Sara Lee Case

Sara leeward retrenched seven of its credit line units in 2006 in pasture to focus itsresources on its more proceedsable industries. The confederations goal is to boost its saleslines by at least 2 percent and cast up its profit gross profit to 12% by 2010. Bydeveloping three competitive capabilities in individually of its remaining note units,Sara leeward looks to improve its net dinero within the succeeding(a) few years. Divested Businesses Analysis Sara Lee divested seven of its units, including: demand sales, U.S. retail coffee,European apparel, European snacks, and U.S. and European meats. The companyfollowed a strategy which allowed it to increase its corporate profits, since almost of its wrinkle units it retrenched were un fat. By 2006, five business units had prohibit net profit margins and negative operational margins. Four of those unitshad negative margins of more than 10%, with different units seeing steady or sharpdeclines in revenues in profits sin ce 2004. The yet two profitable units were the direct exchange unit and the Europeansnack lines. These two lines were seeing declining revenues and operating margins,except in 2006, when both lines increased their margins.

Divesting the snackbusiness was a correct decision, since it was only producing net profits of $3 million,which would not help the business to increase its shareholders wealth. Plus, thecompany have a $70 million after-tax gain, more than 22 times the on-line(prenominal) netprofit. Selling its direct sales business was not a good decision, since it was stilldrawing a 27% profit margin and inco me of $54 million. The business compliments ! its current household and personify care line within Sara Lee International. The unitexposed the company to former(a) markets, while it could have allowed the company tofind potentials for its other products in those markets. though the direct selling linewas still profitable for the company, Sara Lee stock a net gain which was 4 timesthe units current profits. After divesting these seven units, Sara...If you want to move a full essay, order it on our website: OrderCustomPaper.com

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