Case Study Description of Frito-Lay, Inc.: A Strategic Transition (A)
The setting is a food manufacturing company which has stumbled in terms of its historic growth and profit achievements. In trying to recapture its momentum, the president has used information technology as one element in his program of transition. The case focuses on the strategic problem and setting, the use of information technology for organizational change, and the associated implementation problems.
Swot Analysis of "Frito-Lay, Inc.: A Strategic Transition (A)" written by Melissa Mead, Jane Linder includes – strengths weakness that are internal strategic factors of the organization, and opportunities and threats that Transition Stumbled facing as an external strategic factors. Some of the topics covered in Frito-Lay, Inc.: A Strategic Transition (A) case study are - Strategic Management Strategies, Economic development, IT, Manufacturing, Strategy execution and Technology & Operations.
Some of the macro environment factors that can be used to understand the Frito-Lay, Inc.: A Strategic Transition (A) casestudy better are - – competitive advantages are harder to sustain because of technology dispersion, there is increasing trade war between United States & China, talent flight as more people leaving formal jobs, banking and financial system is disrupted by Bitcoin and other crypto currencies, there is backlash against globalization, increasing household debt because of falling income levels, increasing energy prices,
digital marketing is dominated by two big players Facebook and Google, wage bills are increasing, etc
Introduction to SWOT Analysis of Frito-Lay, Inc.: A Strategic Transition (A)
SWOT stands for an organization’s Strengths, Weaknesses, Opportunities and Threats . At Oak Spring University , we believe that protagonist in Frito-Lay, Inc.: A Strategic Transition (A) case study can use SWOT analysis as a strategic management tool to assess the current internal strengths and weaknesses of the Transition Stumbled, and to figure out the opportunities and threats in the macro environment – technological, environmental, political, economic, social, demographic, etc in which Transition Stumbled operates in.
According to Harvard Business Review, 75% of the managers use SWOT analysis for various purposes such as – evaluating current scenario, strategic planning, new venture feasibility, personal growth goals, new market entry, Go To market strategies, portfolio management and strategic trade-off assessment, organizational restructuring, etc.
SWOT Objectives / Importance of SWOT Analysis and SWOT Matrix
SWOT analysis of Frito-Lay, Inc.: A Strategic Transition (A) can be done for the following purposes –
1. Strategic planning using facts provided in Frito-Lay, Inc.: A Strategic Transition (A) case study
2. Improving business portfolio management of Transition Stumbled
3. Assessing feasibility of the new initiative in Technology & Operations field.
4. Making a Technology & Operations topic specific business decision
5. Set goals for the organization
6. Organizational restructuring of Transition Stumbled
Strengths Frito-Lay, Inc.: A Strategic Transition (A) | Internal Strategic Factors
What are Strengths in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The strengths of Transition Stumbled in Frito-Lay, Inc.: A Strategic Transition (A) Harvard Business Review case study are -
Sustainable margins compare to other players in Technology & Operations industry
– Frito-Lay, Inc.: A Strategic Transition (A) firm has clearly differentiated products in the market place. This has enabled Transition Stumbled to fetch slight price premium compare to the competitors in the Technology & Operations industry. The sustainable margins have also helped Transition Stumbled to invest into research and development (R&D) and innovation.
Successful track record of launching new products
– Transition Stumbled has launched numerous new products in last few years, keeping in mind evolving customer preferences and competitive pressures. Transition Stumbled has effective processes in place that helps in exploring new product needs, doing quick pilot testing, and then launching the products quickly using its extensive distribution network.
Ability to recruit top talent
– Transition Stumbled is one of the leading recruiters in the industry. Managers in the Frito-Lay, Inc.: A Strategic Transition (A) are in a position to attract the best talent available. The firm has a robust talent identification program that helps in identifying the brightest.
Effective Research and Development (R&D)
– Transition Stumbled has innovation driven culture where significant part of the revenues are spent on the research and development activities. This has resulted in, as mentioned in case study Frito-Lay, Inc.: A Strategic Transition (A) - staying ahead in the industry in terms of – new product launches, superior customer experience, highly competitive pricing strategies, and great returns to the shareholders.
