FritoLay, Inc.

1
Frito-Lay, Inc.

• A Strategic Transition - Part II
• (1987 - 1992)
• http//www.fritolay.com
• http//www.pepsico.com

2
Anticipatory Implementation
Scope of Change
Incremental Change to a Process or
Function Intrafunctional Interfunctional
Interorganizational
Radical Change to Organizational
or Interorganizational Strategy,
Structure, Process, and Culture
Low Urgency Of Stimulus High
1978-1980 Ideal sales org. study ideal mfg org.
study 1983-1986 Redesign of field sales,
distribution and mfg. (separate initiavives)
Episode 1
Figure A-1 (a)
3
Anticipatory Implementation
Scope of Change
Incremental Change to a Process or
Function Intrafunctional Interfunctional
Interorganizational
Radical Change to Organizational
or Interorganizational Strategy,
Structure, Process, and Culture
Low Urgency Of Stimulus High
1978-1980 Ideal sales org. study ideal mfg org.
study 1983-1986 Redesign of field sales,
distribution and mfg. (separate initiavives)
1990-1992 EDI initiatives 1987-1988 Business
process redesign
Episode 2
Episode 1
Figure A-1 (b)
4
Anticipatory Implementation
Scope of Change
Incremental Change to a Process or
Function Intrafunctional Interfunctional
Interorganizational
Radical Change to Organizational
or Interorganizational Strategy,
Structure, Process, and Culture
Low Urgency Of Stimulus High
1978-1980 Ideal sales org. study ideal mfg org.
study 1983-1986 Redesign of field sales,
distribution and mfg. (separate initiavives)
1990-1992 EDI initiatives 1987-1988 Business
process redesign
1990-1993 Area Business Team reorganization
Episode 3
Episode 2
Episode 1
Figure A-1 (c)
5
Crisis-Driven Implementation
Scope of Change
Incremental Change to a Process or
Function Intrafunctional Interfunctional
Interorganizational
Radical Change to Organizational
or Interorganizational Strategy,
Structure, Process, and Culture
Low Urgency Of Stimulus High
Episode 1
1986-1988 1986-1988 Focused Post-takeove
r redesign key restructuring leveraged
areas
Figure A-2 (a)
6
Crisis-Driven Implementation
Scope of Change
Incremental Change to a Process or
Function Intrafunctional Interfunctional
Interorganizational
Radical Change to Organizational
or Interorganizational Strategy,
Structure, Process, and Culture
Low Urgency Of Stimulus High
Episode 2
1988-1990 Quality Mgmt
Episode 1
1986-1988 1986-1988 Focused Post-takeove
r redesign key restructuring leveraged
areas
Figure A-2 (b)
7
Crisis-Driven Implementation
Scope of Change
Incremental Change to a Process or
Function Intrafunctional Interfunctional
Interorganizational
Radical Change to Organizational
or Interorganizational Strategy,
Structure, Process, and Culture
Low Urgency Of Stimulus High
Episode 3
Episode 2
1991-1992 1992-1993 Business Business Unit
1 process restructuring reengineering 199
1-1992 SBU restructuring
1988-1990 Quality Mgmt
Episode 1
1986-1988 1986-1988 Focused Post-takeove
r redesign key restructuring leveraged
areas
Figure A-2 (c)
8
Leader-Initiated Implementation
Scope of Change
Incremental Change to a Process or
Function Intrafunctional Interfunctional
Interorganizational
Radical Change to Organizational
or Interorganizational Strategy,
Structure, Process, and Culture
Low Urgency Of Stimulus High
Episode 1
1985-1988 Corporatewide reorganization
Figure A-3 (a)
9
Leader-Initiated Implementation
Scope of Change
Incremental Change to a Process or
Function Intrafunctional Interfunctional
Interorganizational
Radical Change to Organizational
or Interorganizational Strategy,
Structure, Process, and Culture
Low Urgency Of Stimulus High
Episode 1
1985-1988 Corporatewide reorganization
1988-1991 Business process redesign within plant
Episode 2
Figure A-3 (b)
10
Leader-Initiated Implementation
Scope of Change
Incremental Change to a Process or
Function Intrafunctional Interfunctional
Interorganizational
Radical Change to Organizational
or Interorganizational Strategy,
Structure, Process, and Culture
Low Urgency Of Stimulus High
Episode 3
1991-1993 Team-based organization redesign
Episode 1
1985-1988 Corporatewide reorganization
