Case Study

1. Newell Company: Corporate Strategy
Analysis
Group 3:
Pallavi Mishra (19DM130)
Raja Babu (19DM152)
Rupesh Singh (19DM169)
Shagun Singh (19DM189)
Shubhali Singh (19DM208)
Sana Ahingba (19DM228)
Rahul Singh (19DM246)

2. Summary
• Established in 1902 by Edgar A. Newell after he purchased a brass curtain
rods manufacturer.
• 1912 – Built relationship with Woolworth Company.
• 1921 – First acquisition of Barnwell Mfg. Company and renamed to Western
Newell.
• 1965 – Dan Ferguson named President who crafted the growth by
acquisition strategy.
• 1983 – Company enters cookware market with purchase of Mirro. Wear Ever
and REMA.
• 1987 – Acquisition of Anchor Hocking
• 1990s – Acquisition of W.T. Rodgers Sanford, Levelor, Goody, Kirsch,
Rolodex, Calphalon, Rubbermaid and others.

3.  The organization developed a two pronged approach to strategy:
i. Following an established acquisition process.
ii. progression over the company’s multiple divisions.
 Acquisition of 2 companies to achieve market capitalization.
 Newell focussed on acquiring manufacturing businesses that were under
performing.

4. Q1. Does Newell have successful corporate strategy : Does the company
add value to the business within its portfolio?
 Build on Strength
 High volume/low cost product
 High customer satisfaction
 Growth by acquisition(profit growth)
 Operational efficiency
 Acquiring company selection
 Versatile yet standardized portfolio
 Newellization process
Based on above points we can say that , Yes Newell have successful corporate
strategy

5. Q2: What are Newell’s distinctive resources and
capabilities?
• Acquisition of Calphalon ,a privately held manufacturer of
anodized aluminum cookware and Rubbermaid, a manufacturer of
plastic consumer and commercial products.
• Used the process of Newellization
• Changed its structure from functional approach to divisional
approach

6. Q3: What challenges did Newell face in the late
1990s?
 Newell had over 40 businesses in the late 1990’s and they also
expanded to foreign territories.
 By 1997, three mass retailer chains controlled roughly 80% of the
discount retailer market hence gaining leverage over price and
scheduling.
 Achieving critical mass.
 Acquisitions of Calphalon and Rubbermaid.

7. Q4: DOES THE ACQUISITION OF CALPHALON MAKE SENSE?
POSITIVE CONSEQUENCES-
 It proved to be quite beneficial for Newell, as it helped Newell to enter Non Mass Merchandise Market.
 Calphalon products are high end products with emotional appeal, which helped Newell enter high end
market.
 Further, this acquisition would also help Calphalon reduce the selling, general and administrative expense
which is 25% per year.
 Newell kept the Calphalon product in the department and specialty stores in order to build its presence in
the channel.
 Calphalon can build its expertise with Newell in developing pull strategies and building strong connection
with distribution channels and customers.

8. NEGATIVE CONSEQUENCES-
 Newell keeps the brand name of the target firm but discards the existing people
and processes, which may hamper the processes developed by Calphalon.
 Newell might destroy the premium position of Calphalon and break the barrier
of entry for premium competitors at high end retailers.

9. How does the acquisition of Rubbermaid
make sense? Rubbermaid?
 Rubbermaid
 Manufacturer of Plastic products for retail-marketplace.
 Earned a name for its Brand Equity and Product Innovation in early 90s.
 Acquisition by Newell
 The acquisition fits well with core competencies of Newell which is to manufacture
high volume/ low cost product and selling it to mass- retailers like Walmart & K-
mart.
 Rubbermaid as the company needed “Newellization” for Survival i.e
Streamlining the operations to gain cost & process efficiency and profitability.
Centralization of administration, Financial integration and IT System for optimization of Sales
and Order Processing to bring down operational costs.

10.  Newell needed Rubbermaid
 To gain target market capitalization of $10 billions so as to exercise greater
bargaining power in dealing with mass-retailers- who were growing very
influential.
 Rubbermaid would also add to global sales and thus help Newell to push its
Globalization strategy.
 It made sense for Newell to acquire a company that was powerful enough in
itself to add to Brand equity and marketshare and shelf-space of the Company.
At the end, the value that Newell is going to gain by the acquisition depends on
how effectively the “Newellization” of Rubbermaid is done and the Newell’s
ability to integrate the new products to its existing Product line.

11. However beautiful the Strategy, you
should occasionally look at the
results.
~ Winston Churchill
Thank You