Sara Lee is an international company that is involved in the production and manufacturing as well as marketing of consumer goods. The company was developed back in 1939. This was the time when CD Kenny Company was acquired by Kenny Company that was involved in the distribution of tea, sugars, and coffee.
The company is involved in a number of product lines that includes beverages, food, household products and branded apparel. The company is involved in a highly competitive market competing with about 2000 markets across the world. Since the company is involved in marketing products whose supply is relatively very high, it is forced to put more effort on marketing in order to maintain a high level of sales.
Sara Lee mission
Sara Lee’s mission is to delight its customers’ everyday. The company is very much determined to maintain value to its customers by providing quality products throughout. Consequently, it is advisable for the company.
Sara Lee’s vision is to be the first choice to the consumers and customers from all over the world. The company is therefore determined to maintain good relationships with its customers. This has been achieved by maintaining value for its customers.
In order to maintain a high level of performance throughout the organisation, Sara Lee Corporation is led by several principles that have significantly contributed to the success of the organization. One of the main principles is to act with integrity (Sara Lee Inc. par 6). The company has maintained this principle across the organisation in all its aspects.
The company is also devoted to be inclusive and work in teams in order to promote the overall performance (Anonymous 5). The company is now determined to integrate these values in its day to day operations. Sara Lee has managed to improve the sustainability of business model by promoting dialogue with its stakeholders. This has ensured that all the parties involved are given an opportunity to make their contributions.
As already noted, Sara Lee is one of the global marketer and producer of consumer goods (Sara Lee Inc. par 4). The company deals mainly with the foods and beverages. Since the company operates in the global market, it faces a very high level of competition. The company has a number of competitors in the global markets.
These include Bimbo, Kraft, Tyson Foods, Blyth, Inc., Arcor Group among others. Despite the fact that the company has recorded a good performance in the market, it is required to come up with effective strategies in order to maintain good performance compared to its competitors. Lacking to do so may cause the company to lose to its competitors.
Sara Lee’s external environment can clearly be understood using Porter’s five forces model. This model can help in understanding Sara Lee’s external environment. One of the Porter’s forces is the intensity of competition rivalry. The level of competition plays a significant role in determining the performance of an organisation.
Sara Lee faces a high level of competition from other companies in the industry. The bargaining power of the suppliers supplying Sara lee with raw materials is very low. This is because there are many suppliers in the industry. Therefore, the company can easily choose the supplier who is offering the lowest price. On the other hand, the bargaining power of the consumers is high.
There are many companies providing products similar to those provided by Sara Lee. Therefore, buyers can easily shift from one seller to another. Sara Lee is also faced by threat of new substitute products. For instance, more customers are now shifting to organic products. This may lead to a significant fall in the company’s level of sales.
As already noted, Sara Lee is one of the top performing organizations across the world. It has a strongly built brand in branded consumer packaged goods. Its strongly developed brand ensures a stable growth of its capital, the factor that has significantly contributed to the growth of the company’s competitive advantage.
However, it has been projected that the private labels may increase significantly in the future. As a result, the position of Sara Lee may weaken since its sales will tend to diminish as it loose more customers to its competitors.
One of the major strength for Sara Lee lies on its strong brand that is easily recognizable across the world. The strength of the brand is one of the major factors that determine the ability of an organisation to promote its sales. Organizations with strong brands are able to maintain a high level of sales. For instance, an organization can easily market a product with a strong brand in any part of the world.
Little marketing effort will result in high level of sales compared to other competitors in the same industry. Therefore, strong brand is one of the major factors where Sara Lees’ competitive advantage lies. The major brands that are widely known include the Douwe Egberts, Earth Grains, Jimmy Dean, and Kiwi among others.
All these brands are easily recognized in many parts across the world. As a result, the company can easily sell these products in a different market. This has helped the organization to maintain a high level of sales. This is a clear implication that the company has paid adequate attention in the creation of strong brands in order to come up with such strongly built brands.
It costs an organization significantly to come up with a strong brand. An organisation is required to invest both human and financial capital in order to realize strong brands. Strong brands ensure repetitive purchases of organizations’ product and consequently maintaining a perpetual growth in organization’s revenue.
Sara Lee has also managed to promote diversification in its operations. In most cases, one product may fail in the market; when this happens, organizations specializing on single products may lose significantly. Specialization in one field can therefore lead to total failure, which may even lead to closing of the company. Sara Lee has managed to overcome all these problems by having a diversified business.
The company has diversified its business both geographically and in terms of products. As already noted, the company is involved in manufacturing and selling a wide range of products. Therefore, the company is always in the safer side incase one of the product fails. By dealing with different lines of products, the company is also able to mitigate the risks associated with product cycles.
For instance, the cash cows can maximize the organization’s revenue as the other products at their lower stages of development improve. By operating in different markets, the company is able to innovate. However, the company has come up with a retrenchment strategy in order to concentrate on the cash cows.
Over the past, Sara Lee has managed to maintain perpetual innovation within the organization. Innovation is based on observation and speculations on current and the future needs of the consumers. This has directed the company in innovations and improvement of product quality.
Therefore, the company has managed to maintain a high level rate of customer satisfaction. This has also helped in building the organization’s competitive advantage. Innovation has also led to effective differentiation of the company’s product from those privileged by its competitors.
One of the major weakness of the company lies on its poor financial performance. For instance, its revenue fell from $ 19,566 million in 2004 to $10,793 million in 2010 (Thompson and Gamble 252). This is a significant difference. This revenue has also been characterized by a high level of fluctuations.
