that

computes all cost, both overhead and running costs acquired during product

14
development and adds a percentage increase to set the selling price (Dholakia, U.

2018).

ii) Price Skimming: Under this pricing strategy a company will place the price of its

products at the highest point initially and then gradually reduces it to attract customers

who are more sensitive to product pricing (Hayes, A. 2022). It is commonly used for new

product entrant into the market when there is increased demand and no rivalry.

(Corporate Finance Institute, 2022).

iii) Price Penetration, this is the opposite of price skimming, the product is introduced

into the market at low pricing to enable the company claim a niche of the market as well

as discourage rivalry. It is a competitive tool (Schlegelmilch, B. 2016. p113).

iv) Premium pricing strategy: This involves setting higher prices on goods when

compared to the cost of the products of the competitor. The product brand name as well

as the market perception is used to place higher prices on similar goods. (Bhasin, H.

2020).

v) Competition Based Pricing is a pricing method where a company prices its goods

after monitoring competitors. To adopt this pricing strategy, the product of the rival must

be similar.

vi) Value based pricing: The strategy sets prices by utilizing the worth a product

provides to a group of consumers. According to Ingenbleek, et al. (2003 cited by

Hinterhuber, A. 2008).

15
The pricing policy adopted by Lays product in Slovakia is the competitor based pricing

strategy, its prices are homogeneous with competitors’ prices but its pays particular

attention to introducing different alternatives of the product at similar price to appeal to

its consumers. The pricing policy in Slovakia is adaptation because prices are sent

based on competitors prices. In Tanzania it is a standardized pricing policy this is

because the cost-based pricing strategy is adopted since products are distributed

mainly by independent distributors who set the price on the products for the sole

purpose of making a profit.

5.3 Place: In international marketing, it is the connection between producers of

commodities or services and the final purchaser. Distribution is effected through direct,

indirect or hybrid channels. Direct distribution involves transacting with a foreign

company while indirect distribution involves transacting with a company acting as an

intermediary in the host country (Hollensen, S.p.551. 2019) while hybrid distribution also

known as multichannel distribution policy involves utilizing a combination of direct and

indirect channels of distribution (Schlengelmilch, B. p137. 2016).

To reduce the cost of distribution globally, many firms have created distribution

locations that distribute products to several countries while others companies are

deploying their distribution to specialized outlets like FedEX, DHL or UPS(p.135).

Furthermore a company must determine how strong its wants the market coverage to

be (Schlengelmilch, B. p139. 2016). The coverage policy adopted must develop a

system of distribution to accommodate its coverage objective (Hollensen, S. p554.

2019). The approaches to market coverage include

16
i) Intensive Distribution/Coverage: This entails distribution of commodities through a

very large number of intermediaries in a great number of retail shops.

ii) Exclusive Distribution/Coverage: Here the manufacturer places a restriction on the

number of intermediaries permitted to showcase its products.

iii) Selective Distribution/Coverage: It involves choosing retail outlets based on certain

factors such as the location or the target customer.

The intermediaries involved in an indirect logistics structure includes Agents/Brokers,

Distributors/Dealers, Franchises, Wholesalers and Retailers.

In Slovakia, Frito Lay Lays products are distributed directly through a company named

Karlovarské Minerálne Vody a Czech company in a joint venture relationship with

PepsiCo. the parent company of Frito Lay. The company receives Lays’s products from

PepsiCo’s production plant in Europe and in turn distributes to wholesalers and retailers

in form of On-trade, malls, convenient shops, e-retailers, supermarkets, food and drink

specialists, hypermarkets and others in Slovakia (Market Research.com, 2017). The

reason for this mode of distribution is to enable Frito lay easily implement and have

control over such decision like product creation, allocation of resources and changes in

pricing. In Tanzania Lay’s product are distributed using intermediaries since the size of

the market is small and sales volumes low. The sale of the products is handled by

agents who purchase directly from the company who exports and then sell at a margin

because they absorb the market risk.

