Critical Success Factors of Pepsico Segment - Frito-Lay North America - Report Example

PepsiCo Segment: Frito-Lay North America number Introduction and company background The report is based on the SWOT analysis and critical success factors (CSFs) analysis of Frito-Lay, a division of PepsiCo Company. The organization is well known as a manufacturer and marketer of various snacks items which includes potato and corn chips. This division of PepsiCo Company was established in the year of 1961 and it is headquartered in Texas, USA (Marketline, 2014). To gather the information about the segment of PepsiCo Company, a brief interview has been conducted with few key employees of different levels of the organization. This interview process has provided help to gather valuable data about the organizational operations and its marketing strategies. With the help of the data received, a balance scorecard has been prepared. The balanced scorecard has been utilized to evaluate the CSFs of this segment. The study has also discussed the importance of these CSFs in accessing the success of the organization. The report has also evaluated the segment to analyze whether it is achieving these CSFs or not. SWOT Analysis The gathered data from the interview process has provided assistance to clearly identify the strength, weaknesses, opportunities and threats of the organization. Strength The organization possesses a very strong and innovative research and development. Product line of Frito-Lay includes a huge number of product categories to consumers from different market segment. Their commitment towards customer’s requirement has been appreciated by different market segment across the globe. The organization distributes their products through 350,000 outlets nationwide (Cjonline.com, 2004). Weaknesses Consumers are getting more health conscious day by day which is declining the sales of these snacks product. To match the current demand of healthier snacks they have introduced new range of healthy snacks which includes few chemicals such as Olean and Olestra. Due to few side effect caused by these chemicals, the entire product line lost their popularity and market share ( Marketline, 2014). Opportunities The snack industry is getting more indulge in the current trend of ethnic flavors in their food items. Considering their commitment towards diversity, Frito-Lay can introduce new flavors for their traditional product range. The organization can increase their product line by introducing crackers and candies. Introducing new range of nutritional snacks and promoting the nutritional values of their existing products can help them to secure their position in the market ( Cjonline.com, 2004). Threat Their biggest threat is the availability of different competitors in the market such as Kellogg and Conagra foods who offers healthy snacks to customers. Corn is one of the major ingredients for the preparation of the snacks items of Frito-Lay. The increasing rate of corn is causing threat to the production cost of the company (Marketline, 2014). Balanced scorecard and critical success factors (CSFs) Area of objectives Critical success factors (CSFs) Measurement of the CSF Customers Customer satisfaction As per the American Customer Satisfaction Index (ACSI) the organization has witnessed 5% increase in the customer satisfaction ratio against their last year performance (Bankingbusiness.com, 2013). Improved customer service The average response time of the management towards the customer queries has decreased by 10-15% in comparison to last two years (Bankingbusiness.com, 2013). Increased customer awareness Frito-Lay has increased their promotional spending by 5% to attract more consumers towards their new range of products (Karolefski, 2012). Area of objectives Critical success factors (CSFs) Measurement of the CSF Financial Sales growth Their sales have shown 5% growth in the span of nine month ending on September 2014 (Bankingbusiness.com, 2013). Increased profitability Frito-Lay has lowered their production cost by 2% in comparison to their last year’s data (Daniels Fund Ethics Initiative, 2014). Meeting expectation of shareholders The organization has recorded 29% return on equity to ensure the satisfaction of their stakeholder’s products (Karolefski, 2012). Internal process Healthy and nutritional products The organization has started using 15% less salt in their production facility (Team, 2014). Improvement in product quality Their product default ratio has decreased by 20% as per their annual report (Team, 2014). Success in retaining suppliers Their supplier retention rate has drastically increased over the last year. In the year of 2014 it has shown almost 90% increase (Daniels Fund Ethics Initiative, 2014). Understanding of customer segmentation The organization is allocating 5 agents in each location to understand the taste and preference of customers (Team, 2014). Growth and learning Innovative product line The marketing strategy of the organization follows introduction of 5 new products after every 6 months (Team, 2014). Localization of products They have witnessed 