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

2. 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

3. 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
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4. 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

5. 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.

6. “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

7. 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

8. NEWELLIZATION NICHE MARKETS FOCUSSED GROWTH SMALL BUSINESS
INTERNAL STRATEGY
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9. 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%

10. 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.

11. 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

12. 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

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 billion
Expand global presence

14. THANK YOU