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Frito-Lay Product Line. Market dominator in the salty snack industryThese are the brands currently marketed by the company:. January 1987. Michael Jordan, CEO of PepsiCo Worldwide Foods, took charge of Frito-Lay following Willard Korn's resignation Abandoned the micromarketing strategy (centralized decision making)Reestablished consistency company-wideMaintained KAM positions salesforce segmentationImplemented the HHC technologyReaffirmed the strategic transition, but refocused its execution.
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1. “A Strategic Transition, 1987-1992 (Abridged)”
2. Frito-Lay Product Line Market dominator in the salty snack industry
These are the brands currently marketed by the company:
3. January 1987 Michael Jordan, CEO of PepsiCo Worldwide Foods, took charge of Frito-Lay following Willard Korn’s resignation
Abandoned the micromarketing strategy (centralized decision making)
Reestablished consistency company-wide
Maintained KAM positions salesforce segmentation
Implemented the HHC technology
Reaffirmed the strategic transition, but refocused its execution
4. Three Lessons Learned:
Vision of change must be shared company-wide
Decentralization lead to loss in efficiency and control
Necessity for organizational restructuring
5. Jordan’s Initiatives (1987-1989) Focus on two interrelated efforts to redevelop organizational and information infrastructure
Plan to eventually re-implement the micromarketing strategy without loss of control
6. Functional Redesign Company-wide quality improvement program
Poorest performers targeted for improvement
Focus on contribution to profit, not just cost control
7. Functional Redesign Implementation of the HHCs
Prototype testing with team support
Salesforce tasked with productivity target achievement goals to help justify IT expense
HHC project a joint effort across functions
Well received; saved salesforce valuable time
8. Building Info Infrastructure Realization of the need for information to support the micromarketing strategy
Help streamline, integrate and time-synchronize operating processes
Operation is only as strong as its weakest link
Supporting IT found to contain varying levels of effectiveness
9. Building Info Infrastructure Redesign of management structures, systems and decisions that provided operational control
Integrate corporate strategic perspective with salesforces’ local market knowledge (establish a link from top to bottom)
10. Building Info Infrastructure Late 1989, IS implementation at corporate headquarters
Executives armed with more timely information, allowing better centralized business management and control
Same info not yet being shared with field management
Profitability increased; however, market share improvements not anticipated until implementation of micromarketing strategy
11. Redesigning the Organization Jordan reorganizes nationwide operations—first effort to decentralize organizational structure
Each ABT given approach authority
ABT managers encouraged to stop viewing information as an outcome, and become responsive
12. Redesigning the Organization Implementation of planning and control systems
Timed to the business information cycle; reflective of the need for quicker decision making
Increased frequency of operational planning and performance reviewing
By 1991 production targets were established that integrated cross-functional view of the business
13. Redesigning the Organization ABT managers broaden focus from functions to entire business
Significant reduction in product delivery times
Finance function takes on new, non-traditional role; not simply reporting P&L outcomes
14. Tuning the Info Infrastructure 1990: ABT managers experience information overload
Information not tailored to support business decisions
Pre-formatted reporting systems made data retrieval time consuming and complicated
15. Tuning the Info Infrastructure Corporate headquarters responds to IS problems by assigning regional MIS personnel
Helped decentralize MIS function
Helped ABT analysts spend less time retrieving data and more time analyzing
MIS personnel plays guiding role
16. The 1991 Restructuring Roger Enrico named new CEO of Frito-Lay
Management consultants immediately hired to recommend the best organizational structure
MIS leader assigned to head restructuring; realizing MIS’ critical role in the process
Company-wide reorganization occurred, including redesign of geographical divisions to maintain consistency with parent company, PepsiCo
17. In Summary... FRITO-LAY’S USE OF IT:
A tool to assist in making strategic
business decisions, and better
determine the competitive forces that
were causing change in the snack food
industry.
18. Competitive Forces in the Snack Food Industry Michael Porter’s Five Competitive Forces Model:
19. Overall goal of IT/MIS implementation
20. Creating consistency with PepsiCo The 1991 organizational restructuring that established 2 divisions and 22 ABTs was possible because of the IT architecture finally in place.
IT was used as:
Communications platform
Decision support system (DSS)
Implementation tool
21. Michael Jordan, former CEO, learned that the micromarketing strategy’s failure was due to inadequate MIS
After years of organizational redesign, new IT architecture and MIS were established which better prepared the company for re-implementation of the micromarketing strategy by the early 1990s In Retrospect...
22. Future Recommendations We suggest the following considerations when assimilating future IT improvements at Frito-Lay:
Identify new technologies and their required investment
Identify factors in learning and adapting new technology
Identify what level of management control is applicable
Identify when widespread technology transfer has been reached
23. Possible Future IT Problems IT business models are difficult to find
Continuously changing environment
IT use related conflicts
Technology problems/quirks
Legal issues
Security
Connectivity
Management control capabilities
Hidden Costs ($)
24. Future Goals for Frito-Lay Reduce cycle times for all nationwide markets (1-2 days delivery for ALL goods)
Increase penetration of global markets (only in 10 major markets internationally); reduce risks associated with exposure to domestic competitive pressures
25. Future Benefits of IT Improve automation of information collection and reporting systems
Reduction in bottlenecks
Assist in process reengineering
New IT Applications:
Global networks
Enterprise networks
Distributed computing
Portable computing
Accessibility
26. Final Concluding Comment Senior management must continue to take an active role in the development and use of IT in their business strategy. They must broaden their view of the organization, as a whole, rather than individual functions. IT is a facilitating tool that will aid in every aspect of successful business decision-making efforts in the new business environment.
27. Thank you for your time and attention! --Mary, Kevin & Yutaka