Learning organization
- Transition Stumbled is a learning organization. It has inculcated three key characters of learning organization in its processes and operations – exploration, creativity, and expansiveness. The work place at Transition Stumbled is open place that encourages instructiveness, ideation, open minded discussions, and creativity. Employees and leaders in Frito-Lay, Inc.: A Strategic Transition (A) Harvard Business Review case study emphasize – knowledge, initiative, and innovation.
Innovation driven organization
– Transition Stumbled is one of the most innovative firm in sector. Manager in Frito-Lay, Inc.: A Strategic Transition (A) Harvard Business Review case study can use Clayton Christensen Disruptive Innovation strategies to further increase the scale of innovtions in the organization.
Training and development
– Transition Stumbled has one of the best training and development program in the industry. The effectiveness of the training programs can be measured in Frito-Lay, Inc.: A Strategic Transition (A) Harvard Business Review case study by analyzing – employees retention, in-house promotion, loyalty, new venture initiation, lack of conflict, and high level of both employees and customer engagement.
Low bargaining power of suppliers
– Suppliers of Transition Stumbled in the sector have low bargaining power. Frito-Lay, Inc.: A Strategic Transition (A) has further diversified its suppliers portfolio by building a robust supply chain across various countries. This helps Transition Stumbled to manage not only supply disruptions but also source products at highly competitive prices.
Digital Transformation in Technology & Operations segment
- digital transformation varies from industry to industry. For Transition Stumbled digital transformation journey comprises differing goals based on market maturity, customer technology acceptance, and organizational culture. Transition Stumbled has successfully integrated the four key components of digital transformation – digital integration in processes, digital integration in marketing and customer relationship management, digital integration into the value chain, and using technology to explore new products and market opportunities.
High brand equity
– Transition Stumbled has strong brand awareness and brand recognition among both - the exiting customers and potential new customers. Strong brand equity has enabled Transition Stumbled to keep acquiring new customers and building profitable relationship with both the new and loyal customers.
Ability to lead change in Technology & Operations field
– Transition Stumbled is one of the leading players in its industry. Over the years it has not only transformed the business landscape in its segment but also across the whole industry. The ability to lead change has enabled Transition Stumbled in – penetrating new markets, reaching out to new customers, and providing different value propositions to different customers in the international markets.
Highly skilled collaborators
– Transition Stumbled has highly efficient outsourcing and offshoring strategy. It has resulted in greater operational flexibility and bringing down the costs in highly price sensitive segment. Secondly the value chain collaborators of the firm in Frito-Lay, Inc.: A Strategic Transition (A) HBR case study have helped the firm to develop new products and bring them quickly to the marketplace.
Weaknesses Frito-Lay, Inc.: A Strategic Transition (A) | Internal Strategic Factors
What are Weaknesses in SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The weaknesses of Frito-Lay, Inc.: A Strategic Transition (A) are -
Slow to harness new channels of communication
– Even though competitors are using new communication channels such as Instagram, Tiktok, and Snap, Transition Stumbled is slow explore the new channels of communication. These new channels of communication mentioned in marketing section of case study Frito-Lay, Inc.: A Strategic Transition (A) can help to provide better information regarding products and services. It can also build an online community to further reach out to potential customers.
Compensation and incentives
– The revenue per employee as mentioned in the HBR case study Frito-Lay, Inc.: A Strategic Transition (A), is just above the industry average. Transition Stumbled needs to redesign the compensation structure and incentives to increase the revenue per employees. Some of the steps that it can take are – hiring more specialists on project basis, etc.
No frontier risks strategy
– After analyzing the HBR case study Frito-Lay, Inc.: A Strategic Transition (A), it seems that company is thinking about the frontier risks that can impact Technology & Operations strategy. But it has very little resources allocation to manage the risks emerging from events such as natural disasters, climate change, melting of permafrost, tacking the rise of artificial intelligence, opportunities and threats emerging from commercialization of space etc.
Slow decision making process
– As mentioned earlier in the report, Transition Stumbled has a very deliberative decision making approach. This approach has resulted in prudent decisions, but it has also resulted in missing opportunities in the industry over the last five years. Transition Stumbled even though has strong showing on digital transformation primary two stages, it has struggled to capitalize the power of digital transformation in marketing efforts and new venture efforts.
