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A Strategic Transition, 19871992 Abridged

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Market dominator in the salty snack industry ... Michael Jordan, CEO of PepsiCo Worldwide Foods, took charge of Frito-Lay ... In Retrospect... Future Recommendations ... – PowerPoint PPT presentation

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Title: A Strategic Transition, 19871992 Abridged


1
  • A Strategic Transition, 1987-1992 (Abridged)

PRESENTED BY Mary Nellenbach, Kevin Morgans
Yutaka Nakamura June 6, 2001
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 Korns
    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
Jordans 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
(1/2)
  • Company-wide quality improvement program
  • Poorest performers targeted for improvement
  • Focus on contribution to profit, not just cost
    control

7
Functional Redesign
(2/2)
  • 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
(1/3)
  • 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
(2/3)
  • 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
(3/3)
  • 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
(1/3)
  • Jordan reorganizes nationwide operationsfirst
    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
(2/3)
  • 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
(3/3)
  • 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 PL outcomes

14
Tuning the Info Infrastructure
(1/2)
  • 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
(2/2)
  • 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-LAYS 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 Porters Five Competitive Forces Model

New Market Entrants
Customers
Threats
Traditional Competitors
Organization
Bargaining Power
Substitute Products and Services
Suppliers
19
Overall goal of IT/MIS implementation
AUTOMATE
ROLES OF INFO SYSTEMS
INNOVATE
INFORMATE
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
In Retrospect...
  • Michael Jordan, former CEO, learned that the
    micromarketing strategys 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

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
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