17
5.4 Promotion or communication Mix involves the manufacturer sending messages

through any type of media outlet to an identified group of the target market. In

international marketing, the role of communication is to liaise and supply consumers

with the knowledge they need to enable them make decisions about buying. The five

components of promotion mix are

i) Advertising: It is an important component of the promotional mix because of its

worldwide reach, it contributes to market perception and strong brand growth, potential

and existing consumers can receive a company’s message via advertising. However,

when bad advertising spreads the wrong information it can result in the failure of a

product or brand (Bhasin, H. (2021).

ii) Public Relations: This component looks to increase corporate perception and

command positive media treatment. It is the function that completes programs about the

commodity and company which are intended to procure public comprehension and

acknowledgment (Hollensen, S. p600. 2019).

iii) Sales Promotion: This component is regularly used by firms to increase buying and

revenue. It is also advantageous for notifying prospective and existing customers of new

products including reviving old and existing customers (Bhasin, H. (2021).

iv) Direct Marketing: The focus of this component is existing and potential customers,

through the use of social networking websites, mail advertisement and web marketing.

Direct marketing is a crucial promotion mix component in recent times because a large

number of people make use of the internet. It is used by companies to engage

18
customers one-sided communication about announcements, promotions, confirmations

and inquiries about products (Bhasin, H. (2021).

v) Personal Selling: This is a two-sided mode of communication between a company

and existing and potential customers with feedback received immediately. It is a very

expensive but effective method of selling products. It is used to market durable

commodities, sell to members of the logistics channel and business-to-business

marketing (Hollensen, S. p608. 2019).

In Slovakia, in order to develop brand recognition and gain market share, Frito Lay

employs intensive promotion and utilizes all the components of the promotional mix. It

tries to portray itself as an essential label through creative and fascinating promotional

campaigns. Because of its presence in Slovakia Frito Lay uses social platforms,

television, radio, magazines, newspapers and billboards to advertise it products. It also

use celebrity endorsements such as football or entertainment stars to promote its brand

including campaigns were customers take part in competitions and win prizes at the end

of the competition for example the “Do us a flavor” Campaign (Odell, P. (2017) and the

“A Big Thank You From America” campaign (Digital Training Academy, 2012). The

promotional mix practice for Frito-Lay in Slovakia is Standardization this is because

carries out the same intensive promotional marketing in all locations where it has a

huge presence and a large share of the market.

In Tanzania however no intensive promotional activities exist, this is because the size of

the market is small and it is the country of origin perception that promotes the product.

19
6.0 Conclusion

The aim of this study is to examine the global marketing processes utilized by Frito-Lay

in marketing its Lays brand in two culturally different countries namely Tanzania and

Slovakia, how it entered the markets, achieved success and managed competition in

both markets. Pestle Analysis and Michael Porter’s 5 forces theory were used for

evaluation.

The macro and micro environment showed positive indices that could stimulate growth

in the potato snack industry of both countries. However in determining the practice of

adaptation and standardization of Frito Lay, it can be summarized that it will be difficult

to homogenize the marketing mix of both countries due to several factors stated in the

study. Nevertheless it will be logical for Frito Lay to adopt adaptation where it is

important and standardization when it is possible.

20
7.0 REFERENCES

Albaum, G. & Duerr, E. (2011). International Marketing and Export Management. 7th ed.
Harlow. Pearson Education Limited
Atlas Big, (2022). World Potato Production by Country. Available at:
https://www.atlasbig.com/en-us/countries-potato-production. [Assessed 10 April 2022]
Bhasin, H. (2018). Marketing Mix of Frito Lay’s – Frito Lay’s Marketing Mix.
Marketing91. Available at: https://www.marketing91.com/marketing-mix-frito-lays/.
[Accessed 7 April 2022]

Bhasin, H. (2020). Premium Pricing-Definition, Strategy, Advantages. Marketing91.

Available at: https://www.marketing91.com/premium-pricing/. [Accessed 17 April 2022]
Bhasin, H. (2021). Promotional mix – What are the different types of promotions?

