Comprehensive Report: Frito-Lay North America SWOT and CSF Analysis

This report presents a SWOT (Strengths, Weaknesses, Opportunities, and Threats) and Critical Success Factors (CSF) analysis of Frito-Lay North America, a division of PepsiCo. The report begins with an overview of the company, its background, and the methodology employed, which includes interviews with employees and the use of a balanced scorecard. The SWOT analysis reveals Frito-Lay's strengths in R&D and product diversity, while highlighting weaknesses related to health-conscious consumers and certain ingredients. Opportunities include expanding ethnic flavors and introducing new product lines. Threats include competition and rising ingredient costs. The CSF analysis, derived from the balanced scorecard, focuses on customer satisfaction, sales growth, profitability, shareholder expectations, product innovation, and workforce productivity. The report evaluates Frito-Lay's performance against these CSFs, noting improvements in customer satisfaction, sales, and product quality. The discussion emphasizes the importance of each CSF in achieving competitive advantages, such as maintaining customer loyalty, adapting to market trends, and ensuring financial stability. The report concludes by assessing Frito-Lay's progress in achieving its CSFs, demonstrating its commitment to customer service, product innovation, and market adaptation.

Running Head: PEPSICO SEGMENT: FRITO-LAY NORTH AMERICA 1
PepsiCo Segment: Frito-Lay North America
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PEPSICO SEGMENT: FRITO-LAY NORTH AMERICA 2
Abstract
The paper illustrates the SWOT analysis and CSF analysis for Frito Lays America. Through
the valuable information derived by the employees of Frito Lays America, the balance
scorecard has been formulated to perform CSF analysis. The results of the analysis reveals
the company is at it growth phase and needs to work hard to excel in the competitive market.

PEPSICO SEGMENT: FRITO-LAY NORTH AMERICA 3
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 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).

PEPSICO SEGMENT: FRITO-LAY NORTH AMERICA 4
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).
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).

PEPSICO SEGMENT: FRITO-LAY NORTH AMERICA 5
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

PEPSICO SEGMENT: FRITO-LAY NORTH AMERICA 6
(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

PEPSICO SEGMENT: FRITO-LAY NORTH AMERICA 7
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 handle all the complaints
and queries of customers from different parts of the globe (Frito-Lay North America, Inc,
2010).

PEPSICO SEGMENT: FRITO-LAY NORTH AMERICA 8
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).

PEPSICO SEGMENT: FRITO-LAY NORTH AMERICA 9
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.

PEPSICO SEGMENT: FRITO-LAY NORTH AMERICA 10
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