Sara Lee Corporation in 2011: Has Its Retrenchment Strategy Been Successful?

Sara Lee Corporation in 2011: Has Its Retrenchment Strategy Been Successful?

Should Sara Lee continue to pursue the strategy of divesting their portfolio of subsidiary businesses to pursue a more focused strategy?

Sara Lee has taken on a retrenchment strategy by divesting many business segments to focus on a branded food portfolio and the most profitable divisions. I believed that Sara Lee should continue to pursue the strategy of divesting their portfolio of subsidiary business as the household and body care business segment is not profitable to the business. This I believe and I also agreed with the executives that the retrenchment would allow revenue to growth while they focus on the most powerful brands that would increase shares in the company. My recommendation is for Sara Lee to seek diversifying into new beverages and snacks business. To increase Sara Lee's competitive advantage, a concentric diversification for these types of products would expand their branded product portfolio and market share. I believe this would be a good strategic fit based on the current branded portfolio of Sara Lee. Sara Lee would be more attractive and known for their global brands.

Is this the appropriate long term strategy for the firm?

Yes, I believed the above strategy will be an appropriate long term one for the firm. Because the household and body care business is not favorable to the firm and the food service industry is a considerable growth opportunity. I recommend that Sara Lee pursue a more focused strategies such as acquisition of an existing business, a joint venture, and concentric diversification of related businesses.

Acquiring an existing business will expand their current brand portfolio and market share. It will also increase Sara Lee's market share, sales, competitive advantage, and profitability. Acquisitions will allow Sara Lee to be a diversified company with various brands that are well-known to consumers.

Establishing a joint venture with the one of the global leaders will enhance their global participation and foreign sales and profitability. A joint venture with a business with expertise in their business model would be desired. Although joint venture does have some drawbacks, this would be an attractive mode of entry for Sara Lee to increase their foreign business and globalization. Sara Lee would be more attractive and known for their global brands. The joint venture would be beneficial for both parties as long as the terms, agreements, and objectives are clearly defined and both parties have mutual interests to expand their global business.

Concentric diversification is a diversifying strategy for related businesses. My recommendation is for Sara Lee to seek diversifying into new beverages and snacks business. Sara Lee strength of the company is coffee to increase diversification and be more competitive business can invest in more beverage and snacks business.

Was this divestiture strategy appropriate for the past two decades? Did it help or hurt the firm. Explain

As per the article in 1985 consolidated foods changed its name to Sara Lee Corporation with $5 billion in sales. Sales peaked at the $20 million level up to 1999 in which management struggle to manage the company's broadly diversified and geographically scattered operation. Below are the comparisons of net profit margin for 2004 and 2006 which are the first and last year of divestiture strategy. The year 2004 shows a higher net profit margin therefore the after tax profits per dollar of sales was better than 2006. In my option even thou sales seem like it was not favorable in 2006; I believe the divestiture strategy creates more room for the post retrenchment strategy and it also changed the nature of the business. Management was able to launched Project Accelerate in March 2008 to strengthen the company's ability to meet its objective of achieving