You will continue to develop Section IV of the Strategic Audit Report (started in Activity 4.3) by adding three more parts to include Operations and Logistics, Human Resource Management (HRM), and Inf

Running head: SARA LEE STRATEGIC AUDIT REPORT 1

Strategic Audit of Sara Lee International

Sara Lee Corporation is a global producer and marketer of high-quality brand packaged products such as meats, beverage as well as bakery goods. The company’s major brands comprise of Jimmy Dean, Ball Park, Hillshire Farm, Senseo, Sara Lee, and Douwe Egbets. The organization boasts of five business segments, including, North American Retail, North American Foodservice, and North American Fresh Bakery. The other two categories are the International Beverage and the International Bakery. After many years of restructuring, acquisitions plus divestment, Sara Lee has emerged as one of the largest multinational organizations in the United States courtesy of its innovative culture (SEC, 2010).

Sara Lee Corporation’s Corporate Culture

While traditionally linked with taste and indulgence, the company has managed to produce a variety of products through innovation. Clements and Thompson (2011), single out Sara Lee’s Soft and Smooth whole grain white bread as an innovative product that has enabled the company to appeal to white bread lovers. The white bread appearance, soft texture as well as taste are particularly important to mothers who struggled with resistance from their young ones who despise coarser textured bread. Hence, the company’s innovative culture aligns with the company’s marketing goal and objective of producing high-quality products. For example, Lamb, Hair, and McDaniel (2011) indicate that Sara Lee’s chief executive officer welcomed innovation when she authorized reinvigoration of the company Kiwi shoe polish, which is one of its legacy brands. The chief executive communicates with consumers, marketers, and retailers to determine their preferences before pushing workers to outside the box.

Sara Lee’s culture of innovation also aligns with the company’s business strategy. In 2004, the company unveiled a new brand segmentation strategy, Senseo product, and the single serve coffee system was brought into the United States market because of its innovative culture. The United States Securities and Exchange Commission (2010) indicates that the company is committed to its long-term strategy of developing innovative products, focus on positive cash flow, and investment in the organizational structure. The company has also capitalized on the product development strategy to expand into other categories beyond its traditional frozen dessert brands. The United States Securities and Exchange Commission further asserts that the company’s business strategies are working, enabling it to move closer toward its goal of creating value for shareholders. Through brand segmentation strategy, the company is investing in different businesses to enhance the right growth brands as well as reduce unnecessary costs on products that do not merit investments.

There is an alignment between the company’s innovative culture and its recruitment policy — the innovation culture advocates for recruiting and retaining a talented workforce. Hirsch (2016) indicates that Sara Lee introduced a returnship program in 2009 to attract as well as retain women and middle-level professionals who are interested in rejoining the workforce from leave. The company realized that many women in leadership positions were quitting and not returning. The drain of talented workforce impaired the company’s innovative culture. The Return-ship program provides the company with innovative and flexible employment opportunities for talented candidates. Most importantly, the company’s culture of innovation supports its mission and vision statements. The company’s mission is to feed, clothe as well as care for the consumers plus their families across the globe.

Internal Factor Analysis Summary

The internal factor evaluation matrix is a summary step for conducting an internal strategic management audit of an organization to evaluate the strengths plus weaknesses of its business. It also provides a basis for the identification and evaluation of relationships founded among the key strengths and weaknesses. An analysis of Sara Lee corporations shows that the company’s key strengths are a strong brand portfolio and diverse revenue model, while its major weakness is over-reliance on Wal-Mart for revenue.

Sara Lee’s Internal Factor Analysis Matrix

Key Internal Factors	Weight	Rating	Weighted Score
Strengths
Strong brand portfolio in the beverage, as well as the food categories, are leading to steady revenue growth. Some of the common brands include Jimmy Dean, Ball Park, Hillshire Farm, Senseo, Sara Lee, and Douwe Egbets (SEC, 2010).	0.2		0.8
Diverse revenue model, as evidenced by continued venturing into businesses outside the company’s core operations (Shein & Yamada, 2017).	0.2		0.8
More than 25,000 trademark registrations as well as applications across the globe. Even if the company divestitures its Body Care as well as International Household businesses, it remains with 10,000 registered trademarks and applications, which are some of its most valuable assets (SEC, 2010).	0.15		0.45
Recruitment and retaining top talent through the returnships program. The returnships program aims at attracting and retaining women plus mid-level professionals interested in rejoining the workforce after extended leave (Hirsch, 2016).	0.1		0.3
Weaknesses
Changes in the company’s credit rating, which could affect the cost of borrowing plus the amount of commercial paper. In 2010, the Standard & Poor’s rating for senior unsecured obligation and short-term borrowing was BBB and A-2, respectively. Moody’s ratings for senior unsecured obligations and short-term borrowings were Baa1 and P-2. FitchRatings for senior unsecured obligations and short-term borrowings were BBB and F-2 (SEC, 2010).	0.05		0.15
Overreliance on Wal-Mart can curtail product pricing plus discount flexibility. Wal-Mart accounted for $1.6 billion, which was more than 15 percent of Sara Lee’s consolidated revenue in 2010 (SEC, 2010).	0.2		0.6
Sara Lee’s has realized a reduction in sales volumes due to an excessive focus on cost reduction strategies, price increases to cover the cost of production and stale product packaging (SEC, 2010).	0.1		0.3
Total	1		1.3

The internal factor analysis matrix leads to a final score of 1.3, which is significantly lower than 2.5, subsequently an indication of weak internal position. Whereas the company has a total weighted strength of 2.35, it has challenges identifying its weaknesses as indicated by a total weighted weakness score of 1.05.

Sara Lee’s Form 10-K Analysis

Key Factor	Rating	Weight	Weighted Score
Net sales for 2010 amounted to $10.793 billion, which was a slight decline of $0.089 billion compared to 2009 net sales of $10.882 billion	0.2		0.4
Net operating income for 2010 was $918 million, which was an increment of $431 million from the $487 million recorded in 2009. This was due to a $286 million decrease of impairment charges, favorable impact of the last week of the financial year and increment in operating results from the international beverage as well as the North American retail business segments. Overall, the adjusted operating income rose by 20.2% (SEC, 2010).	0.2		0.6
Cash from operating activities improved by $52 million as a result of improved operating results as well as improved working capital management (SEC, 2010).	0.2		0.8
Gross margin grew by more than $250 million in the financial year ending 2010 due to lower commodity costs, improved sales mix, favorable foreign currency exchange rates, and cost-saving initiatives (SEC, 2010).	0.2		0.8
Notes payable for 2010 amounted to $47 million compared to $20 million for the year 2009. Total debt decreased to $2,781 in 2010 from 2,804 in 2009 (SEC, 2010).	0.2		0.2
Total			2.8

The form 10-k analysis matrix leads to a final score of 2.8, which is higher than 2.5, therefore an indication of strong financial position.

References

Clements, M., & Thompson, T. L. (2011). Tuning into Mom: Understanding America's most powerful consumer. West Lafayette, IN: Purdue University Press.

Lamb, C. W., Hair, J. F., & McDaniel, C. (2011). Marketing. (11th ed.). Mason, OH: South Western Cengage Learning.

Shein, J., & Yamada, L. (2017). Sara lee: A tale of another turnaround. Kellogg School of Management Cases, 1-22. Retrieved from. https://doi.org/10.1108/case.kellogg.2016.000293

Society for Human Resources Management. (2016). Welcome back to the workforce, mom and dad. Hirsch, A. S.

United States Securities and Exchange Commission. (2010). Form 10-k: Sara Lee Corporation. Washington, D.C.: U.S. Government Printing Press.