...Sara Lee’s Retrenchment Strategy Case Study Vinh Tran Strategic Management April 28, 2013 Sara Garski Southwestern College Professional Studies Introduction Sara Lee started out as a small company in wholesale distribution that gradually grew to a series of related and unrelated businesses. For the next 40 years, the company expanded to food processing, retail food, and household products to more than 40 countries. Their broad differentiation strategy and geographically spread operations has management struggling to operate efficiently. Even with the vast company’s portfolio, it did not help with building shareholder value. With the declining profits worldwide, Sara Lee’s retrenchment initiatives is divest eight of its business units to raise profitability through operating profit and sales. Strategies Sara Lee’s retrenchment strategy is required in order to focus its resources on more profitable industries such as the beverage, food, and household products company. Their plan on separating themselves from weak performing business units and product categories will put the company in a better financial position. Management will be able to focus their resources to boost their profitability, sales, and market shares on the remaining products. The spin-off of Hanes brands was a smart move even though the operating profit margin was still a moneymaker. The cash payment needed to eliminate the note payable to Hanes brand from Sara Lee and it did not...
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...------------------------------------------------- Sara Lee Corporation in 2011: Has Its Retrenchment Strategy Been Successful? Executive Summary Sara Lee Corporation was founded in 1939 and, as of 2001, had acquired more than forty companies. Sales reached $10 billion in 1988, $15 billion in 1994, and $20 billion in 1998.However, revenues peaked in 1998, as Sara Lee struggled to manage the company’s broadly diversified and geographically scattered operations. In February 2005, Brenda Barnes, Sara Lee’s newly appointed president and CEO, announced a strategic plan to transform Sara Lee into a more tightly focused food, beverage, and household products company. The centerpiece of Barnes’s transformation plan was the divestiture of weak-performing business units and product categories accounting for $8.2 billion in sales - 40% of Sara Lee’s annual revenue. Barnes believed that Sara Lee could benefit from concentrating its financial and managerial resources on a smaller number of business segments where market prospects were promising and Sara Lee’s brands were well positioned. As the first phase of Barnes’s transformation plan, Sara Lee was to exit eight businesses: Direct selling, U.S. retail coffee, European apparel, European nuts and snacks, European rice, U.S. meat snacks, European meats, and Sara Lee branded apparel.The latter was spun off as an independent company, Hanesbrands Inc. Following the disposition of these nonstrategic businesses in 2006, Sara Lee focused on...
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...Sara Lee’s Retrenchment Strategy Case Study Vinh Tran Strategic Management April 28, 2013 Sara Garski Southwestern College Professional Studies Introduction Sara Lee started out as a small company in wholesale distribution that gradually grew to a series of related and unrelated businesses. For the next 40 years, the company expanded to food processing, retail food, and household products to more than 40 countries. Their broad differentiation strategy and geographically spread operations has management struggling to operate efficiently. Even with the vast company’s portfolio, it did not help with building shareholder value. With the declining profits worldwide, Sara Lee’s retrenchment initiatives is divest eight of its business units to raise profitability through operating profit and sales. Strategies Sara Lee’s retrenchment strategy is required in order to focus its resources on more profitable industries such as the beverage, food, and household products company. Their plan on separating themselves from weak performing business units and product categories will put the company in a better financial position. Management will be able to focus their resources to boost their profitability, sales, and market shares on the remaining products. The spin-off of Hanes brands was a smart move even though the operating profit margin was still a moneymaker. The cash payment needed to eliminate the note payable to Hanes brand from Sara Lee and it did not...
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...Functional strategies mainly focused on the events associated in practical areas of a business that support the anticipated competitive business level strategy and balance each other. These strategies describe the methods selected to be used within the practical areas of a business that’s utilized in the corporate level or business strategy. Functional strategies recognize and organize temporary actions, usually under a year. Structure of functional strategy is normally delegated by the business manager to lower management teams that oversee the operations of the business. Businesses vary in structure as well as the roles and responsibilities of their practice areas, these areas are research and development, marketing, finance, purchasing...
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...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, market shares...
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...STRATEGIES 5.3 Strategies In the previous section you have learnt the objectives for an organization and its key elements. However for an organization to achieve its objectives, the organization must craft or formulate strategies. The strategies are crafted for the purpose of achieving the objectives. In this way the organization will be able to achieve its mission and move closer to its vision. As you have learnt in the first module there are three levels of strategy. In this module we will further discuss the three levels of strategy. 5.3.1 Corporate strategy The following corporate strategy is discussed based on David (2007). For an overview of the different types of corporate strategy you can refer to Table 5.2. Table 5.2: Overview on Different Types of Corporate Strategy |Strategy |Definition | |Forward integration |Gaining ownership or increased control over distributors or retailers | |Backward integration |Seeking ownership or increased control of a firm’s suppliers | |Horizontal integration |Seeking ownership or increased control over competitors | |Market penetration |Seeking increased market share for present products or services in present markets...
