Case Analysis Frito-Lay

4387 Words Mar 21st, 2013 18 Pages
Sustain Your Chips —Sustainable Strategies Consultation for Frito-Lay Inc.
2011
Gillian Hrycko, Goya and Jake
Eco-Innovations Consulting Firm
2011/7/18

Executive Summary
Frito-Lay is a brand known by almost every consumer in North America. With products being exported to 79 countries around the globe and accounting for almost 62% of the salty snack industry in North America, it is certainly a powerful brand. Yet there are still many issues the company faces, both internally and externally. Some external problems the company faces are the threats of new entrants, threats of substitutes, and intense rivalry among competitors. Some internal problems the
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1.2.1 Bargaining Power of Supplier
Usually raw materials provided to Frito-Lay mainly consist of potatoes, barley, spices and other ingredients. Empirically, among these primary materials, potatoes are in the dominating position. Potatoes and even barley are extremely ordinary crops. Frito-Lay has great control power on them. * Again, as one of the common farm crops, potatoes are more likely to be provided by farmers. For Frito-Lay, there are more than enough potato growers to select from, thus the number of potential input suppliers can be huge. * At the same time, as a leader in the industry, the company can be absolutely well informed about these farmers’ products (potato and barley) and market. * Due to the scale and power of influence in North America, Potato suppliers, to a large extent, rely on the cooperative business with Frito-Lay. Sometimes this is the one and only regular customer for some farmers, which means business with Frito-Lay, occupies a relatively large portion of their business. * The unique taste, formulation and production process of chips are definitely commercial secrets. In addition, the barrier to the technology and the restricted capital for machinery also eliminate the possibility for suppliers to directly sell chips to customers of the company.

Therefore, suppliers cannot enjoy a high bargaining power in

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