1988-1991 Business process redesign within plant
Episode 2
Figure A-3 (c)
11
Framework for Organizational Analysis
Competitive Positioning
Product / Service Market Competition Value
Is the strategy correct? Have we correctly
positioned ourselves for success in our markets
industries? Have we defined a strategy that will
create value for all stakeholders?
Figure A-4 (a)
12
Framework for Organizational Analysis
Competitive Positioning
Economic Positioning
Product / Service Market Competition Value
Is the strategy correct? Have we correctly
positioned ourselves for success in our markets
industries? Have we defined a strategy that will
create value for all stakeholders?
Revenue Model Cost Model Asset Model (tangible
intangible)
How will we make money in each product /
service? What is the cost of designing,
developing, delivering maintaining each product
/ service? Are we building safeguarding assets?
Figure A-4 (b)
13
Framework for Organizational Analysis
Competitive Positioning
Economic Positioning
Product / Service Market Competition Value
Is the strategy correct? Have we correctly
positioned ourselves for success in our markets
industries? Have we defined a strategy that will
create value for all stakeholders?
Revenue Model Cost Model Asset Model (tangible
intangible)
How will we make money in each product /
service? What is the cost of designing,
developing, delivering maintaining each product
/ service? Are we building safeguarding assets?
Business Performance
Operating Performance Corporate
Performance Stakeholder Loyalty
Operating margins Budget
performance Process performance
(cycle time, cost, productivity, quality)
Progress toward accomplishing goals
Financial performance Market share
Ability to attract retain
qualified employees, partners, investors
Company image, reputation, and benchmarks
Figure A-4 (c)
14
Framework for Organizational Analysis
Competitive Positioning
Economic Positioning
Product / Service Market Competition Value
Is the strategy correct? Have we correctly
positioned ourselves for success in our markets
industries? Have we defined a strategy that will
create value for all stakeholders?
Revenue Model Cost Model Asset Model (tangible
intangible)
How will we make money in each product /
service? What is the cost of designing,
developing, delivering maintaining each product
/ service? Are we building safeguarding assets?
Business Performance
Operating Performance Corporate
Performance Stakeholder Loyalty
Operating margins Budget
performance Process performance
(cycle time, cost, productivity, quality)
Progress toward accomplishing goals
Financial performance Market share
Ability to attract retain
qualified employees, partners, investors
Company image, reputation, and benchmarks
Enterprise Resources Design
Resources Design Money People
Expertise/Skills Partners/Processes
Material Power Information Infrastructure
Physical Technical
Do we have access to the resources we need to
execute our strategy? Is the extended enterprise
designed for - efficiency in decision
making and action - successful
execution of strategy - quick response
to change
Figure A-4 (d)
15
IT Organizational Design Challenge
Complex Organization Simple
Centralized Intelligence Mainframe (Control)
Business Information Model
Stable / Certain Environment
Dynamic / Uncertain
Figure A-5 (a)
16
IT Organizational Design Challenge
Complex Organization Simple
Centralized Intelligence Mainframe (Control)
Decentralized Intelligence Microcomputer (Autono
my)
Business Information Model
Stable / Certain Environment
Dynamic / Uncertain
Figure A-5 (b)
17
IT Organizational Design Challenge
Complex Organization Simple
Networked Intelligence (Collaboration)
Centralized Intelligence Mainframe (Control)
Decentralized Intelligence Microcomputer (Autono
my)
Business Information Model
Stable / Certain Environment
Dynamic / Uncertain
Figure A-5 (c)
18
Implementing the Shadow Partner
Individual
Information
Task
Technology
Figure A-6 (a)
19
Implementing the Shadow Partner
Individual
Information
Task
Technology

