Newell Company

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Newell’s Corporate Strategy until 1998?
The company’s strategy was to acquire companies selling well branded products to mass retailers at low profit margins. •After acquisition theses companies went through a process known as “Newellization” to align them to Newell operations, with the ultimate goal of turning profit margin to 10-15%. To be considered successful this needed to be achieved in a period less than 18 months. •The companies targeted needed to offer products whom had operations similar in nature to Newell existing line of products but yet had to offer growth opportunities to grow the company as a whole. This allowed Newell to achieve integration of these companies quickly and help achieve the overall efficiencies. •“build on what we do best”

“we knew how to make highvolume/low cost product and how to relate to large retailers” •Two pronged approach. Buy companies which had low tech, offered products which were year in and year out on the shelfs. Operating margins of less than 10%. After newlisaton the profit margin of 15% was achieved given that operations were similar. •Functional structure initially. However, product based approach meant they had to move to devisional structure. •Target products that cam with existing shelf space i.e 1 or 2 in their segment

Logic and Value Add
Newell logic was to transfer Newell processes and technology to these acquired companies to deliver the same products in more efficient manner without reducing quality. These efficiencies helped improve the overall profit margin. •Newly acquired organisations required restructure and sharing of common operations by Newell. •Newell was also able to utilise their existing economies of scale as they sold large volumes to mass retailer. This provided further cost advantage, increasing value add provided by “Newellization”. •Fin and Accounting systems, IT (EDI), Flexible Manufacturing Serve the need of mass retailers •Shelf space

Very specific...
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