Marketing91. Available at: https://www.marketing91.com/promotional-mix/.

[Accessed 18 April 2022]

Biznewske.com, (2022). Michael Porters Five Forces Model. Available at:

https://biznewske.com/michael-porters-five-forces-model/. [Accessed 10 April 2022]
Cateora, P et al (2019). International Marketing.London.McGraw-Hill Higher Ed ISE.
CHCOMPANIESHISTORY.COM. Frito-Lay. Available at:
https://www.companieshistory.com/frito-lay/ [Accessed 5 April 2022]
China-Africa Trade Research Center, 2022). Potato Chips Manufacturing Industry
Investment in Tanzania info.afrindex.com. China-Africa Trade Information Service.
Available at: http://info.afrindex.com/detail_2397/. [Accessed 11 April 2022]

CISION PR Newswire, (2020). Potato Chips Industry Report 2020: Increasing

Expenditure on Savoury Snacks Worldwide. Available at:
https://www.prnewswire.com/news-releases/potato-chips-industry-report-2020-
increasing-expenditure-on-savoury-snacks-worldwide-301051078.html. [Accessed
11 April 2022]
Corporate Finance Institute, (2022). PESTEL Analysis. Available at:
https://corporatefinanceinstitute.com/resources/knowledge/strategy/pestel-analysis/.
[Accessed 8 April 2022]
Corporate Finance Institute, (2022). Price Skimming. Available at:
https://corporatefinanceinstitute.com/resources/knowledge/strategy/price-skimming/.
[Accessed 17 April 2022]

21
Credit Agricole Group, (2022). SLOVAKIA: ECONOMIC AND POLITICAL OVERVIEW.
Available at: https://international.groupecreditagricole.com/en/international-support/
slovakia/economic-overview. [Accessed 8 April 2022]
Dholakia, M. (2018). Pricing Strategy: When Cost-Plus Pricing Is a Good Idea. Harvard
Business Review. Available at: https://hbr.org/2018/07/when-cost-plus-pricing-is-a-
good-idea. [Accessed 17 April 2022]

Digital Training Academy, (2012). Lays wins over Slovak market with low budget
Facebook campaign. Digital marketing industry case study library. Available at:
http://www.digitaltrainingacademy.com/casestudies/2012/11/lays_wins_over_slov
ak_market_w.php. [Accessed 7 April 2022]

EMIS, (2022). Company report search results. Available at:

https://www.emis.com/php/company-profile/index/search. [Accessed 11 April 2022]

Forbes, (2020). Frito-Lay. Available at: < https://www.forbes.com/companies/frito-lay/?

sh=2ece32a830bf>. [Accessed 5 April 2022].
Ghauri, P. and Cateora, P (2021). International Marketing, 5 th ed.London.McGraw-Hill
Higher Ed.
Greener Slovakia: Strategy of the Environmental Policy of the Slovak Republic until
2030 (2019). Available at: https://www.minzp.sk/files/iep/greener_slovakia-
strategy_of_the_environmental_policy_of_the_slovak_republic_until_2030.pdf.
[Accessed 10 April 2022]
Hinterhuber, A.,( 2008). Customer value‐based pricing strategies: why companies
resist. Journal of business strategy. Available at:
https://edisciplinas.usp.br/pluginfile.php/241330/mod_resource/content/1/Primeira
%20Apresenta%C3%A7%C3%A3o.pdf. [Accessed 17 April 2022]
Hollensen, S. (2019). Global Marketing. 8th ed. London: Pearson Education Limited.
Hill, A. (2020). Chartguide. Available at: https://mychartguide.com/what-is-pestle-pestel-
or-pest-analysis/. [Accessed 9 April 2022]
Hofstede Insights. Country Comparison. Available at: https://www.hofstede-
insights.com/country-comparison/slovakia,tanzania/. [Accessed 8 April 2022]

22
Imarc,(2020). Potato Chips Market: Global Industry Trends, Share, Size, Growth,
Opportunity and Forecast 2021-2026. Available at: <
https://www.imarcgroup.com/potato-chips-manufacturing-plant> [Accessed on 7
April 2022]

Ingham, K., Chiteji, F., Mascarenhas, C. and Bryceson, D.

(2021). Tanzania. Encyclopedia Britannica. Available at:
https://www.britannica.com/place/Tanzania. [Accessed 7 April 2022]
Kenton, W. (2021). Penetration Pricing. Investopedia.com. Available at:
https://www.investopedia.com/terms/p/penetration-pricing.asp#:~:text=What%20Is
%20Penetration%20Pricing%3F,attract%20customers%20away%20from
%20competitors. [Accessed 17 April 2022]
Odell, P. (2017). HOW LAY’S DO US A FLAVOR STAYS CRISP YEAR AFTER YEAR.
CHIEF/MARKETER. AVAILABLE AT: HTTPS://WWW.CHIEFMARKETER.COM/HOW-
LAYS-DO-US-A-FLAVOR-STAYS-CRISP-YEAR-AFTER-YEAR/. ACCESSED 13
APRIL 2022]

Lynch, R. (2014) Six FritoLay Strategies for Global Customers. Available at:
https://www.youtube.com/watch?v=DEce5Kaxq4Y [Accessed on 6 April 2022]

Market Research.com, (2017). Country Profile: Savory Snacks Sector in Slovakia.

Available at: https://www.marketresearch.com/GlobalData-v3648/Country-Profile-
Savory-Snacks-Sector-11349683/. [Accessed 7 April 2022]

Nandonde, F.( 2019). A PESTLE Analysis of International Retailing in the East African
Community. Global Business and Organizational Excellence, 38(4), pp.54-61. Available
at: https://onlinelibrary.wiley.com/doi/epdf/10.1002/joe.21935?saml_referrer. [Accessed
8 April 2022]
OECD, (2022), Slovak Republic Economic Snapshot: Enhancing the Slovak National
Productivity Board’s set-up and analytical capacity. Available at:
https://www.oecd.org/economy/slovak-republic-economic-snapshot/. [Accessed
10 April 2022]

PEPSICO, (2019). PepsiCo Targets African Growth With Offer To Acquire Pioneer
Foods. Available at: https://www.pepsico.com/news/press-release/pepsico-targets-
african-growth-with-offer-to-acquire-pioneer-foods07192019#:~:text=It%20will
%20enable%20PepsiCo%20to,and%20preserve%20precious%20natural
%20resources. [Accessed 12 April 2022]

23
PEPSICO, (2022). About the Company. Available at:
https://www.pepsico.com/about/about-the-company, [Accessed 12 April 2022]

Racoma, B. (2019), How Lay’s Potato Chips Adapts Around the World.
DayTransalationsblog. Available at: https://www.daytranslations.com/blog/lays-
expansion-strategy/. Accessed 10 April 2022]

Schlegelmilch, B. (2016). Global Marketing Strategy: An Executive Digest. Switzerland.

Springer International Publishing AG.

SLOVAKIA, (2022). PRODUCTS. Available at: https://www.slovakiachips.sk/products/.

[Accessed 11 April 2022]
Slov Chips, (2022). OUR PRODUCTS. Available at: https://www.slovchips.sk/en/our-
products/. [Accessed 11 April 2022]Slov Chips, (2022). ABOUT US. Available at:
https://www.slovchips.sk/en/our-products/. [Accessed 11 April 2022].

