Newell Corporation

CASE ANALYSIS

Group Members

Roll
No.

ABU ASIF HASAN

MP1300
1

AJIT SINHA

MP1300
3

AKASH PRIYRANJAN

MP1300
4

ASHUTOSH K
TRIPATHY

MP1301
7

GYANESH DUBEY

MP1302
6

SUMANTRA KAHAN

MP1306
0

MISSION
To increase shareholders value by con. To build a company with superior EPS
growth & ROI, and to earn a reputation for excellence in performance &
management
History

s the needs of volume

purchasers
Serving the Mass Retailer

One of Newells Key strategies

Newell brands are in 5 of the top 15 retailers in the U.S.
Newell generates 15% of its revenue from Wal-Mart sales
Bargaining power of buyers (retailers) is significant in Newells industry
Newell has an excellent reputation with the mass retailers
Integration of newly acquired companies must be done efficiently and quickly so
reputation is maintained
Company Structure
Each division handles its own design, manufacturing, marketing, sales,
merchandizing, and service
Each division must adhere to the company strategy
Each division is responsible for its profit performance
Strict financial and operating reviews of divisions monthly
Management salary is based on performance
Internal growth is rewarded

SWOT ANALYSIS
Strength
Diversity of products
Strong brand names
Horizontal acquisition strategy
Create market power and synergy
Divestiture and product line rationalization strategy
Opportunity
Growth and expansion with future acquisitions
Potential acquisitions provide potential expansion, growth, and success
International markets
Weakness
Competition in the industry is high
Newell is largereduces speed in response to events in external environment
Financial weaknesses
Declining profit margin
ROIC & ROA declining
Threat

Culture clash with new acquisitions

Integration difficulties can disrupt the company
Dependency on mass retailer
Threat of private labels
Lack of internal growth

GROWTH STRATEGIES
INTERNAL STRATEGY
Internal Growth is growth from continuing business owned more than one year
Understanding Consumers
Demand Creation through Marketing
Commercializing innovative new products
Cross-selling existing product lines
ACQUISITION STRATEGY
2 + 2 4, if we do this right we get more than 4. - Dan Ferguson
GLOBALIZATION STRATEGY
Global presence small in 1997, but growing
Selective international acquisitions
Growth of consumer brands economies in Eastern Europe, Asia, Mexico, and South
America
Overseas sales: Small
Target global consumer acceptance
Newellization Well-established profit improvement and productivity
enhancement process that is applied to integrate newly acquired product lines to
the parent company.
ACQUISITION STRATEGY
Newellization: newellizing acquired business into a Newell-like company.
Transition cycle:
Starts after 6 18 months
Led by brought-in president and controller
Focusing acquired business strictly on its core competencies
NEWELLIZATION: Reducing corporate overhead through centralization of
administrative functions and tightening financial controls.
CENTRALIZE RESPONSIBILITIES:
Centralize Accounting system
Expenditures Approval
Cash management, A/R, A/P

Order processing
Data processing operations
Newellization: Establishing more focused business strategy, improving
manufacturing processes.
Enhancing efficiency
Eliminating non-productive lines
Reducing inventories
Increasing A/R turnover
Extending A/P terms
Trimming excess costs

TOOLS
Leverage One Newell Rubbermaid
Building one common culture of shared values
Integrating common functional capabilities HR, IS, Finance, etc.
CONSUMER-MEANINGFUL BRANDING
Focusing on pull-strategy
Investing in research
Creating demand around the world
Newell Corp. is looking to grow their company through 2 acquisitions:
SANFORD CORPORATION
Expensive acquisition @ $600million.
Good management
Expansion in office products: plastic storage, file storage box, school supplies.
Has difficulty in absorbing excess capacity & efficiency creation.
LEVOLOR CORPORATION
Less significant acquisition, but important strategic move
Help Newell expand into upscale retailers channel
Bring discipline to financial, organizational, and manufacturing aspects of Levelor

RESULTS
Acquisition of Sanford Corporation should be done on priority as it is
Profitable Organization
Same distribution channels
Diversification of Newell
Increasing market share & new market