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Sara Lee Presentation
Transcript of Sara Lee Presentation
1946- Company’s shares began trading on the New York Stock Exchange.
1954-Company name changed 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
4 decades of series of related and unrelated acquisitions. Danielia Meikle
Selena Williams Retrenchment Strategy Attractive Nonstrategic Businesses Sara Lee International World’s second largest seller of coffee in retail
Bimbo- Number one brand in Spain with a 54% market share
Packaged Bimbo bread- expected to grow by 7-8% by 2010
Household and Body Care
Kiwi -number one shoe care brand worldwide
Global market share of 63%
Sanex was number 1 in bath and brand shower products
Insecticide- 28.1% market share in Europe
Ambipur third largest brand of air freshener Sara Lee Corporation Case Study Case Study Questions What is Sara Lee’s corporate strategy? How has its retrenchment strategy changed the nature of its business lineup? SWOT ANALYSIS John H. Bryan- 1975-2000
-Chief architect of acquisition strategy
Steven McMillan- 2000-2005
-Launched Initiatives to narrow Sara Lee's focus
Brenda C. Barnes- 2005-
-Launched Sara Lee's transformation plan and Retrenchment Strategy Brenda C. Barnes President of PepsiCola North America from 1996 to 1998j
Joined Sara Lee in 2004 as COO (Chief Operating Officer)
Held Board positions at many companies
New York Times Company
Appointed CEO Feb. 10, 2005 QUESTIONS Hanesbrands Spinoff Postretrentchment Strategy Diversification efforts have become too broad, resulting in difficulties in profitably managing all the businesses
Deteriorating market conditions in a once-attractive industry
Lack of strategic or resource fit of a business
A business is a cash hog with questionable long-term potential
A business is weakly positioned in its industry
One or more businesses lack compatibility of values essential to cultural fit Direct Selling
450 Million Dollar Business
Sold cosmetics, skin care products, household products.
Sold to Tupperware Corporation for 557 Million dollars.
U.S. Retail Coffee
$213 million business
Several private label coffees
Sold to Italy based group for $ 82.5 Million dollars.
$ 1.2 Billion business
Global garment producer
Sold it to an affiliate of Sun Capital Partners for $ 115
European Nuts and Snacks
$ 88 Million business
Sold it to PepsiCo for $ 150 million U.S. Meat Snacks
$ 33 million business
Small unit sold for $9 million
$ 1.1 billion business
Sold to Smithfield foods for $ 575 million
Sara Lee Branded Apparel
$ 4.5 billion business
Spun off as an independent company named Hanesbrands Inc.
Sold to Grupo SOS for $62 million Eroding sales and weak returns
Hanesbrands began independent operations in Sep. 2006
One time dividend payment of $ 2.4 Billion
Borrowed $ 2.6 Billion and fell into huge debt
Received a B+ rating by S&P 500
Helped to meet their $3 Billion goal of proceeds from divested units. Attention turned to increasing the sales, market shares and profitability
Objectives (target -2010)
Reach $14 billion in profit
12% operating profit margin
Strategy: Three competitive capabilities
Strong focus on consumer- Innovative products, competitive pricing & brand-building
Category management and leverage through size
Operating excellence- Lean or low cost manufacturing. Sara Lee Food and Beverage Packaged-meat industry
Industry Attractiveness $9.6 billion North American packaged-meat industry
Sales of meats in North America improved by 5%
Sara Lee’s meat products
Market share of 19.6 % (Largest seller Kraft-21% market share) Relative market share: 0.933 Focus on product innovations & effective promotions
Fresh bakery business
Industry Attractiveness Market growth- $91 million in 2003 to $697 million in 2006
Sara Lee’s fresh bakery sales
Number 1 in the national brand of bread with a 7.2 % market share Relative market share: 1.33 (No:2 Pepperidge -5.3 %) Foodservice Industries Food-service industry sales projected to grow from $476 billion in 2006 to $522 billion in2010
SLF (Sara Lee Foodservice) held a 9% market share in deli meats sold to food service customers
Global market share for Foodservice
11% share relevant baked goods
18% share of coffee and tea products. Question 1 Question 2 Question 3 Question 4 Question 5 What actions do you recommend that Sara Lee management take to improve the company's performance and boost shareholder value? What is your assessment of Sara Lee’s financial and operating performance in fiscal years 2008-2010, the period following the divestitures that were the core of Sara Lee’s retrenchment strategy? What actions do you recommend that Sara Lee management take to improve the company’s performance and boost share holder value? Does Sara Lee’s portfolio exhibit good strategic fit? What value-chain match-ups do you see? What opportunities for skills transfer, cost sharing, or brand sharing do you see? What is your assessment of the long-term attractiveness of the industries represented in Sara Lee Corp.’s business portfolio? What is your assessment of the competitive strength of Sara Lee Corp.’s different business units? STRENGTH:
Present for many years.
Represented in many industries WEAKNESS:
Product Placement and Availability OPPORTUNITY:
Retrenchment created new start opportunities THREATS: