Newell Value chain Newell’s distinctive resources was Newellization, which was the profit improvement andproductivity enhancement process employed to bring a newly acquired business up to Newell’shigh standards of productivity and profit. This process was pursued through a series of broadlyapplicable steps such as the transfer of experienced Newell managers into the acquired company,simplification and focusing of the acquired business’s strategy and the implementation ofNewell’s established manufacturing and marketing know-how and programs, centralization ofkey administrative functions including data processing, accounting, EDI, and capital expenditureapproval, and inauguration of Newell’s rigorous, multi-measure, divisional operating control system. Their fundamental competitive strategy applied to all of their operations and was intendedto differentiate on the basis of superior service to their mass merchandise customers. The superi-or service Newell offered included industry-leading quick response and on-time, in-full delivery,the ability to implement sophisticated EDI tie-ins with its customers extending to vendor-man They then became global and served many customers.Was seen as the “no problem” supplier in the industry as it focused its workforce on efficiencyCentralized administration within the company ensuring efficiencyEnsure that companies it acquired focused on to notch product delivery Does Newell have a successful corporate-level strategy? Does the company add value tothe businesses within its portfolio? They acquired companies that were leading suppliers and had important shelf space in the domesticmarketused a single force for selling all products31% return on investment instead of average 18%Newellization would take place= make more efficient business structure of acquisitions to make moremoney and cut costs, centralize administration, cut out unnecessary employess and product delivery time. (3) What is Newell’s functional strategy? What is Newell’s generic strategy? What is Newell’s Organizational Structure? Multi functional - Once these systems were in place, managers were able to control costs by limiting expenses to those previously budgeted. Administration, accounting, and customer-related financial accounting aspects of the acquired business were also consolidated into Newell’s corporate headquarters to further reduce and control costs. However, Newell compensated business managers well for performance. They were paid a bonus based on the profitability of their particular unit—in fact, the firm’s strategy was to achieve profits, not simply growth at the expense of profits. Newell managers could expect a base salary equal to the industry average but could earn bonuses ranging from 35% to 100% based on their rank and unit profitability. Management stressed the goal of creating lean, efficient contributors to the Newell strategy: “If you have an opportunity to make a product line into a profit unit, the Smaller yo ...

1. Newell
Value chain
Newell’s distinctive resources was Newellization, which was
the profit improvement andproductivity enhancement process
employed to bring a newly acquired business up to
Newell’shigh standards of productivity and profit. This process
was pursued through a series of broadlyapplicable steps such as
the transfer of experienced Newell managers into the acquired
company,simplification and focusing of the acquired business’s
strategy and the implementation ofNewell’s established
manufacturing and marketing know-how and programs,
centralization ofkey administrative functions including data
processing, accounting, EDI, and capital expenditureapproval,
and inauguration of Newell’s rigorous, multi-measure,
divisional operating control system. Their fundamental
competitive strategy applied to all of their operations and was
intendedto differentiate on the basis of superior service to their
mass merchandise customers. The superi-or service Newell
offered included industry-leading quick response and on-time,
in-full delivery,the ability to implement sophisticated EDI tie-
ins with its customers extending to vendor-man
They then became global and served many customers.Was seen
as the “no problem” supplier in the industry as it focused its
workforce on efficiencyCentralized administration within the
company ensuring efficiencyEnsure that companies it acquired
focused on to notch product delivery
Does Newell have a successful corporate-level strategy? Does
the company add value tothe businesses within its portfolio?
They acquired companies that were leading suppliers and had
important shelf space in the domesticmarketused a single force

2. for selling all products31% return on investment instead of
average 18%Newellization would take place= make more
efficient business structure of acquisitions to make moremoney
and cut costs, centralize administration, cut out unnecessary
employess and product delivery time.
(3) What is Newell’s functional strategy? What is Newell’s
generic strategy? What is Newell’s Organizational Structure?
Multi functional - Once these systems were in place, managers
were able to control costs by limiting expenses to those
previously budgeted. Administration, accounting, and customer-
related financial accounting aspects of the acquired business
were also consolidated into Newell’s corporate headquarters to
further reduce and control costs. However, Newell compensated
business managers well for performance. They were paid a
bonus based on the profitability of their particular unit—in fact,
the firm’s strategy was to achieve profits, not simply growth at
the expense of profits. Newell managers could expect a base
salary equal to the industry average but could earn bonuses
ranging from 35% to 100% based on their rank and unit
profitability.
Management stressed the goal of creating lean, efficient
contributors
to the Newell strategy: “If you have an opportunity to make a
product line into a profit unit, the
Smaller you can make that unit, the more entrepreneurial drive
you have.”13
Give one example for each type of Newell’s control systems
(personal, output, and behavioral).
Personal:
Given the potential for rewards, demand for positions at Newell
was high. For management-level

