NEWELL COMPANY: Corporate Strategy

Group-4
PGPJ01043 RAJAT SETH
PGPJ01044 RASHMEET KAUR
PGPJ01045 SAHIBA RASTOGI
PGPJ01046 SATHEESHKUMAR D
PGPJ01047 SHIVA JALHOTRA
PGPJ01048 SIDHANT NAIN
PGPJ01049 SOMNATH ROY
PGPJ01050 SRIRAM GOWTHAM R
PGPJ01051 SUPRIYA
PGPJ01052 TANUJ GUPTA
PGPJ01053 THAKOR DARSHAN
PGPJ01054 VIKAS YADAV
PGPJ01056 VORA NEELRAJ MANISH
 SWOT ANALYSIS

Strength Weakness
1.Leadership 1.Inefficient Procurement of
2.Product Diversification Raw Material
3. Growth Focus 2.Product Issues
4.Operational Efficiency
3. People Concerns

Opportunities Threats
1.Product and New Market 1.Market Forces
2.Marketing, Advertising 2.Increased Competition
and Branding 3. Bargaining Power
3. Strategy
 Newells Diversification
Manufacturer and marketer of basic
home and hardware products

Asynchronous Diversification.

Grown over the years through many

acquisitions, the company is facing
one of her most important challenge
 STRATEGY
Newells competitiveness lied in high volume low cost production and its ability
to sell to large mass retailers.
With this core competence, Newell diversified into several companies which were
underperforming due to high cost and had operating margins less than 10%.
These companies ranked first and second in terms of market share.
These companies were undervalued due to poor management.
After acquisition, these companies went through a process of Newellization.
These companies were important to the retailers and had considerable shelf
space.
This helped Newell in leveraging economies of scope by exploiting relationships
with discount retailers to get the shelf space it needs.
Newell then negotiates the terms and conditions for products belonging to other
subsidiaries in its portfolio.
 VALUE ADDITION TO ACQUIRED
COMPANIES
The acquired companies went through a process of Newellization
It streamlined the businesses of the acquired companies through its IT-based sales and flexible
manufacturing system.
Newell re-designed its organizational structures according to the need of the hour, it set forth a
dynamic process of development within the company.
Each product division functioned as an entrepreneurial entity.
It emphasized profit over sales, as sales could be high but with little or no effect on the bottom-line
because the processes of production and marketing etc. were not efficient enough.
Newell made the cash collection procedures of the acquired companies flexible by eliminating the
90-day terms agreements.
 Newell Distinctive Resources
Newell took a number of steps in order to improve its position in the market by capitalizing on
internal strengths.
Done through acquiring some new companies; Rubbermaid and Calphalon.

The Newellization process was based on the prospective acquisition target of having a number
of attributes that correlate with Newells requirements of the target organization.
In reality, Newells success was attributed to its strength in three general capabilities.
It did not lose focus on its goal of keeping a solid reputation with national chains.
It was able to deliver on this target because of its second strength that was its corporate
structure.
Finally, it possessed technology, in the form of EDI, which is more than adequate for the
needs of its retailers.
Does the acquisition of Calphalon make
sense?
The Acquisition of Calphalon proved quite beneficial for Newel as it moved into the non mass merchandise market
Leveraging the existing strength of Calphalon, Newel can differentiate its portfolio by using skilled sales force, by giving
product demonstration and training
The existing strength of Calphalon of having connection with consumers and retailers could be used by Newel to establish its
image as a retail brand.
The acquisition would also help to reduce the Calphalon selling, general and administrative expense which is 25% per year.
Besides this Newell management can bring discipline to Calphalon business in areas of financial, organization and
manufacturing and Calphalon can share its expertise with Newel in developing pull strategies and building strong connection
with distribution channels and customers.
One negative aspect of the acquisition would be that executives of Calphalon would be discarded.

.
Was the Rubbermaid acquisition a good
move for Newell?
Rubbermaid acquisition was a good move because it helped Newel to integrate a new acquisition in to a new product
line with in a short lead time
The main aim behind acquiring Rubbermaid was to gain significant shelf space at mass retailers. This acquisition will
help Newel to place its products at the front of the aisles and to increase its sales.
Despite the fact that Rubbermaid was inefficient in its operations, however Newel can help Rubbermaid by leveraging
its operational and financial system and can use the existing brand to improve Rubbermaid deteriorating position.
By controlling the Rubbermaids cost Newel could make 9 % to 11% net income as a percentage of sales. Moreover,
acquiring Rubbermaid will value Newel over the $ 10 billion market capitalization. This market capitalization would
further help to overcome the increasing market power of retailers as they try to reduce Newel margins.
The Newel two pronged strategy fits well with that of Rubbermaid. This acquisition helped Newel to enhance its
opportunities for internal growth and globalization by leveraging the strengths of smaller companies.
Newel needs to devote a lot of time and resources for training and managing Rubbermaid workforce therefore a trade
off needs to be done by Newel that whether to spend time on new acquisitions or on leveraging the Rubbermaid
existing strengths and making use of product development and innovation.