Petkova, A.(2016). Traditional brands remain attractive. Available at:

https://spectator.sme.sk/c/20414782/traditional-brands-remain-attractive.html.
[Accessed 11 April 2022]

Potato Chip machinery, (2022). Tanzania Pre-Feasibility Study of Potato Chips Industry.
Available at https://www.potatochipsmachinery.com/news/pre-feasibility-study-of-
tanzania-potato-chips-industry.html. [Accessed 3 April, 2022]

The Dallas Morning News, (2020). Frito-Lay snacks emerge as pandemic winner with
Cheetos hungry Americans stocking up on comfort. Available at:
https://www.dallasnews.com/business/local-companies/2020/07/13/frito-lay-snacks-
emerge-as-pandemic-winner-with-cheetos-hungry-americans-stocking-up-on-comfort/.
[Accessed 11 April 2022]
World Bank/Oxford Policy Management (2021). Education Quality Improvement
Programme in Tanzania Impact Evaluation Baseline Survey 2014, Version 2.3 of the
public use dataset. Available at:
https://microdata.worldbank.org/index.php/catalog/2290. [Accessed 10 April 2022]

Reference for Business. Frito-Lay Company - Company Profile, Information, Business

Description, History, Background Information on Frito-Lay Company. Available at:
https://www.referenceforbusiness.com/history2/53/Frito-Lay-Company.html.[Accessed on 6 April
2022]

Statista, (2022). Snack Food. Slovakia. Available at:<

https://www.statista.com/outlook/cmo/food/confectionery-snacks/snack-food/slovakia>
[Accessed 7 April 2022]

24
Statista, (2022). Snack Food.Tanzania. Available at:<
https://www.statista.com/outlook/cmo/food/confectionery-snacks/snack-food/tanzania>
[Accessed 7 April 2022]
Statista, (2021). Slovakia: Growth rate of the real gross domestic product (GDP) from
2016 to 2026. Available at: https://www.statista.com/statistics/375270/gross-domestic-
product-gdp-growth-rate-in-slovakia/. [Assessed 9 April 2022]
Statista, (2021). Tanzania: Growth rate of the real gross domestic product (GDP)
from 2016 to 2026. Available at: https://www.statista.com/statistics/447598/gross-
domestic-product-gdp-growth-rate-in-tanzania/. [Assessed 9 April 2022].

Galandova, M., Kriz, M. and Oravec, P. (2021). Doing Business in Slovakia:

Overview. THOMSON REUTERS PRACTICAL LAW. Available at:
https://uk.practicallaw.thomsonreuters.com/w-019-0769?
transitionType=Default&contextData=(sc.Default)&firstPage=true#co_anchor_a12
6185. [Accessed 7 April 2022]

U.S.News (2021). Slovakia. Available at:

https://www.usnews.com/news/best-countries/slovakia#country-overview [Accessed 7 April
2022]

World Bank, (2022). The World Bank in Tanzania. Available at:

https://www.worldbank.org/en/country/tanzania/overview#1. [Accessed 10 April 2022]
World Bank Group, (2019). Tanzania 2019 Country Environmental Analysis:
Environmental Trends and Threats, and Pathways to Improved Sustainability. Open
Learning Campus. Available at: https://olc.worldbank.org/content/tanzania-2019-
country-environmental-analysis-environmental-trends-and-threats-and-pathways-
0. [Accessed 10 April 2022]
Zervos, N., Ndyetabura, J., Mramba, C., Gasper, G., Mayeye, H., and Nasson, D.,
(2021). Establishing a business in Tanzania. Thompson Reuters Practical Law. Available
at: https://uk.practicallaw.thomsonreuters.com/7-562-2905?
transitionType=Default&contextData=(sc.Default)&firstPage=true#. [Accessed 10
April 2022]

25
8.0 Appendixes

PESTLE ANALYSIS EXPLANATION Appendix 1

Political Factor

The political environment of Slovakia is relatively stable, in a report by World Bank

(2020, cited by Market Line, 2021), in 2020 Slovakia ranked above 65% in all good

governance parameters used including voice and accountability, political stability,

absence of violence, government effectiveness, regulatory quality, rule of law and

corruption. The same report carried out on Tanzania using 2019 as the year of

reference suggests that the political environment requires improvement, this is because

Tanzania’s ranking on all good governance parameters stated above were below 41%

with the ranking for government effectiveness, regulatory quality and rule of law

17.41%, 27.88 and 29.33 respectively. A non-volatile political environment is necessary

for a business to thrive.

