Newell’s Distinctive Capabilities/Resources:
Newell possessed quite a few distinctive capabilities and resources that really distinguished it from other companies. In this section of the case analysis, we will be taking a look at some of the decisions that Newell took that put them at a sustainable competitive advantage, the strategies they followed, and components of their business strategy that made them more profitable and well off.
Acquisition Strategy: One thing that Newell did that really distinguished it from other companies was that is followed an acquisition strategy. What this meant was that Newell would buy out a smaller company, which would then add on a new product line to the Newell Company. This allowed Newell to grow both in size as well as market share, as they were able to tap into many different industries. Newell’s first big acquisition was in the 1969 when they acquired Mirra-Cote bath hardware. This pattern continued on for the next 20 years, as Newell ended up acquiring 30 more major business in different product lines, ranging from cookware, to office supplies, to children’s products, etc. This particular strategy was of great value to Newell, as it brought on a lot of revenue and expanded their company to many product lines. It was rare in the sense that not many other companies followed this exact strategy as dedicatedly, and not as easy to imitate, since this process needed to be conducted carefully in order to make profit. Finally, the acquisition strategy was completely exploited by the organization; Newell thrived off of it.
Newellization: As mentioned in the case, Newell would generally acquire companies that manufactured low-technology, nonseasonal, noncyclical, and nonfashionable products that volume retailers could keep on shelves consistently; something very generic. Coincidentally, these firms would always be underperforming due to high costs, and most had operating margins of less than 10%. After...
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