5% growth in the sales of localized products (Attaran & Grijalva, 2001). Improved productivity of workforce They have shown 4% growth in the overall productivity in comparison to their last year’s data (Attaran & Grijalva, 2001). Discussion about chosen CSFs Critical success factors are those elements which are essential for any organization or segment to achieve their mission (Howell, 2009). Frito-Lay Company has demonstrated a number of critical success factors which will provide them competitive advantages in the global market. Maintaining customer satisfaction is one of the important success factors of the organization. Customer satisfaction is one of the key indicators of the loyalty and repurchasing intention of customers. It will be more cost effective for the organization to maintain their old customer rather than acquiring new one (Dellmour, 2011). Customer service is one of the major points of contact between consumer and the organization. Due to the competitive market condition, Frito-Lay needs to understand the needs and demands of consumers perfectly to maintain their position in the market. A properly formed customer service procedure enables the organization to understand their customer better (Howell, 2009). Another critical success factor for the organization is increasing the consumer awareness. Businesses need to follow various promotional activities to update the awareness of their customers about their product offerings (Dellmour, 2011). Increased awareness helps the organization to attract new consumers towards their products. Growth in sales and profitability helps the organization to maintain their financial status. It also supports them to indulge in the research and development of new product line for their new market. Their profitability further assists them to introduce innovative promotional procedure to increase their customer database (Frito-Lay North America, Inc, 2010). Meeting the expectation of the shareholders and maintaining the relationship is very essential for any organization to have a strong competitive market presence. Strong relationship with shareholders ensures the increased value of share prices of the organization (Frito-Lay North America, Inc, 2010). The snacks industry in the USA is transforming as per the change in the consumer preferences. Most of the customers are becoming more health conscious due to the increased heart diseases and obesity problem among the population. Consumers are becoming more interested about the ingredients and manufacturing procedure of these products to ensure their healthy consumption (Frito-Lay North America, Inc, 2010). Frito-Lay needs to increase their low calorie product line to capture the changing need of the current market. Increase in the nutritional value will help the organization to attract new customers. It will also help the organization to handle the competition of the current market (Frito-Lay North America, Inc, 2010). Retaining valuable suppliers is essential for any organization to maintain their product quality and timeliness in delivery (Howell, 2009). Frito-Lay requires maintaining their relationship with their suppliers to stabilize the cost of raw materials. It also helps them to ensure the delivery of good quality final products (Frito-Lay North America, Inc, 2010). Most of the global organizations are focusing on localization of their products and services to meet the preferences of customers from different segments. Understanding the need and demands of different segments of consumers are very necessary for Frito-Lay to secure a respectable position in the competitive market (Frito-Lay North America, Inc, 2010). Introduction of innovative product line helps any organization to eliminate the market saturation. It also assists the organization to stay in the growth phase of its life cycle for a long time (Frito-Lay North America, Inc, 2010). Frito-Lay has a range of products which is very well established in the market for a long time. Retaining valuable workforce and ensuring their satisfaction is mandatory to increase the productivity. Improved productivity allows the organization to maintain their delivery schedule all over the world (Frito-Lay North America, Inc, 2010). Evaluation organization in achieving the CSFs To assure the success of the segment, the organization needs to monitor whether they are properly achieving these critical success factor or not. Customer satisfaction: The organization has introduced varieties as per the different taste and preferences of consumers. The organization has also introduced rubber packaging for their chips and crackers to reduce customer’s inconvenience in the public place. The customer satisfaction index of the USA has confirmed 5% increase in the customer satisfaction ratio (Frito-Lay North America, Inc, 2010). Customer service: The organization has allocated a number of customer service specialists to different geographical locations. Each team of specialist is supposed to handle selected products issues. This procedure helps the organization to efficiently handle all the complaints and queries