Economic Factors

According to Maeket Line, (2021), Slovakia’s economy had been thriving from 1996 to

2008 due to positive structural changes introduced by the government in taxation,

health, social and pension sectors. The reforms increased Slovakia’s FDI’s and export

values. However between 2008 and 2018, the economic growth fluctuated and declined

to 0.67% in 2013 due to decreasing internal and external demands including private

consumption. Due to increasing household consumption, employment and growth in

investments the economy grew in 2018 to 3.77% but due to the impact of Covid-19

26
pandemic, exportation, employment rate and disposable income declined which

resulted in contracted GDP of 5.20% in 2020 (Market Line, 2021), . Slovakia’s GDP

growth rate was expected to increase in 2021 by 4.43% according to Statista (2021),

see Figure 2 below.

Figure 2, Slovakia’s Real GDP Growth Rate 2016 to 2026 (Statista, 2021)

Tanzania’s economic outlook has been very positive according to Market Line (2021),

with increasing foreign direct investments due to reforms that permits free repatriation of

proceeds from foreign investors including advancement in natural gas development and

exploration. The report indicates that Tanzania’s inflation rate has consistently declined

since 2013 (7.87%), it decreased to 3.29% in 2020, with decline estimated to average

3.34% from 2021 to 2024. Tazania’s declining inflation is due to reduction in the price of

foods, sound monetary and macroeconomic policies. Furthermore, due to government’s

investment in infrastructural facilities and banking sector regulation, Tanzania’s

27
economy has been growing from an average growth rate of 6.54% from 2001 – 2010 to

6.79% in 2019 according to Market Line (2021). The GDP growth rate however declined

in 2020 to 1.03% in 2020 due to the impact of Covid-19. The government of Tanzania

has shown commitment to economic growth by making deals with other countries that

contribute to its economic development Market Line (2021). According to Statista (2021)

the real GDP growth rate analysis of Tanzania is estimated to increase from 2022 to

2025.

Figure 3: Tanzania’s Real GDP Growth Rate 2016 to 2026 (Statista, 2021).

Social Factors

According to Market Line, (2021), 67.62% Slovakia’s population was between the age of

15-64 indicating a young working class population, the education system is well

regulated, with resources and investments provided by the government to boosts its

28
development. The report indicates that the health system is provided with continous

funds to curb the spread of Covid-19 pandemic including improvement of health care

facilities. Through the provision of health and unemployment insurance, Slovakia has

successfully limited defference in wealth and earnings including poverty restrictions.

Market Line (2021). According to Eurostat, (2020, Market Line, (2021), the percentage

of Slovakian’s at risk of social exclusion declined from 16.4% in 2019 to 14.8% in 2020.

On the other hand, Tanzania’s age demographics only 3.22% of its population is

between the age of 15-65, while 42.2% are 14years and below Market line (2021)

suggesting that although Tanzana, has a young population, only 3.22% is in the working

class age group. According to World bank (2022), the estimated marginal decline of

Tanzania’s rate of national porverty was from 27.1% in 2020 to 27% in 2021attributed to

income from non-agrarian companies and increase in employment. Due to its sustained

economice growth, Tanzania has moved from a low-income to a lower middle income

economy (World Bank, 2022). The government of Tanzania in conjuction with DFID UK

carried out a 6 year (2014 to 2020) education quality improvement program targeted at

regions lagging behind in education, with the aim of improving learning output and

quality of basic education especially for females (World Bank, 2021). Market Line

(2021), indicates that the health care system in Tanzania is also growing with increased

traininig and funding with respect to managing Covid-19 pandemic.

Technological Factors

(Market Line, (2021) Although Expenditure on Research and Development in Slovakia

is poor, effort is being made by the government to attract investors to its technology
29
sector including encouraging corporate bodies investment research and development

sectors. The report indicates that digital transformation strategies are being

implemented that will prioritize new technological capabilities for example Internet of

things, big data and Artificial intelligence.

