Sara Lee What does a 9-cell industry attractiveness/business strength matrix displaying Sara Lees 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 Lees 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 Lees 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

Intl Coffee 7/1.75 6/.9 8/1.6 8/.8 5/1.25 9/.45 6.75

Intl 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 Lees 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

Intl Beverage 8/1.6 8/1.6 6/1.2

Intl Bakery 5/1.0 6/1.2 6/1.2

Distribution capabilities Brand name recognition/image TOTALS

0.2 0.2 1.0

10/2.0 10/2.0 8.8

10/2.0 10/2.0 8.8

10/2.0 10/2.0 8.8

6/1.2 3/0.6 5.8

8/1.6 8/1.6 7.0

10/2.0 9/1.8 8.2

4/0.8 5/1.0 5.2

Theres ample room for judgmental differences regarding selection of the factors, the weights, and the ratings used to draw a 9-cell GE matrix depicting Sara Lees portfolio. So you should expect that opinions will vary and the matrices they come up with will vary. In this instance, however, the variations should not be very great since it is clear that, with the exception of North American food service, the industries represented in Sara Lees portfolio are only moderately attractive. None of the business units would fall into an unattractive category, although frozen desserts and International Bakery have the lowest industry attractiveness. All of Sara Lees businesses in North America have relatively strong positions in their respective categories. Also, Sara Lees International Beverage business has a relatively strong position in the European market for coffee products. The 9-cell GE-style matrix analysis (Figure 1) indicates that Sara Lees North American Retail meats, North American Fresh Bakery, International Beverages, 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, only Sara Lee Foodservice competes in an industry capable of delivering significant increases in shareholder value. Sara Lees core meat and bakery should continue to receive adequate funding to develop innovative product variations to support growth, but its unlikely new varieties of sausage and sandwich meats or package breads are capable of yielding significant revenue and earnings gains. One can suggest that Senseo and International Bakery are question marks and should receive only medium investment priorities. One can suggest that further retrenchment is necessary and a number of these businesses are candidates for divestiture.