Spectrum Brands Strategy for Diversification: Success of Failure?
Abstract
Assessing the strategies of CEO David Jones to globalize Rayovac’s battery and flashlight business during 1999 to 2004 will determine if globalizing was strategically sound. An assessment on the attractiveness of each industry Spectrum diversified into will determine which business units have attractive degrees of competitive strength in their respective industries, and whether a strategy of related or unrelated diversification was pursued will determine which fits exists in both strategy and resources available within sister business units. An assessment of the company’s financial results will be based on data from the case and other sources. Recommendations from the assessments performed will be given on what it will take to restore the company to profitability and boost its long-term performance prospects.
Spectrum Brands Strategy for Diversification: Success or Failure?
When assessing the strategies of CEO David Jones on globalizing Rayovac’s battery and flashlight business during 1999 to 2004, there is the need to consider the purchase of Rayovac in 1996 by a private equity company Thomas H. Lee Partners (THL) and what philosophies were instilled in Mr. Jones prior to becoming chairman and CEO of Rayovac (p. C292). One article in Business Week, written by Elizabeth Woyke and David Henry, stated:
The story of Spectrum stretches back long before the buyout boom began…it follows a trajectory remarkably similar to recent deals. In August, 1996 …THL scooped up battery maker Rayovac for $326 million, borrowing much of the money…the…firm took Rayovac public…, and the stock…doubled in 13 months. THL gradually sold off…its shares, distributing the last…to its investors. It booked a fourfold gain…(2007, para. 6)… [The] relationship with Rayovac didn't end there. In January, 1999, THL bought United Industries Corp, a 30-year-old garden fertilizer and insecticide manufacturer, for $652 million, putting up $255 million of its own money…, THL installed
Assessing the strategies of CEO David Jones to globalize Rayovac’s battery and flashlight business during 1999 to 2004 will determine if globalizing was strategically sound. An assessment on the attractiveness of each industry Spectrum diversified into will determine which business units have attractive degrees of competitive strength in their respective industries, and whether a strategy of related or unrelated diversification was pursued will determine which fits exists in both strategy and resources available within sister business units. An assessment of the company’s financial results will be based on data from the case and other sources. Recommendations from the assessments performed will be given on what it will take to restore the company to profitability and boost its long-term performance prospects.
Spectrum Brands Strategy for Diversification: Success or Failure?
When assessing the strategies of CEO David Jones on globalizing Rayovac’s battery and flashlight business during 1999 to 2004, there is the need to consider the purchase of Rayovac in 1996 by a private equity company Thomas H. Lee Partners (THL) and what philosophies were instilled in Mr. Jones prior to becoming chairman and CEO of Rayovac (p. C292). One article in Business Week, written by Elizabeth Woyke and David Henry, stated:
The story of Spectrum stretches back long before the buyout boom began…it follows a trajectory remarkably similar to recent deals. In August, 1996 …THL scooped up battery maker Rayovac for $326 million, borrowing much of the money…the…firm took Rayovac public…, and the stock…doubled in 13 months. THL gradually sold off…its shares, distributing the last…to its investors. It booked a fourfold gain…(2007, para. 6)… [The] relationship with Rayovac didn't end there. In January, 1999, THL bought United Industries Corp, a 30-year-old garden fertilizer and insecticide manufacturer, for $652 million, putting up $255 million of its own money…, THL installed
References: American City Business Journal, Inc. (2008, March 7). Spectrum Brands, Harbinger explore sale possibilities. The St. Louis Business Journal on the Web. Retrieved May 8, 2008, from http://www.bizjournals.com/stlouis/stories/2008/03/03daily75.html?t=printbl e. Spectrum Brands, Inc. (2007). Retrieved May 8, 2008 from http://www.spectrumbrands.com/corpinfo/. http://phx.corporate-ir.net/phoenix.zhtml?c=75225&p=irol-fundssumfin. Thompson, Strickland & Gamble (2008). Crafting & Executing Strategy the Quest for Competitive Advantage Concepts and Cases (16th ed.). New York, NY: McGraw-Hill/Irwin. Woyke, E, & Henry, D. (2007, August 13). Markets in Turmoil: The Buyout Boom’s Dark Side. Business Week on the Web. Retrieved May 8, 2008, from http://www.businessweek.com/print/magazine/content/07_33/b4046616.ht m?chan=gl. 10Q Detective. (2006, March 29). Spectrum Brands: In Need of More Than Doggie Doo Relief (SPC). Seeking Alpha on the Web. Retrieved May 8, 2008, from http://seeking alpha.com/article/8317-spectrum-brands-in- need-of-more-than-doggie-doo-relief-spc.