Newell Case Assignment

Newell Case Assignment

Discussion Questions:

1.      Use the Collis and Montgomery corporate strategy model to describe Newell’s corporate strategy.

2.      What makes a good acquisition target for Newell?  What does success in “newellization” depend upon?

3.      As a member of the Newell Board and based on your understanding of its strategy and the “newellization” process,  evaluate the proposed merger with Rubbermaid.

Question1

Newell’s corporate strategy, which applied to all of its operations, was to differentiate on the basis of superior service to its mass merchandise customers. For Newell, superior service included industry-leading quick response times, in full deliveries, implementing EDI, and the provision of marketing and merchandising programs for product categories that encompassed good, better and best times.

Question 2

Newell had a pretty aggressive and disciplined approach when it came to acquisitions. A good acquisition target would have:

• Strategic fit with the business
• Leading in their own respective markets with established shelf-space
• Long product life cycle
• Potential to reach Newell’s standard of profitability

The success in “newellization” depended on the smooth integration of the acquired company with Newell. Some of the key points of the Newellization were:

• Transfer of experienced Newell managers
• Simplification and focusing on the acquired business’s strategy
• Inauguration of Newell’s culture to the business

Question 3

The proposed merger with Rubbermaid was a good decision for Newell for the following reasons:

• Rubbermaid had the existing qualities in their business that Newell values, such as: efficient supplier the mass merchandiser, low cost sourcing and strong consumer franchise ie, shelf space
• Newell’s management forecasts appear to be attractive with the introduction of the “newellization” process into Rubbermaid
• By acquiring a player as big as Rubbermaid, Newell would be able to solidify its position in the market