Sara Lee Corporation Case

SARA LEE Case Analysis:

Company portfolio/Strategy:

Since 1939, although under various names, the Sara Lee Corporation has been operating as a wholesaler and distributor of goods and services. As the company changed names it also changed the size and scope of its portfolio and holdings. The diversification of its portfolio has led to span of control that requires management around the globe. This focused management from 1980 to 1999 continually saw a steady increase in revue and a return on investment to shareholders. In 1999 at its peak the company begin to see the numbers lag and profits decrease so a concerted effort begin to narrow the focus of the portfolio and take initiatives divest the company in several areas. The strategy of Sara Lee Corporation under Mr. Bryan, the architect of the company’s acquisition strategy, was to diversify the company accounts and emerge as a global presence, this simplified strategy made this organization extremely successful for 25 years with incremental growth over that time span. As revenue peaked in 1999 the management team struggled with its span of control of operations and diversified portfolio. The CEO was succeeded and a new leadership team was brought in and undertook a drastic strategic turn to shrink the company’s footprint in market areas that were not as strategic and sharpen its business focus in other areas. To that end, Brenda Barnes the CEO had to step down due to health reasons and leadership was turned over to the interim, Marcel Smits, the focused remained for the Sara Lee Corporation to divest in several areas. Smits, and I agree with his assessment, of focusing on increasing share in the company’s brands that had a strong foothold in the market and pursue growth in geographic markets that indicated great potential. Another initiative toward the new strategy was a focus area named, Project Accelerate, it focused on outsourcing functions such as supply chain operations thus reducing many overhead cost. A well devised plan, but how did Sara Lee Corporation get to this point…an assessment of the business follows:

Sara Lee Corporation’s portfolio does not lend itself to a good strategic fit. The beginnings of this corporation were about distribution of goods and later diversified into food processing, packaging and distribution. These activities fit nicely together as one can easily see the food correlation. However, for some 40 years Sara Lee began an aggressive acquisition strategy that increased revenue for 25 years but some of the acquisitions were not sustainable within the framework of distribution, food processing and packaging. In my opinion, that was the framework this corporation was built upon and the acquisition that lends itself to have applicability are those that relate to food packaging and distribution. I believe the divesture of several parts of the