NEWELL COMPANY: CORPORATE STRATEGY Submitted by: Group No. 3

Introduction Broad range manufacturer of basic home and hardware products Two important acquisitions by CEO John McDonough Calphalon a privately held manufacturer of anodized aluminum cookware Rubbermaid a maufacturer of plastic consumer and commercial products with revenues of $2.4 billion vs Newells $3.2 billion

NEWELL HISTORY ESTABLISHED Brass curtain rods NATIONAL DISTRIBUTION. FIRST ACQUISITION PUBLICLY LISTED 1902 1917 1966 1972 1990 GROWTH AND DISTRIBUTION. FURTHER EXPANSION OF BUSINESS LINE ACQUIRED OVER 30 FIRMS This 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.

Reasons for Acquisitions “Course correction” part of next phase of Newells strategy Increasing 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

Roots of Strategy E.A.Newell bought assets of bankrupt manufacturer of brass curtain rods in 1902 Drivers for early success Migration to cities Demand for extensive windows Initial consumers were small hardware stores, industrial builders, specialty retailers and later national chain stores Early problem identified was lack of differentiation in product. (Ex. Selling drapery hardware to all channels) Solution was to acquire a small window shade manufacturer.

“build on what we do best” philosophy Identified trend toward consolidation in retail business Focus on making a low cost/high volume product and sell it to the large mass retailer Acquired first non drapery brand Mirra-Cote adding a new product line and a new relationship with discount retailer Zayre Possibility to leverage the relationship for selling other products too

Acquisition Serving Mass Retailer Growth Strategy Should add value to existing product portfolio Make Newell more important supplier to retailers 2+2 ≥4 Be brand name staple product with #1 or #2 in market share Compliment existing product line but focus on efficiency rather than pricing power as powerful customers encourage d competition if one supplier got too strong Lead to market rationalization as sick competitors could distort market Help in globalization as even customers were becoming global Exit any non strategic business even if it is profit making. Ex. Home Sewing Products Serving Mass Retailer Emergence of large scale mass retailers in 1970 By 1992 three retailers controlled 70% of market Ability to dictate the quality and quantity shipped as well as the pricing Led 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 supplier Newell vied to be the industry standard for suppliers Rather than being the cheapest supplier it chose to focus on service and quality

NEWELLIZATION NICHE MARKETS FOCUSSED GROWTH SMALL BUSINESS INTERNAL STRATEGY This 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.

1 2 3 4 NEWELLIZATION Quickly compare Income Statements Recognise Cost structure Problems 3 Find ways to reduce costs 4 Raise Operating Margins above 15%

Newellization The process of giving new acquisitions integrated Sales & order processing system Financial System Flexible manufacturing System Example: Anchor Hocking a manufacturer of glassware and cabinet hardware. Though bigger than Newell in terms of revenue it had far lower profit margins.

The Corporate Role Basic Functions with the Newell headquarter Legal and Tax issues Benefits Credit, collection and financial system Corporate charge to the division – 2% of sales Clear mandate while considering acquisitions was to generate profits Each business unit adhered to a specific and disciplined strategy with permission to develop but not expand its core product focus

Largest acquisition to date BUSINESS STRATEGY Less significant acquisition, but important strategic move Help Newell expand into upscale retailers channel Bring discipline to financial, organizational, and manufacturing aspects of Calphalon Largest acquisition to date

BUSINESS STRATEGY Increase the size of Newell dramatically Name change to Newell Rubbermaid, Inc. Market value of Newell Rubbermaid will increase to over $10 billion Expand global presence

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