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Frito Lay North America

Abdullah Bin Jadid

University of the Incarnate Word

Table of Contents

Mission--------------------------------------------------------------------------------------------------------3

Introduction--------------------------------------------------------------------------------------------------5

Factors in the Remote Environment--------------------------------------------------------------------7

Factors in the Operating Environment ----------------------------------------------------------------9

The External Environment------------------------------------------------------------------------------11

The Industry Analysis------------------------------------------------------------------------------------11

A Porter’s Five Forces Analysis------------------------------------------------------------------------12

Strategy #3---------------------------------------------------------------------------------------------------

Strategy #4---------------------------------------------------------------------------------------------------

Conclusion---------------------------------------------------------------------------------------------------

References---------------------------------------------------------------------------------------------------

Mission Statement

Per Pearce, J.A. & Robinson, R.B, the company mission is a broadly framed but enduring statement of a firm’s intent. It embodies the business philosophy of the firm’s strategic decision makers, implies the image the firm seeks to project, reflects the firm’s self-concept, and indicates the firm’s principal product or service areas and the primary customer needs the firm will attempt to satisfy. In short, it describes the firm’s product, market, and technological areas of emphasis, and it does so in a way that reflects the values and priorities of the firm’s strategic decision makers. An excellent example is the company mission statement of Nicor Inc., shown in Exhibit 2.1, Strategy in Action. (p. 23)

As stated by Frito-Lay, the vision from their official website is “At Frito-Lay, we’re all about good fun — from making tasty snacks to get your party started to taking care of our 50,000 employees who know how to find the fun in everyday challenges. As a proud member of the PepsiCo family, Performance with Purpose is what we work to achieve every day. And to us, that means creating the high-quality snacks our fans deserve, while caring for our people, communities and the environment we share” F. (2017). Furthermore, Frito-Lay is the manufacturer of over 40 different snack products. Together with Pepsi-Cola, Frito-Lay is responsible for satisfying snack urges to billions all over the world. Frito-Lay truly is the world's favorite snack and is always within arm's reach S. (1970, January 01).

Frito-Lay Leaderships are:

Vivek Sankaran is president and chief operating officer (COO) of Frito-Lay North America, Inc. Hari Avula is chief financial officer of Frito-Lay North America. Kristen Blum is senior vice president and CIO for Frito-Lay North America. David Flavell is senior vice president and general counsel of Frito-Lay North America together with PepsiCo Latin America. Ted Herrod is the senior vice president of Sales Transformation for Frito-Lay North America. Michael Hourihan is vice president of Procurement and Market Supply Officer for Frito-Lay North America. Chris Kuechenmeister is vice president of Communications for Frito-Lay North America. Jason is president of PepsiCo Foods Canada. Dr. Jonathan McIntyre is senior vice president of PepsiCo Research & Development, Global Snacks Category. Patrick McLaughlin is senior vice president of human resources and chief human resources officer for Frito-Lay North America. Randy Melville is senior vice president and general manager of Frito-Lay North America. Craig Musgrove is currently senior vice president of National Sales - Large Format and e-commerce for Frito-Lay North America. Jennifer Saenz serves as senior vice president and chief marketing officer of Frito-Lay North America. Leslie Starr Keating is senior vice president of PepsiCo’s North America Foods Supply Chain. Chris Turner is senior vice president of Strategy for Frito-Lay North America. Kevin Vivian serves as senior vice president of National Sales - Immediate Consumption for Frito-Lay North America. Steven Williams is the senior vice president of the East Division of Frito-Lay. F. (2017)

Introduction

Frito Lay North America is one of the most successful as well as resilient companies in the Food Industry. This is evident in the fact that the company has been in existence since the year 1961. The company started as two companies that existed independently in the 1930 and existence as Frito-Lay started in the year 1961. The resilience and success that the company has registered over the years can be attributed to its strengths as well as strategy. Many companies have not been capable of surviving over the period especially due to times of financial recessions which weighed them down. One of the key strengths that the company has is diversity in the products that it offers to its customers. Ensuring that its products are of top quality through improvements over the years has also contributed to the success that the company has continued to register over the decades. This has ensured that the products are satisfactory and in line with the expectations of the customers. The strategic aspect of Frito lay was in the merger with Pepsi-Co in the year 1965. The market share of the company in the United States alone comprises 40% of snacks that are sold in the whole market while it is a global leader in the snacks products. Frito Lay North America has been a great success and this is evident in that the sales of Frito Lay comprise above 30% of the total sales on an annual basis. Frito Lay North America is highly detrimental to the operations of the company as whole especially given that operations regarding research and development of the products of the company takes pace here. The operations of sales and more importantly distribution of the products of the snacks food products in the United States as well as in Canada take place in North America as well, further making it an essential organ and section of the company. The leadership at Frito Lay North America has also been key to its success (Walker, 2013). Various leadership positions and the holders of these positions have their duties and tasks clearly outlined. The company culture of ensuring that the needs of customers are a priority and innovation to produce new and improved products has been its core as well. Given that the technology has become part of businesses and organizations in the current era, the company continues to exploit technology in its operations locally and in its global market environment. Technology has helped promote efficiency as well as delivery in an efficient manner to meet the expectation of the company’s consumers. Employees play a major role in the determination of the success that a business or an organization registers. Frito Lay North America considers its employees a huge asset and takes a broad range of actions to ensure that the employees feel appreciated. The employees are made to personalize and feel happy at work, an aspect that aims at enhancing their satisfaction at work and motivation to work hard. The achievements that the company has had have essentially been due to a dedicated and highly productive workforce (Villegas, & Barrar, 2006).

