Sara Lee What does a 9-cell industry attractiveness/business strength matrix displaying Sara Lee’s business units

look like?
To draw a 9-cell industry attractiveness/business strength matrix for Sara LeeCorp. using rigorous methodology, you need to do industry attractiveness ratings for each of the industries in which Sara Lee competes and do competitive strength ratings for each of Sara Lee’s business units. These ratings should then be used to plot the location of the bubbles on the 9-cell grid. Otherwise, one can end up locating the bubbles on the basis of “judgment,” which may or may not match up well with a welldone set of ratings. Try and spendcl time to go through the development of industry attractiveness ratings and business strength ratings as given in text book and then use the ratings to draw the 9-cell matrix. However, if time is tight you can resort to the judgment approach. Table 1 of this note shows industry attractiveness ratings and Table 2 presents business strength ratings. Figure 1 shows a 9-cell GE-style matrix where the location of the bubbles is based on the industry attractiveness and business strength ratings shown in Tables 1 and 2. TABLE 1 Industry Attractiveness Assessment for Sara Lee’s Businesses (Scale 1 = very low attractiveness, 5 = average attractiveness, 10 = very strong attractiveness)
N.A. Single Serving Coffee 2/.5 5/.75 8/1.6 7/.7 5/1.25 9/.45 5.25

Attractiveness Measure Market size and growth rate Industry profitability Intensity of competition Emerging opportunities and threats Product innovation Social, political, environmental, factors TOTALS

Weight 0.25 0.15 0.20 0.10 0.25 0.05 1.0

N.A. Retail Meats 7/1.75 5/.75 6/1.2 5/.5 5/1.25 9/.45 5.9

N.A. Retail Bakery 7/1.75 5/.75 5/1.0 5/.5 5/1.25 9/.45 5.7

N.A. Frozen Desserts 2/.5 5/.75 7/1.4 6/.6 3/.75 9/.45 4.65

N.A. Food Service 10/2.5 6/.9 8/1.6 10/1.0 9/2.25 9/.45 8.7

Int’l Coffee 7/1.75 6/.9 8/1.6 8/.8 5/1.25 9/.45 6.75

Int’l Bakery 4/1.0 5/.75 5/1.0 8/.8 5/1.25 9/.45 5.25

TABLE 2

Competitive Position/Business Strength Calculations for Sara Lee’s Business Units (Scale 1 = very weak, 5 = average, 10 = very strong)
N.A. Retail Meats 8/1.6 10/2.0 6/1.2 N.A. Fesh Bakery 7/1.4 10/2.0 7/1.4 Sara Lee Frozen Desserts 10/2.0 8/1.6 6/1.2 N.A. Food Service 6/1.2 7/1.4 6/1.2

Strength Measures Relative market share Marketing and promotion Product innovation capabilities

Weight 0.2 0.2 0.2

Senseo 9/1.8 5/1.0 6/1.2

Int’l Beverage 8/1.6 8/1.6 6/1.2

Int’l Bakery 5/1.0 6/1.2 6/1.2

6 7. although frozen desserts and International Bakery have the lowest industry attractiveness.0 10/2.8 5/1.6 8/1.8 10/2. Sara Lee’s core meat and bakery should continue to receive adequate funding to develop innovative product variations to support growth. International Beverages.0 10/2. the industries represented in Sara Lee’s portfolio are only moderately attractive. but its unlikely new varieties of sausage and sandwich meats or package breads are capable of yielding significant revenue and earnings gains.2 4/0. The 9-cell GE-style matrix analysis (Figure 1) indicates that Sara Lee’s North American Retail meats.8 8/1.0 10/2. however. only Sara Lee Foodservice competes in an industry capable of delivering significant increases in shareholder value.0 8.2 0.8 10/2.0 8.0 10/2. and Sara Lee Foodservice businesses are all “grow and build” businesses that should be given a high priority for investment. You should note that even though these businesses fall into “grow and build” cells on the matrix.0 9/1. So you should expect that opinions will vary and the matrices they come up with will vary. Also.8 8.8 6/1.6 5. One can suggest that further retrenchment is necessary and a number of these businesses are candidates for divestiture.0 10/2. None of the business units would fall into an unattractive category. with the exception of North American food service. the weights.2 There’s ample room for judgmental differences regarding selection of the factors.Distribution capabilities Brand name recognition/image TOTALS 0.2 3/0.0 8.2 1.0 5. . Sara Lee’s International Beverage business has a relatively strong position in the European market for coffee products. All of Sara Lee’s businesses in North America have relatively strong positions in their respective categories. and the ratings used to draw a 9-cell GE matrix depicting Sara Lee’s portfolio. In this instance. One can suggest that Senseo and International Bakery are “question marks” and should receive only medium investment priorities. North American Fresh Bakery. the variations should not be very great since it is clear that.

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