In Tanzania, there is little investment in technology due to governments focus on

economic and social development. However effort is being made to transfer technology

through tetiary institutions and R & D centers with focus on technologies linked to

agriculture. The World bank has also supported the country in the development of it

telecommunications infrastructure.

Legal Factors

Slovakia is a member of the European Union and a signatory to several international

treaties, the legal system is statue based civil law and the court of appeal makes the

final decision where necessary according to an article by Galandova, M. et al, (2021).

The Article indicates that FDI in critical infrastructure companies will undergo a new

screening procedure and only 10% share ownership is permitted in such companies

effective March 2021. There are no foreign exchange control with the exception of

foreign currency exigencies threatening to derail its financial system. Investment aids,

tax reliefs and grants are given to new business setup depending on the business

location, some regions are exempted from investment aid (Galandova, M. et al, 2021).

Foreign entities can gain entry into Slovakia market through investement, contractual

and Export entry strategies.

30
The constitution of Tanzania, prevails over all other forms of legislation including bill of

rights, case law, customary law, international law, paliamentary laws and other

regulators and statutory bodies rules and regulations. A foreign entity can gain entry

through Export, contractual or invesment entry mode strategies, however a registered

foreign entity is governed by Tanzania’s Laws according to an article by Zervos, N. et al.

(2021). The article also indicates that some restrictions exist with respect to share

ownership in specific organisations, foreign exchange controls on certain transactions

and land ownership.

Environmental Factors:

Slovakia is faced with several environmental challenges which includes management of

wastes, air and water pollution, species and ecosystems conservation, however with the

government’s implementation of the Environstrategy 2030 policy, there will be

improvement and sustainability in the current environmental situation.

Tanzania’s environmental issues include water and air pollution, exploitation of natural

resources including trafficking, conserving biodiversity, protecting ecosystems,

deforestation and land and water resource management. Policies by the government

aimed at managing the above stated issues will foster competition and ensure

sustainable development in Tanzania (World Bank Group, 2019.).

Competitive Analysis Slovakia Appendix 2

NAME OF SLOVAKIA CHIPS SLOVCHIPS S.R.O

COMPETITORS

ORIGIN GERMANY SLOVAKIA

31
SMALL, MEDIUM SMALL SMALL
OR LARGE
SCALE

MARKET LEADER YES NO

COMPETITORS LAYS CHIPS, SLOV CHIPS, LAYS CHIPS, SLOVAKIA CHIPS

OTHER IMPORTED CHIPS

CUSTOMERS YOUNGSTERS, MIDDLE INCOME YOUNGSTERS, MIDDLE

EARNERS, RICH AND TOUSRIST INCOME EARNERS, RICH AND
TOUSRIST

BRANDS •ZLAHKA •PRIMA POTATO CHIPS

•VRUBKY •CHRUMMM POTATO CHIPS

•KOTLIKOVE •TRADITIONAL POTATO CHIPS

•Z PECE •NATURE PRODUCTS POTATO

CHIPS
•SLOVAKIA
•FARMERS POTATO CHIPS

•SPISSKE POTATO CHIPS

COMPETITIVE •HIGH QUALITY •TRADITIONAL METHODS

ADVANTAGE
•INNOVATIVE FLAVOURS •TOP QUALITY INGREDIENTS

• LIMITED EDITIONS •SUPPORTS LOCAL FARMERS

COMPETITIVE •PRODUCTION OF HEALTHY •LONG TERM DEALS WITH

STRATEGY PRODUCTS WHOLESALERS AND
RETAILERS
•EXCELLENT WORKING
CONDITIONS •PRIVATE BRANDS FOR
LOCAL AND FOREIGN
•EMPLOYEE TRAINING & PARTNERS
DEVELOPMENT & TEAM
BUILDING •PATNERS WITH COMPANIES
THAT PROMOTE SLOVAKIA
•WASTE REDUCTION PRODUCTS