• Levels of Functionality
• Data
• Information
• Rules
• Decision Making
• Levels of Functionality
• How knowledge is apportioned between machine and
  individual
• Level of interactivity between machine and
  individual
• Degree timing of feedback provided to individual

Figure A-6 (b)
20
Implementing the Shadow Partner
Effectiveness
Individual
Intervening Factors
Results

• Alignment
• Commitment
• Mastery / Competence

• Individual
• Work Group
• Organization

Information
Task
Technology

• Levels of Functionality
• Data
• Information
• Rules
• Decision Making
• Levels of Functionality
• How knowledge is apportioned between machine and
  individual
• Level of interactivity between machine and
  individual
• Degree timing of feedback provided to individual

Figure A-6 (c)
21
Implementing the Shadow Partner
Context
Effectiveness
Individual

• Environment
• Organization
• Work Group

Intervening Factors
Results

• Alignment
• Commitment
• Mastery / Competence

• Individual
• Work Group
• Organization

Information
Task
Technology

• Levels of Functionality
• Data
• Information
• Rules
• Decision Making
• Levels of Functionality
• How knowledge is apportioned between machine and
  individual
• Level of interactivity between machine and
  individual
• Degree timing of feedback provided to individual

Figure A-6 (d)
22
Competitive Forces
Strategic Business Unit
Figure A-7 (a)
23
Competitive Forces
Bargaining Power of Buyers
Inflation constrains pricing
Strategic Business Unit
Figure A-7 (b)
24
Competitive Forces
Bargaining Power of Suppliers
Bargaining Power of Buyers
Market Saturation in traditional markets
Inflation constrains pricing
Strategic Business Unit
Figure A-7 (c)
25
Competitive Forces
Potential New Entrants
Traditional
Bargaining Power of Suppliers
Bargaining Power of Buyers
Market Saturation in traditional markets
Inflation constrains pricing
Strategic Business Unit
Figure A-7 (d)
26
Competitive Forces
Potential New Entrants
Traditional
Bargaining Power of Suppliers
Bargaining Power of Buyers
Market Saturation in traditional markets
Inflation constrains pricing
Strategic Business Unit
Intra-Industry Rivalry
Threat of Substitute Products or Services
Figure A-7 (e)
27
Competitive Forces
Potential New Entrants
Traditional
Bargaining Power of Suppliers
Bargaining Power of Buyers
Market Saturation in traditional markets
Inflation constrains pricing
Strategic Business Unit
Intra-Industry Rivalry
Threat of Substitute Products or Services
Figure A-7 (f)
28
Starguest Network
Distributor (operational node)
Travel Wholesalers
Travel Chains
Individual Travel Agency
Figure A-8 (a)
29
Starguest Network
Distributor (operational node)
Plane
Travel Wholesalers
Travel Chains
Train
Coach
Individual Travel Agency
Carriers (operational node)
Figure A-8 (b)
30
Starguest Network
Hotel
Conference Holiday Service Group
(operational node)
Tour
Restaurant
Distributor (operational node)
Plane
Travel Wholesalers
Travel Chains
Train
Coach
Individual Travel Agency
Carriers (operational node)
Figure A-8 (c)
31
Starguest Network
Integrator
Marketing
Hotel
Conference Holiday Service Group
(operational node)
Telecommunications
Tour
Restaurant
R D
Distributor (operational node)
Plane
Travel Wholesalers
Travel Chains
Train
Coach
Individual Travel Agency
Carriers (operational node)
Figure A-8 (d)
32
Starguest Network
Integrator
Marketing
Hotel
Conference Holiday Service Group
(operational node)
Telecommunications
Tour
Restaurant
R D
Support Group
Customer Satisfaction System
Distributor (operational node)
Plane
Travel Wholesalers
Travel Chains
Train
Coach
Individual Travel Agency
Carriers (operational node)
Figure A-8 (e)