Thesis Statement

Frito Lay North America is one of the operating divisions of Frito-Lay Company, a division that has been critical to the success that the company has been capable of registering due to the various operations that are undertaken as well as the leadership capabilities that are unique.

Factors in the Remote Environment.

The remote environment in a business or organization is an environment that constitutes of factors that come from beyond and are irrespective of any particular firm’s operating condition: social factors, political factors, economic factors, ecological factors and technological factors. The remote environment can present an organization or business with threats, constraints or opportunities and the organization rarely employ some meaningful reciprocal impact. The remote environment surrounding the Frito Lay North America Company greatly influences the progress of the company in either a negative or a positive manner, the company may either find solutions to minimize the threats and constraints that it may face or make the necessary adjustment in case of constraints and threats that cannot be changed so as to ensure they remain in the market. The company should be keen in ensuring that they utilize all the opportunities presented in the remote environment to make sur that they keep up with the fast-growing food industry with one of the opportunities being presented being technological advancement since the world is turning into a technological era.

The economic factors that have an impact on the operations of the Frito Lay North America include; general credit availability, North American’s propensity to save, North American’s disposable income levels, inflation rates, gross domestic product growth and the interest rates in North America. The growth rate of the gross domestic product in North America is high by 2009 it was at 2.4% this is a growth rate that has a positive impact on the growth of the Frito Lay North America Company (Engerman & Gallman 1986). A positive growth rate leads to increase in job opportunities that leads to an increase in people’s disposable income thus enabling people to spend more on products and services. Frito Lay North America benefits due to increase in demand for their products, this leads to increase in profitability due to increased sales volume. The inflation rate in North America was estimated to be around 0.62 in 2015 this is a low rate that means well to the operations of Frito Lay North America. This is because low inflation leads to stable demand and supply factors thus the company conducts its business and is able to supply products to their customers thus increasing their sales volume as prices are favorable and stable. The highest lending interest rate in North America is currently estimated to be around 3.42% the highest rate, this is a relatively low rate that indicates that there is availability of credit in the state. This means that people can easily access credit this increases their disposable income therefore increasing the sales volume of Frito Lay North America.

The social factors that the company faces include the changing taste and preferences of their customers, Frito Lay North America has to ensure that it keeps up with this changes in order to attract and retain their customers. The company’s reputation is very important as it creates a negative or positive impression to the customers and it may attract or discourage potential customers (MarketLine 2016). The political factors in North American creates constraints and threats to the Frito Lay North America especially due to the presidential elections that passed, the customers may prefer retaining their money rather than spending since they are uncertain about the economic conditions. Alterations in drug and food laws in North America has a negative impact towards the sale of food products thus may cause constraints on the operations of Frito Lay North America.

Technological factors may cause threats, constraints or lead to opportunities to the Frito Lay North America it all depends on how the company will handle these factors. North America has a high technological industrial economy; this gives opportunities for organization to advance in technological changes globally. Frito Lay North America should make use of this economy to ensure that it keeps up with the global technological advancement that will enable it to innovate and come up with high quality differentiated products. The rapid technological advancement may lead to increased cost on companies that have low technology and this may lead to them going out of the market due to high competition, Frito Lay North America should ensure it is not among these companies. Frito Lay North America is in the food industry and this industry is mostly affected by ecological factors since agriculture being the main raw material in this industry is highly affected by climatic change. Water plays a major role is the production of Frito Lay North America products thus the company should come up with measures to ensure that they minimize water consumption and help in environmental sustainability that creates a good impression on customers and therefore attracting more customers.

