...Rebecca Christie, Kody Lynn) SUBJ: Sara Lee Corporation in 2011: Has Its Retrenchment Strategy Been Successful? EXECUTIVE SUMMARY: In 2005, Sara Lee placed a strategic plan in action to transform the business into a more tightly focused food, beverage and household products company. This involved the divestiture of weak-performing business and product categories, which included eight business units. Although the divestiture would decrease Sara Lee’s revenues, it was believed that concentrating their financial and managerial resources on a smaller number of business units would be beneficial. Sara Lee struggled at the beginning of the retrenchment strategy but has been progressing upward in the last couple of years. ANALYSIS: Strategy Analysis Sara Lee’s corporate strategy was to transform the company into a more tightly focused company by focusing on their food, beverage, and household products. In order to accomplish this, Sara Lee planned to divest their weak performing business units and product categories which accounted for $7.2 billion in sales. Although the divestitures would decrease Sara Lee’s revenues from $19.3 billion to $12.3 billion, they believed it would be better to concentrate on its financial and managerial resources on a smaller number of business segments. These smaller number business segments had prospective markets and were well positioned. After the completion of the retrenchment strategy Sara Lee focused solely on increasing the sales...
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...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...
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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...
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... Bydeveloping three competitive capabilities in each of its remaining business units,Sara Lee looks to improve its net profits within the next few years. Divested Businesses Analysis Sara Lee divested seven of its units, including: direct sales, U.S. retail coffee,European apparel, European snacks, and U.S. and European meats. The companyfollowed a strategy which allowed it to increase its corporate profits, since most of its business units it retrenched were unprofitable. By 2006, five business units hadnegative net profit margins and negative operating margins. Four of those unitshad negative margins of more than 10%, with different units seeing steady or sharpdeclines in revenues in profits since 2004. The only two profitable units were the direct selling unit and the Europeansnack lines. These two lines were seeing declining revenues and operating margins,except in 2006, when both lines increased their margins. Divesting the snackbusiness was a correct decision, since it was only producing net profits of $3 million,which would not help the business to increase its shareholders’ wealth. Plus, thecompany received a $70 million after-tax gain, more than 22 times the current netprofit. Selling its direct sales business was not a good decision, since it was stilldrawing a 27% profit margin and income of $54 million. The business compliments its current household and body care line within Sara Lee International. The unitexposed the company to other markets, while it could have...
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...1. What is Sara Lee’s corporate strategy? How has its retrenchment strategy changed the nature of its business lineup? The strategy at Sara Lee is to expand globally, for Sara Lee acquiring new business models to expand into new product categories is how they plan to achieve this goal. For many years Sara Lee has successfully acquired both related and unrelated products, but will now streamline this a little more with the retrenchment strategy. The previous management team struggled with this broad product offering and the disseminated locations. The retrenchment strategy will allow Sara Lee to focus their resources on a smaller, tight knit beverage, food and household business. It will also allow for a change in the model from a wholesale distributor to a larger retail company. 2. What is your assessment of the long-term attractiveness of the industries represented in Sara Lee Corp.’s business portfolio? Sara Lee has the potential to grow. With a focus on core products that are their food company, they have dropped the dead weight of not so profitable products. The food industry will continue to grow within reason due to the requirement of us to have food to survive. It is beneficial to Sara Lee to have established brand power within the market segments as well. If Sara Lee stays active in the market segments and acquires only products that benefit them in the long term, they should keep profits up. 3. What is your assessment of the competitive strength of Sara Lee...
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...of cheesecakes after his daughter, Sara Lee. In the 1950s, Consolidated Foods bought out his company, where he continued to be the senior executive for many years. In the 1980s, Consolidated Foods changed its name to Sara lee. Sara Lee started out as a small wholesale distributor of sugar, coffee, and tea, then it acquire a food processing, packaging, and distribution, and then retail food business Sara Lee Corporation is now a global manufacturer and marketer of brand-name products for consumers globally focused primarily on the meats, bakery, beverage and household products categories. Its major brands include Ball Park, Douwe Egberts, Hillshire Farm, Jimmy Dean, Senseo and of course its namesake, Sara Lee. The corporation has five segments, namely: North American Retail, North American Fresh Bakery, North American Foodservice, International Beverage and International Bakery. Just as any other organization, Sara Lee has a vision, mission, and values. Their 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. Their mission is “To simply delight you…every day.” Values; Act with Integrity, Use Imagination, Be Inclusive, Work as a Team, Have Passion to excel. *INTEGRITY, IMAGINATION, INCLUSIVE, TEAM, PASSION* (www.saralee.com) This paper’s discussion that includes the corporate strategy and how its retrenchment strategy changed the nature of its business lineup...