Similarly, the profits have been fluctuating significantly. For instance, profit fell by about 62 percent between 2005 and 2006 (Thompson and Gamble 252). This threatens the performance of an organisation since it becomes hard to make predictions.
One of the major opportunities for the company is the emergence of new markets. New markets are emerging in areas like Eastern Europe, some parts of Asia and Central Europe. The company can increase the level of sales by venturing into such markets. By so doing, the company will be able to compensate on the sales lost from the current market saturation. The company has also managed to acquire major organisation. The company can therefore increase its sales by capitalizing on their markets (Witzel 87).
One major threat to the company is the emergence of the private label. Many consumers are shifting to private labels, the factor that has made Sara Lee to lose a significant number of consumers.
This poses a major threat to the company as more consumers change their purchasing pattern. Another threat is the increasing oil prices. High oil prices have led to increase in operational costs. This has led to shrinking of the profit margins. For instance, the costs of distributing products have been increasing with the increase in oil prices.
The rise in the consumers’ diet consciousness also raises a major threat to the company (Data monitor 6). Consumers are now more concerned about the nutrition content of a particular product. Another threat is posed by the environmental and the governmental regulations (Data monitor 6). These requirements tend to form major barriers to the company in its efforts to minimize its production costs.
The company purchases the raw materials from manufacturers, distributers, agents and consultants. Then, the materials are used in production of different products in the company’s premises. By procuring raw materials cheaply from the suppliers, Sara Lee has managed to minimize its operational costs.
The company is determined to minimize its operational costs by restructuring its supply chain. These efforts are aimed at streaming the production process hence reducing the costs. Recently, the company is opting to outsource most of its activities, the fact that has led to a significant decrease in its operational costs.
Once the goods are manufactured, they are distributed to various stores located in strategic points in the market. Finally, the products are distributed to the wholesalers and retailers from where the consumers can access the goods.
As already noted, Sara Lee has emphasized on the need for diversity in its operations. It is involved in the production of numerous food products and beverages. This has minimized the risks since the company cannot be adversely affected in case one of the products fails (Mercer 70). The company also operates in different markets. Therefore, it is able to retain high level of sales in case one of them fails.
Sara Lee is committed to promote the effectiveness of all proposed strategies. The company is committed to achieve its goals by engaging all the stakeholders in the decision making process. Therefore, the company has maintained its actions in line with its strategies.
In order to boost its profit margins, Sara Lee decided to undertake retrenchment in order to remain with only those products that have been doing well in the market. So far, the company has executed the strategy effectively. For instance, the company increased its profits margins by 8.5 percent (Thompson and Gamble 243).
It has been noted that even after implementing the retrenchment strategy, Sara Lee still records a very low level of percentage increase in profits. The company’s failure can be attributed to the threats discussed above. Therefore, there is a need to come up with strategies to mitigate these risks in order to promote the performance of these organizations.
Adopting Cheaper Transportation Means
As already noted, the company has been experiencing a highly increasing distribution costs following increase in oil prices. However, this threat can be mitigated by adopting cheaper transportation modes like train. In most cases, the company distributes it products using tracks and other kinds of vehicles accordingly.
Transportation of products in small quantities is more expensive compared to bulk transportation. By using transportation modes like the train, Sara Lee will use a smaller amount of fuel. This will be cheaper. This will therefore help the company to reduce its distribution costs despite of the hiking oil prices.
Another major way through which Sara Lee can maintain a high level of performance is by carrying out campaigns and training programmes in order to educate communities on eating and wellness. It has been realized that consumers are now more conscious about the diet when buying foods and beverages.
In order to avoid loss of customer from such cases, there is a need to conduct training activities in order to educate consumers on the importance of the company’s products in improving their health. This can easily be conducted through the media where it can reach a large number of populations (Lamb, Hair and McDaniel 58). This kind of education may also attract new customers who will seek to use company’s products to get the required nutrients.
In every organisation, change is very important in promoting feasibility between the organization’s operations and the changing market. From the above discussion, it is clear that Sara Lee has a wide range of opportunities that need to be utilized. Although the company has recorded good performance compared to its competitors, there is still a room for improvement.
For instance, the company’s income before tax has been fluctuating significantly. The total income tax has also been falling from 2004 to 2010 (from $1,542 million to $9180 million) (Thompson and Gamble 252). This implies that there is lot to be done in order to realize the company’s potential level of performance.
Some of the products are performing exceptionally well while others are performing exceptionally poor. In order to overcome this problem, the organization must be able to promote collaboration so as to promote the overall performance. It is also important to involve customers by collecting their views on product issues.
Anonymous. “Sara Lee 2009 Sustainability Report.” Sara lee, Web. 02 Dec. 2011
Data monitor. “Sara Lee Corporation.” Favormall, May 2007. 1st Dec. 2011.
Lamb, Charles, Hair, Joseph, and McDaniel Carl. Marketing. Mason, OH: Cengage Learning, 2008. Print
Mercer, David. Marketing. U.K: Wiley-Blackwell, 1996. Print
Sara Lee Inc. “Our Brands.” Sara Lee, 2011. Web. 1st Dec. 2011. http://www.saralee.com/
Thompson, Arthur, and Gamble John. Sara Lee Corporation: Has Its Retrenchment Being Successful. Part 2 Cases in Crafting and Executing Strategy
Witzel, Morgen. Management: The Basics. New York: Routledge, 2004. Print