Factors in the Operating Environment.

The operating environment of an organization constitutes of factors that are in competitive situation that impact’s an organization’s success that help in acquiring resources that are needed or in enhancing profitable marketing of the company’s goods and services. Factors that may affect Frito Lay North America in the operating environment include; first the organization’s competitive position, Frito Lay North America is renowned for its great advertisement capability this is among the factors that has brought great success to the company over the years. Advertising products enhances customer’s loyalty and it attracts potential customers, this has made the company to keep up with the competition in the snack industry that has a stiff competition especially in North America and it has achieved 59% of people that eat snacks. The other factor that has made Frito Lay North America, competitive is the innovative capability of the organization, over the years the company has come up with new and differentiated products that are preferred by many customers. The most leading product being “Ranch Kettle Cooked Chips” that is highly demanded and has boosted the company’s success. The company’s competitive position is also attributed to the company’s ability to produce products that satisfy their customer’s tastes and preferences through producing the flavors that their customers crave this has helped in beating many snacks in the market.

The second factor is the company’s customers, Frito Lay North America has not been able to capture the elite class customers in most of their snacks especially chips, this is because most of the people in the elite class do not like chips as they are believed to have been fried using pig fat. Frito Lay North America mostly offers unhealthy snacks thus most people shy away from buying this snacks especially the wealthy consumers as they are health-oriented (Schlosser 2012). Frito Lay North America should come up with a group of healthy snacks so as to attract more customer base.

The third factor is the organization’s capability to attract qualified employees. Over the years Frito Lay North America has made it their business to ensure that they offer a good working condition for their employees and it ensures that their employees are a top priority. The company ensures that the employees benefits are available they include health and life insurance covers and benefits as well as retirement benefits thus attracting qualified employees.

Business enterprises are normally surrounded by various that are either occurring inside the enterprise or as a result of the surrounding environment. The two factors are either those that are classified under internal or external factors are both very essential for any business organization to able to survive in a competitive venture. The factors that are classified under the internal environment are those that normally affect the business enterprise from within thus the business can have control over them if they handle them in a manner that would bring positive results to the company.

The External Environment

The external environment is referred to factors normally impact a business enterprise from within thus causing either positive or negative impact on the company’s performance and growth. The external environment is not controllable. Those that are given the managerial position of a business have no influence over business contenders, or changes to law, or general monetary conditions. However, the administrators of a business or association do have some measure of control with reference to how the business responds to changes in its outside condition. The same case applies to Frito lay company which is categorized under food and beverages section. Therefore, this piece of work is going to focus on the external environment of Frito lay company following the five Porter’s forces of analysis.

The Industry Analysis

Frito lay company is mostly affected by the following factors. Political Factors: As a traded on an open market enterprise, Frito-Lay is required to take after each appropriate corporate direction set by the central government. Lay's must likewise keep any generation controls executed by the legislature, for example, points of confinement to Trans Fat use, limitations on bundling materials, and so on. These creation directions likewise stretch out to work confinements, which differ contingent upon the nation; in this manner, wherever Lay's delivers its Classic chips, it must hold fast to the work laws set up in that nation.

Economic Factors-Lay’s primary economic concern likely stems from the presence of its competitors in the snack food industry, since there generally isn’t a great deal of customer involvement when choosing to purchase a bag of chips-In addressing its presence in the snack food market, Lay’s must necessarily study the products, marketing strategies, research and development initiatives, and other important business aspects of competitors, such as Nabisco and Pepperidge Farm. As it said, for any business institution to be able to grow in terms of financial profit in a competitive environment it has to be aware of the external factors that are likely to hold it backwards if not taken with the seriousness that they deserve. This is the secret behind the prosperity of the Frito lay company as it has focused on the environmental factors in order to continue thriving and remaining on top of the industry in a such a competitive environment.

A Porter’s Five Forces Analysis

Some of the key external environment factors that affect Frito lay North America are: Current economic conditions-The prevailing economic state of the countries where a company is situated will affect the spending trends of residents (Bornscheuer et al ,2015). Increments in financing costs as well as an abnormal state of unemployment will discourage utilization of trivial merchandise and enterprises. For instance: at the point when individuals encounter budgetary hardship, they will spend significantly less on game and entertainment, occasions, new autos and extravagance merchandise.

