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Copy of Sara Lee Corporation in 2011

Comp & Strategy
by

Divya Jagadish

on 25 January 2014

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Transcript of Copy of Sara Lee Corporation in 2011

photo (cc) Malte Sörensen @ flickr
Sara Lee Corporation in 2011:
Has its retrenchment strategy been successful?
Good Evening!
Industry Rivalry
Bargaining power of Buyers
Bargaining power of Suppliers
Threat of substitutes
Porters Five Forces
High
High
High
Medium-High
Medium
Q & A
Thank You!
External Analysis
Internal Analysis
- Substitutes are readily available
- Switching cost are low
- Substitutes are attractively priced
- Buyers are well informed
- Buyers are price-sensitive
- Buyers cost to switch are low
- Sellers' products are differentiated
- Ability to delay/postpone purchases
- Sara Lee doesn't rely on just one supplier
- Item supplied is a commodity
- Ability to integrate backward
- Supplier services are critical to Sara Lee
Limited differentiation between products
Large well established industry competitors
Key competitors are comparable in size and strength: Uniliver, P&G, General Mills, Kraft, etc
Entry barriers are low
Majority of goods are necessities
Other producers can easily copy Sara Lee's Products
Driving Forces
C.P.
Threat of
New
Entrants
Financial Highlights
Performance Indicators
- Fluctuations in commodity prices
- High level competition
- Economic uncertainty
- Variations in foreign currency rates
- Consumer taste, and demographics are constantly changing
- Government regulations
- Disruption from weather, natural disaster, or any outside force
Threats
Weaknesses
- Become more focused and agile
- Exploit the Sara Lee brand
- Capitalize on Project Accelerate prospects
- Positive developments in the US foodservice industry
- New CEO, new perspective
- Online advertising and other social media to promote products
Opportunities
- Reliance on Wal-Mart
- Over diversified and slow moving
- Geographically scattered operations
- High debt (example: Hanesbrands)
- Not meeting aggressive company goals
- Global presence
- Strong brand portfolio in the food and beverage category
- Large number of registered trademarks in the end markets of Sara Lee
- Market leading position in several international coffee markets
Strengths
SWOT Analysis
C.P. Pg. 62
C.P. Pg. 69
- Technological Change
- Emerging new Internet capabilities and applications
- Changing attitudes/
Lifestyles
Impact of the Factors Driving Change
- The business line-ups were still able to consistently generate revenue/profits
- Have excellent brand recognition in their separate fields
- Well –received
Long Term Attractiveness of the Company’s Business Line up
- Company exited 8 business units which were considered non-strategic to the company
- Focus shifted to making remaining business line up, more tightly focused and closely related.
- Possibility of cross business in their present line up.
Retrenchment Strategy Focus
Corporate Strategy
1939: Originated when Nathan Cummins acquired C.D. Kenny Company
1942: The purchase of Sprague, Warner & Company
1946: Company's shares began trading on the New York Stock Exchange
1954: Company name change to Consolidated Foods Corporation
1956: Consolidated Foods Corporation acquired Kitchens of Sara Lee and 24 Piggly-Wiggly supermarkets
1985: Consolidated Foods changed its name to Sara Lee Corporation
2005: New President/CEO; Brenda Barness - New Strategy
2006: 5 Business Units Left
2011: Interim CEO, Marcel Smits - Same Strategy
Timeline
1. Sara Lee Corporation was an American consumer-goods company based in Downers Grove, Illinois.
2. It had operations in more than 40 countries and sold its products in over 180 nations worldwide.
3. Its international operations were headquartered in Utrecht, Netherlands.
Quick Facts about Sarah Lee Corporation
Mission and Vision
SWOT
Continue to focus on those businesses that offer the best growth opportunities, divest from poorly performing businesses, and consider acquisition of companies that can contribute to Sara Lee’s future growth.
Acquisition of up-and-coming companies or mergers with established firms in the other food and beverage industries that can help them quickly enter new markets or more rapidly expand in existing markets.
Initiate discussions with larger food and beverage firms to identify whether a strategic alliance or merger can benefit both companies.
Increase Sales, Market Share, Profitability, and Brand Awareness from existing business units.
Making Project Accelerate more effective.
Recommendations
Sara Lee
Summary
- Increase in income
- Increase in operating margin
- Increase in net profit margin
- Decrease in the debt-to-
asset ratio

Goals:
- Boost revenue to $14 Billion by 2010
Actual: $10.8 Billion
- Accomplish 12% Operating Profit Margin in 2010
Actual: 8.5%
Alvin Kusuma, Gede Arya, Sarah Putri, William Widjaja
VALUES
Work as a TEAM
Act with INTEGRITY
Use IMAGINATION
Be INCLUSIVE
Have PASSION to excel
2005
Sara Lee breads and bakery products
Ball Park meats
Douwe Egberts coffees
Hillshire Farm meats
Jimmy dean sausage
Senseo single serve coffee products
Direct selling
US retail coffee
European Apparel
European nuts and snacks
European rice
U.S meat snacks
European meats
Sara Lee branded apparel
During retrenchment
2006
Post retrenchment
However by end of 2007 Operating Excellence was not progressing well
2008
Project Accelerate
Additional business process outsourcing
Operating segment restructuring
New supply chain efficiencies
Reductions in corporate overhead
Reductions in employee benefit cost
Sara Lee became structured around 6 Divisions
North American Retail
North American Fresh Bakery
North American Food Service
International beverage
International Bakery
Recession
International Household and body care
Divested
Branded Apparel became spin off Hanesbrands
Multi-year strategy announced to transform
Sara Lee into more strategically focused company
Divested
Retained
Goal: increase sales, market shares and profitability
Corporate Strategy
Manufacture and market to please customers
Category management and leverage through size
Operating excellence
2009-2012
Retrenchment Strategy
Purpose of the retrenchment strategy
Three strategic issues / problems
The purpose of the Retrenchment Strategy is to transform Sara Lee Corporation into a more focused company, enabling higher profits in the consumer goods industry.
Several divestitures occurred in early 2000s to eliminate weak business segments and boost revenue and sales.
Initiate retrenchment strategy to close businesses that were unprofitable for Sara Lee
Focus sales on foods, beverage, and household product industries to strengthen the financial situation of Sara Lee
Optimize the overall productivity of Sara Lee with the initiation of Project Accelerate
Pestle analysis
Political: merging, acquiring and divesting of business
Economic: impact of recession
Social: changing lifestyle habits
Technological: Product manufacture and delivery
Legal: ensuring compliance with each country the company operates
Environmental: Creating and delivering products that promote CSR
Conclusions
Sara Lee's retrenchment strategy effectively trimmed the 'fat' of weaker business's to focus resources and grow successful business units to become an efficient, competitive company
Post retrenchment Sara Lee focused on increasing sales, market shares and profitability through the implementation of corporate strategy based on
Pleasing the consumer through competitive pricing, innovative new products, and brand building capabilities
Category management and leverage through size to gain market share
Operating excellence to reduce costs and increase efficiency
Sara Lee faces issues concerning
Growth in the international market
expansion in the food service sector
increasing the efficiency of Project accelerate
Full transcript