Aligning sales with marketing
– It come across in the case study Frito-Lay, Inc.: A Strategic Transition (A) that the firm needs to have more collaboration between its sales team and marketing team. Sales professionals in the industry have deep experience in developing customer relationships. Marketing department in the case Frito-Lay, Inc.: A Strategic Transition (A) can leverage the sales team experience to cultivate customer relationships as Transition Stumbled is planning to shift buying processes online.
Increasing silos among functional specialists
– The organizational structure of Transition Stumbled is dominated by functional specialists. It is not different from other players in the Technology & Operations segment. Transition Stumbled needs to de-silo the office environment to harness the true potential of its workforce. Secondly the de-silo will also help Transition Stumbled to focus more on services rather than just following the product oriented approach.
Slow to strategic competitive environment developments
– As Frito-Lay, Inc.: A Strategic Transition (A) HBR case study mentions - Transition Stumbled takes time to assess the upcoming competitions. This has led to missing out on atleast 2-3 big opportunities in the industry in last five years.
Workers concerns about automation
– As automation is fast increasing in the segment, Transition Stumbled needs to come up with a strategy to reduce the workers concern regarding automation. Without a clear strategy, it could lead to disruption and uncertainty within the organization.
Skills based hiring
– The stress on hiring functional specialists at Transition Stumbled has created an environment where the organization is dominated by functional specialists rather than management generalist. This has resulted into product oriented approach rather than marketing oriented approach or consumers oriented approach.
High dependence on existing supply chain
– The disruption in the global supply chains because of the Covid-19 pandemic and blockage of the Suez Canal illustrated the fragile nature of Transition Stumbled supply chain. Even after few cautionary changes mentioned in the HBR case study - Frito-Lay, Inc.: A Strategic Transition (A), it is still heavily dependent upon the existing supply chain. The existing supply chain though brings in cost efficiencies but it has left Transition Stumbled vulnerable to further global disruptions in South East Asia.
Need for greater diversity
– Transition Stumbled has taken concrete steps on diversity, equity, and inclusion. But the efforts so far has resulted in limited success. It needs to expand the recruitment and selection process to hire more people from the minorities and underprivileged background.
Opportunities Frito-Lay, Inc.: A Strategic Transition (A) | External Strategic Factors
What are Opportunities in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The opportunities highlighted in the Harvard Business Review case study Frito-Lay, Inc.: A Strategic Transition (A) are -
Learning at scale
– Online learning technologies has now opened space for Transition Stumbled to conduct training and development for its employees across the world. This will result in not only reducing the cost of training but also help employees in different part of the world to integrate with the headquarter work culture, ethos, and standards.
Developing new processes and practices
– Transition Stumbled can develop new processes and procedures in Technology & Operations industry using technology such as automation using artificial intelligence, real time transportation and products tracking, 3D modeling for concept development and new products pilot testing etc.
Buying journey improvements
– Transition Stumbled can improve the customer journey of consumers in the industry by using analytics and artificial intelligence. Frito-Lay, Inc.: A Strategic Transition (A) suggest that firm can provide automated chats to help consumers solve their own problems, provide online suggestions to get maximum out of the products and services, and help consumers to build a community where they can interact with each other to develop new features and uses.
Harnessing reconfiguration of the global supply chains
– As the trade war between US and China heats up in the coming years, Transition Stumbled can build a diversified supply chain model across various countries in - South East Asia, India, and other parts of the world. This reconfiguration of global supply chain can help, as suggested in case study, Frito-Lay, Inc.: A Strategic Transition (A), to buy more products closer to the markets, and it can leverage its size and influence to get better deal from the local markets.
Low interest rates
– Even though inflation is raising its head in most developed economies, Transition Stumbled can still utilize the low interest rates to borrow money for capital investment. Secondly it can also use the increase of government spending in infrastructure projects to get new business.
