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Sara Lee

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Case 16. Sara Lee in 2010: Has its retrenchment Strategy Benefited Shareholders?

Question#1. What is Sara Lee’s corporate strategy? How has its retrenchment strategy changed the nature of its business lineup?

Sara Lee’s vision is “to be the first choice of consumers and customers around the world by bringing together innovative ideas, continuous improvement and people who make things happen”. Sara Lee’s corporate strategy was to transform Sara Lee into company focused on its food, beverage, household, and body care businesses not only in US also internationally. Continuously, Sara Lee developed its Retrenchment Strategy which is uses to reduce the diversity or the overall size of the operations of the company. First plan was to exit eight businesses that had been marked as nonstrategic:
• Direct Selling. Sara Lee sold its business that sells cosmetics, skin care products for $ 547 million cash.
• U.S retail coffee. Company sold its well-known coffee brands.
• European apparel
• European nuts and snacks
• European rice
• U.S meat snacks
• European meats
• Sara Lee branded apparel Company expected retrenchment initiatives to generate combined net after-tax proceeds in excess of $3 billion.
Next, Sara Lee started to focus to increase the sales, market shares, and profitability of remaining business. Two most important goals were increase sales by 2-4 percent annually to reach $14 billion. Company’s key objectives for remaining businesses were focus on customer needs and operating excellence, while creating a strong brand through innovations and competitive pricing.
Sara Lee was successful in its food business (North American Retail) which provides ability to use its meats in restaurants and fast food centers. Company’s success in market was its innovative packaged meats, which have helped to reduce labor cost for

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