...The case is about the company Newell considering the acquisition of Rubbermaid Incorporated to develop a new company. . Rubbermaid is a manufacturer of plastic products ranging from children’s toys, house wares, to commercial items. Acquisitions are Newell’s main foundation when it comes to growing as a company and making sure every acquisition goes through the proper Newellization process to improve new businesses. Rubbermaid suffered from problems affecting the retail buyers who purchased their items, operations, not being able to compete with rival prices, to a decline in the company’s net earnings. In this case Newell Company contemplated whether or not acquiring Rubbermaid would be a good decision to make. Although Rubbermaid posed great growth opportunity and could possibly bring an increase in income for Newell, I do not think it would be a wise idea for them as a company to merge. Newell Company is highly respected and well known for its customer satisfaction, in-full delivery, the ability to implement sophisticated EDI tie-in with its customers, and the provision of marketing and merchandising programs for the different products they offer. Rubbermaid has had many problems when it comes to customer service, competing with their competitors, and unrealistic financial targets. In an article done by Fortune it was revealed that Rubbermaid had angered their most important retail buyers with ballooning cost forcing them to give shelf space to competitors, lacked modern...
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...Newell Company-The Rubbermaid Opportunity When performing an internal analysis of Newell Company, a few common denominators of Newell’s businesses can be observed. Newell’s strategy was to acquire companies selling well-branded goods to mass retailers at low profit margins. The after the acquisition of theses companies, they would go through a process known as “Newellization.” The goal of “Newellization” was to align the newly acquired companies with Newell operations, with the end goal of turning profit margin to 10-15% within a period of less than 18 months. The companies targeted typically offered products that had operations similar in nature to Newell existing line of products but also offered growth prospects to develop the company as a whole. This allowed Newell to accomplish an integration of these companies rapidly and help achieve an overall efficiency. All of the businesses target the mass retail market. They target this market by distributing off-the-shelf products through mass-retail channels. This is one of the main reasons the Newell businesses achieved success as their value propositions of shelf space and on-time delivery were incorporated into their strategies. Newell also uses growing through acquisitions as another one of its corporate strategies. This is done by the leveraging of synergies among resources, not products, allowing things to be very consistent throughout each business and the newly acquired firms. I believe the critical corporate...
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...Question 1. Success of Newell Corporate Strategy The strategy of Newell Corporation can be described as a strategy of related diversification. The diversification strategy may seem unrelated because Newell was acquiring companies from different industries (office products, picture frames, cookware etc.), but in fact the diversification was related on the basis of: 1) Deploying the unique resources of the company (management relationship with retailers, logistics etc.) 2) Using the same channels of distribution (Wall-mart, Kmart, etc) 3) Common characteristics of the products: low-technology, non- seasonal, non- cyclical, non-fashionable . The most representative quantitative data that proves the success of the Newell strategy is 10 years average return of 31% for investors, that was much higher than average market return of 18%. Also we can mention the stable growth of revenues and profit of the company, but these figures may be not very representative, because the growth in revenues could be a result of extensive growth of the company (if you acquire a lot of companies, your sales will grow for sure, but it is not an indicator of success). What is more important is a stable growth in earning per share in 1992-1997 from $1,05 to $1,82. Another indicator of stable financial situation in the company was a high level of liquidity. This fact could be mention not only on the level of competitive strategy, but also on the level of corporate strategy because the policy of relationship...
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...1. Based on the case and the paper "Creating Corporate Advantage" characterize the previous corporate strategy of Newell (before 2001) in terms of: Corporate Resources ; Businesses; Functions of Corporate Office Before Daniel Ferguson became Newell´s CEO, as an old-line manufacturer of brass curtain rods, the company´s main effort was in offering curtain rods through a big array of channels. In the absence of a defined composition of strategy with a specific target and as to build a corporate advantage, Ferguson recognized that there many elements within the company could be aligned with one another. He foresaw the market trend and announced Newell´s consolidation in the retail business. Based on “build on what we do best”, Newell started to focus on manufacturing and distributing sized merchandise lines to the volume merchandiser. Over the next three decades, through the acquisition of businesses that fit its strategy, Newell acquired 75 different sized companies. What made Newell´s strategy so special? To answer this question, there are three elements that contributed positively to the success of Newell’s corporate strategy: corporate resources, businesses and functions of Corporate Office. Starting with the nature of the resources owned by Newell, which include its assets, skills and capabilities, we could not say whether it is specific or general; Newell is responsible for owning a large diversified portfolio with different business units. This outstanding portfolio included...