Changes in consumer behavior post Covid-19
– Consumer behavior has changed in the Technology & Operations industry because of Covid-19 restrictions. Some of this behavior will stay once things get back to normal. Transition Stumbled can take advantage of these changes in consumer behavior to build a far more efficient business model. For example consumer regular ordering of products can reduce both last mile delivery costs and market penetration costs. Transition Stumbled can further use this consumer data to build better customer loyalty, provide better products and service collection, and improve the value proposition in inflationary times.
Leveraging digital technologies
– Transition Stumbled can leverage digital technologies such as artificial intelligence and machine learning to automate the production process, customer analytics to get better insights into consumer behavior, realtime digital dashboards to get better sales tracking, logistics and transportation, product tracking, etc.
Reforming the budgeting process
- By establishing new metrics that will be used to evaluate both existing and potential projects Transition Stumbled can not only reduce the costs of the project but also help it in integrating the projects with other processes within the organization.
Lowering marketing communication costs
– 5G expansion will open new opportunities for Transition Stumbled in the field of marketing communication. It will bring down the cost of doing business, provide technology platform to build new products in the Technology & Operations segment, and it will provide faster access to the consumers.
Reconfiguring business model
– The expansion of digital payment system, the bringing down of international transactions costs using Bitcoin and other blockchain based currencies, etc can help Transition Stumbled to reconfigure its entire business model. For example it can used blockchain based technologies to reduce piracy of its products in the big markets such as China. Secondly it can use the popularity of e-commerce in various developing markets to build a Direct to Customer business model rather than the current Channel Heavy distribution network.
Remote work and new talent hiring opportunities
– The widespread usage of remote working technologies during Covid-19 has opened opportunities for Transition Stumbled to expand its talent hiring zone. According to McKinsey Global Institute, 20% of the high end workforce in fields such as finance, information technology, can continously work from remote local post Covid-19. This presents a really great opportunity for Transition Stumbled to hire the very best people irrespective of their geographical location.
Identify volunteer opportunities
– Covid-19 has impacted working population in two ways – it has led to people soul searching about their professional choices, resulting in mass resignation. Secondly it has encouraged people to do things that they are passionate about. This has opened opportunities for businesses to build volunteer oriented socially driven projects. Transition Stumbled can explore opportunities that can attract volunteers and are consistent with its mission and vision.
Loyalty marketing
– Transition Stumbled has focused on building a highly responsive customer relationship management platform. This platform is built on in-house data and driven by analytics and artificial intelligence. The customer analytics can help the organization to fine tune its loyalty marketing efforts, increase the wallet share of the organization, reduce wastage on mainstream advertising spending, build better pricing strategies using personalization, etc.
Threats Frito-Lay, Inc.: A Strategic Transition (A) External Strategic Factors
What are Threats in the SWOT Analysis / TOWS Matrix / Weighted SWOT Analysis
The threats mentioned in the HBR case study Frito-Lay, Inc.: A Strategic Transition (A) are -
Trade war between China and United States
– The trade war between two of the biggest economies can hugely impact the opportunities for Transition Stumbled in the Technology & Operations industry. The Technology & Operations industry is already at various protected from local competition in China, with the rise of trade war the protection levels may go up. This presents a clear threat of current business model in Chinese market.
Capital market disruption
– During the Covid-19, Dow Jones has touched record high. The valuations of a number of companies are way beyond their existing business model potential. This can lead to capital market correction which can put a number of suppliers, collaborators, value chain partners in great financial difficulty. It will directly impact the business of Transition Stumbled.
Consumer confidence and its impact on Transition Stumbled demand
– There is a high probability of declining consumer confidence, given – high inflammation rate, rise of gig economy, lower job stability, increasing cost of living, higher interest rates, and aging demography. All the factors contribute to people saving higher rate of their income, resulting in lower consumer demand in the industry and other sectors.
Instability in the European markets
– European Union markets are facing three big challenges post Covid – expanded balance sheets, Brexit related business disruption, and aggressive Russia looking to distract the existing security mechanism. Transition Stumbled will face different problems in different parts of Europe. For example it will face inflationary pressures in UK, France, and Germany, balance sheet expansion and demand challenges in Southern European countries, and geopolitical instability in the Eastern Europe.
