Sara Lee Corp Analysis
Sara Lee Corp. in 2011:
Has Its Retrenchment Strategy
Benefitted Shareholders?
Assignment Questions
1. What is Sara Lee’s corporate strategy? How has its retrenchment strategy changed the nature of its business lineup? Sara Lee corporate strategy was to implement acquisition strategies which would enlarge their geographical coverage in order to expand into new business classes. When the company started it was a small wholesale distributor of several items: coffee, tea and sugar and over time Sarah Lee acquired food processing, packaging, distribution and the retail food business. Over 40 years, the Sarah Lee Company acquired related and non-related business. Sarah Lee sold 8 businesses that were looked upon as non-strategic. This initiative was expected to generate combined net after tax proceeds in excess of $3B. The leaders of Sarah struggled over time to manage broadly diversified and geographically operations. So it was decided in order for the company to stay focus it would concentrate on the grocery portion and the upcoming trend of the single serve coffee machines. Therefore, Sarah would also focus on the single serve coffee line business, which they believed would be profitable for the company and shareholders.
The retrenchment strategy changed the nature of its business lineup from a small wholesale distributor to acquiring retail food business. The retrenchment strategy would allow Sarah Lee to focus even more closely on the food, beverage, and household products. Management believed in order to save cost and to be more profitable they would concentrate its financial and managerial resources on a smaller number of business segments in which market prospects were promising and by Sara Lee’s brands being well known and well positioned would help them to stay in alignment with the strategy. Sarah Lee also executed an outsourcing strategy known as Project Accelerate. It’s a company-wide cost saving and productivity project that focused on
Has Its Retrenchment Strategy
Benefitted Shareholders?
Assignment Questions
1. What is Sara Lee’s corporate strategy? How has its retrenchment strategy changed the nature of its business lineup? Sara Lee corporate strategy was to implement acquisition strategies which would enlarge their geographical coverage in order to expand into new business classes. When the company started it was a small wholesale distributor of several items: coffee, tea and sugar and over time Sarah Lee acquired food processing, packaging, distribution and the retail food business. Over 40 years, the Sarah Lee Company acquired related and non-related business. Sarah Lee sold 8 businesses that were looked upon as non-strategic. This initiative was expected to generate combined net after tax proceeds in excess of $3B. The leaders of Sarah struggled over time to manage broadly diversified and geographically operations. So it was decided in order for the company to stay focus it would concentrate on the grocery portion and the upcoming trend of the single serve coffee machines. Therefore, Sarah would also focus on the single serve coffee line business, which they believed would be profitable for the company and shareholders.
The retrenchment strategy changed the nature of its business lineup from a small wholesale distributor to acquiring retail food business. The retrenchment strategy would allow Sarah Lee to focus even more closely on the food, beverage, and household products. Management believed in order to save cost and to be more profitable they would concentrate its financial and managerial resources on a smaller number of business segments in which market prospects were promising and by Sara Lee’s brands being well known and well positioned would help them to stay in alignment with the strategy. Sarah Lee also executed an outsourcing strategy known as Project Accelerate. It’s a company-wide cost saving and productivity project that focused on