A Strategic Transition, 1987-1992 Abridged

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