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...15.7 Clash of the Cultures: The Case of Newell Rubbermaid Figure 15.13 © Thinkstock Over time, Newell Company grew to be a diversified manufacturer and marketer of simple household items. In the early 1950s, Newell Company’s business consisted solely of manufactured curtain rods. Since the 1960s, however, the company diversified through acquisitions of businesses for paintbrushes, writing pens, pots and pans, hairbrushes, and the like. Over 90% of its growth is attributed to many small acquisitions and the subsequent restructuring and cost cutting Newell instituted. Usually within a year of the acquisition, Newell would bring in new leadership and install its own financial controller in the acquired unit. Then, three standard sets of controls were introduced: an integrated financial accounting system, a sales and order processing and tracking system, and a flexible manufacturing system. Once these systems were in place, managers were able to control costs by limiting expenses to those previously budgeted. Administration, accounting, and customer-related financial accounting aspects of the acquired business were also consolidated into Newell’s corporate headquarters to further reduce and control costs. However, Newell compensated business managers well for performance. They were paid a bonus based on the profitability of their particular unit—in fact, the firm’s strategy was to achieve profits, not simply growth at the expense of profits. Newell managers could expect a base...
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...| Newell & Rubbermaid | Case Study Analysis | | Submitted By:Vinesh MotwaniZain AliAffan RiazFaryal ArifNabil Nasir | 6/23/2014 | | | | | | | | | COMPANY BACKGROUNDTimeline * 1903 Created in 1903 by the acquisition of curtain rods manufacturer by Edgar Newell * 1921 First acquisition of Barnwell Mfg. Co. and renamed to Western Newell * 1965 Dan Ferguson named President who crafted the growth-by-acquisition strategy * 1983 onwards – acquisitions of W.T Rogers, Sanford, Levelor, Goody, Kirsch, Rolodex, Calphalon, Rubbermaid and othersVisionNewell is a manufacturer and full service marketer of consumer products serving the needs of volume purchasers”Offerings: Best better good“Newellization” – Well-established profit improvement and productivity enhancement process that is applied to integrate newly acquired product lines to the parent company.Newell’s key resources and capabilities are tailored around the company’s needs for growth and their customers need for diversity and efficient distribution. The company’s product range and depth (good, better, best) creates huge incentive for retailers to stock product from only one supplier. Their logistics operation with nearly100% first-pass line fill and expanding global presence help the company improve and expand with their customers (mass-merchandisers). The process of “Newellization” is a valuable resource to the company by which Newell acquire, convert, and integrate a new acquisition...
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...te____________ Strategic Management _____________ (BUSA 5051)MBA (PART TIME) (2013)Individual Assignment (Session 5) | | Egor A. Oussov (Student No. 578723)Word Count: 996 Submission Date: May 15, 2012 | Table of Contents Table of Contents 2 1. Newell Case Study 3 Question 1: 3 Question 2: 4 Question 3: 4 Question 4: 5 List of References 6 1. Newell Case Study Question 1: Does Newell have a successful corporate-level strategy? Does the company add value to the business within its portfolio? Newell has a successful corporate-level strategy which has definitely proven itself over nine decades with annual revenue reaching $6 billion. The corporate strategy is embedded on well defined pillars, which has a strong emphasis on the growth through acquisitions of top performing brands in relating industries, creating efficiencies though centralised administration with an assessment of the divisional performance in terms of profitability and distributing their products through mass retailers. Newell’s CEO believed acquisitions contributed towards growth strategy which provided “course corrections”, increasing their market power and striving towards $10 billion plus market mass which would help to reach the critical mass to help to increase their profitability and market dominance. I strongly believe that Newell corporate division adds value for its businesses within its portfolio. The head office is responsible for identifying...