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...Sara Lee retrenched seven of its business units in 2006 in order to focus its resources on its more profitable industries. The company’s goal is to boost its sales lines by at least 2 percent and increase its profit margin to 12% by 2010. By developing three competitive capabilities in each of its remaining business units, Sara Lee looks to improve its net profits within the next few years. Sara Lee, a 58-year-old company that was known as Consolidated Foods Corp. before it adopted its current name in 1985, operates in four industries: packaged meats and bakery items, coffee and grocery goods, household and body-care products and personal products. Its other familiar brands include Hanes, L'eggs and Sheer Energy hosiery; Playtex bras; Kiwi shoe polish; Brylcreem hair products; Jimmy Dean and Hilshire Farm packaged meats; and Champion apparel (Peltz 1). Divested Businesses Analysis Sara Lee divested seven of its units, including: direct sales, U.S. retail coffee, European apparel, European snacks, and U.S. and European meats. The company followed a strategy which allowed it to increase its corporate profits, since most of its business units it retrenched were unprofitable. By 2006, five business units had negative net profit margins and negative operating margins. Four of those units had negative margins of more than 10%, with different units seeing steady or sharp declines in revenues in profits since 2004. Contrary to what has become understood from how the past has evolved...
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...Sara Lee Corporation ANALYSIS OF THE CASE Sara Lee retrenched seven of its business units in 2006 in order to focus its resources on its more profitable industries. The company’s goal is to boost its sales lines by at least 2 percent and increase its profit margin to 12% by 2010. By developing three competitive capabilities in each of its remaining business units, Sara Lee looks to improve its net profits within the next few years. Summary of the case This case study provides an evaluation of Sara Lee Corporation and particularly its operations of product lines available through the Wal-Mart stores. To begin with, an effective SWOT analysis of the company was conducted where strengths and opportunities are identified while addressing possible threats and improving its weaknesses to avoid giving the competition an aggressive advantage. Marketing requires effective identification of issues as a key factor in devising the best methods of addressing them. Therefore, Kirk Nelson identifies the Basic Hipster style to be a major problem in the market because it was not doing well. Effective establishment of the best possible solution is therefore critical to maintain the corporation’s market share for the Wal-Mart Account. This analysis generates key alternatives that Kirk Nelson as the Sara Lee Wal-Mart Girl’s Panty analyst should consider in getting out of the current deadlock. History Sara Lee Corporation is a fortune 500 company listed on...
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...Overview Sara Lee Corporation has a vision “to be the first choice of consumers and customers around the world by bringing together innovative ideas, continuous improvement and people who can make things happen.” The company’s vision can be summed up simply with their mission: “To simply delight you…everyday.” The company has been trying to achieve these goals since 1939 when the company began. Sara Lee employs a broad differentiation strategy, and has been diversifying since inception, mainly by acquisition. In 2005, the company, in an effort to raise profitability, began to divest eight of its business. The company’s goal was to increase sales to at least $14 billion, and increase operating profit to 12%. The idea was to focus efforts on the good, beverage and household product industry, which were seen as more profitable, and profits would increase. In 2008, Sara Lee launched an initiative called Project Accelerate. This program was designed to cut costs and increase productivity by focusing on overhead costs, streamlining the supply chain and outsourcing. It is expected to save of sum of $350 to $400 million by the end of 2012. By 2010, Project Accelerate had saved the company $180 million. The management team also decided to buyback $2.5 to $3 billion of common shares over a three year period. Despite their efforts, by the end of 2010, Sara Lee has revenues of just $10.8 billion and the operating profit margin was well below the target 12% at 8.5%. In an attempt to boost...
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...Analysis of Sara Lee Corp. | Retrenchment Strategy Review | | [Type the author name] | [Pick the date] | Introduction Sara Lee Corporation, then known as C.D. Kenny Company, was established in 1939 and had net sales of $24 million. By 1998-1999 the company had acquired over forty related and non-related businesses and had peaked at revenues of $20 billion. During the late 1990’s Sara Lee managers began to experience a difficult time in managing the company and increasing profits. This was due to the highly diversified and globally scattered operations that Sara Lee Corp. had developed into. (Gamble & Thomson, 2010) Over the next decade Sarah Lee would begin to transform the company into a streamlined, less globally and industrial diverse company; with a focus and commitment on superior products and customer service. The transformation would include divesting of businesses that contributed to approx. 37% of annual revenue and a spin-off of branded apparel into a new business, Hanesbrand, with the expectation that the retrenchment initiatives would generate $3 billion in net after-tax proceeds. With the introduction of a new CEO in 2000, Steven McMillan launched a new strategic initiative to narrow Sara Lee’s focus by divesting of unrelated business assets and companies that were not key to the organizations focused industries. In 2005 Brenda Barnes was appointed as President and CEO of Sara Lee Corp and with her appointment the announcement that Sara Lee Corp...