of customers from different parts of the globe (Frito-Lay North America, Inc, 2010). Customer awareness: Frito-lay utilizes almost all the promotional procedure to increase the awareness of their customers. The organization advertises through television, social media, newspapers, magazines and radio. The organization also uses sales promotion to indulge more customers to try their new range of products (Frito-Lay North America, Inc, 2010). Sales growth, increased profitability and product localization: The organization has witnesses a sharp growth in their revenue in the last few months. They have also lowered down their production cost with the better technology usage. The main reason behind their sales growth and increased profitability is their localized approach for traditional product line. The organization is successfully attracting new customers by offering varieties of flavors. These flavors include Bacon and Cheddar, Cinnamon Sugar, Garden Salsa, Cream onion, Chili lemon and salted caramel (PepsiCo, 2013). Improved product quality and introducing nutritional product line: The organization has introduced a range of nutritional products which includes oven baked potato chips, products with low additive and preservative, lightly salted potato chips, sea salt flavors, gluten free snacks and cheddar flavored popcorn (PepsiCo, 2013). It helps the organization to attract more consumers. Innovative products also help them to reduce the risk of market saturation. Frito-Lay has also innovated products which includes vitamin C and Soy ingredients (PepsiCo, 2013). Meeting expectation of shareholders and retaining suppliers: The increased profitability and sales growth has assisted the organization to increase their return on equity in the last few years. This situation has enabled the organization to ensure the satisfaction of their shareholders. Frito-lay has always been very aware about timely payment of their suppliers. The management conducts time to time meetings to retain the transparency of their dealing with their suppliers (PepsiCo, 2013). Product innovation and customer segmentation: Frito-Lay is one of the leading organizations to introduce innovative product line as per the taste and preferences of each segment of customers. The organization has successfully allocated agents in different segments of the market to get the first hand information about customer preferences (PepsiCo, 2013). Productivity of the workforce: Frito-lay has organized different training procedures to enhance the skill set and competencies of their workforce. Their increased productivity has helped PepsiCo Company to gain 9% increment in their yearly earning (PepsiCo, 2013). Conclusion The study of the SWOT analysis and balance scorecard of Frito-Lay has concluded that the organization is in the growth phase of its lifecycle. The organization is witnessing improvement in terms of their customer services and sales procedure. The organization is well versed with the present competition in the market and they are working very hard to maintain their leading position in the snacks industry. The study has also conveyed that the organization is localizing their products successfully while they are maintaining their global reputation. References Attaran, M. & Grijalva, S. M. (2001). Strategic management of technology at Frito-Lay’s Kern manufacturing facility. Industrial Management & Data Systems, 101(6), 264-272. Bankingbusiness.com, (2013). Frito-Lay boosts PepsiCo Americas Foods. Retrieved from http://www.bakingbusiness.com/articles/news_home/Financial-Performance/2013/10/Frito-Lay_boosts_PepsiCo_Ameri.aspx?ID=%7B757C7BC1-BB2B-4D6C-AE58-38182CD8BCF8%7D&cck=1. Cjonline.com, (2004). Frito-Lay helps boost PepsiCos earnings. Retrieved from http://cjonline.com/stories/020604/bus_fritos.shtml. Daniels Fund Ethics Initiative, 2014. PepsiCo’s Journey Toward an Ethical and Socially Responsible Culture. Retrieved from http://danielsethics.mgt.unm.edu/pdf/PepsiCo%20Case.pdf. Dellmour, B. (2011). Critical Success Factors It-Start-up Companies. Germany: GRIN Verlag. Frito-Lay North America, Inc, 2010. Frito-Lay’s Sustainability Initiatives. Retrieved from https://snacksense.com/files/FL_HealthWellness.pdf. Howell, M. T. (2009). Critical Success Factors Simplified: Implementing the Powerful Drivers of Dramatic Business Improvement. New York: CRC Press. Karolefski, J., (2012). Frito-Lay Deploys Behavior Research To Boost Sales In Stores. Retrieved from http://smartrevenue.com/sites/default/files/publications/Frito_Lay_Deploys_Behavior_Research--01-30-12.pdf. Marketline, (2014). Frito-Lay North America, Inc.: Company Overview. Retrieved from file:///C:/Users/USER/Downloads/Frito-Lay%20North%20America,%20Inc..pdf. PepsiCo, 2013. Annual Report. Retrieved from http://www.pepsico.com/Assets/Download/PEP_Annual_Report_2013.pdf. Team, T. 2014. Frito-Lay Dominates U.S. Salty Snacks, But Rising Cracker Sales Could Stall Growth. Retrieved from http://www.forbes.com/sites/greatspeculations/2014/06/27/frito-lay-dominates-u-s-salty-snacks-but-rising-cracker-sales-could-stall-growth/. Read More