Assignment -2

Group -8
Amit Agarwal – 06 I Priyanka Jain -38
Amrit Mohanty- 09 I Swardesh Jha-52

Vinay thakur-56 I Vishwa Ranjan-58

Frito-Lay: A strategic transition

Industry: Salty Snacks, Customer B2B – retailers, Shelf life: 35 days,

Strength: Distribution Network, Economies of scale, Mktg., Geographical expansion, effective sales
force, compensation to employees, less competition.

Weakness: Less Regional focus, street-store profitability low, Lot of paper generated reports
Opportunities: increase sales in up-down street stores
Threat: Competition started emerging, Saturation started in late 70s, Technology not available for MIS
implementation.

1980:
Strength: Distribution Network, Economies of scale.
Weakness: Complication due to increased scale and numbers of product, Geographical saturation leads
to drop in sales growth to 3-4%, Failure of new product launched, Lack of IT skills and technology
(Increased maintenance cost and turn over which was below industry benchmark)

Opportunities: Increase in sales to existing consumers through regional focus strategy, (Key A/c: Super
Mkt, Street Stores), decentralization of decision making on product mix,

Threat: Competition & reduced profitability, Technology not available for MIS implementation.

Strategy Implemented by Frito-lay to overcome weakness & Threats:-

1. Change of strategy from functional efficiency to adaptability to changing market requirement.
2. Mfg: Innovation, Flexibility and lowest operating cost communication with other dept.
3. MIS: Improvement in people skills and successful Pilot project on HHC, however they failed to
implement it due to lack of available technology.
4. Concept of Ideal Sales Organization: Decentralization of decision making on proportion and
product Mix – Micromarketing Approach:
Segmentation of market for increased focus on Super Markets and Street stores. However, it
failed due to following reasons:-
1. Delegation of decision making to KAM without support of information system, which lead to
decrease in profitability. KAM remained focused on sales as his compensation was based on
sales volume.
2. Frustration among employees due to reduction in commission.
 3. Significant investment done in manufacturing facilities & launch new products without test
mktg., which couldn’t drive sales.
4. Running new product into existing plants was disruptive.

Solutions: Short Term:-

1. Change in commission policy of KAM to meet the profitability target of Organization.
2. Focus on improvement of sales at up-down street stores which were neglected in past.
3. Focused to be increased on improvement of shelf life of product.
4. Geographical expansion of Frito-lay in other continents.

Long Term:

1. New information system to be implemented for capturing & flow of information at fast rate so
that informed decisions may be taken at KAM level and corporate level.
2. Investment in skill development of IT personnel.
3. Implementation of technology for forecasting of demand.
4. Test Mktg. the products before new launch & investment.