CASE STUDY #4, “SARA LEE CORPORATION IN 2011: Has its retrenchment strategy been successful?”

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When Brenda Barnes took the helm as the president and CEO of Sara Lee Corporation, she enacted a plan to totally revamp the business. Her plan of retrenchment included divesting itself of business units that were lower performers, and concentrating their resources in the areas where they were already doing well.
Sara Lee’s retrenchment growth strategy was built around three main core competencies: “competitive pricing, innovative new products, and brand-building capabilities”. (Thompson, Peteraf, Gamble, & Strickland, III, 2012, p. C250) In 2008 they added another initiative, Project Accelerate, whose goal was to focus on cost savings throughout their value chain. This would support the competitive pricing strategy with overall savings.
In 2011 Marcel Smits became interim CEO, and his strategy focused on growing the most powerful brands in the company. As part of this strategy, Sara Lee made a major decision to reorganize its remaining businesses into two divisions; the International Beverage division, renamed D E Master Blender 1753, and its North American division, renamed “Hillshire Brands Company”. (Prigmore, 2012) Hillshire is using a broad differentiation strategy to grow the brand in North America. Sean Connolly, chief executive officer of Hillshire Brands, stated in an interview with Food Business News that Hillshire “…products have to be really differentiated. The reason differentiation is important is because it helps you break through the clutter and create loyalty between the consumer and the brand.” (Nunes, K. 2013)
Why is Sara Lee retrenching?
The main purpose of retrenching was financial. Sara Lee Corporation had grown quite large thru multiple acquisitions throughout the world, but sales growth had becom...

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Nunes, K. (2013, February 26). Exclusive: Hillshire Brands’ ‘provocative’ product development strategy. Food Business News. Retrieved January 4, 2014, from http://www.foodbusinessnews.net/articles/news_home/Site_News/2013/02/Exclusive_Hillshire_Brands_pro.aspx?ID=%7B78A0AAAD-E108-4452-987F-DF5FF63A469C%7D&cck=1
Prigmore, B. (2012, June 12). Sara Lee: Split to unleash potential through brand building and cost efficiencies. Hillshire Brands Co (HSH):. Retrieved January 4, 2014, from http://seekingalpha.com/article/639991-sara-lee-split-to-unleash-potential-through-brand-building-and-cost-efficiencies
Thompson, A., Peteraf, M., Gamble, J., & Strickland, III. (2012). Crafting and executing strategy: The quest for competitive advantage (18th ed., pp. C243-C256). New York, NY: McGraw-Hill Irwin.

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