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...matrix: 6 Profit impact of market strategy (PIMS) 7 P4 7 Organizational audit for Tesco: 7 SWOT analysis 7 Value chain analysis: 8 PESTLE analysis: 8 Significance of Stakeholder analysis: 9 P7 10 Alternate strategies relation with substantive growth, limited growth, retrenchment: 10 Substantive Growth: 10 Limited Growth: 10 Retrenchment: 10 P8 11 Appropriate Future strategy for Orange Mobile operation: 11 P9 11 Roles and responsibilities of strategic Implementation: 11 P10 12 Requirement of Resource for Implementing a New Strategy: 12 P11 12 Targets and Timescales to monitor and achieve a Given Strategy: 12 Conclusion: 13 Bibliography 14 INTRODUCTION: For organization success strategic planning is one important tool. And for successfully implementing strategy various techniques are required to be acquired. Management in a proper way and planning in timely manner is important to implement strategy. From various solutions best one has to be picked. And every step has to be predefined achieve all the organizations goal. P1 Strategic context: every organization has its own context. They build up strategy based on their context. For building up strategies for organization context analysis has to be done first. It is the process of analyzing the environment. According to the scenario Northern Rock has its own strategy based on its context. To achieve its goal of high growth target it has set strategies like emphasizing on ongoing investment...
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...Table of Contents Introduction……………………………………………………………………. 2 Air Asia Current Business Strategies…………………………………………..3 Possible Alternative Strategies Evaluation……………………………………. 7 Air Asia Resources Evaluation………………………………………………. 11 Possible Future Strategies For Air Asia Indonesia…………………………… 12 Air Asia Indonesia vs. Adam Air…………………………………………….. 14 Targets For Achievements of The Strategies………………………………… 16 Appendix……………………………………………………………………... 17 Bibliography………………………………………………………………….. 18 2 Introduction Air Asia Indonesia is an originally Malaysian airline company, which started to operate in Indonesia in year 2006. The report is about Air Asia Indonesia and strategies to make it a major player in the Indonesian airline market. 3 Air Asia Current Business Strategies Air Asia wants to be the lowest short-haul airline in every market it goes in. To achieve the goal, it has some strategies such as lean cost structure, different ways of promotion, keeping safety, satisfying guests, and developing human resources (AirAsia.com, 2007, Internet) . Air Asia always tries to keep the operations simple and efficient to keep the costs low, for example by simple and efficient online ticket booking. According to Fu Sen, an ex employee of Awair – the airline company bought by Air Asia , the tickets that have been booked online can printed by the customers or the customers can just remember the booking code and show their...
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...expected from pursuing certain strategies. 2) Objectives provide direction and allow for organizational synergy. 3) Strategic objectives include those associated with growth in revenues, growth in earnings, higher dividends, larger profit margins and improved cash flow. 4) Strategic objectives include larger market share, quicker on-time delivery than rivals, quicker design-to-market times than rivals, lower costs than rivals, and wider geographic coverage than rivals. 5) "If it ain't broke, don't fix it" refers to managing by crisis. 6) The overall aim of the Balanced Scorecard is to balance financial objectives with strategic objectives. 7) Since a combination strategy bears no risk, many organizations pursue a combination of two or more strategies simultaneously. 8) Horizontal integration is seeking ownership or increased control over competitors. 9) Divestiture is selling all of a company's assets, in parts, for their tangible worth. 10) A chief executive officer is located in the divisional level of a large firm. 11) Gaining ownership or increased control over distributors or retailers is called forward integration strategy. 12) Franchising is an effective means of implementing forward integration. 13) A growing trend is for franchisers to buy out their part of the business from their franchisees. 14) McDonalds currently owns more than 50 percent of its restaurants. 15) Forward integration strategy is especially effective when...
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...expected from pursuing certain strategies. 2) Objectives provide direction and allow for organizational synergy. 3) Strategic objectives include those associated with growth in revenues, growth in earnings, higher dividends, larger profit margins and improved cash flow. 4) Strategic objectives include larger market share, quicker on-time delivery than rivals, quicker design-to-market times than rivals, lower costs than rivals, and wider geographic coverage than rivals. 5) "If it ain't broke, don't fix it" refers to managing by crisis. 6) The overall aim of the Balanced Scorecard is to balance financial objectives with strategic objectives. 7) Since a combination strategy bears no risk, many organizations pursue a combination of two or more strategies simultaneously. 8) Horizontal integration is seeking ownership or increased control over competitors. 9) Divestiture is selling all of a company's assets, in parts, for their tangible worth. 10) A chief executive officer is located in the divisional level of a large firm. 11) Gaining ownership or increased control over distributors or retailers is called forward integration strategy. 12) Franchising is an effective means of implementing forward integration. 13) A growing trend is for franchisers to buy out their part of the business from their franchisees. 14) McDonalds currently owns more than 50 percent of its restaurants. 15) Forward integration strategy is especially effective when...
