From time to time Sara lee has been altering its general organization strategies. During the formation of the organization, its market share rose due to the involvement of many other organizations internationally. It started initially as an extensive supplier of goods such as sugar, tea, and coffee (Arthur 2011). In its ambitions to spread its market, it acquired the food processing and that even included food packaging. This expanded its horizon and at the end of the day, the organization made major investments in the retail food sector.
Moreover successes of the business at diverse phases of the market made the business to promote continue with acquisition of different connected and unconnected dealings. This made the giant business expand in their product output and geographical area. This became a problem to the executives due to the fact that they were not able to handle with the market change. This need a good strategy to curb the big issue and to ensure every business department is cost-effective and also to create a close business that is lucrative.
According to Arthur (2012), the newly appointed president and also the chief executive officer, Brenda Barnes of Sara Lee Corporation in 2005 strategic plan to transform the corporation into a tightly focused food and beverage and household products company was unique. The corporate strategy was an acquisition strategy whereby it acquired retail food businesses hence changing its lineup from small whole sale distributor. Moreover, it also acquired related or unrelated businesses. In doing so, Sara lee corporations transformed it into a more focused and well rounded food, beverage and household products enterprise where the roots of its name is recognized and originated.
This transformation of strategy was laid down giving focus on frontline business and rewarding businesses which have been profitable. They included products such as beverages, food, and domestic products that had a probability for growth. In a bid to save money, the company they came up with a Project Accelerate that entailed cost saving method because the management believed that concentrating on the more promising businesses they would save a lot and increase the overall return on investments given that they were well established in the market
From the outlook of the Sara lee corporation, the business was more entrenched in the retail industry. From the analysis, it’s evident that the foods section services, the retail and the entire business was attractive in the long term. This is because; their sales will remain high given that the consumers purchase the products at every given time without restriction to their amount of money. They are affordable and are also ready consumables. The state of the economy does not also affect their sales.
The strategy for Sara lee was to be more focused and concentrated on the food industry .this is seen as the company shied away from less profiting industries. This narrowing down to fewer areas in the industry allowed for increase in technological application, match ups in shipping logistics and be more focused on the customers for their satisfaction. In condensing related industries together, there emerged transfer of skills, cost sharing and even sharing of brands. For example the bakery, the foodservice and also the retail sector are similar and somehow produce same or maybe identical products. Therefore it’s prudent to produce similar or same products in large scale which is cost effective rather than operate related industries as separate.
The 9 cell industry strength matrix showed that at least there were chances for rapid growth and great potential to gain a stronger position.
The Sara Lee Corporation made to sell their 8 non strategic businesses. They therefore focused on the groceries section and also their one and only coffee line believing it will be very profitable and even bring more profits as they concentrate on their single line to serve coffee machines.
I do not think their retrenchment plan has worked out very well. By scrutinizing their financial documents, it’s evident that the income revenues are low or just a slight improvement compared to before their strategic plan before.
In their argument, they claimed that by executing the plan they will increase shareholders dividends by .20 cents but it was not clear whether they will be able to do it. From the analysis, it’s also believable that it was not prudent for Sara lee to make their spin off company Hanes brand Inc. pay the $2.4 billion to them as “dividend” payment because that indebted them automatically. It’s stated that they had to borrow $2.6 billion in order to start up Sara Lee. This was a problem to the investors due to their worry with their credit rates in addition to the rising competition (Arthur 2012).
In the analysis of the long term appeal of the industry in Sara Lee’s business, it’s evident that the marketing industry and the food package sector have a high probability of success. Ever since Sara Lee has made a branding to its name in the retail production, it was able to raise its market share. The company is also focusing on the groceries sites that led to generation of one hundred million dollars to the revenue of the organization in 2008.Similarly Senseosingle offred the products of coffee a product of North America in 2008 had a 55% market share this is a further attractiveness. Therefore, it’s likely the products to maintain being competent as industry is still growing and expanding; in addition, Sara Lane had its retrenchment plan that is currently concentrated on these industry units.
After adoption of retrenchment strategy by Sara Lee, the company increased in his competitive strength because the company will focus its smaller business units therefore meeting requirements of the organization and coming up with more e products that are more competitive.
The 9 cell matrix is that is applied portray the place of the the industry is based on the grounds that the complex the organization on the y axis, the higher they grow within the industry. On the other hand, the x-axis tht entails the extreme left a company is place the more in the performance and the strength of the company, and the weaker the company the more right its located on the extreme right of the x-axis.
After thorough analysis of performances of the corporation, it is evident that the corporation was able to upsurge its income margin to 8.5%, too much lower than the expected 12%. Consequently the market results of Sara Lee are not at its best but not bad as well ever since it has been capable of increasing its effective profit.
The portfolio Sara Lee’ of exhibited worthy planned fit for many factors. The initial factor entails the product line. Almost all products were same or similar or related to one another which are beneficial. For example bakery, meat products and beverages and can be retailed less than one roof given they are eatable and similar. This saves cost. Besides, since the corporation is selling and whole selling, it’s an advantage as the material can be consumed. Moreover, the product line in this industry enhances cost saving in positions of skill labor and skill transfer.
On a broad perspective, the company can save vast amount of money as branding of diverse products can be practiced single handedly by several methods. In addition, products can be stored in one point hence helping in saving and generation of revenue. Ever since the corporation is the supplier and the distributor, it helps in further saving and also enjoys advertisements.
It was a brave move by the management Sara Lee in taking a retrenchment plan. However, contrary to the expectations operative profit brims by 12%, it cannot reach its target. Project Accelerate programme started to save the cost of around350 million dollars to 400 million dollars by the year 2012 only promoted the business by protecting 180 million dollars in an accumulative manner. The retrenchment plan by Sara Lee is evident has not made any significant revenues and has not worked out well according to the prospects of the managers. Growth in certain sectors is not about the retrenchment plan but for the reason that of the companies’ prospective the particular sector. And also the growth portrayed is far much below compared to previous years.
Furthermore, from the financial statements of the business, it demonstrates that Sara Lee’s shareholders did not benefit much from the retrenchment plan from the analysis, it’s clear that the company’s retrenchment strategy has not provided the organization a good boost in relations of growth in main sectors. This plan has minimized and restricted their income generation avenues. The corporation is limited to market of its beverages, food, and domestic products. Therefore, sound administration is essential different ways to expand and develop is require stopping overreliance on the limited industries.
Although potential of these businesses is seen, possibility of competition in future is there. Therefore, Sara Lee ought to recommend their existing produces in new internationally so as to increase profits. Three products lines of the Sara Lee organization include one of the production techniques that are linked to each other. A decline in one product implicates that there may be effect on others products as well. As a result, new product lines ought to be established and given thought.