Frito-Lay It Strategy

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Frito-Lay in the mid to late 1980’s was looking to change its way of doing business. As with many large companies, decisions were made on a corporate level, with field operations carrying out the business plan. This model, though efficient in terms of use of resources on the corporate level, did not allow for the kind of flexibility that the snack foods market demanded. The outgoing CEO, Willard Korn, had set forward a micromarketing strategy where each field office would be responsible for identifying demand, conducting promotions and other marketing activities and ordering replenishment. The problem with this approach was that Frito-Lay lacked the technological framework to make it happen in an efficient manner. (Frito-Lay, 1992)

Overlap Between IT and Corporate Strategy
Frito-Lay’s corporate strategy, set forward by the new CEO, Michael Jordan, was to initiate the micromarketing strategy begun by his predecessor, but do so in a way that will allow the company to retain overall control while allowing regional decision making to adapt to market changes. Essentially, Mr. Jordan was implementing the same strategy, but his approach was to garner much more success.

The key to success would be to use technology to improve the flow of information to and from production, sales, marketing and the corporate level. The IT strategy would center on understanding the information needs of the business and designing and executing a technology solution that will help achieve corporate goals.

Overlap Between IT and Functional Area Strategy
The central problem Frito-Lay was experiencing was that information gathering and decision making was most efficient when closest to the consumer process, or “where the rubber meets the road”. Given variations from region to region, different marketing efforts needed to be developed and no corporate marketing plan would allow for the most efficient use of resources across the entire company.

To achieve this, IT strategy would center on developing an efficient and usable system to allow the free flow of information from consumer purchases up to regional sales offices. The primary tool that would be used in this effort would be the handheld computer (HHC). This tool would allow field representatives to gather restocking information, sell-through and other sales data when visiting each store that sells the product. This information could then be sent, in real-time, to the regional office for ordering replenishment and marketing analysis. (Frito-Lay, 1992)

The functional area strategy is the plan for Frito-Lay to implement the new IT and corporate plans on the operational level. Obviously, any well-laid out corporate and IT strategy is useless if it isn’t implemented properly in the operation of the business.

Strategic Plan Items Needing Review
Obviously such a large change in operating procedure would require review of the plan by management of both the IT process and business processes. If a review is not conducted, then money and resources may be spent on projects that end up not working as intended, thereby wasting those resources. (Turban, 2010)

The first thing that should be reviewed is the overall business strategy and whether the plan will achieve the objectives of moving operational and marketing decision making downstream, closer to the consumer. This includes the following items: 1)Will the sales force be able to use the information quickly? 2)Will replenishment be more efficient than under the current model? 3)How will marketing decisions be made and what influence will the corporate strategy have on them? Secondly, the IT strategy must be analyzed to determine if the technology solutions will meet the business need: 1)Can the HHCs be used by the current workforce without a significant investment in training? 2)Will the regional sales offices be able to make accurate and timely decisions based upon the information gathered? 3)Can the corporate...
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