1. Does Newell have a successful corporate-level strategy? Does the company add value to the businesses within its portfolio? -Their strategy is to increase their sales and profits by offering a wide range of products and reliable service to the mass retail channel. -Newell does this through key acquisitions rather than internal growth -21 product lines encourages retailers to buy many products from one source -Nearly 100% first-pass line fill
-“Newellization” = Newell obtains, transforms, and integrates a new acquisition of products into their existing product lines with a short lead time. -Newell’s emphasis on companies that have high brand awareness and a low cost structure after Newellization creates an offering in the market, which is hard to copy (Exhibit #2). -Newell’s control system makes all new acquisitions meet certain criteria:
-Selling, General, and Administrative Expenses
-Projected Operating Margin
-Newell does a good job of combining their structure, system and processes with its businesses and resources. -Training process that links corporate vision to the values and resources at the division level. -Newell University instills company strategies and values in its workers. -Their corporate-level strategy has proven successful by their financial numbers:
-Hardware/Home Furnishings – 46% of Newell’s revenue
-Office Products – 28% of Newell’s revenue
-Housewares – 26% of Newell’s revenue
-They control costs at the division level, which leads to returning 9% net income as a percentage of sales. -10-year average return to its investors is 13% above the industry average.
4. Does the acquisition of Calphalon make sense?
-Calphalon became part of their Housewares division, which extended their reach into the non-mass merchandise market. -Did not cannibalize themselves with current cookware at mass retailers. -Newell is expanding into non-saturated markets where products haven’t reached critical...
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