Case Analysis Frito-Lay

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Sustain Your Chips —Sustainable Strategies Consultation for Frito-Lay Inc. 2011
Gillian Hrycko, Goya and Jake
Eco-Innovations Consulting Firm
2011/7/18

Executive Summary
Frito-Lay is a brand known by almost every consumer in North America. With products being exported to 79 countries around the globe and accounting for almost 62% of the salty snack industry in North America, it is certainly a powerful brand. Yet there are still many issues the company faces, both internally and externally. Some external problems the company faces are the threats of new entrants, threats of substitutes, and intense rivalry among competitors. Some internal problems the company faces are the rigid capital structure, falling profits, and increasing pressure from consumers to reduce their adverse environmental impacts. Eco-Innovations Consulting Firm has come up with a sustainable strategy for the company to put forward in the future. Focusing on pollution prevention, we recommend for the company focus on four main areas: * Reducing energy consumption;

* Reduce water consumption;
* Reducing waste generation from products, as well as at the production plants; and * Educating workers and the community.

This strategy will help differentiate Frito-Lay from its competitors and bring about a positive reputation as an environmental steward. With customers becoming increasingly more concerned with the environmental footprint they are leaving on the world, switching to a pollution prevention strategy is not only a smart, but also necessary step for Frito-Lay as it moves toward dominating the salty snack industry.

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1.0 External Analysis
The external analysis of the client company Frito-Lay includes three parts: Value chain analysis, Industry analysis, and Competitor Analysis. 1.1 Structure and Value Chain
As Frito-Lay’s core business, Potato chip production will be assessed as the key-point. Thus, here Frito-Lay’s supplier network mainly will be mainly defined as farmers. It has no more than 100 individual suppliers (Admin, 2008). These farmers are identified as core suppliers because they focus on cultivating a limited number of potato varieties. Then, Frito-Lay provides them with long-term contracts, which improves the business into a more efficient and profitable status in other parts of the value chain. The company annually purchases 2.3 billion pounds of potatoes from these suppliers. Furthermore, Frito-Lay follows the logistical movement of products throughout the supply chain, from obtaining raw materials to final product disposal with its 848 tractors, 2,251 trailers, and a fleet of local computer-equipped delivery trucks (Admin, 2008). On next step, Frito-Lay delivers the raw materials such as potatoes and corn as well as packaging materials to any of the 41production factories all over the Country. These factories produce 1,800,000 packages of products per hour. The huge quantity of production demonstrates the high efficiency and low cost. Afterwards, thousands of trucks are operated to convey products from these factories to 1,900 warehouses and 200 distribution centers (Admin, 2008). Finally, 400,000 stores across the country will receive Frito-Lay’s snack food products on time for retail sale with the guidance by Frito-Lay how technological systems, reallocating shelf space, for example, can produce larger profits. Overall, the analysis, computation, track and operation as a systematic value chain demonstrate the maximized supply with minimized costs. In addition, Frito-Lay is firmly convinced that the value in their services for retail store, supermarket and other distribution centers is derived from the company’s ability to utilize innovative information technologies to efficiently and effectively transport their products to the appropriate target markets. 1.2 Industry Analysis

The status of Frito-Lay in the industry will...
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