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...systems were introduced: an integrated financial system, a sales and order processing system, and a flexible manufacturing system. Corporate teams, composed of a few company executives, were assembled to centralize administration, accounting, and customer-related financial aspects, consolidating the systems into a single corporate computer system. Rubbermaid Acquisition: Rubbermaid had excellent skill with its ability to develop products, however, it struggled bringing that skill to the bottom line. For Rubbermaid, it will be a chance for a company to deliver its brand equity to the bottom line. While Newell has had much experience with acquisitions of smaller companies, Rubbermaid might be too large to digest. Rubbermaid had to restructure its operations twice, as well as customers complained that Rubbermaid could not provide the service that they required. These motives were typically not value enhancing. Also, shares of Newell have declined over 20% since the acquisition of Rubbermaid. Value Extraction: Newell needs to integrate Rubbermaid into its company by fixing its cost issues, as well as its shipping problems. Rubbermaid needs to be more responsible with timely shipping, fill rates, and product cost. Newell has to meet the needs of the customers,...
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...9-704-491 REV: SEPTEMBER 2, 2005 CYNTHIA A. MONTGOMERY Newell Rubbermaid: Strategy in Transition Joe Galli, 43, was recruited to be the CEO of Newell Rubbermaid in January 2001, two years after the two companies were combined. His mission was to forge a turnaround after a string of disappointing earnings. As he moved ahead, Galli took a personal, hands-on approach. Always in motion, whether walking the aisles of retail stores, meeting with customers, or training his new cadre of managers, Galli’s energy seemed boundless. He strove to embody the attitudes and behavior he felt were vital to achieving his far-reaching agenda for the company. It was an agenda Wall Street seemed to like. In December, 2000, the month before Galli took over, Newell’s stock price dipped to $19.50; it closed at $35.99 in August of the following year.1 While still below the company’s historic high of $54.44 four years earlier, the momentum was forward.2 By the spring of 2003 Merrill Lynch, Prudential Financial, Fahnestock & Co., Inc. and Banc of America Securities maintained ‘buy’ ratings on the stock while Raymond James & Associates reiterated a ‘strong buy’. What did the future hold for the 100 year-old company? Newell’s Former Strategy Newel defines its basic business as that of manufacturing and distributing volume merchandise lines to the volume merchandisers. — Newell Company Strategy, 1967 In 1966, Daniel Ferguson became CEO of Newell Company, a privately held curtain rod manufacturer...
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...| Newell | Memo To: Alex From: Morgan Baker CC: Jimmy Lanigan Date: November 17, 2008 Re: Newell’s current situation Recently, the United States based basic home and hardware product company Newell acquired Calphalon, a manufacturer of anodized aluminum cookware and Rubbermaid, a manufacturer of plastic consumer and commercial products. These acquisitions were deemed necessary by CEO John McDonough. Calphalon will give Newell the ability to enter the department and specialty store markets as well as help Newell’s cookware product line reach the top of the market. Rubbermaid allows Newell greater presence globally and increases brand name. Below you will find information about the Newell Company that will help you better understand the current position and the direction to take in the future. Corporate Level Strategy The Newell Corporate Level Strategy started as a product line strategy where Newell sold their products of drapery hardware to all channels, but the product lines lacked differentiation. In 1966, Newell bought a small window-shade manufacturer in attempts to conquer the problem of differentiation. It was not until Dan Ferguson met Stanford Professor Bob Katz and spoke about differentiation strategies that Newell really began to develop a “build on what we do best” philosophy. After this discussion, Ferguson realized that Newell’s competitive advantage was the knowledge of how to make a high-volume/low-cost product and relate to and sell to the...
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...time and offers wide range of products with strong brand identities that the end users demand from the retailers. To sustain these competitive advantages, Newell grew through acquisition of companies that fit its strategic goals and transformed these companies to operate more efficiently through economy of scale and centralization of corporate functions. With an excellent track record with the mass retailers, strong relationships between the executive teams, and the corporate environment fostering driven management teams, Newell created corporate advantages that reinforces its competitive advantages and made them extremely difficult to copy by the new entrants and to substitute by its competitors. Prior to acquisition of Calphalon and Rubbermaid, Newell created corporate advantages through 2 streamlines. First, Newell consistently generate growth through strategic acquisitions that aligned with its key goals of maximizing profit and servicing mass retailers. Second, Newell created corporate advantage through centralized corporate functions to achieve efficiencies. All post-acquisition companies went through the process of “Newellization” – redirecting acquired business to focus on core products, aligning with Newell’s systems and process in between 6 – 18 month timeframe, and occupying all price points in the same product category through different product/company...
