Course Title: Strategic Management Course Code: MGT-412 Submitted to Sawkat Ara Khanam Course Instructor ASA University Bangladesh Date of submission: 17 th April, 2012 Submitted to Submitted by Dewan Imran Uddin 091-12-0186 Rinku Biswas 091-12-0179 Sayed Hossien Tuhin 091-12-0340 Kedar Nath Roy 091-12-0203 Md. Nazrul Islam 091-12-0068
17 th April, 2012 Showkat Ara Khanam Course Instructor Faculty of Business ASA University Bangladesh Subject: Letter of transmittal for the Case Study on Costco Sara Lee Corporation. Dear Madam, We are glad to submit this Case Study on Sara Lee Corporation. Since this case study is necessary as a partial fulfillment of our BBA studies course. We tried our best to work on it carefully and sincerely to make it perfect. We are very thankful to you for your sincere co-operation throughout the duration of the course. If you need further clarification on any issues, please summon us any time at your convenience. We would like to request you to accept our assignment and oblige thereby. Sincerely, Dewan Imran Uddin 091-12-0186 Rinku Biswas 091-12-0179 Sayed Hossien Tuhin 091-12-0340 Kedar Nath Roy 091-12-0203 Md. Nazrul Islam 091-12-0068
Acknowledgement We gratefully acknowledge the kindness of all people concerned this assignment. Our thanks also go to our friends who helped us many ways; we highly acknowledge their help & contribution. We owe special thanks to our honorable course teacher- Showkat Ara Khanam.. Many of us who are close to us provide valuable comments & suggestions. We are indebted to that people:
Table of content Serial No. Titles Page No. 1 Title page 2 2 Letter of transmittal 3 3 Acknowledgement 4 4 Company profile at a glance 6 5 Sara Lee Corporation profile 7-9 Vision and Mission Statements
1.0 Introduction Sara Lee Corporation (At a glance) Sara Lee Corporation is a global consumer-goods company based in Downers Grove, Illinois, USA. It has operations in more than 40 countries and sells its products in over 180 nations worldwide. Its international operations are headquartered in Utrecht, the Netherlands. Sara Lee Corporation is a leading global manufacturer and marketer of brand-name consumer packaged goods within three major business areas: food and beverage (52 percent of fiscal 2002 revenues), intimates and underwear (37 percent), and household products (11 percent). Within food and beverage, Sara Lee focuses on three principal areas: packaged meats, bakery products, and coffee and tea beverages. The company claims to be the world's leading producer of packaged meats through such brands as Hillshire Farm, Ball Park, and Jimmy Dean. In bakery products, the firm produces fresh and frozen desserts, breads, and doughs, including the famous Sara Lee cheesecake and Earthgrains bread. Through such brands as Douwe Egberts, Maison du Café, Hills Bros., Chock Full o' Nuts, and Pickwick, Sara Lee's beverage business holds one of the top two positions in coffee and/or tea in several European nations, is the leading coffee marketer in Brazil, and maintains the number three position in the U.S. retail coffee market. Sara Lee's apparel operations focus on intimates, underwear, and legwear; the company holds leading share positions in these market sectors in North America, Europe, and several Latin American countries. The firm's well-known apparel brands include Bali, Champion, Dim, Hanes, Hanes Her Way, Just My Size, L'Eggs, Playtex, and Wonderbra. The household products operation is Sara Lee's most global business and has leading positions in four categories: shoe care, body care, air care, and insecticides. Brands include Kiwi shoe care products, Ambi Pur air care products, and Sanex body care products. Although seemingly disparate, most Sara Lee products would be considered staples, helping insulate the company from the effects of economic cycles.
2.0 Company Profile Sara Lee Corporation: Retrenching to a Narrower Range of Business 2.1 Company Name: Sara Lee Corporation 2.2 Address: Corporate Headquarter 3500 Lacey Road Downers Grove, IL 60515, United States Telephone 630-598-6000 Fax: 630-598-8482 2.3 Key Person: Marcel Smits (Acting CEO, 2010- ) James Crown (Chairman, 2010- ) Stephen J. Cerrone Executive vice President of Human Resources Mark Garvey Chief Financial Officer Paulette Dodson interim General Counsel and Corporate Secretary Christopher J. (CJ) Fraleigh Executive vice President B. Thomas Hansson Senior vice President Frank van Oers Chief Executive Officer Marcel Smits Executive vice President and Chief Executive Officer
2.4 Product line: Product Category Food Beverage Household Baby Care Cosmetics etc. Product Line Coffee Butter-Nut Cappuccino Packaged Meat Skin care product etc. 2.5 Branches: 1. America 2. Europe 3. Australia/New Zealand 4. Asia 2.6 Established Year: 1939 2.7 Key Competitors: Tyson Foods Incorporation Kraft Foods Incorporation
2.8 Vision and Mission Statements Vision Statement: To be the first choice of consumers and customers around the world by bringing together innovative ideas, continuous improvement and people who make things happen. Mission Statement: To Simply Delight you.everyday. 2.9 Objectives: Financial Objectives Strategic Objectives Sara lee planed to achieve a 12% Operating profit margins. Sales revenue expected to increase $14 million during the year 2010. Expected to Increase shareholders value in fiscal year 2007 by delivering $370 million divident payout. Planed to increase annual dividend. Expected to increase annual cost savings of between $575 and $800 million. Planed to down company's total debt to between $1.5 and 2 billion by fiscal 2010. Turned its full attention to growing the sales, market shares and profitability. Company had a very lean manufacturing cost structure over rivals. The potential of high sales volume. Better product selection than rivals. Provide quality product and better customer service than the rivals. Strenghening the company's brand name appeal.
