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Restructuring / Turnaround Strategies Case Study
Case Title:
Sara Lee: CEO Brenda Barnes' Restructuring Strategies
Publication Year : 2006
Authors: Satyabrata, Sumit Kumar Chaudhuri
Industry: Food and Beverages
Region: US
Case Code: RTS0095
Teaching Note: Not Available
Structured Assignment: Not Available
Abstract:
By the turn of the 21st century, Sara Lee Corp., which started as a food products manufacturing company in the US in 1939, had transformed into a $20 billion conglomerate of diversified businesses ranging from Jimmy Dean sausages, Kiwi shoe polish, Hanes undergarments to Ambi pure air freshener and Sara Lee bakery. However, a series of expensive but unyielding acquisitions, lack of investment in new product innovation, negligible expenditure on advertising and the declining returns from its unrelated businesses started affecting the bottom line of Sara Lee. The problem was further compounded by rising commodity prices, sluggish European and US economies, increasing bargaining powers of mega discount stores like Wal-Mart, fluctuating exchange rates and the company itself was mired a series of controversies. Although the company endeavoured to address the situation through several restructuring measures under different CEOs, it failed to overcome its challenges. In February 2005, Brenda Barnes took over as the CEO of Sara Lee and embarked upon one of the biggest restructuring tasks in the US corporate history to revive the fortunes of the company.
Pedagogical Objectives:
- To comprehend how Sara Lee had grown as a market leader in the US by focusing on coherent business expansions
- To discuss the factors that prompted Sara Lee to foray into several un-related businesses in the mid-1990s and the challenges that are faced by companies with diversified business portfolios
- To analyse the reasons behind the failure of various restructuring initiatives undertaken by different CEOs to boost the sagging financial health of the company
- To debate whether the new restructuring strategies of Brenda Barnes would be able to turn Sara Lee's fortunes around.
Keywords : Steven McMillan; John Bryan; Sara Lee's restructuring strategies; Divestiture; Jimmy Dean; De-verticalisation; New vision; Bill Mar; Senseo; Restructuring / Turnaround Strategies Case Study; Acquisition of Earthgrain; Listeorisis controversy; Sara Lee Bakery Group (SLBG); Consolidated Food Corporation