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...has some negative effects on American society, more specifically American workers. Firstly, Wal-Mart decides what to sell, and they want it at a small cost, which essentially corners businesses into giving them what they want, thus controlling businesses. Producers realize that Wal-Mart allows for the widespread consumption of their products, and are willing to bend over backwards to appease the megacorporation. One former Wal-Mart supplier said that Wal-Mart will auction off prices, forcing suppliers to grapple for the lowest possible price in return for their products being sold. One example of Wal-Martś ability to control businesses is their ordeal with Rubbermaid. When Rubbermaid found that their cost of production was increasing, they asked Wal-Mart if they could increase their itemś prices. Wal-Mart refused Rubbermaid´s request, and...
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...China’s prices are cheaper. The low cost of labor in China makes their products cheaper than American products. Chinese products allows Walmart to sell the products to consumers for a low cost. Walmart rakes in the profits because of the large mark-up they use. The United States currently has a major trade deficit. The trade deficit hurts our economy. We are buying more products from other countries than we are selling to them. Manufactures have to go to Walmart headquarters to negotiate prices. If Walmart disagrees with the terms, the manufactures lose them as clients. Rubbermaid once made and sold products to Walmart. The price of resin increased, and Rubbermaid had to increase their prices. Walmart refused to take the price increase. They stopped carrying Rubbermaid products. Rubbermaid was hurt drastically by Walmart’s decision. They later went out of business. If Walmart had took the price increase, Rubbermaid could have possibly stayed in business instead of have to sell their name. Many manufactures can make products at the low price that foreign manufactures can. In order for them to keep Walmart happy and stay in business, they had to take their productions to China or other countries. This takes away many jobs from US...
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...how the item is selling and when. It is important because this helps Wal-Mart keep their shelves full with what they need and when they need it. This also gives Wal-Mart an edge in the negotiating process with suppliers since they know exactly how the supplier’s goods have done in the past. This gives much more power to the retailer rather than the producer. 2. In the year 1994, Rubbermaid was ranked as the nation’s most admired company. This came in part because originally the company did not do business with Wal-Mart, but once Rubbermaid started dealing with Wal-Mart they saw their numbers grow. As the years went on Rubbermaid ran into a problem where the cost for the raw materials used in their products went up causing production costs to increase. As a result Rubbermaid attempted to ask its retailers to increase the price of Rubbermaid products. Wal-Mart refused because of their low price promise to the customer. Wal-Mart then began to cut some Rubbermaid products from their stores which negatively reflected on Rubbermaid. As a result in the year 2004, rather than Rubbermaid being the most admired company, it had become Wal-Mart. 3. An opening price point was a price on a product towards the front of that section of the store reflecting on what other items may be sold in that section. Wal-Mart would use this by putting, say a television in front of the electronics section at a very low price. This would then draw in customers to look at what else is...
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...reader * Track sales of specific items, on specific days, spikes in sales, colors, sizes, flavors, etc. * Shift from push to pull production * Push: manufacturers deciding what to produce, and telling retailors to sell it * Pull: retailors deciding what is being sold, and telling manufacturers what to produce and when to produce it * Have satellite sales offices for manufacturers, focused on prices * Not much negotiations with manufacturers and Wal-Mart * Manufacturer and retailor power shift * Rubbermaid sales and profits fueled by Wal-Mart affiliation * When costs of Rubbermaid products increased, price needed to increase, but Wal-Mart refused to take a price increase * Wal-Mart dropped a number of Rubbermaid products, signaled decline of Rubbermaid * Rubbermaid bought out by Newell, a competitor * Rubbermaid auctioned off remaining items * Wal-Mart represents a cost-driven low-priced model * Opening price point is what is at the heart of the pricing strategy, and attracts all the customers * Consumers formed false perception of everything near that opening price point is being sold at the lowest price * Low-cost supplies from Asia became integral to Wal-Mart’s low prices * 1500 stores in 1990 * After Sam Walton’s death, Wal-Mart stock...
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