32
 •SUPPORTS SUPPLIERS &
FAMILIES

•EXTENSIVE CONSUMER
RESEARCH

Competitive Analysis Tanzania Appendix 3

NAME OF KING CHIPS TZ COY. LTD TOMY TAMY FOODS

COMPANY INDUSTRIES

ORIGIN TANZANIA TANZANIA

SMALL, MEDIUM SMALL SMALL

OR LARGE
SCALE

MARKET LEADER YES NO

COMPETITORS •TOMY TAMY FOODS, •KING CHIPS TZ COY LTD,

•IMPORTERS OF POTATO SNACK •IMPORTERS OF POTATO
SNACK

CUSTOMERS YOUNGSTERS, MIDDLE INCOME YOUNGSTERS, MIDDLE

EARNERS, RICH AND TOUSRIST INCOME EARNERS, RICH AND
TOUSRIST

BRANDS • KING CHIPS TZ •TOMY TAMY CHIPS

COMPETITIVE •AVAILABILITY OF RAW •AVAILABILITY OF RAW

ADVANTAGE MATERIALS MATERIALS

•AVAILABILITY OF CHEAP •AVAILABILITY OF CHEAP

LABOUR LABOUR

•INCREASING DEMAND FOR •INCREASING DEMAND FOR

POTATO SNACKS POTATO SNACKS

33
Michael Porter’s Five Forces Theory Explanation Appendix 4

i) The bargaining power of Suppliers

Slovakia is a country which produced potatoes both for internal consumption and

exportation, with production reaching 182,420tons in 2021 (Atlas Big, 2022) . The major

input used by Frito-Lay in its Lays chips product is potatoes. As a result of the fall in

potato production and decrease in consumption resulting from rising prices (Sadovska,

E, (2019), the bargaining power of suppliers in Slovakia will be low. Furthermore since

Frito-Lay is an American company and America is the 5 th largest producer of potatoes in

the world (Atlas Big, (2021) this input can be easily imported from America.

Tanzania on the other hand produced over 1,013million tons of potatoes in 2021 (Atlas

Big, 2022), and is among the top potato producing countries in East Africa. Due to the

availability of suppliers of potatoes and the lack of storage facilities for preservation the

bargaining power of suppliers will also be low as they would want to sell their produce

quickly so as to prevent wastage and ultimately reduction in profits.

ii) Bargaining power of Buyers

The higher the availability of potato snack manufactures the higher the bargaining

power of customers this is because they would have alternatives to choose from. The

bargaining power of consumers in Slovakia as a high income economy will be low this is

because the despite the availability to alternative they would prefer to purchase a

branded product of good quality irrespective of the price.

34
In Tanzania due to the low number of manufacturers of potato snacks and the low level

of alternative products the bargaining power of the consumer will be low.

iii) Threat of Substitute Products

This framework evaluates the customers’ ability to switch to alternatives, Slovakia has

two major Potato snack manufacturers, Slovakia Chips a subsidiary of Intersnack Group

with origins from Germany and Slov Chips originally Slovakia. Since Frito-Lays Lays

potato chips is a top brand global branch and Slovakian’s love branded products the

threat of close substitute will be low.

The threat of close alternatives will also be low in Tanzania because only two potato

snack manufacturing company exist Kingchips Industry TZ and Tomy Tamy Foods

Industries.

iv) Threat of New Entrants

The Slovakia and Tanzania Governments both want foreign direct investments into their

countries to boost employment and investments in research and development, since

Frito-Lay is in the food sector, there are no legal or political barriers that hinders their

entry into both markets hence the threat of new entrants is low.

v) Rivalry among Existing Competitors

This analyzes how fierce competition is in the market, measured by the number of

existing competitors and their ability to meet customers’ needs. When competitors with

35
equivalent strength and size in the industry are many rivalry is high. Since competitors

that exist in Slovakia Potato snack food industry are few, the threat of rivalry will be low.

Tanzania also has a low competitor base in the potato snack food industry hence rivalry

will be low.

36