IT Strategy and Business strategy

Frito-Lay, Inc.:

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Introduction

Frito- Lay, Inc. case focuses on the performance failure due to utilization of old strategies propelling the drive to implement new strategy. The old strategies were in form of paper-based practices as well as management system of control centered on hierarchy. The old strategies could not result to profitability as their integration in the dynamic market led to failure (Harvard Business School, 1997). IT strategy alignment in business strategy provides an organization with clear factors that are centered on performance of the organization (Benson, Bugnitz & Walton, 2004).

This paper sets to investigate the relationships, similarities and differences between the IT strategy and the business strategy in Frito-Lay, Inc. Organization strategies formulated should have a bound focus of interrelationship for the envisioned goals as well as interplay in the diversified market advancements and time advancements.

Discussion

Overlap between IT strategy and Frito-Lay, Inc. Business strategy

The overlap between IT strategy and Frito-Lay’s business strategy can be associated to the changes that were envisioned and implemented with some not fully actualizing. For instance, the micromarketing strategy. Therefore it can be identified that the overlap occurred in the planning phase on integrating IT strategy over the business strategy, with consideration of various aspects.

First, IT and business strategies in Frito-Lay, Inc. were focused on unanimously improving the performance of the company through more simplified practices aided by technology and decisions made. The IT strategy was to overlap, with concerns on information gathering and relaying to achieve balanced outcomes in the business strategy. First, the redesigning of functions within the organization aimed at work processes designed to improve the poor performing areas within the organization hence lead to improved productivity. This was further facilitated by use handheld computers enhancing simplification of complex procedures such as sales inventories management.

Secondly, the information infrastructure was built to facilitate decision making through information relayed from the redesigned market areas. This information infrastructure incorporated both decentralized and centralized structures which performed simultaneously. Control would be enhanced from the top management as information was relayed effectively with considerable efficiency.

Thirdly, for more decentralization, Frito-Lay, Inc. focused on organizational design based on regional segregation. The organization had six representatives within the regional areas; with communication in each respective segment as well as the central headquarter. Further, this fueled management control on each segment with adequate planning and control in decision making aided by information systems.

The IT strategy was developed to gain access to information within the company to facilitate comprehensive decision making approaches. The IT system overlapped the business strategy in form of more information being retrieved to be incorporated in the business operations. The system led to business strategies clash as information retrieval to aid decision making took much time hence imbalanced relationship.

Element between IT strategy and corporate strategies

There are several related elements in Frito-Lay Inc. IT and business strategies. First, decision making approaches in Frito-Lay, Inc. were the main drive behind the implementation of information technology.  According to (Ireland, Hoskinsson & Hitt, 2008) decision making has its root based on information obtained on a particular aspect within the business. In Frito-Lay, Inc. for instance, the data collected on sales inventories as well as sales targets met. This clearly points out the interrelationship between IT and business strategies based on making decisions.

Another element related to the two strategies involves relay of information to facilitate decision making process. Ireland, Hoskinsson and Hitt (2008) note that, in business information enhances understanding of varied business scenarios, developing goal oriented strategies. The information acts as evidence or reference to the decisions made. Therefore, Frito-Lay, Inc.’s IT strategy focused on information retrieval to facilitate analysis hence act on developing the corporate decisions for business strategies.

Improving productivity is also an element focusing on relationship between IT strategy and corporate strategies. Initially productivity increase can be termed as the major force in redesigning the organizations practices with more aspects focused to performance. As a result, Ireland, Hoskinsson and Hitt (2008) highlight that; the IT strategy assimilation in corporate strategies requires an integral approach to realize envisioned goals. As a result, the old strategies in Frito-Lay, Inc. were singled out as the main reason behind the failure. Therefore, the corporate strategies were to improve performance and productivity through control of its operation aided by IT system. The productivity was more centered on information acquisition from handheld computers, HCC to facilitate development of strategies in micromarketing.

 

Key components to Frito-Lay’s Plan review

Frito lay had planned to improve in varied aspects of its operations. The key components in the company’s plans probing reviewing are:

Goals-              Productivity improvement and acquisition of control in the operating process

Management decision making

Strategies –     Micromarketing strategy

IT strategy

Business strategies

Projects-          Information technology systems

Reorganization

 

Justification

Goals envisioned by Frito-Lay corporate management was to improve productivity through controlling the processes in operating areas. Reviewing these aspects will garner more integral plans which will lead to maximum performance of the company. According to (Benson, Bugnitz & Walton, 2004) organizations formulate goals with best outcomes envisioned though this does not negate the approaches taken by Frito-Lay.

The decision making process was envisioned as a long term goal in Frito-Lay. It emerged that through incorporation of information infrastructure in the organization, decisions would be more enhanced. This factor must be reviewed to impact fully on decentralization and centralization of decision making simultaneously.

Micromarketing was the strategy envisioned after low profits in 1986. The strategy calls for reviewing as it never initialized as projected. The reason being that, for this strategy to be realized, the company had to understand it performance which led to introduction of information infrastructure.

The IT strategy was meant to facilitate acquisition of information for the company’s operations hence data collected influence corporate decision making. Reviewing of this aspect would be facilitated through formulation of a systematic process to be followed. More so, deriving approaches on how to deal with information on all practices within the organization.

