FritoLay, Inc'

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Frito-Lay, Inc.

• A Strategic Transition - Part II
• (1987 - 1992)
• http//www.fritolay.com
• http//www.pepsico.com

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Why the Frito-Lay Case (Part II) ?

• Learning the companys efforts between 1978 and
  1992 to transform to meet the challenges of
  operating in a more complex, faster-paced, and
  intensely competitive environment.
• Learning an anticipatory changes model from the
  Frito-Lay series.

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About the Case

• Description Describes the changes in structure,
  management systems, people, and processes
  instituted by the company. Provides students with
  an opportunity to explore the nature of
  "IT-enabled" organizational change and the
  process through which it is implemented. Also
  enables a more general discussion of the
  challenges that companies face in organizing and
  managing in the 1990s and the actions that they
  are taking to meet those challenges. Affords an
  opportunity to confront the rhetoric of the
  emergence of a "new organization paradigm" with
  the reality.
• Subjects Covered Food, Information systems,
  Information technology, Organizational change,
  Strategy implementation.
• Setting United States Consumer products
  Fortune 500 6.1 billion revenues 1990-1992

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Case Scenario

• A new CEO must take action to return the company
  to profitability, to clarify the vision, and then
  to build the infrastructure (human, capital, and
  information) needed to support the long-term
  change in strategy and organization.
• The case provides a rich description of the
  evolutionary nature of the vision for change and
  the development of the organizational and
  information infrastructure needed to support it.
• The company institutes changes in structure,
  management systems, people, and processes in a
  second round of organizational change
  initiatives--this time more radical in nature.

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Analysis of the Information Infrastructure Changes

• The HHC project
• Provided accurate information to salespeople,
  their supervisors and the senior management.
• Time saving
• The Pipleline project
• Enlisted the support and expertise of both IT
  pros and high-potential, mid-level functional
  managers who understood how the business
  currently operated. Working as a team, these
  individuals redesigned operating processes and
  developed IS to support the companys new way of
  doing business.
• The Blue Chip project
• Developed focused management support systems that
  would enable the organization redesign.

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Vision vs. Strategy
Ideal Sales Organization - 6 sales growth -
double-digit profit growth
Vision
Implication of Organization Design
Infrastructure
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Streamlining the Business Cycle
1. The business cycle is composed of two types of
related processes
Core Operating Processes The primary activities
through which an organization designs, produces,
markets, delivers, and supports its products or
services.
Management Processes Set of activities through
which an organization manages the design
production, marketing, delivery, and support of
its products or services .
MGMT
CORE OPERATING
PROCESS
PROCESS
Exhibit TN-9
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Streamlining the Business Cycle
2. Many companies attempts to streamline the
business cycle by streamlining operating
processes without a corresponding streamlining of
management processes
MGMT
CORE OPERATING
PROCESS
PROCESS
Organizational Dysfunction
Exhibit TN-9
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Streamlining the Business Cycle
3. The key is to streamline, integrate and
time-synchronize both operating and management
processes.
MGMT
CORE OPERATING
PROCESS
PROCESS
Exhibit TN-9
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Frito-Lays Business Cycle Improvement
Streamlining the business cycle involves
simultaneous redesign of both operating
(organization) and management processes.
Core Operating Processes The primary activities
through which an organization designs, produces,
markets, sells, distributes, and supports its
products or services.
Management Processes The set of activities
through which an organization manages core
operating processes.
Exhibit TN-9
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Information and Authority
TN-8
Management Level
N
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Redefining Authority
Hierarchical Organization
Information Age Organization
Management Level
TN-8 (cont.)
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The Information Age Organization
Hierarchy
Complex
Standardization
Learning Flexibility
Supervision (compliance)
Collaboration (commitment)
Organization
Autonomy
Simple
Entrepreneurial
Environment
Stable Certain
Dynamic Uncertain
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Roles of the Information Infrastructure

• Three key roles of information infrastructure are
  to
• 1. serve as a buffer for complexity, uncertainty
  and speed of change
• 2. enable the complex, interlocking authority
  structures and incentive systems that were
  adopted and
• 3. enable streamlining, integration, and
  time-synchronization of operating and management
  processes.

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Information

• BAD information is WORSE than ...

NO inforamtion
Drowning in the data and starved for
information
Information is one of companys assets and one
of their biggest liabilities.
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Frito Lays Financial Performance
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Exhibit TN-1 Frito-Lay Anticipatory Change
Process (Anticipatory Model)
Scope of Change
Incremental Change to a Process or Function
Radical Change to Organizational
or Interorganizational Strategy,
Structure, Process, and Culture
Intrafunctional Interfunctional
Interorganizational
Low
Urgency Of Stimulus
High
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