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...Sara Lee Equity Analysis and Valuation Valued at 1 April 1, 2007 Analysts: Todd L. Ehlers: todd.ehlers@ttu.edu Michael D. Estes: mikestes@sbcglobal.net Daniel W. Taylor: dtaylor1184@yahoo.com Joseph R. Torres: rhyno1112@sbcglobal.net Table of Contents Page Number Executive Summary……………………………………………………………………………………………… 2 Analysis Snapshot............................................................................................ 2 Company and Industry Overview…………………………………………………………………… 3 Accounting Analysis………………………………………………………………………………………. 3 Financial Ratio Analysis…………………………………………………………………………………. 4 Analysts Evaluations……………………………………………………………………………………… 4 Overview of Firm and Industry............................................................................... 5 Industry Overview and Analysis………………………………………………………………………….. 8 Rivalry Among Existing Firms………………………………………………………………………….8 Threat of New Entrants…………………………………………………………………………………. 15 Threat of Substitute Products………………………………………………………………………… 17 Bargaining Power of Buyers…………………………………………………………………………… 18 Bargaining Power of Suppliers……………………………………………………………………….. 20 Characterization of Industry……………………………………………………………………………20 Value Chain Analysis: Key Success Factors…………………………………………………………. 21 Competitive Advantage Analysis…………………………………………………………………………. 23 Cost Leadership……………………………………………………………………………………………. 24 Differentiation……………………………………………………………………………………………….27 Accounting Analysis………………………………………………………………………………………………...
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...The Sophisticated Innovator The Innovation Value Chain Rather than reflexively importing innovation best practices, managers should adopt a tailored, end-to-end approach to generating, converting, and diffusing ideas. by Morten T. Hansen and Julian Birkinshaw Mick Wiggins E XECUTIVES IN LARGE COMPANIES often ask themselves, “Why aren’t we better at innovation?” After all, there is no shortage of sound advice on how to improve: Come up with better ideas. Look outside the company for concepts and partners. Establish different funding mechanisms. Protect the new and radically different businesses from the old. Sharpen the execution. Such strategic counsel, however, is based on the assumption that all organizations face the same obstacles to developing new products, services, or lines of business. In reality, innovation challenges differ from firm to firm, and otherwise commonly followed advice can be wasteful, even harmful, if applied to the wrong situations. hbr.org 1179 Hansen_new.indd 121 | June 2007 | Harvard Business Review 121 5/2/07 8:05:09 PM The Sophisticated Innovator Consider how two different CEOs confronted the innovation challenges facing their companies. When Steve Bennett joined Intuit, the maker of the financial software programs Quicken and QuickBooks, in January 2000, it was a company with lots of ideas – most collected from outside the organization – but little discipline for bringing those ideas to market...
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...Market opportunity 13 Sabra 13 Entering the U.S market 13 Max Brenner 13 Background 14 The dilemma 14 Developing the concept 14 2005 and beyond 15 Appendixes 16 Background 19 Supply 19 Processing 19 Marketing 20 Distribution 20 Nestle 20 ICraft 21 Sara Lee 21 P&G 22 Tchibo 22 Lavazza 22 Segafredo 22 Global Expansion in the 21 Century In a conference room at the offices of Strauss-Elite in Ramiat Gan, we were introduced to the heart of the organisation by the CEO of the company, Erez Vigoodman. What we were given was a bird's eye view of the entire company as it stood at the end of 2005. It quickly became apparent that the organisation stood poised at a pivotal moment in its long history. In the eight years since the acquisition of Elite in 1997, the company has gone through nothing short of a revolution. Yet despite being transformed from end to end, Strauss-Elite still remains a family-run company with an acute sense of its past and a clear sense of its future, Now, after a long and challenging process of change that has lasted many years, Strauss-Elite looks ready to once again make another bold leap forward. Introduction There are few Israelis, no matter what age or background, who are not familiar with the products of Strauss and...
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...Evolution of a Family Business - Godrej Group Case Study Submitted by (Section C- Group 4): Abhishek Kumar(PGP11/129) Balaji Manohar(PGP11/140) Karthik Kumar(PGP11/151) Prashant Gangwal (PGP11/162) Santosh(PGP11/173) Supriya(PGP11/184) Group Assignment – Organizational Behavior II – IIMK Introduction ........................................................................................................................................................................ 4 Executive Summary ......................................................................................................................................................... 5 Overview of the Godrej Group ................................................................................................................................... 7 Organizational Structure .............................................................................................................................................. 7 Godrej Group Companies ........................................................................................................................................ 8 Competition .................................................................................................................................................................... 9 Family Business Model .......................................................................................................................................... 10 Key Success...
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...Business description 1|Page TABLE OF CONTENT Executive Summary.................................................................................. 3 Business Description................................................................................ 4 Enter the World of Nespresso........................................................................... 4 Nespresso Products/ Services offering.............................................................. 4 Key strategies of Nespresso…………………..................................................... 5 Business model Framework………………........................................................ 6 Organization’s Channel Environment........................................................ 7 Government..................................................................................................... 7 Competition... …………………......................................................................... 7 Market...............................................................................................................9 Technologies....................................................................................................10 Profile of Organization’s Channel...............................................................12 Market segmentation........................................................................................12 Nespresso Channel structure..........................................................................
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