Frito-Lay, Inc. had major shortcomings in their business strategies focus on the sale and account areas which were deemed to be low performing. Benson, Bugnitz and Walton (2004) indicate that, developing focus especially related to a new approach, it is vital to consider the whole organization. It can be argued that, segregating the low performing areas could have propelled more liabilities in relayed information.

Information infrastructure was Frito-Lay’s plan to assist the operations within the company as well as the corporate decisions. It was meant to provide information from internal aspects in the organization as well as external factors such as competition and pricing. Reviewing this project would enhance development of strategies in reference to information facilitating easier understanding of the organization hence quality decision making.

Reorganization of the company’s operations is another aspect that requires reviewing. Due to reorganization of the operations major responsibilities were diffused leading to more problems in retrieval of information. As a result, information retrieval from analysis led to slow realization of plans in form of decision making.

Effective communication of plans

Communication in business, especially if based on plans has to consider efficiency to implicate on management decisions (Ireland, Hoskinsson & Hitt, 2008). Based on that communication of plans between involved staff within Frito –Lay proves to be unreliable as the outcomes relayed correlates to the approaches implemented.  According to (Ireland, Hoskinsson & Hitt, 2008), one strategy to consider in communicating plans effectively is the organizational structure. More so, in any given organization, information is relayed in a hierarchical order so as to facilitate plans adjustments before the presentation to the senior management. In the case study, Frito-Lay, Inc. had developed a system of communication where purchasing and manufacturing operations relayed their report to the area general manager, AGM. This flow has no considerable alignment to hierarchical organization.

Another approach to communication of plans involves the sequence applied in the communication process (Ireland, Hoskinsson & Hitt, 2008). This indicates how often communication is done based on plans formulated. Timely communication of plans derives approaches to decide the feasibility concept. More so, adjustments are emphasized with continuous assessment if the plan is viable within the scope formulated. In reference to Frito-Lay’s case, there were no schedueled plans communications for considering opinions. This can be aligned to the CEO implementing the best approaches to integrating IT and business strategies on the companies initiative.

Differences in relayed information between IT staff and Executive staff

First, this can be attributed to the reorganization of the company’s operations with emphasis on reporting. For instance in the case study, purchasing and also, the manufacturing industry reports were centrally focused. They reported directly to the area general managers, which results arrangements of information lacking within the organization. More so, this can also, be connected to the retrieval of information presenting hurdles for the analysis phase, to assist in decisions making. Therefore, information that was derived to the IT staff was in mass quantities resulting to long periods of analysis. This led to general approach of information such that the corporate received information on an aggregate perspective regarding performance. The more detailed information was confined to specific areas hence implicating on decision making in business

Frame work supporting IT strategy to support business strategy

IT strategies can effectively support business strategies with concerns adhered to various factors. In Frito-Lay, Inc. the IT strategy has no evidence of fully supporting the company’s business strategies. This can be attributed to lack of a comprehensive planning process to indicate in clear organization, what to achieve in long term as well as short term.

A comprehensive approach as indicated by (Benson, Bugnitz & Walton, 2004) focuses on organization formulating the strategies to be aligned with IT strategy. Through developing these strategies the corporate team needs to develop a planning process that elaborates all the activities and aspects to be incorporated within the IT strategy. Furthermore, these aspects have to consider time as well as the preference according to the benefits aligned with their incorporation. Once plans have been formulated, the next point is to consider appropriate decisions based on resources. Resources will include the financial aspect as well as personnel resources. Frito-Lay has to consider the operational plans coupled with the project and formulation of a budget within the organizational means.

IT strategy can be integrated with consideration of the previous performance factors which will determine the outcomes. Benson, Bugnitz and Walton (2004) add that to fully support the business strategy in Frito-Lay, the project need to be facilitated by a specific team centered on formulation, implementation with monitoring aligned with the corporate goals.

 

Business strategy                   Micromarketing strategy                     IT strategy

Sub strategies                         Acquisition of information

Analysis of information

Interpretation of information

Presentation in the information infrastructure

Decision making process

Implementation

Monitoring and consistency

Recommendation

IT strategy in Frito-Lay was not fully prospective. To facilitate success in business units, Frito-Lay could gain in decision making approaches facilitated by the development of more systematic flow of information. This information would be assessed and relayed in the information infrastructure for easy access and in comprehensive format.

Secondly, IT could assist the company in identifying performance scales through differentiated presentation of information. As a result this enhances productivity as information relayed presents areas of weaknesses and strengths to act on.  Also, information on performance can also be presented with consideration of internal indicators such as personnel engagement as well as external such as competition, pricing approaches and many more

Finally, IT can assist Frito-Lay, Inc. to realize varied expansion strategies facilitated by decisions in productivity increase thus improving organizational resources. These resources can be utilized further to develop the company through more research in areas probing improvements.

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References

Benson, R. J, Bugnitz, T. L & Walton, W. B. (2004). From Business Strategy to IT action: Right   decisions for a better Bottom Line. New Jersey: John Wiley & Sons, Inc.

Harvard Business School. (1997). Frito-Lay, Inc.: A Strategic Transition, 1987-1992. I-24

Ireland, D.R, Hoskinsson, R.E & Hitt, M. A. (2008). Understanding Business Strategy: Concepts             and Cases. Natorp Boulevard: South -Western Cengage Learning.

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