3. hires the company sought people who would be motivated by
success and a lucrative bonus system.
Applicants—mostly mid-level executives from other consumer
goods companies—were screened for
these particular management traits with a personality test and
put through an intensive application
process that only 1 in 10 passed. Each newly hired company
employee underwent a two day training
This document is authorized for use only by Nabih Saaty in
Spring 2014 BUS 612A-03 taught by Kamal from
February 2014 to August 2014.
799-139 Newell Company: Corporate Strategy
program in the Newell corporate culture. The so-called “Newell
University” stressed product focus
and profit-orientation—the underpinnings of Newellization.
Output control:
Newell would bring in new leadership and install its own
financial controller in the acquired unit. Then, three standard
sets of controls were introduced: an integrated financial
accounting system, a sales and order processing and tracking
system, and a flexible manufacturing system. Once these
systems were in place, managers were able to control costs by
limiting expenses to those previously budgeted. Administration,
accounting, and customer-related financial accounting aspects
of the acquired business were also consolidated into Newell’s
corporate headquarters to further reduce and control costs.
Behavioral:
As he said at the 1997 Annual
Meeting, “We [Newell] are not big enough to get attention.”
With the Rubbermaid acquisition
Newell’s market value would cross the $10 billion threshold.
Page 1 on the case
The bonuses were based on division

4. performance alone, and the culture encouraged competition by
convening managers for award
ceremonies to honor top performers. Stock options, an
additional form of incentive made available
when the company went public, were granted according to a
formula based on salary and position.
Historically, the company’s system for evaluating yearly
bonuses focused exclusively on pre-tax
ROA. The goals were high—beginning at 32.5% pre-tax ROA
and reaching the maximum payout at
43.5%— and standard across all divisions.
Give three examples of Newell’s organizational culture.
early on it became clear that the two businesses were
incompatible in terms of differing strategies and corresponding
organizational cultures. Newell was a low-cost, high-volume
supplier while Rubbermaid was a consumer-oriented innovator
that offered premium products. After careful consideration,
Newell decided to redefine the newly merged company culture.
After two unsuccessful CEO attempts to turn things around, in
2001 Newell Rubbermaid hired Joseph Galli to run the
company. He rethought the strategies of both companies and
embraced the idea of changing the culture by hiring new kinds
of people for a new kind of company. He cut 3,000 jobs
throughout the company and made 141 changes at the executive
level (vice presidents and above). He introduced new incentive
plans and 6-week leadership boot camps to align employees
around the new company culture and goals. Did his drastic
changes pay off? Since this time and continuing under the new
leadership of CEO Mark Ketchum, both revenues and profits are
up, and in 2010, Fortune named Newell Rubbermaid the number
7 “Most Admired Company” in the home equipment and
furnishings category. This indicates that while the changes he
implemented were painful for employees at the time, they did
seem to put them on the right track.

5. E-Harmony
Generic Strategy:
The eHarmony company is only using the differentiation
strategy as eHarmony only use matching algorithm to match
those single individuals for serious relationship. Therefore, they
should take consideration in venturing into new markets such as
casual daters, gay market and others but not only focus on
singles which would limit the potential customers/or create
another online dating website for other markets so that serious
daters are not mixed together. This can potentially boost the
revenue for eHarmony since new markets equals to new
customers and increase profitability.
Functional Strategy
The management team put together and executed a cross-
functional strategy that included a redesigned user experience
from desktop to mobile, increased technological capacity and a
new marketing program. These changes have led to growing
numbers of subscribers who stay longer and are willing to pay
more than in years past.
After putting the company back on course, Dr. Warren then
announced plans to expand the company’s current offerings to
include nine new verticals aimed at taking eHarmony beyond
the online dating industry to become the world’s first
relationship company.
Now in a growth stage, eHarmony has launched eH+, its
premium matchmaking service with plans to launch a beta

