Presentation on theme: "NEWELL COMPANY: CORPORATE STRATEGY"— Presentation transcript:
1 NEWELL COMPANY: CORPORATE STRATEGY Submitted by: Group No. 3
2 IntroductionBroad range manufacturer of basic home and hardware productsTwo important acquisitions by CEO John McDonoughCalphalon a privately held manufacturer of anodized aluminum cookwareRubbermaid a maufacturer of plastic consumer and commercial products with revenues of $2.4 billion vs Newells $3.2 billion
3 NEWELL HISTORY ESTABLISHED Brass curtain rods NATIONAL DISTRIBUTION. FIRST ACQUISITIONPUBLICLY LISTED19021917196619721990GROWTH AND DISTRIBUTION.FURTHER EXPANSION OF BUSINESS LINEACQUIRED OVER 30 FIRMSThis is an example text. Go ahead and replace it with your own text. It is meant to give you a feeling of how the designs looks including text.
4 Reasons for Acquisitions “Course correction” part of next phase of Newells strategyIncreasing pricing power from customers (volume retailers) forced Newell to develop or buy strong brands.Need to grow as research showed that companies with over $10 billion commanded higher valuations
5 Roots of StrategyE.A.Newell bought assets of bankrupt manufacturer of brass curtain rods in 1902Drivers for early successMigration to citiesDemand for extensive windowsInitial consumers were small hardware stores, industrial builders, specialty retailers and later national chain storesEarly problem identified was lack of differentiation in product. (Ex. Selling drapery hardware to all channels)Solution was to acquire a small window shade manufacturer.
6 “build on what we do best” philosophy Identified trend toward consolidation in retail businessFocus on making a low cost/high volume product and sell it to the large mass retailerAcquired first non drapery brand Mirra-Cote adding a new product line and a new relationship with discount retailer ZayrePossibility to leverage the relationship for selling other products too
7 Acquisition Serving Mass Retailer Growth Strategy Should add value to existing product portfolioMake Newell more important supplier to retailers2+2 ≥4Be brand name staple product with #1 or #2 in market shareCompliment existing product line but focus on efficiency rather than pricing power as powerful customers encourage d competition if one supplier got too strongLead to market rationalization as sick competitors could distort marketHelp in globalization as even customers were becoming globalExit any non strategic business even if it is profit making. Ex. Home Sewing ProductsServing Mass RetailerEmergence of large scale mass retailers in 1970By 1992 three retailers controlled 70% of marketAbility to dictate the quality and quantity shipped as well as the pricingLed to increase in efficiency from the suppliers and heavy investment in IT“Cross Docking” allowed retailers to eliminate any inventory other than that at the stores. The suppliers were sent directly to the stores and any arising loss due to missing shipment was to be incurred by the supplierNewell vied to be the industry standard for suppliersRather than being the cheapest supplier it chose to focus on service and quality
8 NEWELLIZATION NICHE MARKETS FOCUSSED GROWTH SMALL BUSINESS INTERNAL STRATEGYThis is an example text. Go ahead and replace it with your own text. It is meant to give you a feeling of how the designs looks including text.
10 Newellization The process of giving new acquisitions integrated Sales & order processing systemFinancial SystemFlexible manufacturing SystemExample: Anchor Hocking a manufacturer of glassware and cabinet hardware. Though bigger than Newell in terms of revenue it had far lower profit margins.
11 The Corporate Role Basic Functions with the Newell headquarter Legal and Tax issuesBenefitsCredit, collection and financial systemCorporate charge to the division – 2% of salesClear mandate while considering acquisitions was to generate profitsEach business unit adhered to a specific and disciplined strategy with permission to develop but not expand its core product focus
12 Largest acquisition to date BUSINESS STRATEGYLess significant acquisition, butimportant strategic moveHelp Newell expand into upscale retailers channelBring discipline to financial, organizational, and manufacturing aspects of CalphalonLargest acquisition to date
13 BUSINESS STRATEGY Increase the size of Newell dramatically Name change to Newell Rubbermaid, Inc.Market value of Newell Rubbermaid will increase to over $10 billionExpand global presence