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...Alternative Strategies. 1.0 Integration Strategies. Forward integrations, backward integrations, and horizontal integrations are sometimes collectively referred to as vertical integrations strategies. Vertical integrations strategies allow a firm to gain control over distributors, supplier and competitors. The degree to which a firm owns its upstream suppliers and its downstream buyers is referred to as vertical integration. Because it can have a significant impact on a business unit's position in its industry with respect to cost, differentiation, and other strategic issues, the vertical scope of the firm is an important consideration in corporate strategy. Expansion of activities downstream is referred to as forward integration, and expansion upstream is referred to as backward integration. The concept of vertical integration can be visualized using the value chain. Consider a firm whose products are made via an assembly process. Such a firm may consider backward integrating into intermediate manufacturing or forward integrating into distribution. Example Value Chain. 1.1 Forward Integration Forward integration is a type of vertical merger (vertical integration) in which a supplier acquires a manufacturer or a manufacturer acquires a distributor. Businesses engage in forward integration either to generate a higher margin from a key input which it owns or produces or to better market its...
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...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 the numbers further, the company divested the International Household and Body Care business. Although Sara Lee cut down business operations between 2008 and 2010, the company’s strategy is the same. The company employs a broad differentiation strategy. In all research conducted, Sara Lee does not say that the goal is to be the lowest price product...
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...Sara Lee in 2011: Retrenchment strategy UNIVERSITY OF MARYLAND UNIVERSITY COLLEGE SUBMITTED BY ALLIE JOSIAH TO: PROFESSOR JON GETTMAN DATE: 24TH APRIL 2013 Introduction Retrenchment Strategy Evaluation After Sara Lee's conservation, the association was ready to concentrate on its sustenance & drink, foodservice and worldwide organizations. Sara Lee's key goals for its remaining organizations were to keep tabs on client needs and managing perfection, while making an in number mark through wide developments and focused estimating. The association truly uses its retail meats, pushing comparative meats to its nourishment administration clients. Its meats have viewed expands in bargains and working salary, while productively making the most of improvements inside perishable things. The aforementioned advancements helped bargains more than $100 million, indeed, when its center items' bargains were even. The association holds a 20% piece of the overall industry in a developing industry of just about $10 billion. Sara Lee is the business sector pioneer in retail breads in North America, while nearly trailing Kraft inside the meat part. New bread bargains bounced more than $600 million inside 3 years, because of the power Sara Lee had with markets to build retire space for its features. Sara Lee furnished imaginative breads for its clients, while commanding the breakfast bread market. While holding a 14% piece of the pie in a $100 billion industry, Sara Lee is positioned...
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...Company profile Company name: Sara Lee Corporation Company Address: 3500 Lacey Road Downers Grove, IL 60515 United States Phone: 630-598-6000 Fax: 630-598-8482 Website: http://www.saralee.com CEO/President: Brenda Barnes Founding Year: 1939 Product line Breath: Sara Lee Corporation’s product line mainly consists of food, beverage and household products. ▪ Food & beverage (SLFB) division include Ball Park franks, Dean Sausage, Hillshire Farm deli meats, Sara Lee Breads & bakery products, Sara Lee frozen desserts and Senseo single serving coffeemakers and coffee pods. ▪ Household & body care products include Ambi pure air fresheners, Kiwi shoe care products & Sanex personal care products. Sara Lee also provides Foodservice to their customers. Branches: Sara Lee operates more than 40 countries such as USA, Australia, Newzeland, Netherlands, Philippines & etc. Key competitor: Hostess Brands, Inc; Kraft Foods Inc. (kft); Tyson Foods, Inc. (tsn) Mission: To simply delight you……everyday. Vision: 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. Objective of the company: |Financial Objective |Strategic Objective ...
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...versus outsiders, problems in retrenchment, managing diverse cultures following an acquisition, and total quality management (TQM). Strategy implementation is an important step that requires staffing and directing and puts strategy into action. According to McCarthy 'strategy implementation may be said to consist of securing resources, organizing these resources, and directing the use of these resources within and outside the organization.' The concept executive succession, is an integral part to a company. Whether to hire an outside or inside manager is better for replacement within a company depends on the circumstances of the company. If a company is doing well, then hiring someone from the inside would improve performance. If a company is on thin ice, hiring an outsider can save the company. Studies have shown that hiring someone from the inside results in better performance than hiring someone from the outside. I've learned that steps for top-management succession is exceptionally critical to a company and can stabilize its performance from sinking below average. A great CEO needs the experience, skills and expertise. Before my research and analysis, I believed that right CEO is one who's been working for the company for long time because of the amount of knowledge captivated during his/her years. However, that's not always the right choice because of circumstance a company might be experiencing. The next concept is problems in retrenchment, particularly downsizing. The...
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