6. version of a new job matching product in the coming months,
establishing two of the nine new verticals projected.
VRIO + porter 5
eHarmony’s pricing structure. Chemistry accepts customers
using a similar matchmaking methodology as eHarmony, but
undercuts the price by 10%. Competitors in the personals
industry are in a pricing war that depends heavily on
advertising, as an effort to gain more paying customers. Many
websites offer matchmaking services for free with minimal
restrictions, further undermining the expansion effort of
eHarmony. Furthermore, the focus of eHarmony is on
psychology, yet physical location is always a crucial factor in
relationships. 2 External Analysis of the Personals Industry The
5 Forces framework illustrates competition in the online
matchmaking industry: • Rivalry among existing competitors –
high there is a pricing war, and each company wants to siphon
customers away from other organizations. • Threat of new
entrants – high few barriers to entry, and low capital cost. •
Threat of substitute products – medium many alternate options
for personals. However, few of them have the strict selection
criteria as eHarmony. • Bargaining power of suppliers – medium
eHarmony has a differentiated matching methodology that no
other company can copy. Yet, buyers can find many aspects of
matchmaking at other personals; eHarmony wields limited
power over buyers. • Bargaining power of buyers – medium
customers have the power whether or not to use matchmaking
products, and customers can select which one they want. Buyers
are restricted by the product / service offerings of suppliers. To
a large extent, industry products are standardized, so buyers
compare different matchmakers based on price. Buyers have
little switching costs; they simply let their prepaid service
expire
VRIO Again
eHarmony’s success is based on the business level strategy
employed by the company through which, the company is able
to identify its customer base, the services needed, and how to

7. satisfy those needs. When eHarmony started in 2001, the
customer base was, mainly composed of people seeking serious
relationships especially among faith-based communities.
Piskorski, Halaburda & Smith write that eHarmony received
over 100,000 subscriptions within the first few weeks after
launching (4). However, with time, the company was able to
expand its customer base to cover a broader customer base
especially as a result of massive advertising. By 2004, the
company had managed 3 million subscriptions. eHarmony
understood that the customers were in search of potential
lifetime partners, thus making the company’s match-making
process very specific.
The customer’s personal interests were analyzed through a
matching algorithm that often guarantees personal satisfaction.
According to Piskorski, Halaburda & Smith, results from a
study conducted in 2005 showed that on average in the United
States, members belonging to the eHarmony site married
everyday, and by 2007on average, 236 eHarmony members were
getting married daily (8). The company continued to strategize
in a bid to invent products that would attract more members and
retain the current ones. For instance, according to Piskorski,
Halaburda & Smith, the company was considering easing some
of the restrictions to joining the site, allowing more casual
daters, and expanding geographically (13-14).In addition, the
company looks to focus more customers’ life events such as
weddings, births, parenting, and care for the elderly.
Meltdown
1. Explain how the resources and capabilities of Bear Stearns,
Lehman Brothers, and AIG respectively affected the Treasury
Secretary Hank Paulsen’s approach to intervention?
Bear Stearns
Bear Stearns have heavily invested in sub-prime mortgages

8. or what is commonly referred to as toxic assets. The toxic assets
were also being as security by the bank. Bear Stearns had
acquired a large number of mortgages which would be used as
securities and passed them to investors. As the housing bubble
burst, Hank Paulson was concerned that the crisis at Bear
Stearns would ravage the whole of Wall Street. This led to the
decision that an acquisition was the best intervention for
averting a crisis. Consequently, Bear Stearns underwent
acquisition by J.P. Morgan. Bear Stearns’ asset base could be
used as collateral for obtaining loans. In fact, the real issue at
the company was liquidity rather than insolvency (“Frontline,”
(n.d)).
Lehman Brothers
Lehman Brothers’ imminent collapse sent shockwaves to
Wall Street. Paulson had invested much of his time and energy
to see that the company did not collapse. However, Lehman
Brothers lacked collateral against which a bailout plan could be
based. Due to the lack of enough resources which could be used
as collateral, Fed had no other option but to let Lehman file for
bankruptcy. Lehman was seen as insolvent and hence a lot of
resources would be required to avert the company’s failure.
Thus as much as Paulson tried to avert the company’s failure,
the risks were too high. The only solution was thus to declare
the company bankrupt (“Frontline,” (n.d)).
AIG
The decision to bailout A.I.G was reached after an analysis
revealed that the company had reasonable collateral to offer.
Fed was therefore willing to lend the ailing company in order to
avoid bankruptcy. In this case, Fed’s loans to A.I.G. were
hedged against the assets of the company. A.I.G. had made
significant losses in its credit default swaps unit. Nonetheless,
the insurance part of the firm was doing well. Thus it was clear
that the real problem at A.I.G. was that of liquidity rather than
insolvency. The best option in this case was to provide loans
which would enable A.I.G. return to its former financial
position (“Frontline,” (n.d)).

