Newell Company Corporate Strategy Essay

1. In assessing Newell Companys bodied-level dodge and whether the come with adds value to the businesses at bottom its portfolio, it is prerequisite to identify its all overarching strategy and then explain it with context to how it affects the various businesses inside the pear-shapedr integrated body. Newell Companys main somatic-level strategy as defined by Dan Fergurson was build on what we do best. The political party concentreed on ingathering through strategic acquisitions of besotteds that interchange disordered cost and mettlesome volume merchandises to large retailers, but that were underperforming out-of-pocket to proud operating cost. After an acquisition, Newell would then change the actual operational systems of the firm to align it with its merged structure. The aim was to attach operational ability and advantageousness and to focus it on a key carrefour. In 1990, Newell likewise recognised the importance of internal emergence and embroild i t in its somatic-level strategy.Newells corporate-level strategy had a spicy level of positive impact beca practise it was internally consistent. The corporate office maintained control over legal, administrative and financial functions succession allowing individual divisions to control marketing, manufacturing and sales. It also retained strict control over to each one divisions product lines as it disallowed any difference of opinion from the key product focus defined by Newell. This ensured that the decisions made by various divisions remained in line with the Newell corporate office strategies. Overarching company goals were also aligned with its business strategies and acquisitions, and this was beneficial for the various companies it acquired over time. wholeness of Newells corporate strategies was selling products a despoil opposite price points. This remained in consistency with its goal of being a provider of low cost and high volume goods to large retailers and h elped to keep the company competitive against new entrants to the different price categories.This was advantageous to businesses under Newell as its respective product lines were equal to(p) to retain important shelf space, ensuring better sales of products. Focused growth via streamlining strategic acquisitions was enabled by Newells appropriate use of available resources. One of Newells core competencies was its operational efficiency and its system of bringing acquired companies to its high standards of efficiency and profitability. Its success in the streamlining process can be seen from the deftness with which changes were made and the results of the process. As stated in the case study,Newellization typically took little than 6 months to implement. After acquiring Anchor Hocking, the management from Newell achieved cost nest egg by letting go of unnecessary resources within the company much(prenominal)(prenominal) as its glass factory and its retail stores and introduced new systems which helped to bring about improved efficiency such as reducing its node put out order period from 18 to 7 days. succession the businesses within Newell may commence encountered issues due to the restrictions on progressive growth, they ultimately benefited from the focus on operational efficiency and cost savings resulting in high operating margins.Newells corporate-level strategy was reasonably dynamic relative to the environment. While it maintained a strict focus on certain goals, the corporate strategy was also modified to include new ideas that would ensure sustainable growth. This can be seen from the case where Newells growth strategy was grow to include the international market, widening their acquisition target field to include companies based overseas. This was due to the fact that Newells target market, retailers like Walmart, was expanding into abroad markets. In 1989, corporate management recognized the importance of internal growth within the re spective divisions instead of simply focusing on each division generating higher levels of profit, and the growth of the company being driven by acquisitions. They reflected this change in attitude by changing the corporate incentive structure to encourage executives to pursue internal growth in supplement to its existing goals.Newells corporate-level strategy was effective for many a(prenominal) years as can be seen from the fact that it had higher returns to investors comp atomic number 18d to the S&P 500. This was due to a number of factors such as maintaining internal consistency, efficient use of resources and keeping corporate strategy dynamic relative to the changing environment. Businesses acquired were in synergy and this was beneficial to individual businesses in ensuring less wastage and improved levels of renovation and efficacy. In addition, businesses were also able to take advantage of Newells economies of collection plate and economies of scope. However, despite its positive financial returns, as financial returns argon common mood of past policies being effective, it would non be symptomatic of future success. Newells strict enforcement of focus on key product lines without allowing for more innovative expansion of those product lines could have to much slower levels of growth later on initial operational synergies were realized.This would in turn be detrimental in maintaining its competitive advantage in the long run.4. While the acquisition of Calphalon could portray some problems in the integration process, it was aligned to Newells boilers suit corporate strategy and would be beneficial to Newell in the long run if Calphalon was incorporated without eroding its premium product offering. Calphalons acquisition was beneficial to Newell in two ways. It allowed Newell to branch out into new markets that had not reached saturation without cannibalizing its existing product lines. While Newell focused on mass market retailers such as Wa lmart and Home Depot, Calphalons products were sold to high end retailers such as Williams Sonoma and Macys. Calphalons product offering and strong carry cognizance would enable Newell to reach out to the premium market and diversify its product portfolio further. At the alike(p) time, Newells strong focus on customer relationships and Calphalons attitude of building partnerships with its retailers are similar and would ease its preoccupancy into the firm.Calphalons pull strategies could also be leveraged by Newell to differentiate its product portfolio from other low cost competitors, enabling it to maintain its existing market share. Newells core competencies would be useful in reducing Calphalons rising costs while concentrating on its strength as a premium product. As can be seen from the financial statements, cost of goods sold increased significantly from 1996 to 1997 without a correspondingly large increase in revenue. The problems faced by Calphalon in terms of operation s would be comfortably manageable for Newell condition its strong background in operational efficiency and its experience with assimilating acquisitions to its corporate system. However, as Newells product offerings were mainly utilitarian while Calphalons products focused on an emotional radio link between the product and the premium end user, Calphalons integration into Newell would be more delicate than other acquisitions.As the Newellization process typically removes the acquired companys systems to replace it with Newells system, its stringency could erode Calphalons blur equity as a premium cookware producer. While this would be ambitious, it would still describe sense in the long run given the potential benefits to Newell and the relatively low amount of risk present in the acquisition.The acquisition of Rubbermaid would seem beneficial given the numerous advantages that Newell would gain, but the many complications associated with the process as well as the fundamental differences between Newell and Rubbermaid make the acquisition too risky to undertake, and thus strategically unsound. The advantages associated with the Rubbermaid acquisition are obvious. Rubbermaid fit into Newells criteria for acquisition. It sold targeted product lines to mass retailers, and had strong brand equity. It also suffered from troubled operations, which Newellization would help to address. In addition, the purchase of Rubbermaid would enable Newell to cross the $10 billion threshold that would in turn lead to an increase in market power against retailers like Walmart who implemented harsh policies which were nonnegotiable.However, these advantages are offset by a number of issues. Newell and Rubbermaid, while pursuing the same product offerings, had fundamentally different bases for competitive advantages. While Newell focused on operational efficiency, Rubbermaid was known for its product innovation. This would correspond that the processes that helped to streamli ne Newell-led companies would probably lead to the erosion Rubbermaids core competencies. At the time of the acquisition, Rubbermaid was only some smaller than Newell. The integration process would be more complicated and difficult due to the fact that Rubbermaid had many different product lines, all of which would have to changed to fit Newells corporate system.At the same time, Rubbermaids large size would mean that it would be more challenging for Newell to change corporate strategy without alienating the existing workforce. Both of the factors above combined would mean that in order to pursue the acquisition and realize all the benefits associated with it, it would be necessary for Newell to change its corporate strategy to address the differences between Newell and Rubbermaid. However, this was not mentioned in the case study. Thus, without implementing a large-scale change in Newell, it would be difficult to merge both companies to create synergy and value for the overall firm . The difficulties in integration, the high risks associated with the integration, and the lack of change in Newells corporate strategies translate to an illogical acquisition by Newell.