Competition-The other external factor that surrounds the Frito lay company is competition. The reason as to why completion is categorized under this section is because the competitors affect a company from the outside part. As a factor of concern, competition continues to increase every day due to the emergence of new competitors and the improvement of commodities by the existing firms. Frito Lay Company in the past has been able to cope up with the increasing competition to from force of Suppliers -This compels addresses how effortlessly providers can drive up the cost of merchandise and ventures. It is influenced by the quantity of providers of key parts of a decent or administration, how remarkable these angles are and the amount it would cost an organization to change starting with one provider then onto the next. (Grossberg, 2016). The less number of providers and the more an organization relies on a provider, the more power a provider holds. Frito lay has been able to thrive in business since it owns the power of supply as it ensures that its commodities are consumed and availed in all retail centres like supermarkets.

Capability of New Entrants into an Industry-An organization's energy is additionally influenced by the disadvantages of new participants into its market. The less cash and time it costs for a contender to enter an organization's market and be a viable contender, the more an organization's position might be fundamentally debilitated. In the food industry, this kind of trend has been happening thus leading to new competitors to the Frito lay company. The new competitors for Frito lay company are mondelez and Kellogg’s. This has in return forced the company to come up with new strategies of curbing the competition (Chao et al 2016).

Monetary conditions -These are worldwide also national, and when there is worldwide money related emergence as in 2007, changes in the outer condition can be emotional. For instance, in 2005, soda annual sales in the United States dropped without precedent for a long time. Coca-Cola sold 2% less cases, and Pepsi's aggregate case volume diminished by 3.2%. Frito-Lay's business development tumbled from 11 percent in 2000 to 7 percent in 2001 to just 5 percent in 2002. One reason was that its private-name snack contenders were offering their items at lower costs than Frito-Lay. Likewise, Frito-Lay was moving into more advantageous snacks, for example, heated chips, putting Frito-Lay in firm rivalry with organizations, like General Mills and Kraft. PepsiCo acknowledged it needed to discover approaches to expand its net revenues. Today, there are many Pepsi item and bundling arrangements, contrasted with 50 just a few years ago and store rack space has not expanded to oblige every one of these things. Pepsi must discover better approaches to offer, cost, advance, and convey its soda pops and different items at far less cost (Blosch et al , 2015).

Risk of Substitutes.

Contender substitutions that can be utilized as a part of place of an organization's items or administrations represent a risk. For instance, if clients depend on an organization to give an instrument or administration that can be substituted with another apparatus or benefit or by playing out the assignment physically, and this substitution is genuinely simple and of minimal effort, an organization's energy can be debilitated. Frito lays product has been faced with substitutes especially since most of them have got high level of cholesterol.

The success of the company has not been without vain since as evidenced in the above essay the company has had to deal with numerous factors that were derailing its progress. The company also continues to improve its commodities in order to be able to control the external environment which poses a threat to its resources. Therefore, the external factors cannot be taken for granted since the serious in whom they are taken determines a lot the success of a business.

References

Blosch, K., Phua, V., & Silva, J. (2015). Frito-Lay-Supply Chain Impact Analysis.

Bornscheuer, U., Brundiek, H., Evitt, A., SaB, S., Bonisch, F., & Kourist, R. (2015). U.S. Patent No. 8,975,055. Washington, DC: U.S. Patent and Trademark Office.

Chao, M. C. H., & Florenthal, B. (2016). A comparison of global companies' performance on Twitter and Weibo. International Journal of Business Environment, 8(3), 242-264.

Engerman, S. & Gallman, R. (1986). Long-term factors in American economic growth. Chicago: University of Chicago Press.

Frito-Lay - Good Fun! Retrieved January 26, 2017, from http://www.fritolay.com/company

Frito-Lay Mission Statement. Retrieved January 26, 2017, from http://dangerouslycheese-z.blogspot.com/2013/02/frito-lay-mission-statement.html

Grossberg, K. A., & Grossberg, K. A. (2016). The new marketing solutions that will drive strategy implementation. Strategy & Leadership, 44(3), 20-26.

MarketLine. (2016). Frito-Lay North America, Inc. – Strategy and SWOT Report. Retrieved from http://www.just-food.com/market-research/frito-lay-north-america-inc-strategy-and-swot-report_id254915.aspx

Pearce, J.A. & Robinson, R.B. (2015). Strategic management: Planning for domestic & global competition (14th ed.). NY: McGraw Hill Education.

Schlosser, E. (2012). Fast food nation: The dark side of the all-American meal. Houghton Mifflin Harcourt.

Villegas, F., & Barrar, P. (2006). Supply Chain Dynamics, the case of FRITO-LAY in Latin America. OR Insight, 19(4), 14-34. doi:10.1057/ori.2006.16

Walker, A. (2013). Frito-Lay North America/NREL CRADA: Cooperative Research and Development Final Report, CRADA Number CRD-06-176. doi:10.2172/1087785