Sara Lee’s corporate strategy
Sara Lee changes its business strategies so that it can manage to align its operations with market demands. When the company was being formed, it acquired different industries so that it could increase its overall global market share. When this strategy became successful, the company began investing in other business units such as the food processing and packaging units. The success of this strategy encouraged the company to acquire other businesses that were related to their main portfolio. However; as the company expanded, it created problems for its managers. The managers were unable to cope with the issue of diversification. As a result, the company implemented the retrenchment strategy to ensure that all its divisions became successful. Therefore, the retrenchment strategy aimed to ensure that all the business units gave good rewards. Today, the company believes that the strategy will help it reduce costs of operation and make it possible for managers to emphasize the promising business units (Thomson, Peteraf, Strickland, & Gamble, 2012).
Long-term attractiveness of Sara Lee
About the long-term attractiveness of Sara Lee, the managers of the company indeed demonstrate great potential while addressing the needs of the food industry. The company has been successful in terms of supplying meat to its customers. The company has also taken advantage of the grocery market. For example, the company was able to increase its revenue by $100 million in 2008. In 2010, the company recorded an increase in market share on its core products. The company also realized a 3.1 percent increase in market share between 2009 and 2010. Therefore, it is true that Sara Lee’s retrenchment strategy has allowed it to focus on its major business units thus allowing it to remain competitive in the market.
The competitive strength of Sara Lees’ different business units
The competitive strength of Sara Lee resulted from its retrenchment strategy. After implementing the retrenchment strategy, the company was able to focus on its major business units. This is an indication that the company can address the needs of the market as well as introduce other competitive products to its customers. By focusing on the food industry, the company has been able to implement new production technologies. They have made it possible for the company to transfer skills and reduce costs of operation.
9-cell industry attractiveness
The 9-cell matrix is used to show the position of the company in the industry. When the performance of the industry is analyzed using the 9-cell matrix, the company is indeed growing at a moderate pace. Moreover, the profit margin of the company is expected to rise at a rate of 3 percent annually. Therefore, it is true that the performance of the company is not bad since it has been able to increase its operating profit.
Sara Lee’s portfolio reveals a good strategic fit
Sara Lee’s portfolio exhibits a good strategic fit. This is because all the products that the company offers are related. The products that the company deals with are eatables. As a result, the products can be sold under one roof thus reducing the company’s costs of operation. The products that the company deals with also provide it with opportunities to transfer skills. This means that it is possible for a person working in the beverage sector to work in the meat sector. Therefore, it is true that the company is capable of making huge savings by adopting the retrenchment strategy (Thomson, Peteraf, Strickland, & Gamble, 2012).
Sara Lee’s financial and operating performance
When Sara Lee adopted the retrenchment strategy, the managers of the company were forced to close down some of the business units that were not profitable. The company expected to increase its profit margins by 12 percent after implementing the retrenchment strategy. However, the company failed to reach its target and therefore decided to launch the Project Accelerate program to help it reduce its operating costs.
Overall evaluation of Sara Lee’s retrenchment plan
The retrenchment strategy has not worked according to the expectations of Sara Lee’s managers. The growth that has been realized in some business units of the company has resulted from the efforts that the sectors have made. When the company implemented the retrenchment strategy, the managers believed that revenue generation would increase tremendously. However, in 2010, the company was unable to realize the profits that it had anticipated. This means that Sara Lee’s shareholders did not receive significant benefits when the retrenchment strategy was set in place.
Recommendations to improve the company’s overall performance
Since the retrenchment plan has not given the company any significant boost in terms of revenue generation, the managers need to implement proper managerial skills so that the company can expand its business operations successfully. Therefore, the company should endorse its products in new markets to help it boost its profitability significantly (Thomson, Peteraf, Strickland, & Gamble, 2012).
Reference
Thomson, A. A., Peteraf, M., Strickland, A. J., & Gamble, J. E. (2012). Crafting & Executing Strategy: The Quest for Competitive Advantage: Concepts and Cases. New York: McGraw Hill.