9. 2. It is possible to combine different ethical approaches? Are
moral hazard and systemic risk distinct approaches to ethic?
It is possible to combine a variety of ethical approaches
in solving a problem. Moral hazard arises when banks or other
institutions make reckless decisions when lending since they are
aware that they may receive a bailout when faced by a crisis.
Systemic risk occurs when the entire system is faced by an
imminent collapse or challenge. As such, these are indistinct
approaches to ethics because they relate in some way. A moral
hazard issue can affect the entire system, which becomes the
systemic risk, and hence the two are interrelated.
3. Do innovators (firms in this case that create or use new
financial products ) have to take responsibility for the
externalities that result from absence of regulatory or
legalgovernece mechanisms?
Firms that use new financial products should take responsibility
for the externalities that arise due to absence of legal
mechanisms. In any innovation or new financial product, the
firm involved should take responsibility since if there are
profits the firm will also likely enjoy alone. Firms should thus
take responsibility for any risks that arise including those that
may be due to lack of a legal framework. This is important
because it can help prevent a moral hazard which arises due to
reckless behavior from firms.
Walmart

10. the Business strategies Wal-Mart uses and how they
differentiate their services/products
There are 3 generic business strategies and they consist of the
Focus strategy, the Differentiation strategy, and Overall Cost
leadership. The Focus strategy is usually defined as focusing on
offering products and services to a particular market segment or
buyer group, within a segment of a product line, and/ or to a
specific geographic market. The Differentiation strategy is
defined as offering a product or service that is perceived as
unique in the marketplace. Wal-Mart‘s business
strategy is Overall Cost Leadership, offering their customers
great quality service and products at a lower price than their
competition. Overall Cost Leadership is defined as offering the
same or better quality product or service at a price that is less
than what any of the competition is able to do. In achieving this
goal it relies on a Supply Chain Management, that ensures
products are available to the customers when they it. The items
offered are broken down into products and services, products
would be privately labeled brands such as, “George, Metro 7,
Mainstays and other licensed brands from Disney and Mary-
Kate and Ashley”. Services would be that they offer home
goods, beauty supplies and seasonal items.
- The estimated power each of the 5 forces has (suppliers
include their employees and suppliers of technology). How Wal-
Mart reduces the buyer and supplier power and how Wal-Mart
creates switching costs and entry barriers.
The five forces are buyer power, supplier power, threat of
substitute products and services, threat of new entrants, and
rivalry among existing competitors. Wal-mart follows the five

11. forces business strategy
Functional strategy:
Innovation offering the latest in online innovations to give our
customers a unique shopping experience.
Wal-Mart Asia, including Wal-Mart China, was also attracting
younger consumers through
their cell phones. Plans to send customers store information
over their cell phones and to
encourage the use of Wal-Mart-derived micro-blogs were
developed in 2011.
Customer responsiveness
Whereas in the United States the retailer traditionally focused
on electronics and
other non-perishables as its key source of revenue, in China
Wal-Mart learned how critically
important food, cosmetics, package size, variety and store
location were to keeping the
Chinese consumer buying
IDEO
What is IDEO’s strategy? How is the organization structured?
Simple, Functional or Multidivisional?
Functional: innovation
To support employee development, Deloitte founded Deloitte
University, a campus in Texas that aims to ensure the company

12. remains a place where leaders thrive and ideas prosper, in
October 2011. Shortly thereafter, Deloitte tapped IDEO to re-
envision the Deloitte Lab—until then a series of workshops
focused on innovating client relationships. IDEO re-envisioned
it as a holistic experience, comprised of a highly-designed lab
space, a series of workshops, and a set of tools that would
support the incubation of new ideas, the development of leaders,
and the prototyping of methods for building client relationships.
The project’s goal was to establish a design-thinking
environment that would encourage and enable Deloitte staff to
experiment, both individually and as a team.
Play to Innovation Enabling playful creativity within an
organization can lead to a flood of innovation. In our “Play to
Innovation” projects and workshops, we rely on practical
techniques and academic theory to develop new structures and
processes that foster creativity and creative confidence. Toy
Invention IDEO Toy Lab has a proven track record of inventing
toy and game experiences, such as the Balloonimals app for
iPhone. The Lab applies IDEO’s innovation process to this
focused area, and it has also developed its own techniques for
involving kids in idea generation and prototyping.
They do a remarkable job of taking observations and turning
them into opportunities and eventually innovations,”
is that you innovate by iterating quickly, by having lots of
prototypes. Prototyping allows you to learn from risks very
quickly.”
Generic Business Strategy: differentiation,
•Form a diverse team
•Team members brainstorm
•Team members engage in rapid prototyping
•Team members implement the fruits of their labors
Generic Business Strategy:
focus

