The five competitive forces for Sara Lee Corporation have overall caused an increase in competition. The threat of substitute products and buyer bargaining power are both a result in this increase. Sara Lee negotiates with the buyers so that their products are able to get more shelf space in the supermarkets. The five most important key success factors for Sara Lee’s various industries are distribution, low cost, capacity utilization, brand recognition, and product differentiation. Distribution is the most important because Sara Lee is widely globalized corporation, good distribution is necessary to remain competitive.
Low cost is vital when competing in foreign markets against local and regional competitors with fewer costs. Higher capacity utilization will lead to improvement in economies of scale. Brand recognition allows companies to generate sales in current and new markets based on reputation. The importance of product differentiation is largely due to competing globally. A perfect example of this is international bakery industry where one country prefers fresh bread, another may prefer frozen bread, and another yet may prefer refrigerated bread. Product differentiation allows a company to successfully compete in several regions. Other key success factors would include marketing, innovation, and inventory management systems.
Sara Lee’s retrenchment strategy moved it from using a broad differentiation strategy to a focused differentiation strategy. The purpose of the change was to eliminate weak performing divisions and focus on the areas of the corporation that were most profitable or had the most promising prospects.
Sara Lee was made up of many different unrelated businesses. There were business that revolved around apparel, retail coffee, the direct selling of cosmetics, household products, and more, and snack and meat products. Sara Lee sold many of these businesses because they were nonstrategic to the company. Although some of the businesses have been sold off, Sara Lee has the spin-off brand to the Hanesbrand which has been beneficial to their shareholders. Shareholders receive one share for every eight shares that they own.
Our final recommendation is to continue revamping the value chain, coordinate with suppliers, and reduce material and shipment costs. Though the original financial goals stated by Sara Lee were not met, the newly implemented Project Accelerate is showing signs of improving the company’s costs and value chain efficiency which is why they should continue to focus on those areas.