Backlash against dominant players
– US Congress and other legislative arms of the government are getting tough on big business especially technology companies. The digital arm of Transition Stumbled business can come under increasing regulations regarding data privacy, data security, etc.
Easy access to finance
– Easy access to finance in Technology & Operations field will also reduce the barriers to entry in the industry, thus putting downward pressure on the prices because of increasing competition. Transition Stumbled can utilize it by borrowing at lower rates and invest it into research and development, capital expenditure to fortify its core competitive advantage.
Learning curve for new practices
– As the technology based on artificial intelligence and machine learning platform is getting complex, as highlighted in case study Frito-Lay, Inc.: A Strategic Transition (A), Transition Stumbled may face longer learning curve for training and development of existing employees. This can open space for more nimble competitors in the field of Technology & Operations .
Aging population
– As the populations of most advanced economies are aging, it will lead to high social security costs, higher savings among population, and lower demand for goods and services in the economy. The household savings in US, France, UK, Germany, and Japan are growing faster than predicted because of uncertainty caused by pandemic.
Technology acceleration in Forth Industrial Revolution
– Transition Stumbled has witnessed rapid integration of technology during Covid-19 in the Technology & Operations industry. As one of the leading players in the industry, Transition Stumbled needs to keep up with the evolution of technology in the Technology & Operations sector. According to Mckinsey study top managers believe that the adoption of technology in operations, communications is 20-25 times faster than what they planned in the beginning of 2019.
Environmental challenges
– Transition Stumbled needs to have a robust strategy against the disruptions arising from climate change and energy requirements. EU has identified it as key priority area and spending 30% of its 880 billion Euros European post Covid-19 recovery funds on green technology. Transition Stumbled can take advantage of this fund but it will also bring new competitors in the Technology & Operations industry.
Regulatory challenges
– Transition Stumbled needs to prepare for regulatory challenges as consumer protection groups and other pressure groups are vigorously advocating for more regulations on big business - to reduce inequality, to create a level playing field, to product data privacy and consumer privacy, to reduce the influence of big money on democratic institutions, etc. This can lead to significant changes in the Technology & Operations industry regulations.
New competition
– After the dotcom bust of 2001, financial crisis of 2008-09, the business formation in US economy had declined. But in 2020 alone, there are more than 1.5 million new business applications in United States. This can lead to greater competition for Transition Stumbled in the Technology & Operations sector and impact the bottomline of the organization.
Technology disruption because of hacks, piracy etc
– The colonial pipeline illustrated, how vulnerable modern organization are to international hackers, miscreants, and disruptors. The cyber security interruption, data leaks, etc can seriously jeopardize the future growth of the organization.
Weighted SWOT Analysis of Frito-Lay, Inc.: A Strategic Transition (A) Template, Example
Not all factors mentioned under the Strengths, Weakness, Opportunities, and Threats quadrants in the SWOT Analysis are equal. Managers in the HBR case study Frito-Lay, Inc.: A Strategic Transition (A) needs to zero down on the relative importance of each factor mentioned in the Strengths, Weakness, Opportunities, and Threats quadrants.
We can provide the relative importance to each factor by assigning relative weights. Weighted SWOT analysis process is a three stage process –
First stage for doing weighted SWOT analysis of the case study Frito-Lay, Inc.: A Strategic Transition (A) is to rank the strengths and weaknesses of the organization. This will help you to assess the most important strengths and weaknesses of the firm and which one of the strengths and weaknesses mentioned in the initial lists are marginal and can be left out.
Second stage for conducting weighted SWOT analysis of the Harvard case study Frito-Lay, Inc.: A Strategic Transition (A) is to give probabilities to the external strategic factors thus better understanding the opportunities and threats arising out of macro environment changes and developments.
Third stage of constructing weighted SWOT analysis of Frito-Lay, Inc.: A Strategic Transition (A) is to provide strategic recommendations includes – joining likelihood of external strategic factors such as opportunities and threats to the internal strategic factors – strengths and weaknesses. You should start with external factors as they will provide the direction of the overall industry. Secondly by joining probabilities with internal strategic factors can help the company not only strategic fit but also the most probably strategic trade-off that Transition Stumbled needs to make to build a sustainable competitive advantage.