Case Study Sara Lee
How has its retrenchment strategy changed the nature of its business lineup? – new CEO wanted to transform Sara Lee into a more profitable company – a part of new strategy is the elimination of eight branded apparel business because of poor economic performance and decreasing sales 0 this leads to concentration of its financial and managerial resources into smaller and better positioned business segments. CLC goal: reaching of economies of scale by what
It was Internally known as project Accelerate, a cost saving plan all across the company and productivity initiative focused on outsourcing, increase the supply chain efficiency and reduce overhead costs – After completion of its retrenchment strategy the company focused on increasing sales, market share and profitability of its key remaining brands -The organizational structure post-divestitures became a six division organization built around product similarities, customer types, and geographic regions. The core of the strategy: Orlando corporate strategy headed for he acquisition of new businesses and adding them to the portfolio D Change to non- core lower producing businesses, like mentioned before, and create a more focused company regarding their consumer goods lines like food, beverages and household products 0 The new strategy would lead us to the conclusion that Sara Lee is following now a Best-Cost Provider Hybrid Approach: 1 .
The differentiate their products and 2. Focus also on lower prices than rivals – In Dalton the nature of their business line-up changed by concentrating now on a ewe product lines, specifically foods and beverages. 2.
What is your assessment of the competitive strength of Sara Lee Corp.. ‘s different business units? To sum it up: The Project “Accelerate” is not fully represented by numbers in the financial report – the results that were reached by the end of the fiscal year 2010 are unclear D It does not become clear how beneficial the changes of the project were – the net profit as well as the operating profit margin expectations could not be reached the revenue for 2010 was anticipated to grow to $14 billion ND the operating profit margin was expected to increase by 12% D both missed for 2010 – On the other hand: reduction of overhead cost increased the overall efficiency – Produced economies of scale were not fully operational as predicted – The new business approach was remarkable by exiting more inefficient business units (sticks also to the Best-Cost Provider Strategy because of the differentiation of exiting Business units) – Food products are more In focus after the application of the new business approach C] as competitive strength because Sara Lee can look for opportunities to reduce cost and improve margins along the value chain – Sara Lee is trying to run a business without a lot of several uncoordinated and not fitting industries Does Sara Lee’s protocol oxen t DID good strategic TIP want value-canal match-ups 00 you see? What opportunities for skills transfer, cost sharing, or brand sharing do you see?
The retrenchment strategy has allowed the company to differentiate to its core expertise: food industry The costumers prefer the brands of Sara Lee and the positioning of the brands are in favor of the company however the financial position s not strong enough to invest or develop the business segments The strategy allowed Sara Lee to focus their financial and managerial resourced to the strategic business units like foods however the financial situation does not represent all of that There are several possible value chain match-ups from using the same facilities to produce multiple lines of similar products to skill transfer of workers within different but similar production facilities. There are also opportunities in the operations as well as the distribution sections of the value chain to supply the trials for the finished products as well as using the same distribution methods to deliver multiple product lines. 4.
What is your overall evaluation of Sara Lee’s retrenchment plan? What evidence and/or reasons support a conclusion that Sara Lee’s shareholders have or have not benefited from the company’s retrenchment strategy?