Bobby Leanch Case

Strategic Analysis

BOBBY LEACH, TRISH MCMANUS, & ANITA WILLIAMS

November 2012

Dallas Baptist University

TABLE OF CONTENTS

Executive summary 4

Future Environmental Turbulence 5

Marketing Turbulence 6

Future Innovation Turbulence 11

Organizational Assessment 15

Marketing Aggressiveness 15

Innovation Aggressiveness 18

Technology Applications 21

Product Life Cycle 22

CEO Attributes 23

Management 25

Culture 28

Organizational Structure 30

Decision Systems 32

Strategic Capacity 34

References 36

EXECUTIVE SUMMARY

Yahoo Finance dubbed Frito Lay as the undisputed chip champ of North America. PepsiCo is the parent company for Frito Lay however; Frito Lay covers the majority of the financial profile for the company. PR News (2010) states that Frito Lay boasts values such as offering healthy snack choices, a reduction in environmental impact, and an inclusive work place. Frito lay is headed by CEO Al Carey.

This paper utilizes the Ansoff Model to analyze Frito Lay. A review was complete of Frito Lay's competitors in order to measure the future turbulence for Frito Lay. The future competitive turbulence for Frito Lay is predicted to be 4.3. This paper analyzed how well Frito Lay will stand against this level of competition and what measures, if any the company will need to take to withstand the competitive environment. This is done by identifying "gaps" on the future performance of the company.

Four areas were researched for Frito Lay to determine the company's strategy. These areas were comprised of Marketing Aggressiveness, Innovation Aggressiveness, Product Portfolio, and Product Technology. To further determine how well Frito Lay will fair, an analysis was made of the organization of the company. This deliverable is based on attributes of the CEO, the management style, corporate culture, formal structure, speed of decisions, technology, strategy and strategic capacity.

These components were weighed against an overall turbulence of 4.3.

FUTURE ENVIRONMENTAL TURBULENCE

According to the Ansoff Model Future Environmental Turbulence consists of Marketing Turbulence and Innovation Turbulence averaged. The Future Environment Turbulence is used to benchmark the company you are assessing with the competition. Once the comparison is made one can determine if the company has any gaps and how the gaps can be addressed (Underwood, 2002).

After careful analysis the Marketing Turbulence was measured at 4.7 and the Innovation Turbulence was measured at 3.9 which provided a Turbulence score of 4.3

MARKETING TURBULENCE

Sales Aggressiveness (4.7, Highly Aggressive)

The research analyzed in this reports shows sales aggressiveness to be 4.7, which classifies it as highly aggressive. The highly aggressive rating validates the tough competition "with approximately 50 companies accounting for 90 percent of the revenue in the snack food industry" (Hoovers). "The snack food industry generates sales in excess of $300 billion, with stiff competition for sales from US companies as well as companies from Mexico, UK, Japan, and South Korea" (Snack Foods Manufacturing, 2012). There is a huge increase in snacking as people are busier today and are trying to grab a snack to carry them until dinner or lunch.

"Presently about 70 percent of snacks are purchased at retailers, but package snacks are starting to face competition from restaurants and convenient stores. Package snacks will also now have to compete with fast food restaurants as well as convenient stores who are realizing this huge opportunity of offering snack options, and are offering a hot food snack alternative" (The State of Snacks, 2012).

Part of having good sales is being able to meet the demand of customers. One of the most important parts of the sales cycle is having the product in stock at the time the customer wants to make the purchase. The snack industry has gone to a direct store delivery (DSD) in order to meet the customer demands and improve sales and margins for retailers. "The DSD system allows for shelf inventory management, in store forecasting, price and promotion execution and in-store merchandising" (MWPVL International Inc., Global Supply Chain and Logistics Consultants).

Marketing Aggressiveness (4.8, Highly Aggressive)

Marketing aggressiveness in the snack industry is very competitive resulting in marketing aggressiveness rating of 4.8. Marketers are recognizing the great opportunity ahead as consumers are snacking more, driving the marketing aggressiveness of competitors. "At the same time consumers are looking for healthier snacks with fewer carbohydrates, explaining why meat snacks have grown by 20 percent in the last 5 years. Just as chips are generally sold at convenient stores, the majority of meat snack are as well" (Opportunity: Meat Snacks Gain Popularity, 2012).

There is also a great opportunity as consumers are becoming healthier and watching what they eat. Consumers want healthier snacks and some are starting to look to yogurt and snack bars to meet this need and satisfy their lifestyle. "Approximately 40 percent of consumers view consuming snacks as a healthier daily eating plan and are willing to try new products as a result"(State of the Snack Food Industry, 2011).

Market Aggressiveness (4.6, Highly Aggressive)

The present market aggressiveness for the snack industry is 4.6. The highly aggressiveness is apparent since many companies are going after this segment. Package chips or cookies are no longer the