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Newell Company: A Corporate Strategy Case Solution
Newell’s business model has revolved around increasing sales revenue through a diverse product offering. For this, the company engages in acquisitions to expand its product line and sales. The Newellization strategy has been successful for the company’s corporate strategic mission in the past and enables them to diversify their portfolio. The Newellization process enables the company integrates the acquired products into its existing product line. This enabled them to add value to the existing business that they are engaged in. The strategy helps the company in two ways. Firstly, the acquisition process is crafted intellectually, and the potential firms go through an extensive screening process to ensure a mix with the company’s existing business operations. Secondly, the company ensures longevity through its established divisional support system and infrastructure. The strategy’s roots had always focused towards profit growth that was translated through the growth of sales. Acquisitions were the primary source of value addition for the company.
Following questions are answered in this case study solution
Does Newell have a successful corporate strategy? Does the company add value to the business within its portfolio?
What are Newell’s distinctive resources?
What challenges faced the company in the late 1990s?
In this context, does the acquisition of Calphalon make sense? Rubbermaid? Would a different strategic vehicle had made sense in either acquisition (e.g. an alliance)?
Case Analysis for Newell Company: A Corporate Strategy
The strategic intent was always to add value through these acquisitions and if that was not achieved the company divested. Another source of value addition was the servicing the mass retailer since they were the main platform to target a wider range of customers. The Newellization strategy, therefore, enables the company not only to diversify and expand but also enhance value addition within the existing network.
2. What are Newell’s distinctive resources?
The company has numerous resources and abilities that it uses to its advantage highly efficiently and effectively. These resources have been developed overtime keeping in mind the company’s long term growth strategy and objectives. Firstly, the company has a wide variety of products which encourages retailers. Secondly, this extensive product suite is supported by a strong and well-knit logistics system. Thirdly, the process of Newellization itself is a highly valuable asset for the organization since it has contributed immensely towards its success in the past. The systems and policies ensure the strategy is followed, and stringent monitoring and control measures track progress. These stringent measures allow them to evaluate the acquisitions continuously and develop strategies to efficiently integrate the business models. The process by which they integrate new businesses with the existing business enables the company to gain additional market share, newer customers, increased brand awareness and brand equity. Moreover, distribution channel development is also another aspect of this approach which further strengthens the resources of the company. All these aspects add to the growth and value addition to the existing business.
3. What challenges faced the company in the late 1990s?
In the 1990’s the company acquired Corning’s House wares business and marked its entrance into the global market. The globalization presented various challenges for the organization. Moreover, during the same period the US retail industry changed as new large mass retailers entered the market e.g. Wal-Mart. Contributing to this was the transition of people moving to big cities and population increases were witnessed in many metropolitan areas. Wal-Mart and other similar businesses were able to tap into a larger and broader customer base through the provision of a gigantic product suite in their outlets. Given this advantage, they were able to dictate various terms with wholesalers and suppliers like Newell. Such big scale retailers who were highly demanding required more efficient distribution and supply chain networks. Production and distribution scheduling was undertaken based on their requirements. Moreover, information technology had gained more importance and automation of many processes was underway. This implied more efficient shipping and manufacturing schedules. These were the various pressures that Newell faced in the 1990’s which they addressed successfully.
4. In this context, does the acquisition of Calphalon make sense? Rubbermaid? Would a different strategic vehicle had made sense in either acquisition (e.g. an alliance)?
In this context, the company had to expand and strengthen its business to be able to cater to larger markets. The acquisition of Calphalon did create value for the company. Through the acquisition, Newell was able to tap the non-mass merchandise market. The product offering was premium and high-end which was a market Newell was not currently tapping. The company had core competencies in the high-end retail segment which Newell capitalized upon.
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