Starbucks Case
Sara Lee Corp. Case
The main strategic issue for Sara Lee is that the diversification efforts of the company have become too broad. This has resulted in the company to invest in non-strategic areas. When doing this it makes it extremely difficult in becoming profitable and to be able to effectively manage all the businesses. Sara Lee has managed to over diversify itself and needs to slim down to just what they are good at. If they just begin to focus on what they can do well they will be able to cut cost and profits will be greater if when cutting multiple segments out.
Sara Lee Corporation is a broad differentiation strategy. The company has many different product lines and they are trying to finds ways that their product is better than the rivals next to them. Right now it seems that Sara Lee has found itself becoming too broad. The company has tried to diversify itself into multiple markets but have forgotten about the advantages they already have. They have become too broad in the sense they have too many business that give them no strategic advantage. The company should focus on the products that have a high advantage on that and focus on capturing the economies of scale for that product. It we eliminate one product that opens more store shelf space which could allow us to produce more of a product and fill the shelves with it. More space will equal into more product to be made which will lower unit cost.
If Sara Lee focuses on only what is good at they will be fine. They already have sustained some competitive advantage in the industry. According the Porter Model of Five forces the potential entrants are low. Sara Lee is most likely not going to see many new competitors pop up in the industry. There is too much cost and learning skills to be a leader in this industry. On the other hand the threats of substitutes are high for Sara Lee. Sara Lee needs to do a good job of differing the product. There are similar substitutes readily available for consumers so we need to find a way to get them to buy ours. The bargaining power of the customers and suppliers