2.10 Strategies: Corporate Level Business Level Functional Level Operating Level Develop a strong focus on consumer and customer needs and on operating excellence. Offer competitive pricing, innovative new products and brand building capabilities. Establish new accounts with supermarket and discount store customers. Lean manufacturing cost. Centralized purchasing to achieve economies of scope. Implementation of a common corporate-wide information system platform. Organize effective training program for the employees. Promote special overtime schedule for their employees. Five Forces & SWOT Analysis of sara lee food & Beverage division: Sara lee s food & beverage division included Ball park franks, Jimmy dean sauages, Hillashire Farm deli meats, Sara Lee deli meats, sara lee bakery product, sara lee frozen product, and Senseo single serving coffeemakers and coffee pods.
SWOT Analysis Strengths Sara Lee have product variety and diversification Sara Lee has strong supply chain system. Sara Lee has an strong innovation in production and distribution network. They have competitive pricing model. Achieved Loyal customer Market share leadership, product are marketed in about 180 countries. Weaknesses Management team is changed in a very short interval. Their promotional activity not that much attractive. Their Operating level activities are not specified. Opportunities They use various innovations in their product and marketing system. They provide a variety of Product and services expansion.
Their market emerging day by day. Threats Have to compete with strong competition. With different competitors they have to maintain the price wars. Have to continue their business with exchange rate fluctuation. In their product line various product substitution is exist. Have to survive with external changes (government, politics, taxes, etc). Five forces generic strategy Threat of competitors: The biggest threat in the US food & Beverage industry is competition. In particular, the main players are sara lee, kraft, Smithfield food, hormel and conagra. karaft is the main competitor, with share 21 market share during 2006. Sara lee, as the 2 nd largest industry leader, with 19 percent market share, has adopted a cost leadership generic strategy.
Threat of New Entrants: The food &beverage industry s threat of new entrants is very low. New firms would be faced with the task of beating the prices of economically giants immediate upon entry. Given the economies of scale, brand recognition, service, and variety of product offerings that sara lee, kraft, Smithfield food, hormel, conagra, and others continue to improve on each day, this seems very unlikely. In addition, existing firms could afford to temporarily drop prices even lower in order to force a new competitor out of the market. Suppliers Power: The suppliers to sara lee and other company have too much power. Sara lee collects most of all raw materials from supplier. if supplier their delay delivery or increase prices then sare lee should be affected. Buyers Power: Buyers actually hold a good deal of power in the US food & Beverage industry. Generally the US food & Beverage market is perfect competition market. In the market there have lots of competitors and buyer always prefers good quality product with low price. If sara lee fail then it can also loss their market share. Availability of Substitutes - What is the likelihood that someone will switch to a competitive product or service? If the cost of switching is low, then this poses a serious threat. Here are a few factors that can affect the threat of substitutes: The main issue is the similarity of substitutes. For example, if the price of coffee rises substantially, a coffee drinker may switch over to a beverage like tea. If substitutes are similar, it can be viewed in the same light as a new entrant. Conclusion & Recommendation Sara Lee has several positions that it can take that can strategically grow its profitability. The company currently has limited margins on its bakery line, especially from its dessert items. Since Sara Lee has significant market share with its packaged bread in North America, the company should eliminate its dessert sales and the sale of single-serving coffeemakers. Growth in this segment is very slow, and is not growing within the foodservice industry either. By
selling off its dessert brands, Sara Lee can invest the profits of the sale into other innovations in its other business units. Sara Lee International should expand its household and body care brands into the United States. Its air freshener brands hold significant market share in Europe, which could be utilized in North America. The market for cleaning products and air fresheners is strong in the United States. Sara Lee s innovations would be very successful in the growing market across the Atlantic. The company can also sell more of its insecticides in developing nations, where few treatments are available to prevent bacteria. Nations in Africa are still growing, and could utilize the insecticides to improve farming practices within the continent. Beverage products sold by Sara Lee International produce almost 50% of all profits. These beverages could be sold to local retail business, similar to what is done with Sara Lee Foodservice. The company has already begun selling beverages in retail operations, and with the current contacts and knowledge of the foodservice industry, profits could easily be managed. This strategy allows Sara Lee to develop larger profits by selling its teas and coffees within local businesses throughout Europe. If Sara Lee follows these strategies, the company will be able to amass profits similar to what it had before its divestures. They should more consurner about their marketing sector. They should concentrate on their labor management. They should implement a strong management team for long term benefit. Sara Lee should innovate new marketing promotions. They should be more specific in their operating level activities.