4. What corporate culture issues might exist when a former division of a big company is spun off? Coach Inc. started out In 1941 making virtually indestructible, high-quality handbags. In the 1970s it was bought by Sara Lee Corp., a big company that was pursuing a strategy of diversification. Because Coach was just one of literally dozens of businesses owned by Sara Lee, it suffered from the lack of focused management attention.

Coach's CEO, Lew Frankfort, knew that his company's success depended on finding the right industry niche.

In 2000, he convinced Sara Lee to spin off Coach as an independent company.

By 2007, Coach had sales of $2.6 billion, and the company's net income growth had averaged 51 percent per year for the previous five years. In spite of the recession that started in 2008, the company planned to open many new stores in North America and in China And it had big plans to compete with the best-known brand names in the industry. For example, just a few years ago in China, Louis Vuitton had the largest market share

(33 perc,ent), followed by Gucci and Prada (more than 10 percent each). Coach had only 2 percent. But by 2007, Coach's market share had Increased to 12 percent, Louis Vuitton's share had dropped to 27 percent, and Gucci and Prada had less than 10 percent each.