13. Sharpen the focus. Good brainstormers will get off to a better
start—and you can bring people back into the main topic more
easily—if you have a well-articulated description of the
problem at just the right level of specificity. For example,
“spill-proof coffee cup lids” is too narrow and already presumes
you know the answer. Another approach, “bicycle cup holders,”
is too dry and product-focused.
Read more at https://www.ideo.com/work/innovation-
labs#3pdxVP9e42Ui0oZ0.99
2. What are IDEO’s control systems? How do they measure
their results? Personal, Output and Behavioral? How does it
standardize inputs, conversion activities, outputs?
Functional:There are some departments → “need areas”,
separate divisions -toy. THey are flat but multidivisional.
Offices in London and multiple areas.
Personal control: adults actually sitting with the teams
Output control: time limits since its a messy process and the
ideas will build forver so the adilts join in as they mentioned ,
number of designs, cool and buildable designs, number of
design awards
Behavioral control: post it notes” one conversation at a time ,
stay foucused on the topic enocourage bright ideas , build ideas
on others people restrain them self from critiquing others ideas
and if so they get the bill , use of the bell, u get waild ideas
then build over these wild ideas , warming up client before they
attend the meeting room so they dont get shocked when they
enter the real office when they emplyee throughing baset ballls
and darts at each other the place in general is play full as the
CEO calls them the crazys this is where the crazys live
3. What is unique about IDEO’s culture? What are their values
and norms?

14. havior within their organizations. In the top-performing
companies it is a norm that colleagues support one another’s
efforts to do the best work possible. That has always been true
for pragmatic reasons: If companies were to operate at peak
efficiency without what organizational scholars call “citizenship
behavior,” tasks would have to be optimally assigned 100% of
the time, projects could not take any unexpected turns, and no
part of any project could go faster or slower than anticipated.
But mutual helping is even more vital in an era of knowledge
work, when positive business outcomes depend on creativity in
often very complex projects. Beyond simple workload
sharing,collaborative help comes to the fore—lending
perspective, experience, and expertise that improve the quality
and execution of ideas.
Helpfulness must be actively nurtured in organizations,
however, because it does not arise automatically among
colleagues. Individuals in social groups experience conflicting
impulses: As potential helpers, they may also be inclined to
compete. As potential help seekers, they may also take pride in
going it alone, or be distrustful of those whose assistance they
could use. On both sides, help requires a commitment of time
for uncertain returns and can seem like more trouble than it’s
worth. Through their structures and incentives, organizations
may, however unwittingly, compound the reluctance to provide
or seek help.
The trickiness of this management challenge—to increase a
discretionary behavior that must be inspired, not forced—makes
what the design firm IDEO has achieved all the more
impressive. Ask people there about the organizational culture,
and invariably they mention collaborative help. Observe how
things get done, and you see it at every turn. Actually map the
networks of help, as we did, and it becomes obvious how broad
and dense they are. Clearly the firm is high performing; it is
lauded all over the world for innovations in business,
government, and health care, and regularly called upon to

15. advise other firms that want to increase their innovation
capabilities. All this help seeking and help giving apparently
pays off.
The question for the rest of us is, How has IDEO managed to
make helping the norm? Are there principles that leaders of
other organizations could learn and apply to similar effect? We
spent two years making observations, interviewing people, and
conducting surveys to find out.
IDEO may seem like a very different kind of company from
yours, but it is probably less so than you think. Your
organization, too, is full of knowledge workers tackling
complex problems. It, too, needs to boost its productive
creativity. It could produce better outcomes for customers and
provide a more attractive working environment for top talent if
your employees, like IDEO’s, engaged in effective mutual help.
Let’s look at the four keys to achieving those goals—beginning
with a challenge to the people at the very top of the
organization. Judging by IDEO’s experience, that is where
building a help-friendly company begins.